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Articles 1-42 of the Labor Code

2. RA 8042 (Migrant Workers Act) as amended by RA 10022
3. First 130 pages of The Labor Code With Comments And Cases by C.A. Azucena

4. Cases:

1. People v. Panis, L-58674-77, July 11, 1986

2. Lazo v. Salac, G.R. No. 152642, November 13, 2012

3. Sunace International vs. NLRC G.R. No. 161757, January 25, 2006

4. Serrano v. Gallant, G.R. No. 167614, March 24, 2009

5. Yap v. Thenamaris, G.R. No. 179532, May 30, 2011

6. Meralco vs. NLRC, G.R. No. 78763, July 12, 1989

7. Juco vs. NLRC, G.R. No. 98107, Aug. 18, 1997

8. Republic vs. CA, G.R. No. 87676, December 20, 1989

9. Philippine Association of Service Exporters Inc. v. Drilon (GR 81958)

10. Sevilla v. CA (GR L-41182-3)

11. Francisco v. NLRC (GR 170087)

12. Makati Haberdashery v. NLRC (GR 83380-81)

13. Mendiola v. CA (GR 159333)

14. Sonza v. ABS CBN (GR 138051)

15. NASECO v. NLRC (GR L-69870)

16. Jamer v. NLRC (GR 112630)


By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the Decision and Resolution of the Court of
Appeals (CA).

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine Overseas
Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions:
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month
On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the
position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents that he
would be made Chief Officer by the end of April 1998.
Respondents did not deliver on their promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as
Second Officer and was repatriated to the Philippines on May 26, 1998.
Petitioner’s employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time
of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract,
leaving an unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and
for payment of his money claims in the total amount of US$26,442.73.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding
him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant (petitioner) by
the respondents in the above-entitled case was illegal and the respondents are hereby ordered to pay the
complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange
prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S.
DOLLARS (US $8,770.00), representing the complainant’s salary for three (3) months of the unexpired
portion of the aforesaid contract of employment.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary
period of three months only — rather than the entire unexpired portion of nine months and 23 days of
petitioner’s employment contract – applying the subject clause. However, the LA applied the salary rate of
US$2,590.00, consisting of petitioner’s “[b]asic salary, US$1,400.00/month + US$700.00/month, fixed
overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.”

Respondents appealed to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner
was illegally dismissed.
The NLRC modified the LA Decision and corrected the LA’s computation of the lump-sum salary awarded to petitioner by reducing
the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 “does not provide for the award of
overtime pay, which should be proven to have been actually performed, and for vacation leave pay.
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the
subject clause. The NLRC denied the motion.
Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge against the subject clause. After
initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this Court in its Resolution
which granted the petition for certiorari,filed by petitioner.
The CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the
constitutional issue raised by petitioner.
His Motion for Reconsideration having been denied by the CA, petitioner brings his cause to this Court on the following grounds:
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the Supreme
Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of his
contract of employment instead of limiting it to three (3) months.
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely
erred in law in excluding from petitioner’s award the overtime pay and vacation pay provided in his contract
since under the contract they form part of his salary.
The Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question raised

 Whether Section 10 (par 5) of RA 8042 is unconstitutional

 Proper computation of the Lump-sum salary to be awarded to petitioner by reason of his illegal dismissal
 Whether the overtime and leave pay should form part of the salary basis in the computation of his monetary award

The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed.
Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all three fora.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00
covering the period of three months out of the unexpired portion of nine months and 23 days of his employment contract or a
total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the
NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for
the entire nine months and 23 days left of his employment contract, computed at the monthly rate of
Arguments of the Petitioner

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No.
8042, violates the OFWs’ constitutional rights in that it impairs the terms of their contract, deprives them of equal protection and
denies them due process.
The Arguments of Respondents

Respondents contend that the constitutional issue should not be entertained, for this was belatedly interposed by petitioner in his
appeal before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC.40
The Arguments of the Solicitor General

The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired
petitioner’s 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioner’s contract, the provisions thereof are
deemed part of the minimum terms of petitioner’s employment, especially on the matter of money claims, as this was not
stipulated upon by the parties.
The Court’s Ruling:

First Issue

Does the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section
3, Article XIII on Labor as protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal
protection of the law.
Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without distinction as to place of
deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and
parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be
borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the burden
imposed on, others in like circumstances.
Imbued with the same sense of “obligation to afford protection to labor,” the Court in the present case also
employs the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification
prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals
that the subject clause has a discriminatory intent against, and an invidious impact on OFWs
The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause
violates not just petitioner’s right to equal protection, but also her right to substantive due process under
Section 1, Article III of the Constitution.
Second Issue

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were
treated alike in terms of the computation of their monetary benefits in case of illegal dismissal. Their claims were subjected to a
uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their employment
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the
money claims of illegally dismissed OFWs based on their employment periods, in the process singling out one
category whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of
having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all
the while sparing the other category from such prejudice, simply because the latter’s unexpired contracts fall short of one year.
Prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place.
This uniform system was applicable even to local workers with fixed-term employment.
The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause
violates not just petitioner’s right to equal protection, but also her right to substantive due process under
Section 1, Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired
period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to
the enactment of R.A. No. 8042.

Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary
award, because these are fixed benefits that have been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order
No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic
wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all
work “performed” in excess of the regular eight hours, and holiday pay is compensation for any work
“performed” on designated rest days and holidays.
In the same vein, the claim for the day’s leave pay for the unexpired portion of the contract is unwarranted since the same is given
during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause “or for three months for every year of the
unexpired term, whichever is less” in the 5th paragraph of Section 10 of Republic Act No. 8042 is
DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the
Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire
unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate
of US$1,400.00 per month.
G.R. No. 78763 July 12,1989



Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Dominador Maglalang for private respondent.


This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the resolution of the respondent
National Labor Relations Commission dated March 12, 1987 (p. 28, Rollo) in NLRC Case No. NCR-8-3808-83,
entitled, "Apolinario M. Signo, Complainant, versus Manila Electric Company, Respondents", affirming the decision of the
Labor Arbiter which ordered the reinstatement of private respondent herein, Apolinario Signo, to his former position without

The antecedent facts are as follows:

Private respondent Signo was employed in petitioner company as supervisor-leadman since January 1963 up to the time
when his services were terminated on May 18, 1983.

In 1981, a certain Fernando de Lara filed an application with the petitioner company for electrical services at his residence at
Peñafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private respondent Signo facilitated the processing of the said
application as well as the required documentation for said application at the Municipality of Antipolo, Rizal. In consideration
thereof, private respondent received from Fernando de Lara the amount of P7,000.00. Signo thereafter filed the application
for electric services with the Power Sales Division of the company.

It was established that the area where the residence of de Lara was located is not yet within the serviceable point of Meralco,
because the place was beyond the 30-meter distance from the nearest existing Meralco facilities. In order to expedite the
electrical connections at de Lara's residence, certain employees of the company, including respondent Signo, made it appear
in the application that the sari-sari store at the corner of Marcos Highway, an entrance to the subdivision, is applicant de
Lara's establishment, which, in reality is not owned by the latter.

As a result of this scheme, the electrical connections to de Lara's residence were installed and made possible. However, due
to the fault of the Power Sales Division of petitioner company, Fernando de Lara was not billed for more than a year.

Petitioner company conducted an investigation of the matter and found respondent Signo responsible for the said
irregularities in the installation. Thus, the services of the latter were terminated on May 18, 1983.

On August 10 1983, respondent Signo filed a complaint for illegal dismissal, unpaid wages, and separation pay.

After the parties had submitted their position papers, the Labor Arbiter rendered a decision (p. 79, Rollo) on April 29, 1985,
which stated, inter alia:

Verily, complainant's act of inducing the Meralco employees to effectuate the installation on Engr. de Lara's
residence prejudiced the respondent, and therefore, complainant himself had indeed became a participant in
the transactions, although not directly, which turned out to be illegal, not to mention that some of the
materials used therein belongs to Meralco, some of which were inferior quality. . . .

While complainant may deny the violation, he cannot do away with company's Code on Employee Discipline,
more particularly Section 7, par. 8 and Section 6, par. 24 thereof However, as admitted by the respondent,
the infraction of the above cited Code is punishable by reprimand to dismissal."

... . And in this case, while considering that complainant indeed committed the above-cited infractions of
company Code of Employee Discipline, We shall also consider his records of uninterrupted twenty (20) years
of service coupled with two (2) commendations for honesty. Likewise, We shall take note that subject offense
is his first, and therefore, to impose the extreme penalty of dismissal is certainly too drastic. A penalty short
of dismissal is more in keeping with justice, and adherence to compassionate society.

WHEREFORE, respondent Meralco is hereby directed to reinstate complainant Apolinario M. Signo to his
former position as Supervisor Leadman without backwages, considering that he is not at all faultless. He is
however, here warned, that commission of similar offense in the future, shall be dealt with more severely.


Both parties appealed from the decision to the respondent Commission. On March 12, 1987, the respondent Commission
dismissed both appeals for lack of merit and affirmed in toto the decision of the Labor Arbiter.

On June 23, 1987, the instant petition was filed with the petitioner contending that the respondent Commission committed
grave abuse of discretion in affirming the decision of the Labor Arbiter. A temporary restraining order was issued by this Court
on August 3, 1987, enjoining the respondents from enforcing the questioned resolution of the respondent Commission.

The issue to resolve in the instant case is whether or not respondent Signo should be dismissed from petitioner company on
grounds of serious misconduct and loss of trust and confidence.

Petitioner contends that respondent Signo violated Sections 6 and 7 of the company's Code on Employee Discipline, which

Section 6, Par. 24—Encouraging, inducing or threatening another employee to perform an act constituting a
violation of this Code or of company work, rules or an offense in connection with the official duties of the
latter, or allowing himself to be persuaded, induced or influenced to commit such offense.

Penalty—Reprimand to dismissal, depending upon the gravity of the offense.

Section 7, Par. 8—Soliciting or receiving money, gift, share, percentage or benefits from any person,
personally or through the mediation of another, to perform an act prejudicial to the Company.

Penalty—Dismissal. (pp. 13-14, Rollo)

Petitioner further argues that the acts of private respondent constituted breach of trust and caused the petitioner company
economic losses resulting from the unbilled electric consumption of de Lara; that in view thereof, the dismissal of private
respondent Signo is proper considering the circumstances of the case.

The power to dismiss is the normal prerogative of the employer. An employer, generally, can dismiss or lay-off an employee
for just and authorized causes enumerated under Articles 282 and 283 of the Labor Code. However, the right of an employer
to freely discharge his employees is subject to regulation by the State, basically in the exercise of its paramount police power.
This is so because the preservation of the lives of the citizens is a basic duty of the State, more vital than the preservation of
corporate profits (Euro-Linea, Phil. Inc. v. NLRC, G.R. No. 75782, December 1, 1987,156 SCRA 78).

There is no question that herein respondent Signo is guilty of breach of trust and violation of company rules, the penalty for
which ranges from reprimand to dismissal depending on the gravity of the offense. However, as earlier stated, the respondent
Commission and the Labor Arbiter found that dismissal should not be meted to respondent Signo considering his twenty (20)
years of service in the employ of petitioner, without any previous derogatory record, in addition to the fact that petitioner
company had awarded him in the past, two (2) commendations for honesty. If ever the petitioner suffered losses resulting
from the unlisted electric consumption of de Lara, this was found to be the fault of petitioner's Power Sales Division.

We find no reason to disturb these findings. Well-established is the principle that findings of administrative agencies which
have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but
even finality. Judicial review by this Court on labor cases does not go so far as to evaluate the sufficiency of the evidence
upon which the proper labor officer or office based his or its determination but is limited to issues of jurisdiction or grave
abuse of discretion (Special Events and Central Shipping Office Workers Union v. San Miguel Corporation, G.R. Nos. L-
51002-06, May 30,1983,122 SCRA 557).

This Court has held time and again, in a number of decisions, that notwithstanding the existence of a valid cause for
dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed, as it is too severe a
penalty if the latter has been employed for a considerable length of time in the service of his employer. (Itogon-Suyoc Mines,
Inc. v. NLRC, et al., G.R. No. L- 54280, September 30,1982,117 SCRA 523; Meracap v. International Ceramics
Manufacturing Co., Inc., et al., G.R. Nos. L-48235-36, July 30,1979, 92 SCRA 412; Sampang v. Inciong, G.R. No. 50992,
June 19,1985,137 SCRA 56; De Leon v. NLRC, G.R. No. L-52056, October 30,1980, 100 SCRA 691; Philippine Airlines, Inc.
v. PALEA, G.R. No. L-24626, June 28, 1974, 57 SCRA 489).

In a similar case, this Court ruled:

As repeatedly been held by this Court, an employer cannot legally be compelled to continue with the
employment of a person who admittedly was guilty of breach of trust towards his employer and whose
continuance in the service of the latter is patently inimical to its interest. The law in protecting the rights of the
laborers, authorized neither oppression nor self- destruction of the employer.

However, taking into account private respondent's 'twenty-three (23) years of service which undisputedly is
unblemished by any previous derogatory record' as found by the respondent Commission itself, and since he
has been under preventive suspension during the pendency of this case, in the absence of a showing that
the continued employment of private respondent would result in petitioner's oppression or self-destruction,
We are of the considered view that his dismissal is a drastic punishment. ... .

xxx xxx xxx

The ends of social and compassionate justice would therefore be served if private respondent is reinstated
but without backwages in view of petitioner's obvious good faith. (Itogon- Suyoc Mines, Inc. v. NLRC, et al.,
11 7 SCRA 528)

Further, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's
welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the
liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that "all doubts in
the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations
shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140).

In view of the foregoing, reinstatement of respondent Signo is proper in the instant case, but without the award of backwages,
considering the good faith of the employer in dismissing the respondent.

ACCORDINGLY, premises considered, the petition is hereby DISMISSED and the assailed decision of the National Labor
Relations Commission dated March 12, 1987 is AFFIRMED. The temporary restraining order issued on August 3, 1987 is



175 SCRA 277 – Political Law – Constitutional Law – Due Process; Administrative Bodies
Labor Law – Labor Relations – Termination of Employment – Grounds of Termination; when offset
Apolinario Signo was employed by the Manila Electric Company (Meralco) as supervisor-leadman since 1963. During his 20
year-tenure of service in said company, he had been commended twice for honesty. However, one time in 1981, he facilitated
an “illegal” connection to the house of a certain Fernando De Lara; the latter received “free” service of electricity for a year
since he was not billed for Meralco’s services. This irregularity was later discovered and so in 1983, Signo was fired by Meralco
on the ground of breach of trust and loss of confidence which are grounds for termination under the Labor Code.
Signo filed a case for illegal dismissal and for backwages. The Labor Arbiter ruled that though there is breach of trust on the
part of Signo, dismissal is too harsh a penalty considering that Signo has been employed by Meralco for 20 years; that except
for that one time infraction, Signo had a clean slate with Meralco. On appeal, The National Labor Relations Commission (NLRC)
affirmed the factual findings of the Labor Arbiter. Meralco questioned the validity of the NLRC decision before the Supreme
Court via a petition for certiorari under Rule 65 of the Rules of Court.
ISSUE: Whether or not the findings of the NLRC, an administrative body, is reviewable by the Supreme Court in this case.
HELD: No. The Supreme Court sustained the decision of the NLRC. Well-established is the principle that findings of
administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally
accorded not only respect but even finality. Judicial review by this Court on labor cases does not go so far as to evaluate the
sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited to issues of
jurisdiction or grave abuse of discretion. No such issues of jurisdiction or grave abuse of discretion is present in the case at
Further, notwithstanding the existence of a valid cause for dismissal, such as breach of trust by an employee, nevertheless,
dismissal should not be imposed, as it is too severe a penalty if the latter has been employed for a considerable length of time
in the service of his employer. Reinstatement of respondent Signo is proper in the instant case, but without the award of
backwages, considering the good faith of Meralco in dismissing him.

G.R. No. 98107 August 18, 1997

BENJAMIN C. JUCO, petitioner,



This is a petition for certiorari to set aside the Decision of the National Labor Relations Commission (NLRC) dated March 14,
1991, which reversed the Decision dated May 21, 1990 of Labor Arbiter Manuel R Caday, on the ground of lack of

Petitioner Benjamin C. Juco was hired as a project engineer of respondent National Housing Corporation (NHC) from
November 16, 1970 to May 14, 1975. On May 14, 1975, he was separated from the service for having been implicated in a
crime of theft and/or malversation of public funds.

On March 25, 1977, petitioner filed a complaint for illegal dismissal against the NHC with the Department of Labor.

On September 17, 1977, the Labor Arbiter rendered a decision dismissing the complaint on the ground that the NLRC had no
jurisdiction over the case. 1

Petitioner then elevated the case to the NLRC which rendered a decision on December 28, 1982, reversing the decision of
the Labor Arbiter. 2

Dissatisfied with the decision of the NLRC, respondent NHC appealed before this Court and on January 17, 1985, we
rendered a decision, the dispositive portion thereof reads as follows:

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the respondent National Labor
Relations Commission is SET ASIDE. The decision of the Labor Arbiter dismissing the case before it for lack
of jurisdiction is REINSTATED. 3

On January 6, 1989, petitioner filed with the Civil Service Commission a complaint for illegal dismissal, with preliminary
mandatory injunction. 4

On February 6, 1989, respondent NHC moved for the dismissal of the complaint on the ground that the Civil Service
Commission has no jurisdiction over the case. 5

On April 11, 1989, the Civil Service Commission issued an order dismissing the complaint for lack of jurisdiction. It
ratiocinated that:

The Board finds the comment and/or motion to dismiss meritorious. It was not disputed that NHC is a
government corporation without an original charter but organized/created under the Corporation Code.

Article IX, Section 2 (1) of the 1987 Constitution provides:

The civil service embraces all branches, subdivisions, instrumentalities and agencies of the
Government, including government owned and controlled corporations with original charters.
(emphasis supplied)
From the aforequoted constitutional provision, it is clear that respondent NHC is not within the scope of the
civil service and is therefore beyond the jurisdiction of this Board. Moreover, it is pertinent to state that the
1987 Constitution was ratified and became effective on February 2, 1987.

WHEREFORE, for lack of jurisdiction, the instant complaint is hereby dismissed. 6

On April 28, 1989, petitioner filed with respondent NLRC a complaint for illegal dismissal with preliminary mandatory
injunction against respondent NHC. 7

On May 21, 1990, respondent NLRC thru Labor Arbiter Manuel R. Caday ruled that petitioner was illegally dismissed from his
employment by respondent as there was evidence in the record that the criminal case against him was purely fabricated,
prompting the trial court to dismiss the charges against him. Hence, he concluded that the dismissal was illegal as it was
devoid of basis, legal or factual.

He further ruled that the complaint is not barred by prescription considering that the period from which to reckon the
reglementary period of four years should be from the date of the receipt of the decision of the Civil Service Commission
promulgated on April 11, 1989. He also ratiocinated that:

It appears . . . complainant filed the complaint for illegal dismissal with the Civil Service Commission on
January 6, 1989 and the same was dismissed on April 11, 1989 after which on April 28, 1989, this case was
filed by the complainant. Prior to that, this case was ruled upon by the Supreme Court on January 17, 1985
which enjoined the complainant to go to the Civil Service Commission which in fact, complainant did. Under
the circumstances, there is merit on the contention that the running of the reglementary period of four (4)
years was suspended with the filing of the complaint with the said Commission. Verily, it was not the fault of
the respondent for failing to file the complaint as alleged by the respondent but due to, in the words of the
complainant, a "legal knot" that has to be untangled. 8

Thereafter, the Labor Arbiter rendered a decision, the dispositive portion of which reads:

Premises considered, judgment is hereby rendered declaring the dismissal of the complainant as illegal and
ordering the respondent to immediately reinstate him to his former position without loss of seniority rights with
full back wages inclusive of allowance and to his other benefits or equivalent computed from the time it is
withheld from him when he was dismissed on March 27, 1977, until actually reinstated. 9

On June 1, 1990, respondent NHC filed its appeal before the NLRC and on March 14, 1991, the NLRC promulgated a
decision which reversed the decision of Labor Arbiter Manuel R. Caday on the ground of lack of jurisdiction. 10

The primordial issue that confronts us is whether or not public respondent committed grave abuse of discretion in holding that
petitioner is not governed by the Labor Code.

Under the laws then in force, employees of government-owned and/or controlled corporations were governed by the Civil
Service Law and not by the Labor Code. Hence,

Article 277 of the Labor Code (PD 442) then provided:

The terms and conditions of employment of all government employees, including employees of government-
owned and controlled corporations shall be governed by the Civil Service Law, rules and regulations . . . .

The 1973 Constitution, Article II-B, Section 1(1), on the other hand provided:

The Civil Service embraces every branch, agency, subdivision and instrumentality of the government,
including government-owned or controlled corporations.

Although we had earlier ruled in National Housing Corporation v.

Juco, 11 that employees of government-owned and/or controlled corporations, whether created by special law or formed as
subsidiaries under the general Corporation Law, are governed by the Civil Service Law and not by the Labor Code, this ruling
has been supplanted by the 1987 Constitution. Thus, the said Constitution now provides:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government,
including government owned or controlled corporations with original charter. (Article IX-B, Section 2[1])
In National Service Corporation (NASECO) v. National Labor Relations Commission, 12 we had the occasion to apply the
present Constitution in deciding whether or not the employees of NASECO are covered by the Civil Service Law or the Labor
Code notwithstanding that the case arose at the time when the 1973 Constitution was still in effect. We ruled that the NLRC
has jurisdiction over the employees of NASECO on the ground that it is the 1987 Constitution that governs because it is the
Constitution in place at the time of the decision. Furthermore, we ruled that the new phrase "with original charter" means that
government-owned and controlled corporations refer to corporations chartered by special law as distinguished from
corporations organized under the Corporation Code. Thus, NASECO which had been organized under the general
incorporation statute and a subsidiary of the National Investment Development Corporation, which in turn was a subsidiary of
the Philippine National Bank, is exluded from the purview of the Civil Service Commission.

We see no cogent reason to depart from the ruling in the aforesaid case.

In the case at bench, the National Housing Corporation is a government owned corporation organized in 1959 in accordance
with Executive Order No. 399, otherwise known as the Uniform Charter of Government Corporation, dated January 1, 1959.
Its shares of stock are and have been one hundred percent (100%) owned by the Government from its incorporation under
Act 1459, the former corporation law. The government entities that own its shares of stock are the Government Service
Insurance System, the Social Security System, the Development Bank of the Philippines, the National Investment and
Development Corporation and the People's Homesite and Housing Corporation. 13 Considering the fact that the NHA had
been incorporated under Act 1459, the former corporation law, it is but correct to say that it is a government-owned or
controlled corporation whose employees are subject to the provisions of the Labor Code. This observation is reiterated in the
recent case of Trade Union of the Philippines and Allied Services (TUPAS) v. National Housing
Corporation, 14 where we held that the NHA is now within the jurisdiction of the Department of Labor and Employment, it
being a government-owned and/or controlled corporation without an original charter. Furthermore, we also held that the
workers or employees of the NHC (now NHA) undoubtedly have the right to form unions or employee's organization and that
there is no impediment to the holding of a certification election among them as they are covered by the Labor Code.

Thus, the NLRC erred in dismissing petitioner's complaint for lack of jurisdiction because the rule now is that the Civil Service
now covers only government-owned or controlled corporations with original charters. 15 Having been incorporated under the
Corporation Law, its relations with its personnel are governed by the Labor Code and come under the jurisdiction of the
National Labor Relations Commission.

One final point. Petitioners have been tossed from one forum to another for a simple illegal dismissal case. It is but apt that
we put an end to his dilemna in the interest of justice.

WHEREFORE, the decision of the NLRC in NLRC NCR-04-02036089 dated March 14, 1991 is hereby REVERSED and the
Decision of the Labor Arbiter dated May 21, 1990 is REINSTATED.

G.R. No. 87676 December 20, 1989

THEIR MEMBERS, respondents.

Bienvenido D. Comia for respondents.


The Regional Trial Court of Manila, Branch III, dismissed for lack of jurisdiction, the petitioner's complaint in Civil Case No.
88- 44048 praying for a declaration of illegality of the strike of the private respondents and to restrain the same. The Court of
Appeals denied the petitioner's petition for certiorari, hence, this petition for review.

The key issue in this case is whether the petitioner, National Parks Development Committee (NPDC), is a government
agency, or a private corporation, for on this issue depends the right of its employees to strike.

This issue came about because although the NPDC was originally created in 1963 under Executive Order No. 30, as the
Executive Committee for the development of the Quezon Memorial, Luneta and other national parks, and later renamed as
the National Parks Development Committee under Executive Order No. 68, on September 21, 1967, it was registered in the
Securities and Exchange Commission (SEC) as a non-stock and non-profit corporation, known as "The National Parks
Development Committee, Inc."

However, in August, 1987, the NPDC was ordered by the SEC to show cause why its Certificate of Registration should not be
suspended for: (a) failure to submit the General Information Sheet from 1981 to 1987; (b) failure to submit its Financial
Statements from 1981 to 1986; (c) failure to register its Corporate Books; and (d) failure to operate for a continuous period of
at least five (5) years since September 27, 1967.

On August 18, 1987, the NPDC Chairman, Amado Lansang, Jr., informed SEC that his Office had no objection to the
suspension, cancellation, or revocation of the Certificate of Registration of NPDC.

By virtue of Executive Order No. 120 dated January 30, 1989, the NPDC was attached to the Ministry (later Department) of
Tourism and provided with a separate budget subject to audit by the Commission on Audit.

On September 10, 1987, the Civil Service Commission notified NPDC that pursuant to Executive Order No. 120, all
appointments and other personnel actions shall be submitted through the Commission.

Meanwhile, the Rizal Park Supervisory Employees Association, consisting of employees holding supervisory positions in the
different areas of the parks, was organized and it affiliated with the Trade Union of the Philippines and Allied Services
(TUPAS) under Certificate No. 1206.

On June 15, 1987, two collective bargaining agreements were entered into between NPDC and NPDCEA (TUPAS local
Chapter No. 967) and NPDC and NPDCSA (TUPAS Chapter No. 1206), for a period of two years or until June 30, 1989.

On March 20, 1988, these unions staged a stake at the Rizal Park, Fort Santiago, Paco Park, and Pook ni Mariang Makiling
at Los Banos, Laguna, alleging unfair labor practices by NPDC.

On March 21, 1988, NPDC filed in the Regional Trial Court in Manila, Branch III, a complaint against the union to declare the
strike illegal and to restrain it on the ground that the strikers, being government employees, have no right to strike although
they may form a union.

On March 24, 1988, the lower court dismissed the complaint and lifted the restraining order for lack of jurisdiction. It held that
the case "properly falls under the jurisdiction of the Department of Labor," because "there exists an employer-employee
relationship" between NPDC and the strikers, and "that the acts complained of in the complaint, and which plaintiff seeks to
enjoin in this action, fall under paragraph 5 of Article 217 of the Labor Code, ..., in relation to Art. 265 of the same Code,
hence, jurisdiction over said acts does not belong to this Court but to the Labor Arbiters of the Department of Labor." (p. 142,
Petitioner went to the Court of Appeals on certiorari (CA-G.R. SP No. 14204). On March 31, 1989, the Court of appeals
affirmed the order of the trial court, hence, this petition for review. The petitioner alleges that the Court of Appeals erred:

1) in not holding that the NPDC employees are covered by the Civil Service Law; and

2) in ruling that petitioner's labor dispute with its employees is cognizable by the Department of Labor.

We have considered the petition filed by the Solicitor General on behalf of NPDC and the comments thereto and are
persuaded that it is meritorious.

In Jesus P. Perlas, Jr. vs. People of the Philippines, G.R. Nos. 84637-39, August 2, 1989, we ruled that the NPDC is an
agency of the government, not a government-owned or controlled corporation, hence, the Sandiganbayan had jurisdiction
over its acting director who committed estafa. We held thus:

The National Parks Development Committee was created originally as an Executive Committee on January
14,1963, for the development of the Quezon Memorial, Luneta and other national parks (Executive Order No.
30). It was later designated as the National Parks Development Committee (NPDC) on February 7, 1974
(E.O. No. 69). On January 9, 1966, Mrs. Imelda R. Marcos and Teodoro F. Valencia were designated
Chairman and Vice- Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to the Bureau of
Forest Development, Department of Natural Resources, on December 1, 1975 (Letter of Implementation No.
39, issued pursuant to PD No. 830, dated November 27, 1975), the NPDC has remained under the Office of
the President (E.O. No. 709, dated July 27, 1981).

Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government agency under
the Office of the President and allotments for its maintenance and operating expenses were issued direct to
NPDC (Exh. 10-A Perlas, Item No. 2, 3). (Italics ours.)

Since NPDC is a government agency, its employees are covered by civil service rules and regulations (Sec. 2, Article IX,
1987 Constitution). Its employees are civil service employees (Sec. 14, Executive Order No. 180).

While NPDC employees are allowed under the 1987 Constitution to organize and join unions of their choice, there is as yet
no law permitting them to strike. In case of a labor dispute between the employees and the government, Section 15 of
Executive Order No. 180 dated June 1, 1987 provides that the Public Sector Labor- Management Council, not the
Department of Labor and Employment, shall hear the dispute. Clearly, the Court of Appeals and the lower court erred in
holding that the labor dispute between the NPDC and the members of the NPDSA is cognizable by the Department of Labor
and Employment.

WHEREFORE, the petition for review is granted. The decision of the Court of Appeals in CA-G.R. SP No. 14204 is hereby set
aside. The private respondents' complaint should be filed in the Public Sector Labor-Management Council as provided in
Section 15 of Executive Order No. 180. Costs against the private respondents.

Pasei v Drilon
Facts: Petitioner, Phil association of Service Exporters, Inc., is engaged principally in the
recruitment of Filipino workers, male and female of overseas employment. It challenges the
constitutional validity of Dept. Order No. 1 (1998) of DOLE entitled “Guidelines Governing the
Temporary Suspension of Deployment of Filipino Domestic and Household Workers.” It claims
that such order is a discrimination against males and females. The Order does not apply to all
Filipino workers but only to domestic helpersand females with similar skills, and that it is in
violation of the right to travel, it also being an invalid exercise of the lawmaking power.
Further, PASEI invokes Sec 3 of Art 13 of the Constitution, providing for worker participation in
policy and decision-making processes affecting their rights and benefits as may be provided by
law. Thereafter the Solicitor General on behalf of DOLE submitting to the validity of the
challenged guidelinesinvolving the police power of the State and informed the court that the
respondent have lifted the deployment ban in some states where there exists bilateral
agreement with the Philippines and existing mechanism providing for sufficient safeguards to
ensure the welfare and protection of the Filipino workers.

Issue: Whether or not there has been a valid classification in the challenged Department
Order No. 1.

Held: SC in dismissing the petition ruled that there has been validclassification, the Filipino
female domestics working abroad were in a class by themselves, because of the special risk to
which their class was exposed. There is no question that Order No.1 applies only to female
contract workers but it does not thereby make an undue discriminationbetween sexes. It is
well settled hat equality before the law under the constitution does not import a perfect
identity of rights among all men and women. It admits of classification, provided that:

1. Such classification rests on substantial distinctions

2. That they are germane to the purpose of the law
3. They are not confined to existing conditions
4. They apply equally to al members of the same class

In the case at bar, the classifications made, rest on substantial distinctions.

Dept. Order No. 1 does not impair the right to travel. The consequence of the deployment ban
has on the right to travel does not impair the right, as the right to travel is subjects among
other things, to the requirements of “public safety” as may be provided by law. Deployment
ban of female domestic helper is a valid exercise of police power. Police power as been defined
as the state authority to enact legislation that may interfere with personal liberty or property in
order to promote general welfare. Neither is there merit in the contention that Department
Order No. 1 constitutes an invalid exercise of legislative power as the labor code vest the DOLE
with rule making powers.
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Callejo, Sr., and
Chico-Nazario, JJ.
August 31, 2006
x ---------------------------------------------------------------------------------------- x



This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision and Resolution of the
Court of Appeals dated October 29, 2004 [1] and October 7, 2005,[2] respectively, in CA-G.R. SP No. 78515 dismissing the complaint for
constructive dismissal filed by herein petitioner Angelina Francisco. The appellate court reversed and set aside the Decision of the National
Labor Relations Commission (NLRC) dated April 15, 2003, [3] in NLRC NCR CA No. 032766-02 which affirmed with modification the
decision of the Labor Arbiter dated July 31, 2002, [4] in NLRC-NCR Case No. 30-10-0-489-01, finding that private respondents were liable
for constructive dismissal.

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary
and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to
secure business permits, construction permits and other licenses for the initial operation of the company. [5]

Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend
any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate
Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company. [6]

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As
Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management administration functions;
represent the company in all dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security
System (SSS) and in the city government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant
which is owned and operated by Kasei Corporation. [7]

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus
P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. [8]

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared
resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated
Treasurer, convened a meeting of all employees of Kasei Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters. [9]

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total
reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning
well. On October 2001, petitioner did not receive her salary from the company. She made repeated follow-ups with the company cashier
but she was advised that the company was not earning well.[10]

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no
longer connected with the company.[11]

Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the
labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995
as one of its technical consultants on accounting matters and act concurrently as Corporate Secretary. As technical consultant, petitioner
performed her work at her own discretion without control and supervision of Kasei Corporation. Petitioner had no daily time record and she
came to the office any time she wanted. The company never interfered with her work except that from time to time, the management would
ask her opinion on matters relating to her profession. Petitioner did not go through the usual procedure of selection of employees, but her
services were engaged through a Board Resolution designating her as technical consultant. The money received by petitioner from the
corporation was her professional fee subject to the 10% expanded withholding tax on professionals, and that she was not one of those
reported to the BIR or SSS as one of the companys employees. [12]

Petitioners designation as technical consultant depended solely upon the will of management. As such, her consultancy may be
terminated any time considering that her services were only temporary in nature and dependent on the needs of the corporation.

To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the years
1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of
payees subject to expanded withholding tax which included petitioner. SSS records were also submitted showing that petitioners latest
employer was Seiji Corporation.[13]

The Labor Arbiter found that petitioner was illegally dismissed, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. finding complainant an employee of respondent corporation;

2. declaring complainants dismissal as illegal;
3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and jointly
and severally pay complainant her money claims in accordance with the following computation:

a. Backwages 10/2001 07/2002 275,000.00

(27,500 x 10 mos.)
b. Salary Differentials (01/2001 09/2001) 22,500.00
c. Housing Allowance (01/2001 07/2002) 57,000.00
d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorneys fees 87,076.50

If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with additional
backwages that would accrue up to actual payment of separation pay.


On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive portion of which reads:

PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:

1) Respondents are directed to pay complainant separation pay computed at one month per year of service in
addition to full backwages from October 2001 to July 31, 2002;

2) The awards representing moral and exemplary damages and 10% share in profit in the respective accounts of
P100,000.00 and P361,175.00 are deleted;

3) The award of 10% attorneys fees shall be based on salary differential award only;

4) The awards representing salary differentials, housing allowance, mid year bonus and 13 th month pay are


On appeal, the Court of Appeals reversed the NLRC decision, thus:

WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations Commissions
dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby rendered dismissing the complaint
filed by private respondent against Kasei Corporation, et al. for constructive dismissal.


The appellate court denied petitioners motion for reconsideration, hence, the present recourse.

The core issues to be resolved in this case are (1) whether there was an employer-employee relationship between petitioner and
private respondent Kasei Corporation; and if in the affirmative, (2) whether petitioner was illegally dismissed.

Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on one hand, and the
Court of Appeals on the other, there is a need to reexamine the records to determine which of the propositions espoused by the contending
parties is supported by substantial evidence.[17]

We held in Sevilla v. Court of Appeals[18] that in this jurisdiction, there has been no uniform test to determine the existence of an
employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are
performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the
standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the
payrolls, can help in determining the existence of an employer-employee relationship.

However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing
to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the
employers power to control the employee with respect to the means and methods by which the work is to be accomplished, economic
realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the
employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the
activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is
no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various
positions and responsibilities given to the worker over the period of the latters employment.

The control test initially found application in the case of Viaa v. Al-Lagadan and Piga,[19] and lately in Leonardo v. Court of
Appeals, where we held that there is an employer-employee relationship when the person for whom the services are performed reserves
the right to control not only the end achieved but also the manner and means used to achieve that end.

In Sevilla v. Court of Appeals,[21] we observed the need to consider the existing economic conditions prevailing between the parties,
in addition to the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the
existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of the worker.

Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole
economic activity,[22] such as: (1) the extent to which the services performed are an integral part of the employers business; (2) the extent of
the workers investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of
the worker upon the employer for his continued employment in that line of business.[23]

The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued
employment in that line of business.[24] In the United States, the touchstone of economic reality in analyzing possible employment
relationships for purposes of the Federal Labor Standards Act is dependency. [25] By analogy, the benchmark of economic reality in analyzing
possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct
control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job
functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper
operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because
she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month
pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000.[26] When
petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners
membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation
and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between
petitioner and respondent corporation.[27]

It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the
latters line of business.

In Domasig v. National Labor Relations Commission,[28] we held that in a business establishment, an identification card is provided
not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the
cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial evidence adequate to support
a conclusion that petitioner was an employee of private respondent.

We likewise ruled in Flores v. Nuestro[29] that a corporation who registers its workers with the SSS is proof that the latter were the
formers employees. The coverage of Social Security Law is predicated on the existence of an employer-employee relationship.

Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as Corporate
Secretary and that her designation as such was only for convenience. The actual nature of petitioners job was as Kamuras direct assistant
with the duty of acting as Liaison Officer in representing the company to secure construction permits, license to operate and other
requirements imposed by government agencies. Petitioner was never entrusted with corporate documents of the company, nor required to
attend the meeting of the corporation. She was never privy to the preparation of any document for the corporation, although once in a while
she was required to sign prepared documentation for the company.[30]

The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been allegedly
withdrawn by Kamura himself from the records of the case. [31] Regardless of this fact, we are convinced that the allegations in the first
affidavit are sufficient to establish that petitioner is an employee of Kasei Corporation.

Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look with favor on any
retraction or recanted testimony, for it could have been secured by considerations other than to tell the truth and would make solemn trials
a mockery and place the investigation of the truth at the mercy of unscrupulous witnesses. [32] A recantation does not necessarily cancel an
earlier declaration, but like any other testimony the same is subject to the test of credibility and should be received with caution.[33]

Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was
selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in
that line of business. Her main job function involved accounting and tax services rendered to respondent corporation on a regular basis over
an indefinite period of engagement. Respondent corporation hired and engaged petitioner for compensation, with the power to dismiss her
for cause. More importantly, respondent corporation had the power to control petitioner with the means and methods by which the work is
to be accomplished.

The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September
2001. This amounts to an illegal termination of employment, where the petitioner is entitled to full backwages. Since the position of
petitioner as accountant is one of trust and confidence, and under the principle of strained relations, petitioner is further entitled to separation
pay, in lieu of reinstatement.[34]
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary
resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when
there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.[35] In Globe Telecom, Inc. v. Florendo-Flores,[36] we ruled that where an employee ceases to work due to a
demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering it
impossible for such employee to continue working for her employer. Hence, her severance from the company was not of her own making
and therefore amounted to an illegal termination of employment.

In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we,
in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the
policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded
to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming
it as a primary social economic force in furtherance of social justice and national development.

WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated October 29, 2004 and
October 7, 2005, respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE. The Decision of the National Labor Relations
Commission dated April 15, 2003 in NLRC NCR CA No. 032766-02, is REINSTATED. The case is REMANDED to the Labor Arbiter
for the recomputation of petitioner Angelina Franciscos full backwages from the time she was illegally terminated until the date of finality
of this decision, and separation pay representing one-half month pay for every year of service, where a fraction of at least six months shall
be considered as one whole year.
G.R. Nos. 83380-81 Case Digest
G.R. Nos. 83380-81 November 15, 1989
Makati Haberda Shery Inc., Jorge Ledesma and Cecilio Inocencio, petitioners
vs NLRC, etc., respondents.
Ponente: Fernan

This is a petition assailing the decision of NLRC affirming the decision of Labor Arbiter finding Haberda
guilty of illegal dismissal and ordering him to reinstate the dismissed workers and in concluding that there is
employer-employee relationship between workers and Haberda.

The complainants were working for Haberda as tailors, seamstress, sewers, basters and plantsadoras. Paid on
a piece-rate basis with allowance when they report for work before 9:30am everyday.(MON-SAT)

July 1984, the labor organization where the complainants are members filed a complaint for underpayment
of basic wage, living allowance, non-payment of overtime work, non-payment of holiday pay, non-payment of
service incentive pay ad other benefits under wage orders.

During the pendency, Haberda dismiss the workers for the alleged job acceptance from another, which was
denied by the workers and countered by filing a complaint for illegal dismissal. Which was granted by NLRC.
Hence, this petition raising the issues on:

Issues: (1) employer-employee relationship? (2) workers entitled to monetary claims? (3) were respondents
illegally dismissed?

(1) There is employer-employee relationship. The facts at bar indubitably reveal that the most important
requisite of control is present. As gleaned from the operations of petitioner, when a customer enters into a
contract with the haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern
maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants, coat or shirt as
specified by the customer. Supervision is actively manifested in all these aspects — the manner and quality of
cutting, sewing and ironing.
(2) Because the workers were proven to be regular employees, they shall be entitled to minimum wages. Plus
the respondents didn't appealed when the Labor Arbiter granted the minimum wage award to the workers in
the first place. But workers are not entitled to incentive pay and other benefits because piece-rate workers are
paid at fixed amount for performing work irrespective of the time consumed.
(3) There was no illegal dismissal to the two workers accused of the copied Barong Tagalog design, because
when they were asked to explain to their employer, the workers did not but instead go AWOL. Imposing
disciplinary sanctions upon an employee for just and valid cause is within the rights of the employer.
G.R. No. 159333 July 31, 2006

ARSENIO T. MENDIOLA, petitioner,

and/or CELLMARK AB, respondents.



On appeal are the Decision1 and Resolution2 of the Court of Appeals, dated January 30, 2003 and July 30, 2003,
respectively, in CA-G.R. SP No. 71028, affirming the ruling3 of the National Labor Relations Commission (NLRC), which in
turn set aside the July 30, 2001 Decision4 of the labor arbiter. The labor arbiter declared illegal the dismissal of petitioner from
employment and awarded separation pay, moral and exemplary damages, and attorney's fees.

The facts are as follows:

Private respondent Pacific Forest Resources, Phils., Inc. (Pacfor) is a corporation organized and existing under the laws of
California, USA. It is a subsidiary of Cellulose Marketing International, a corporation duly organized under the laws of
Sweden, with principal office in Gothenburg, Sweden.

Private respondent Pacfor entered into a "Side Agreement on Representative Office known as Pacific Forest Resources
(Phils.), Inc."5 with petitioner Arsenio T. Mendiola (ATM), effective May 1, 1995, "assuming that Pacfor-Phils. is already
approved by the Securities and Exchange Commission [SEC] on the said date."6 The Side Agreement outlines the business
relationship of the parties with regard to the Philippine operations of Pacfor. Private respondent will establish a Pacfor
representative office in the Philippines, to be known as Pacfor Phils, and petitioner ATM will be its President. Petitioner's base
salary and the overhead expenditures of the company shall be borne by the representative office and funded by Pacfor/ATM,
since Pacfor Phils. is equally owned on a 50-50 equity by ATM and Pacfor-usa.

On July 14, 1995, the SEC granted the application of private respondent Pacfor for a license to transact business in the
Philippines under the name of Pacfor or Pacfor Phils.7 In its application, private respondent Pacfor proposed to establish its
representative office in the Philippines with the purpose of monitoring and coordinating the market activities for paper
products. It also designated petitioner as its resident agent in the Philippines, authorized to accept summons and processes
in all legal proceedings, and all notices affecting the corporation. 8

In March 1997, the Side Agreement was amended through a "Revised Operating and Profit Sharing Agreement for the
Representative Office Known as Pacific Forest Resources (Philippines)," 9 where the salary of petitioner was increased to
$78,000 per annum. Both agreements show that the operational expenses will be borne by the representative office and
funded by all parties "as equal partners," while the profits and commissions will be shared among them.

In July 2000, petitioner wrote Kevin Daley, Vice President for Asia of Pacfor, seeking confirmation of his 50% equity of Pacfor
Phils.10 Private respondent Pacfor, through William Gleason, its President, replied that petitioner is not a part-owner of Pacfor
Phils. because the latter is merely Pacfor-USA's representative office and not an entity separate and distinct from Pacfor-
USA. "It's simply a 'theoretical company' with the purpose of dividing the income 50-50."11 Petitioner presumably knew of this
arrangement from the start, having been the one to propose to private respondent Pacfor the setting up of a representative
office, and "not a branch office" in the Philippines to save on taxes. 12

Petitioner claimed that he was all along made to believe that he was in a joint venture with them. He alleged he would have
been better off remaining as an independent agent or representative of Pacfor-USA as ATM Marketing Corp.13 Had he known
that no joint venture existed, he would not have allowed Pacfor to take the profitable business of his own company, ATM
Marketing Corp.14 Petitioner raised other issues, such as the rentals of office furniture, salary of the employees, company car,
as well as commissions allegedly due him. The issues were not resolved, hence, in October 2000, petitioner wrote Pacfor-
USA demanding payment of unpaid commissions and office furniture and equipment rentals, amounting to more than one
million dollars.15

On November 27, 2000, private respondent Pacfor, through counsel, ordered petitioner to turn over to it all papers,
documents, files, records, and other materials in his or ATM Marketing Corporation's possession that belong to Pacfor or
Pacfor Phils.16 On December 18, 2000, private respondent Pacfor also required petitioner to remit more than three hundred
thousand-peso Christmas giveaway fund for clients of Pacfor Phils.17 Lastly, private respondent Pacfor withdrew all its offers
of settlement and ordered petitioner to transfer title and turn over to it possession of the service car. 18
Private respondent Pacfor likewise sent letters to its clients in the Philippines, advising them not to deal with Pacfor Phils. In
its letter to Intercontinental Paper Industries, Inc., dated November 21, 2000, private respondent Pacfor stated:

Until further notice, please course all inquiries and communications for Pacific Forest Resources (Philippines) to:

Pacific Forest Resources

200 Tamal Plaza, Suite 200
Corte Madera, CA, USA 94925
(415) 927 1700 phone
(415) 381 4358 fax

Please do not send any communication to Mr. Arsenio "Boy" T. Mendiola or to the offices of ATM Marketing
Corporation at Room 504, Concorde Building, Legaspi Village, Makati City, Philippines. 19

In another letter addressed to Davao Corrugated Carton Corp. (DAVCOR), dated December 2000, private respondent
directed said client "to please communicate directly with us on any further questions associated with these payments or any
future business. Do not communicate with [Pacfor] and/or [ATM]."20

Petitioner construed these directives as a severance of the "unregistered partnership" between him and Pacfor, and the
termination of his employment as resident manager of Pacfor Phils.21 In a memorandum to the employees of Pacfor Phils.,
dated January 29, 2001, he stated:

I received a letter from Pacific Forest Resources, Inc. demanding the turnover of all records to them effective
December 19, 2000. The company records were turned over only on January 26, 2001. This means our jobs with
Pacific Forest were terminated effective December 19, 2000. I am concerned about your welfare. I would like to help
you by offering you to work with ATM Marketing Corporation.

Please let me know if you are interested.22

On the basis of the "Side Agreement," petitioner insisted that he and Pacfor equally own Pacfor Phils. Thus, it follows that he
and Pacfor likewise own, on a 50/50 basis, Pacfor Phils.' office furniture and equipment and the service car. He also
reiterated his demand for unpaid commissions, and proposed to offset these with the remaining Christmas giveaway fund in
his possession.23 Furthermore, he did not renew the lease contract with Pulp and Paper, Inc., the lessor of the office premises
of Pacfor Phils., wherein he was the signatory to the lease agreement.24

On February 2, 2001, private respondent Pacfor placed petitioner on preventive suspension and ordered him to show cause
why no disciplinary action should be taken against him. Private respondent Pacfor charged petitioner with willful disobedience
and serious misconduct for his refusal to turn over the service car and the Christmas giveaway fund which he applied to his
alleged unpaid commissions. Private respondent also alleged loss of confidence and gross neglect of duty on the part of
petitioner for allegedly allowing another corporation owned by petitioner's relatives, High End Products, Inc. (HEPI), to use
the same telephone and facsimile numbers of Pacfor, to possibly steal and divert the sales and business of private
respondent for HEPI's principal, International Forest Products, a competitor of private respondent.25

Petitioner denied the charges. He reiterated that he considered the import of Pacfor President William Gleason's letters as a
"cessation of his position and of the existence of Pacfor Phils." He likewise informed private respondent Pacfor that ATM
Marketing Corp. now occupies Pacfor Phils.' office premises,26 and demanded payment of his separation pay.27 On February
15, 2001, petitioner filed his complaint for illegal dismissal, recovery of separation pay, and payment of attorney's fees with
the NLRC.28

In the meantime, private respondent Pacfor lodged fresh charges against petitioner. In a memorandum dated March 5, 2001,
private respondent directed petitioner to explain why he should not be disciplined for serious misconduct and conflict of
interest. Private respondent charged petitioner anew with serious misconduct for the latter's alleged act of fraud and
misrepresentation in authorizing the release of an additional peso salary for himself, besides the dollar salary agreed upon by
the parties. Private respondent also accused petitioner of disloyalty and representation of conflicting interests for having
continued using the Pacfor Phils.' office for operations of HEPI. In addition, petitioner allegedly solicited business for HEPI
from a competitor company of private respondent Pacfor.29

Labor Arbiter Felipe Pati ruled in favor of petitioner, finding there was constructive dismissal. By directing petitioner to turn
over all office records and materials, regardless of whether he may have retained copies, private respondent Pacfor virtually
deprived petitioner of his job by the gradual diminution of his authority as resident manager. Petitioner's position as resident
manager whose duty, among others, was to maintain the security of its business transactions and communications was
rendered meaningless. The dispositive portion of the decision of the Labor Arbiter reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering herein respondents Cellmark AB and
Pacific Forest Resources, Inc., jointly and severally to compensate complainant Arsenio T. Mendiola separation pay
equivalent to at least one month for every year of service, whichever is higher (sic), as reinstatement is no longer
feasible by reason of the strained relations of the parties equivalent to five (5) months in the amount of $32,000.00
plus the sum of P250,000.00; pay complainant the sum of P500,000.00 as moral and exemplary damages and ten
percent (10%) of the amounts awarded as and for attorney's fees.

All other claims are dismissed for lack of basis.


Private respondent Pacfor appealed to the NLRC which ruled in its favor. On December 20, 2001, the NLRC set aside the
July 30, 2001 decision of the labor arbiter, for lack of jurisdiction and lack of merit. 31 It held there was no employer-employee
relationship between the parties. Based on the two agreements between the parties, it concluded that petitioner is not an
employee of private respondent Pacfor, but a full co-owner (50/50 equity).

The NLRC denied petitioner's Motion for Reconsideration.32

Petitioner was not successful on his appeal to the Court of Appeals. The appellate court upheld the ruling of the NLRC.

Petitioner's Motion for Reconsideration33 of the decision of the Court of Appeals was denied.

Hence, this appeal.34

Petitioner assigns the following errors:

A. The Respondent Court of Appeals committed reversible error and abused its discretion in rendering judgment
against petitioner since jurisdiction has been acquired over the subject matter of the case as there exists employer-
employee relationship between the parties.

B. The Respondent Court of Appeals committed reversible error and abused its discretion in ruling that jurisdiction
over the subject matter cannot be waived and may be alleged even for the first time on appeal or considered by the
court motu prop[r]io.35

The first issue is whether an employer-employee relationship exists between petitioner and private respondent Pacfor.

Petitioner argues that he is an industrial partner of the partnership he formed with private respondent Pacfor, and also an
employee of the partnership. Petitioner insists that an industrial partner may at the same time be an employee of the
partnership, provided there is such an agreement, which, in this case, is the "Side Agreement" and the "Revised Operating
and Profit Sharing Agreement." The Court of Appeals denied the appeal of petitioner, holding that "the legal basis of the
complaint is not employment but perhaps partnership, co-ownership, or independent contractorship." Hence, the Labor Code
cannot apply.

We hold that petitioner is an employee of private respondent Pacfor and that no partnership or co-ownership exists between
the parties.

In a partnership, the members become co-owners of what is contributed to the firm capital and of all property that may be
acquired thereby and through the efforts of the members.36 The property or stock of the partnership forms a community of
goods, a common fund, in which each party has a proprietary interest.37 In fact, the New Civil Code regards a partner as a co-
owner of specific partnership property. 38 Each partner possesses a joint interest in the whole of partnership property. If the
relation does not have this feature, it is not one of partnership.39 This essential element, the community of interest, or co-
ownership of, or joint interest in partnership property is absent in the relations between petitioner and private respondent
Pacfor. Petitioner is not a part-owner of Pacfor Phils. William Gleason, private respondent Pacfor's President established this
fact when he said that Pacfor Phils. is simply a "theoretical company" for the purpose of dividing the income 50-50. He
stressed that petitioner knew of this arrangement from the very start, having been the one to propose to private respondent
Pacfor the setting up of a representative office, and "not a branch office" in the Philippines to save on taxes. Thus, the parties
in this case, merely shared profits. This alone does not make a partnership.40

Besides, a corporation cannot become a member of a partnership in the absence of express authorization by statute or
charter.41 This doctrine is based on the following considerations: (1) that the mutual agency between the partners, whereby
the corporation would be bound by the acts of persons who are not its duly appointed and authorized agents and officers,
would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively;
and, (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by
the stockholders when they originally invested in the corporation.42No such authorization has been proved in the case at bar.

Be that as it may, we hold that on the basis of the evidence, an employer-employee relationship is present in the case at bar.
The elements to determine the existence of an employment relationship are: (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's
conduct. The most important element is the employer's control of the employee's conduct, not only as to the result of the work
to be done, but also as to the means and methods to accomplish it.43

In the instant case, all the foregoing elements are present. First, it was private respondent Pacfor which selected and
engaged the services of petitioner as its resident agent in the Philippines. Second, as stipulated in their Side Agreement,
private respondent Pacfor pays petitioner his salary amounting to $65,000 per annum which was later increased to $78,000.
Third, private respondent Pacfor holds the power of dismissal, as may be gleaned through the various memoranda it issued
against petitioner, placing the latter on preventive suspension while charging him with various offenses, including willful
disobedience, serious misconduct, and gross neglect of duty, and ordering him to show cause why no disciplinary action
should be taken against him.

Lastly and most important, private respondent Pacfor has the power of control over the means and method of petitioner in
accomplishing his work.

The power of control refers merely to the existence of the power, and not to the actual exercise thereof. The principal
consideration is whether the employer has the right to control the manner of doing the work, and it is not the actual exercise
of the right by interfering with the work, but the right to control, which constitutes the test of the existence of an employer-
employee relationship.44 In the case at bar, private respondent Pacfor, as employer, clearly possesses such right of control.
Petitioner, as private respondent Pacfor's resident agent in the Philippines, is, exactly so, only an agent of the corporation, a
representative of Pacfor, who transacts business, and accepts service on its behalf.

This right of control was exercised by private respondent Pacfor during the period of November to December 2000, when it
directed petitioner to turn over to it all records of Pacfor Phils.; when it ordered petitioner to remit the Christmas giveaway
fund intended for clients of Pacfor Phils.; and, when it withdrew all its offers of settlement and ordered petitioner to transfer
title and turn over to it the possession of the service car. It was also during this period when private respondent Pacfor sent
letters to its clients in the Philippines, particularly Intercontinental Paper Industries, Inc. and DAVCOR, advising them not to
deal with petitioner and/or Pacfor Phils. In its letter to DAVCOR, private respondent Pacfor replied to the client's request for
an invoice payment extension, and formulated a revised payment program for DAVCOR. This is one unmistakable proof that
private respondent Pacfor exercises control over the petitioner.

Next, we shall determine if petitioner was constructively dismissed from employment.

The evidence shows that when petitioner insisted on his 50% equity in Pacfor Phils., and would not quit however, private
respondent Pacfor began to systematically deprive petitioner of his duties and benefits to make him feel that his presence in
the company was no longer wanted. First, private respondent Pacfor directed petitioner to turn over to it all records of Pacfor
Phils. This would certainly make the work of petitioner very difficult, if not impossible. Second, private respondent Pacfor
ordered petitioner to remit the Christmas giveaway fund intended for clients of Pacfor Phils. Then it ordered petitioner to
transfer title and turn over to it the possession of the service car. It also advised its clients in the Philippines, particularly
Intercontinental Paper Industries, Inc. and DAVCOR, not to deal with petitioner and/or Pacfor Phils. Lastly, private respondent
Pacfor appointed a new resident agent for Pacfor Phils.45

Although there is no reduction of the salary of petitioner, constructive dismissal is still present because continued employment
of petitioner is rendered, at the very least, unreasonable.46 There is an act of clear discrimination, insensibility or disdain by
the employer that continued employment may become so unbearable on the part of the employee so as to foreclose any
choice on his part except to resign from such employment.47

The harassing acts of the private respondent are unjustified. They were undertaken when petitioner sought clarification from
the private respondent about his supposed 50% equity on Pacfor Phils. Private respondent Pacfor invokes its rights as an
owner. Allegedly, its issuance of the foregoing directives against petitioner was a valid exercise of management prerogative.
We remind private respondent Pacfor that the exercise of management prerogative is not absolute. "By its very nature,
encompassing as it could be, management prerogative must be exercised in good faith and with due regard to the rights of
labor – verily, with the principles of fair play at heart and justice in mind." The exercise of management prerogative cannot be
utilized as an implement to circumvent our laws and oppress employees. 48
As resident agent of private respondent corporation, petitioner occupied a position involving trust and confidence. In the light
of the strained relations between the parties, the full restoration of an employment relationship based on trust and confidence
is no longer possible. He should be awarded separation pay, in lieu of reinstatement.

IN VIEW WHEREOF, the petition is GRANTED. The Court of Appeals' January 30, 2003 Decision in CA-G.R. SP No. 71028
and July 30, 2003 Resolution, affirming the December 20, 2001 Decision of the National Labor Relations Commission,
are ANNULED and SET ASIDE. The July 30, 2001 Decision of the Labor Arbiter is REINSTATED with
the MODIFICATION that the amount of P250,000.00 representing an alleged increase in petitioner's salary shall be deducted
from the grant of separation pay for lack of evidence.
NASECO vs. NLRC, G.R. No. L-69870 November 29 ,1988 Illegal Dismissal
NOVEMBER 2, 2017


Eugenia Credo, Chief of Property and Records of NATIONAL SERVICE CORPORATION (NASECO) filed a complaint before the
Arbitration Branch of the Ministry of Labor after having been placed in forced leave without due process. Said forced leave was a product
of her alleged non-compliance of a memorandum coming from a Finance Manager, and other past acts of misconduct as found by
NASECO’s committee on Personnel Affairs.

In the Manager’s office, Credo was made to explain her side in connection with the conducts for which she is complained of. But because
she failed to explain, she was handed a Notice of Termination. Credo thus filed a supplemental complaint for illegal dismissal and lack of
opportunity to be heard.

ISSUE: Was there an illegal dismissal?


Yes. These guidelines[1] mandate that the employer furnish an employee sought to be dismissed two (2) written notices of dismissal
before a termination of employment can be legally effected. These are the:

(1) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought and

(2) the subsequent notice which informs the employee of the employer’s decision to dismiss him.

The dictates of procedural due process requires that decision to dismiss can only be handed after employer has afforded employee
concerned ample opportunity to be heard and defend himself. In the case at bar, the compliance with the injunction to apprise her of the
charges filed against her and to afford her a chance to prepare her defense was dispensed in only a day. This is not effective compliance
with the legal requirements.

[1] As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law provides that:

“Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts
or omission constituting the grounds for his dismissal .

“Section 5. Answer and Hearing. The worker may answer the allegations stated against him in the notice of dismissal within a reasonable
period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires.

“Section 6. Decision to dismiss. The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly
the reasons therefor.”
[G.R. No. 112630. September 5, 1997]



The decision[1] of public respondent National Labor Relations Commission (NLRC)[2] in NLRC NCR CA 002074-
91,[3] promulgated on November 12 1993, is herein sought to be annulled for having been rendered with grave abuse of
discretion, it having reversed and set aside the decision [4] of Labor Arbiter Pablo C. Espiritu, Jr. by dismissing the petitioners
complaint for illegal dismissal against private respondent Isetann Department Store (Isetann, for brevity). The decretal part of
the NLRC decision reads:

WHEREFORE, premises considered, the appealed decision is hereby set aside and new one promulgated declaring that the dismissal from
the service of complainants Corazon Jamer and Cristina Amortizado was valid and for cause. Consequently, the order of reinstatement
with backwages and attorneys fees are likewise vacated and set aside.[5]

Although the Labor Arbiter[6] and the NLRC reached contrary conclusions, both agree on the following facts:

Complainant, Corazon Jamer was employed on February 10, 1976 as a Cashier at Joy Mart, a sister company of Isetann. After two (2)
years, she was later on promoted to the position of counter supervisor. She was transferred to Isetann, Carriedo Branch, as a money
changer. In 1982 she was transferred to the Cubao Branch of Isetann, as a money changer, till her dismissal on August 31, 1990.

Complainant Cristina Amortizado, on the other hand, was employed also at Joy Mart in May, 1977 as a sales clerk. In 1980 she was
promoted to the position as counter cashier. Thereafter, she was transferred to Young Un Department Store as an assistant to the money
changer. Later on, or in 1985, she transferred to Isetann, Cubao Branch where she worked as a Store Cashier till her dismissal on August
31, 1990.

Both complainants were receiving a salary of P4,182.00 for eight (8) hours work at the time of their dismissal.

Respondent Isetann Department Store on the other hand, is a corporation duly organized and existing under laws of the Philippines and is
engaged in retail trade and the department store business. Individual respondent, John Go is the President/General (Manager) of
respondent Department Store.

This complaint arose from the dismissal of the complainants by the respondents. They were both dismissed on August 31, 1990 on the
alleged ground of dishonesty in their work as Store Cashiers.

Complainants (sic) function as Store Cashiers is to accumulate, at the end of daily operations, the cash sales receipts of the selling floor
cash register clerks. At the close of business hours, all the cash sales of the floor cash register clerks are turned over by them to the Store
Cashiers, complainants herein, together with the tally sheets prepared by the cash register clerks. Thereafter, complainants will reconcile
the cash sales with the tally sheets to determine shortages or coverages(sic) and deposit the same with the bank depositor(sic) of
respondents company. Thereafter, the recorded transactions are forwarded to the main branch of respondents company at Carriedo for

On July 16, 1990, complainants discovered a shortage of P15,353.78. It was complainant Corazon Jamer who first discovered the
shortage. In fact at first, she thought that it was merely a P1,000.00 shortage but when she reconciled the cash receipts, from the cash
register counters, with the tally sheets and the actual money on hand, the shortage amounted to P15,353.78. She informed her co-store
cashier, complainant Cristina Amortizado, about the shortage. Cristina Amortizado also reconciled and re-counted the sale previous to
July 16, 1990 and she also confirmed that there was a discrepancy or a shortage of P15,353.78.. They did not, (sic) immediately report the
shortage to management hoping to find the cause of the shortage but to no avail they failed to reconcile the same. Hence, they had no
other alternative but to report the same to the management on July 17, 1990.

Complainants, together with another Store Cashier, Lutgarda Inducta, were asked to explain and they submitted their respective written
explanations for the shortage of P15,353.78. and the P450.00 under deposit last July 14, 1990.

Respondents placed both complainants and their co-store cashier Lutgarda Inducta under preventive suspension for the alleged shortages.
Thereafter, respondents conducted an administrative investigation. Finding the explanation of the complainants to be unsatisfactory,
respondent dismissed the complainants from the service on August 31, 1990. Aggrieved and not satisfied with the decision of
management terminating their services, complainant instituted this present action on September 26, 1990 for illegal dismissal praying for
reinstatement with payment of backwages and other benefits. [7]

In justifying complainants dismissal from their employment, respondents alleged:

When the transactions for July 15, 1990 were being reconciled, a shortage of P15,353.78 was discovered. Also uncovered was an under-
deposit of P450.00 of cash receipts for July 14, 1990.

Considering that the foregoing deficits were attributable to herein appellees and to another store cashier, Mrs. Lutgarda Inducta, who were
the ones on duty those days respondent Isetanns Human Resources Division Manager, Teresita A. Villanueva, issued letters (Exh. 1 and 5)
individually addressed to herein appellees and Mrs. Inducta requiring them to submit written explanations in regard to their above
malfeasance within 48 hours from receipt thereof. Pursuant to said letters, they were likewise placed under preventive suspension.

Thereafter, the Committee o Discipline of appellant Isetann conducted a series of investigations probing appellees and Mrs. Inductas
aforestated shortages. In addition to the shortage of P15,353.78(sic) and underdeposit of P450.00, said investigation also included the
following sums which appellees failed to turnover or account for:

a) P1,000.00- amount borrowed by Lutgarda Inducta from Corazon Jamer;

b) P 70.00- over replenishment of petty cash expenses incurred by Cristina Amortizado.

After the administrative investigation, the Committee on Discipline rendered its decision (Exhs. 3, 3-A, to 3-D) dated August 23, 1990
duly approved by the General Manager of respondent Isetann, finding the appellees and Mrs. Inducta responsible for said shortages and
consequently requiring them to restitute the same to respondent Isetann. This Decision and the notices of termination were sent by
respondent Isetann to the appellees, and which the latter admittedly received.

On the other hand, the complainants account of the factual antecedents that let (sic) to their dismissal is as follows:

Aside from the foregoing persons, Alex Mejia had and was allowed by management to have uncontrolled access to the said room
including the vault. Ostensibly, the purpose was to assist in the bringing in or taking out of coin bags, monies, etc.

There were therefore, at a minimum at least six (6) persons who could have had access to the company funds. To ascribe liability to the
store cashiers alone, in the absence of a clear proof of any wrongdoing is not only unfair and discriminatory but is likewise illegal.

Parenthetically, and within the parameters of their assigned tasks, herein complainants could not be faulted in any way for the said
shortage as there is no showing that the loss occurred at the time they were in control of the funds concerned.

Complainants do not dispute the fact that there appeared to be a shortage of P15.373.78(sic) for the July 15, 1990 (a Sunday) sales and
which were tallied and the loss discovered on the following day, July 16, 1990. They however vehemently deny any culpability or
participation in any kind, directly or indirectly, in regard to the said loss or shortage. Given the kind of trust reposed upon them by
respondents for fourteen and thirteen years respectively they were not about, although they could have done so before given the
negligence and laxity of management in regard to the control and handling of funds of the store, to break said trust.

At the time the persons who had access either to the vault the money and/or the keys aside from herein complainants, were: 1) Lutgarda
Inducta, also a store cashier on duty at the time; 2) the SOM Mrs. Samonte, the supervisor in charge; 3) Alex Mejia, an employee assigned
as utility man; and 4) Boy Cabatuando.

There were (sic) three (3) keys to the money changers room, and these keys were assigned and distributed to: a) master key is or was with
the SOMs (Mrs. Samonte) room at the 3rd floor of the building; b) another key is or was in the possession of the keeper of the keys, i.e.
Boy Cabatuando; and c) the third and last key is any of the store cashiers depending on who is on duty at the time.

Likewise, there were four (4) persons who were aware and knew of the vault combination. These were the three store cashiers, i.e. herein
complainants, Lutgarda Inducta and their SOM, Mrs. Samonte. [8]

On July 23, 1991, Labor Arbiter Nieves V. de Castro, to whom the instant contoversy was originally assigned, rendered a
decision[9] in favor of herein petitioners, finding that petitioners had been illegally dismissed, the dispositive portion of which

WHEREFORE, respondents are hereby directed to reinstate complainants to service effective August 1, 1991 with full backwages and
without loss of seniority rights.

Expectedly, respondents Isetann and John Go appealed the aforesaid decision to the NLRC. On January 31, 1992, the
NLRC issued a resolution[11] remanding this case to the NLRC National Capital Region Arbitrattion Branch for further
proceedings in the following manner:

WHEREFORE, premises considered, the challenged decision is hereby SET ASIDE and VACATED.

The entire records of this case is hereby remanded to the NLRC National Capital Region Arbitration Branch for further proceedings.

Considering that the Labor Arbiter a quo rendered a decision in this case and in order to dispel any suspicion of pre-judgment of this case,
the Executive Labor Arbiter is hereby directed to have this case re-raffled to another Labor Arbiter.


Consequently, the present case was then re-raffled to Labor Arbiter Pablo C. Espiritu, Jr. After a full-blown trial, the said
Labor Arbiter found for the petitioners and declared that there was no justification, whether in fact or in law, for their dismissal.
The decretal part of the decision[13] dated March 31, 1993, states:

WHEREFORE, above premises considered, judgement(sic) is hereby rendered finding the dismissal of complainants, Cristina Amortizado
and Corazon Jamer to be illegal and concomitantly, (r)espondents are hereby ordered to pay complainants, Corazon Jamer the amount
of P125,460.00 and Cristina Amortizado the amount of P125,460.00, representing full backwages from the time of their dismissal (August
31, 1990) till actual or payroll reinstatement at the option of the respondent (computed until promulgation only). Respondents are also
hereby further ordered to reinstate the complainants to their former position as Store Cashiers without loss of seniority rights, privileges
and benefits, failure to do so backwages shall continue to run but in no case to exceed three (3) years.

Respondents are also ordered to pay complainants the amount of P25,092.00 representing 10% attorneys fees based in the total
judgement(sic) award of P250,920.00.


Dissatisfied over the decision of the Labor Arbiter which struck private respondents as grossly contrary to the evidence
presented, the herein private respondents once again appealed to the NLRC. And, as earlier stated, the NLRC rendered the
challenged decision[15] on November 12, 1993, vacating the decision of the Labor Arbiter and entering a new one dismissing
the petitioners complaint.
Hence, this petition wherein the main issue to be resolved is whether NLRC committed grave abuse of discretion in finding
that petitioners were validly dismissed on the ground of loss of trust and confidence.
At the outset, the Court notes petitioners inexcusable failure to move for the reconsideration of respondent NLRCs
decision. Thus, the present petition suffers from a procedural defect that warrants its outright dismissal. While in some
exceptional cases we allowed the immediate recourse to this Court, we find nothing herein that could warrant an exceptional
treatment to this petition which will justify the omission. This premature action of petitioners constitutes a fatal infirmity as ruled
in a long line of decisions,[16] most recently in the case of Building Care Corporation vs. National Labor Relations Commission,
et al.:[17]

the filing of such a motion is intended to afford public respondent an opportunity to correct any actual or fancied error attributed to it by
way of a re-examination of the legal and factual aspects of the case. Petitioners inaction or negligence under the circumstances is
tantamount to a deprivation of the right and opportunity of the respondent Commission to cleanse itself of an error unwittingly committed
or to vindicate itself of an act unfairly imputed. xxx

xxx And for failure to avail of the correct remedy expressly provided by law, petitioner has permitted the subject Resolution to become
final and executory after the lapse of the ten day period within which to file such motion for reconsideration.

Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings,as in this case, will not
prosper.[18] Rule 65, Section 1 of the Rules of Civil Procedure, as amended, clearly provides that:

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, xxx
The unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law against the acts of respondent. [19] In the case at bench, the plain and adequate
remedy referred to in Rule 65, Section 1, is a motion for reconsideration of the challenged decision and the resolution thereof,
which was expected to provide an adequate and a more speedy remedy than the present petition for certiorari.
Petitioners asseverate that respondent NLRC committed a grave abuse of discretion when it reversed the findings of facts
of the Labor Arbiter.
We find said submissions untenable.
In asserting that there was a grave abuse of discretion, petitioners advert to alleged variances in the factual findings of the
Labor Arbiter and the respondent NLRC. This is inept and erroneous. Firstly, errors of judgment, as distinguished from errors
of jurisdiction, are not within the province of a special civil action for certiorari.[20] Secondly, a careful reading of the records of
this case would readily show that there is any error by public respondent in its analysis of the facts and its evaluation of the
evidence, it is not of such a degree as may be stigmatized as a grave abuse of discretion does not necessarily follow just
because there is a reversal by the NLRC of the decision of the Labor Arbiter. Neither does the mere variance in the evidentiary
assessment of the NLRC and that of the Labor Arbiter would, as a matter of course, so warrant another full review of the facts.
The NLRCs decision, so long as it is not bereft of support from the records, deserves respect from the Court. [21]
We must once more reiterate our much repeated but not well-heeded rule that the special civil action for certiorari is a
remedy designed for the correction of errors of jurisdiction and not errors of judgment. The rationale for this rule is simple.
When a court exercises its 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. This cannot be allowed. The
administration of justice would not countenance such a rule. Consequently, an error of judgment that the court may commit in
the exercise of its jurisdiction is not correctible through the original special civil action of certiorari.[22]
On the merits, we find and so hold that substantial evidence exists to warrant the finding that petitioners were validly
dismissed for just cause and after observance of due process.
Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee by his employer are two-
fold: the substantive and the procedural. Not only must the dismissal be for a valid or authorized cause as provided by law
(Articles 282, 283 and 284, of the Labor Code, as amended), but the rudimentary requirements of due process, basic of which
are the opportunity to be heard and to defend himself, must be observed before an employee may be dismissed.[23]
With respect to the first requisite, Article 282 of the Labor Code, as amended, provides:

ART. 282. 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 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

(e) Other causes analogous to the foregoing. (Italics supplied)

In the instant case, we find no difficulty in agreeing with the findings of the public respondent that the herein petitioners
were guilty of acts of dishonesty by incurring several occurrences of shortages in the amounts
of P15,353.78, P1,000.00, P450.00 and P70.00 which they failed to turnover and account for/and in behalf of respondent
Isetann. Fittingly, the findings of the NLRC are worth stressing at this point, to wit:

With regard to the several occurrences of shortages of the amounts of P15,353.78, P1,000.00, P450.00 and P70.00 , the Labor Arbiter has
failed to consider the fact that complainants-appellees were accorded the chance to explain their side as to the shortages and that they have
utterly failed to do so providing basis for their valid dismissal. This fact has been established by the respondents-appellants in the findings
of the Committee on Discipline on Exhibits 3, 3-A to 3-D, as follows:

a) On the Shortage of P15,353.78:

The 3 respondents, Lutgarda Inducta, Cristy Amortizado and Corazon Jamer denied any involvement in the loss
of P15,353.78. Although the money, is under their responsibility, not one of them gave any explanation about the shortage or loss.
b) On the amount of P1,000.00 borrowed by Inducta from Jamer:

On July 18, 1990, Lutgarda Inducta borrowed money from respondents (sic) Jamer amounting to P1,000.00 to cover her shortage.

Ms. Jamer said that Ms. Inducta paid the amount on that day. But Ms. Jamer did not report the shortage.

c) On the Underdeposit of Cash = P450.00.

The computation of Ms. Amortizado s sales collections last July 14, 1990 resulted to an overage of P350.00. Amortizado turned over the
amount of P350.00, to cover up a shortage incurred by her and Mrs. Inducta.

Jamer used the money given to her by Amortizado (P350.00), and borrowed (P150.00) from the change fund to cover the total shortage
amounting to P500.00 which she had then.

Jamer cannot trace how the shortage came about. Inducta and Jamer shouldered the total shortage amounting to P500.00, P330.00 for
Jamer and P200.00 for Inducta. Jamer claimed that she returned the P350.00 in the box. However, the claim of respondent was further
verified from the payroll section which revealed that a value slip was issued last July 1990. Jamer and Inducta were charged for P200.00
each. A value slip was issued last August 10, 1990 charging P100.00 to Amortizado.

Jamer admitted that she failed to inform the Audit Staff regarding the P350.00 overage which she received from Amortizado. A(s) per
report of Ms. Agnes Gonzales dated 26 July 1990, there was a total under deposit of cash amounting to P450.00.

Total cash admitted P65,428.05

(cash in drawer)

Total cash remitted P64,978.05

(per tally sheet) _________

Overage P 450.00

d) On the P70.00 Replenishment of Petty Cash Expenses:

During the 3rd Administrative hearing, the Committee informed Ms. Amortizado regarding the over replenishment of petty cash expenses
as revealed by the Finance Manager last August 10, 1990.

Mrs. Amortizado readily admitted and explained that she forgot to inform Mrs. Inducta regarding the P70.00. She admitted her failure to
correct the amount from P100.00 to P30.00 (total expenses spent for the taxi fair).

She added that she previously incurred a shortage amounting to P100.00. Then she used the P70.00 to cover for the shortage. The
remaining balance of P30.00 was paid by Amortizado.

Amortizado informed the Committee that she is willing to refund the P70.00 shortage. (Underscoring supplied).[24]

From the foregoing premises, it is crystal clear that the failure of petitioners to report the aforequoted shortages and
overages to management as soon as they arose resulted in the breach of the fiduciary trust reposed in them by respondent
company, thereby causing the latter to lose confidence in them. This warrants their dismissal. Moreover, it must be pointed out
that herein petitioners have in fact admitted the underpayment of P450.00 not only in their Sinumpaang Salaysay but also
during the hearing conducted before Labor Arbiter Pablo C. Espiritu.[25] And, the record shows that the petitioners in fact made
a last ditch effort to conceal the same. Were it not for its timely discovery by private respondents trusted employees, the incident
could not have been discovered at all. Furthermore, it is worth stressing at this juncture that the petitioners have also expressly
admitted the shortage of P15,353.78a substantial amountin their respective sworn statements, and they were not able to
satisfactorily explain such shortage.[26] The Court is convinced that these particular acts or omissions provided Isetann with
enough basis to forfeit its trust and confidence over herein petitioners.
The NLRC, therefore, did not act with grave abuse of discretion in declaring that petitioners were legally dismissed from
employment. The failure of petitioners to report to management the aforementioned irregularities constitute fraud or willful
breach of the trust reposed in them by their employer or duly authorized representative one of the just causes in terminating
employment as provided for by paragraph (c), Article 282 of the Labor Code, as amended.
In other words, petitioners admissions in their sworn statements, together with the other documentary evidences on record,
constituted breach of trust on their part which justifies their dismissal. Private respondents Isetann Department Store and Mr.
John Go cannot be compelled to retain employees who are clearly guilty of malfeasance as their continued employment will be
prejudicial to the formers best interest.[27] The law, I protecting the rights of the employees, authorizes neither oppression nor
self-destruction of the employer.[28]
The cause of social justice is not served by upholding the interest of petitioners in disregard of the right of private
respondents. Social justice ceases to be an effective instrument for the equalization of the social and economic forces by the
State when it is used to shield wrongdoing.[29] While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects ones 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. 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 up 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, Justicia remini regarda est (Justice is to be denied to none).[30]
Thus, this Court has held time and again, in a number of decisions,[31] that:

Loss of confidence is a valid ground for dismissing an employee and proof beyond reasonable doubt of the employees misconduct is not
required to dismiss him on this charge. It is sufficient if there is some basis for such loss of confidence or if the employer has 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. [32]

Parenthetically, the fact that petitioners Jamer and Amortizado had worked for respondent company for fourteen (14) and
thirteen (13) years, respectively, should be taken against them. The infractions that they committed, notwithstanding their long
years of service with the company, reflects a regrettable lack of loyaltyloyalty that they should have shouldered instead of
betrayed. If the petitioners length of service is to be regarded as a justifying circumstance in moderating the dismissal, it will
actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse
its ranks of all undesirables.[33]
Petitioners also maintain that the NLRC acted with grave abuse of discretion when it failed to consider the fact that, other
than petitioners themselves, there were four (4) other persons who had access to the company vaults, and hence, could have
been responsible for the aforesaid cash shortages imputed to them. They aver therefore, that there was a serious flaw and
laxity in the supervision and handling of company funds by respondent Isetann.[34]
We also find this contention devoid of merit.
First, it must pointed out that the petitioners remark that there was laxity in the accounting procedures of the company is
a matter addressed to the respondent employer. However, this does not excuse dishonesty of employees and should not in
any case hamper the right of the employer to terminate the employment of petitioners on the ground of loss of confidence or
breach of trust. Precisely, the accounting procedure which called for improvements was based primarily on trust and
Secondly, it must be noted that the herein petitioners were store cashiers and as such, a special and unique employment
relationship exists between them and the respondent company. More than most key positions, that of cashier calls for the
utmost trust and confidence because their primary function involves basically the handling of a highly essential property of the
respondent employer --- the sales and revenues of the store. Employers are consequently given wider latitude of discretion in
terminating the employment of managerial employees or other personnel occupying positions of responsibility, such as in the
instant case, than in the case of ordinary rank-and-file employees, whose termination on the basis of these same grounds
requires proof of involvement in the malfeasance in question. Mere uncorroborated assertions and accusations by the employer
will not suffice.[36] In that respect , we quote with approval the observations of the NLRC:

To expound further, for the position of a cashier, the honesty and integrity of the persons assuming said position are the primary
considerations for the nature of her work requires that her actuations should be beyond suspicion as they are accorded the responsibility of
handling money and whatever they would do to such property of the employer largely depend on their trustworthiness. Hence, the right of
the employer to dismiss a cashier guilty of breach and trust and confidence should be recognized. In a case decided by the Supreme Court
it has been ruled that:

Honesty and integrity are the primary considerations in petitioners position. The nature of his work requires that the actuations should be
beyond suspicion, our empathy with the cause of labor should not blind us to the rights of management. As we have held, this Court
should help stamp out, rather than tolerate, the commission of irregular acts whenever these are noted. Malpractices should not be allowed
to continue but should be rebuked. (Del Carmen vs. NLRC, 203 SCRA 245) [37]
Finally, we are convinced that the NLRC did not commit grave abuse of discretion in evaluating the evidence. Petitioners
merely denied the charges against them. Denials are weak forms of defenses, particularly when they are not substantiated by
clear and convincing evidence.[38] The petitioners failure to satisfactorily explain the cash shortages, for which sums they are
responsible, given their respective positions in respondent company, is enough reason to warrant their dismissal on the ground
of loss of confidence. They cannot place the burden on somebody else given the factual circumstances of this case. As
succinctly put by the NLRC:

That there were other persons who had access to the vaults of the appellant company implying that these other persons could have been
responsible for the loss of the P15,353.78 is of no moment inasmuch as the appellees were the ones who took first custody of the
possession of said collections. As store cashiers, it is expected of them to exercise ordinary prudence to count the collection and record the
same in the tally sheet before depositing to said vault to avoid a slightest suspicion of having pocketed part of it should a shortage arise.
They did not exert efforts to exercise such prudence demanded of their positions hence, appellants should not be blamed when they were
called for an investigation when said shortage was discovered.

xxx xxx xxx

That the occurrence of shortages is merely an isolated one and therefore should not be taken against the complainant-appellees as a ground
for loss of trust and confidence that would cause their termination cannot be given any credence. The shortages having been established
and admitted has provided the employer sufficient basis for loss of confidence and whether such occurrence is merely an isolated one or
has been repeatedly committed is no longer material. The bone of contention here is whether there is some basis for such loss of trust and
confidence and if the employer has reasonable ground to believe or to entertain the moral conviction that the employee concerned is
responsible for the misconduct which in the instant case has been established.[39]

We reiterate the rule that in cases of dismissal for breach of trust and confidence, proof beyond reasonable doubt of the
employees misconduct is not required. It is sufficient that the employer had reasonable ground to believe that the employees
are responsible for the misconduct which renders him unworthy of the trust and confidence demanded by their position. [40] In
the case at hand, it cannot be doubted that respondents succeeded in discharging its burden of proof.
As regards to the second requisite, the law requires that the employer must furnish the worker sought to be dismissed with
two (2) written notices before termination may be validly effected: first, a notice apprising the employee of the particular acts or
omission for which his dismissal is sought and, second, a subsequent notice informing the employee of the decision to dismiss
In accordance with this requirement, petitioners were given the required notices, on August 2, 1990 and then on August
23, 1990. The Court finds that petitioners were accorded due process before they were dismissed on August 31, 1990. It is a
well-established rule that the essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained
of.[42] It is evident from the records , that herein petitioners were given all the opportunities to defend themselves and air their
side before the Committee on Discipline, having been notified by respondent Isetanns Human Resources Division Manager,
Teresita A. Villanueva, on August 2, 1990 through letters individually sent to them. However, offered no explanation or theory
which could account for money lost in their possession. Hence, the company had no other alternative but to terminate their
employment. As we elucidated in the case of Philippine Savings Bank vs. National Labor Relations Commission, [43] to wit:

xxx the requirement of due process is satisfied when a fair and reasonable opportunity to explain his side of the controversy is afforded the
party. A formal or trial-type hearing is not at all times and in all circumstances essential, especially when the employee chooses not to

WHEREFORE, the assailed decision of the National Labor Relations Commission in NLRC NCR CA 002074-91 is hereby
AFFIRMED. The petition is DISMISSED for lack of merit.