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1. EXODUS INTERNATIONAL CONSTRUCTION CORPORATION and ANTONIO P.

JAVALERA
Petitioners, versus GUILLERMO BISCOCHO, FERNANDO PEREDA, FERDINAND MARIANO,
GREGORIO BELLITA and MIGUEL BOBILLO, Respondents
G.R. No. 166109 February 23, 2011

DEL CASTILLO, J.:

In illegal dismissal cases, it is incumbent upon the employees to first establish the fact of their dismissal before
the burden is shifted to the employer to prove that the dismissal was legal.

This Petition for Review on Certiorari[1] assails the Decision[2] dated August 10, 2004 of the Court of Appeals
(CA) in CA-G.R. SP No. 79800, which dismissed the petition for certiorari challenging the Resolutions dated
January 17, 2003[3] and July 31, 2003[4] of the National Labor Relations Commission (NLRC) in NLRC NCR
CASE Nos. 30-11-04656-00[5] and 30-12-04714-00.

Factual Antecedents

Petitioner Exodus International Construction Corporation (Exodus) is a duly licensed labor contractor for the
painting of residential houses, condominium units and commercial buildings. Petitioner Antonio P. Javalera is
the President and General Manager of Exodus.

On February 1, 1999, Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a contract [6] for the
painting of the Imperial SkyGarden located at Ongpin Street, Binondo, Manila. On July 28, 1999, Dutch Boy
awarded another contract[7] to Exodus for the painting of Pacific Plaza Towers in Fort Bonifacio, Taguig City.

In the furtherance of its business, Exodus hired respondents as painters on different dates with the
corresponding wages appearing opposite their names as hereunder listed:

NAME DATE EMPLOYED DAILY SALARY


1. Guillermo B. Biscocho Feb. 8, 1999 P 222.00
2. Fernando S. Pereda Feb. 8, 1999 235.00
3. Ferdinand M. Mariano April 12, 1999 235.00
4. Gregorio S. Bellita May 20, 1999 225.00
5. Miguel B. Bobillo March 10, 2000 220.00

Guillermo Biscocho (Guillermo) was assigned at the Imperial Sky Garden from February 8, 1999 to February 8,
2000. Fernando Pereda (Fernando) worked in the same project from February 8, 1999 to June 17,
2000. Likewise, Ferdinand Mariano (Ferdinand) worked there from April 12, 1999 to February 17, 2000. All of
them were then transferred to Pacific Plaza Towers.

Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo Yap in Ayala
Alabang, Muntinlupa City from May 20, 1999 to December 4, 1999. Afterwards he was transferred
to Pacific Plaza Towers.

Miguel B. Bobillo (Miguel) was hired and assigned at Pacific Plaza Towers on March 10, 2000.

On November 27, 2000, Guillermo, Fernando, Ferdinand, and Miguel filed a complaint[8] for illegal dismissal
and non-payment of holiday pay, service incentive leave pay, 13th month pay and night-shift differential
pay. This was docketed as NLRC NCR CASE No. 30-11-04656-00.

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On December 1, 2000, Gregorio also filed a complaint[9] which was docketed as NLRC NCR CASE No. 30-12-
04714-00. He claimed that he was dismissed from the service on September 12, 2000 while Guillermo,
Fernando, Ferdinand, and Miguel were orally notified of their dismissal from the service on November 25,
2000.

Petitioners denied respondents allegations. As regards Gregorio, petitioners averred that on September 15,
2000, he absented himself from work and applied as a painter with SAEI-EEI which is the general building
contractor of Pacific Plaza Towers. Since then, he never reported back to work.

Guillermo absented himself from work without leave on November 27, 2000. When he reported for work the
following day, he was reprimanded for being Absent Without Official Leave (AWOL). Because of the
reprimand, he worked only half-day and thereafter was unheard of until the filing of the instant complaint.

Fernando, Ferdinand, and Miguel were caught eating during working hours on November 25, 2000 for which
they were reprimanded by their foreman. Since then they no longer reported for work.

Ruling of the Labor Arbiter

On March 21, 2002, the Labor Arbiter rendered a Decision[10] exonerating petitioners from the charge of illegal
dismissal as respondents chose not to report for work. The Labor Arbiter ruled that since there is neither illegal
dismissal nor abandonment of job, respondents should be reinstated but without any backwages. She
disallowed the claims for premium pay for holidays and rest days and nightshift differential pay as respondents
failed to prove that actual service was rendered on such non-working days. However, she allowed the claims
for holiday pay, service incentive leave pay and 13th month pay. The dispositive portion of the Labor Arbiters
Decision reads:

WHEREFORE, premises considered, respondents Exodus International Construction Corporation and/or


Antonio Javalera are hereby ordered to reinstate complainants to their former positions as painters without loss
of seniority rights and other benefits appurtenant thereto without any backwages.

Respondents are likewise hereby ordered to pay complainants the following:

1. Guillermo Biscocho

P 1,968.75 - Service Incentive Leave Pay

10,237.50 - 13th Month Pay

3,600.00 - Holiday Pay

P 15,806.25 - Sub-Total

+ 1,580.87 - 10% Attorneys Fees

P 17,386.86 Total

2. Fernando Pereda

P 2,056.25 - Service Incentive Leave Pay

10,692.50 - 13th Month Pay

2
3,525.00 - Holiday Pay

P 16,273.75 - Sub-Total

+ 1,627.37 - 10% Attorneys Fees

P 17,901.12 Total

3. Miguel Bobillo

P 3,813.34 - 13th Month Pay

1,320.00 - Holiday Pay

P 5,133.34 - Sub-Total

+ 513.33 - 10% Attorneys Fees

P 5,646.67 Total

4. Ferdinand Mariano

P 1,860.42 - Service Incentive Leave Pay

9,674.19 - 13th Month Pay

3,055.00 - Holiday Pay

P 14,589.61 - Sub-Total

+ 1,458.96 - 10% Attorneys Fees

P 16,048.57 Total

5. Gregorio Bellita

P 1,500.00 - Service Incentive Leave Pay

7,800.00 - 13th Month Pay

2,700.00 - Holiday Pay

P 12,000.00 - Sub-Total

+ 1,200.00 - 10% Attorneys Fees

P 13,200.00 Total

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or the total aggregate sum of Seventy Thousand, One Hundred Eighty Three and 23/100 (P70,183.23) Pesos,
inclusive of the ten (10%) percent of the award herein by way of attorneys fees, all within ten (10) days from
receipt hereof;

The rest of complainants claims for lack of merit are hereby Dismissed.

SO ORDERED.[11]

Ruling of the National Labor Relations Commission

Petitioners sought recourse to the NLRC limiting their appeal to the award of service incentive leave pay,
13th month pay, holiday pay and 10% attorneys fees in the sum of P70,183.23.

On January 17, 2003, the NLRC dismissed the appeal. It ruled that petitioners, who have complete control over
the records of the company, could have easily rebutted the monetary claims against it. All that it had to do was
to present the vouchers showing payment of the same. However, they opted not to lift a finger, giving an
impression that they never paid said benefits.

As to the award of attorneys fees, the NLRC found the same to be proper because respondents were forced to
litigate in order to validate their claim.

The NLRC thus affirmed the Decision of the Labor Arbiter, viz:

Accordingly, premises considered, the decision appealed from is hereby AFFIRMED and the appeal
DISMISSED for lack of merit.

SO ORDERED.[12]

Petitioners filed a Motion for Reconsideration[13] which was denied by the NLRC in a Resolution[14] dated July
31, 2003.

Ruling of the Court of Appeals

Aggrieved, petitioners filed with the CA a petition for certiorari. The CA through a Resolution[15] dated October
22, 2003, directed the respondents to file their comment. On December 4, 2003, respondents filed their
comment.[16] On January 12, 2004, petitioners filed their reply.[17]

On August 10, 2004, the CA dismissed the petition and affirmed the findings of the Labor Arbiter and the
NLRC. It opined that in a situation where the employer has complete control over the records and could thus
easily rebut any monetary claims against it but opted not to lift any finger, the burden is on the employer and
not on the complainants. This is so because the latter are definitely not in a position to adduce any
documentary evidence, the control of which being not with them.

However, in addition to the reliefs awarded to respondents in the March 21, 2002 Decision of the Labor Arbiter
which was affirmed by the NLRC in a Resolution dated January 17, 2003, the petitioners were directed by the
CA to solidarily pay full backwages, inclusive of all benefits the respondents should have received had they not
been dismissed.

The dispositive portion of the CA Decision reads:

WHEREFORE, the instant petition for certiorari is dismissed. However, in addition to the reliefs awarded to
private respondents in the decision dated March 21, 2002 of Labor Arbiter Aldas and resolution of the NLRC
dated January 17, 2003, the petitioners are directed to solidarily pay private respondents full backwages,
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inclusive of all benefits they should have received had they not been dismissed, computed from the time their
wages were withheld until the time they are actually reinstated. Such award of full backwages shall be included
in the computation of public respondents award of ten percent (10%) attorneys fees.

SO ORDERED.[18]

Petitioners moved for reconsideration,[19] but to no avail. Hence, this appeal anchored on the following grounds:

Issues

I.The Honorable Court of Appeals erred and committed grave abuse of discretion in ordering the reinstatement
of respondents to their former positions which were no longer existing because its findings of facts are
premised on misappreciation of facts.

II.The Honorable Court of Appeals also seriously erred and committed grave abuse of discretion in affirming
the award of service incentive leave pay, 13th month pay, and holiday pay in the absence of evidentiary and
legal basis therefor.

III.The Honorable Court of Appeals likewise seriously erred and committed grave abuse of discretion in
affirming the award of attorney's fees even in the absence of counsel on record to handle and prosecute the
case.

IV.The Honorable Court of Appeals also seriously erred and gravely abused its discretion in holding individual
petitioner solidarily liable with petitioner company without specific evidence on which the same was based.[20]

Petitioners Arguments

Petitioners contend that, contrary to their allegations, respondents were never dismissed from the service. If
respondents find themselves no longer in the service of petitioners, it is simply because of their refusal to
report for work. Further, granting that they were dismissed, respondents prolonged absences is tantamount to
abandonment which is a valid ground for the termination of their employment. As to respondents monetary
claims, it is incumbent upon them to prove the same because the burden of proof rests on their shoulders. But
since respondents failed to prove the same, their claims should be denied.

Respondents Arguments

Respondents, in support of their claim that they were illegally dismissed, argue that as painters, they
performed activities which were necessary and desirable in the usual business of petitioners, who are engaged
in the business of contracting painting jobs. Hence, they are regular employees who, under the law, cannot just
be dismissed from the service without prior notice and without any just or valid cause. According to the
respondents, they did not abandon their job. For abandonment to serve as basis for a valid termination of their
employment, it must first be established that there was a deliberate and unjustified refusal on their part to
resume work. Mere absences are not sufficient for these must be accompanied by overt acts pointing to the
fact that they simply do not want to work anymore. Petitioners failed to prove this. Furthermore, the filing of a
complaint for illegal dismissal ably defeats the theory of abandonment of the job.

Our Ruling

The petition is partly meritorious.

[T]his Court is not unmindful of the rule that in cases of illegal dismissal, the employer bears the burden of
proof to prove that the termination was for a valid or authorized cause.[21] But [b]efore the [petitioners] must
bear the burden of proving that the dismissal was legal, [the respondents] must first establish by substantial
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evidence that indeed they were dismissed. [I]f there is no dismissal, then there can be no question as to the
legality or illegality thereof.[22]

There was no dismissal in this case, hence, there is no question that can be entertained regarding its legality
or illegality.

As found by the Labor Arbiter, there was no evidence that respondents were dismissed nor were they
prevented from returning to their work. It was only respondents unsubstantiated conclusion that they were
dismissed. As a matter of fact, respondents could not name the particular person who effected their dismissal
and under what particular circumstances.

In Machica v. Roosevelt Services Center, Inc.,[23] this Court sustained the employer's denial as against the
employees' categorical assertion of illegal dismissal. In so ruling, this Court held that:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove
their allegation that respondents dismissed them from their employment. It must be stressed that the evidence
to prove this fact must be clear, positive and convincing. The rule that the employer bears the burden of proof
in illegal dismissal cases finds no application here because the respondents deny having dismissed the
petitioners.

In this case, petitioners were able to show that they never dismissed respondents. As to the case of Fernando,
Miguel and Ferdinand, it was shown that on November 25, 2000, at around 7:30 a.m., the petitioners foreman,
Wenifredo Lalap (Wenifredo) caught the three still eating when they were supposed to be working
already. Wenifredo reprimanded them and, apparently, they resented it so they no longer reported for work. In
the case of Gregorio, he absented himself from work on September 15, 2000 to apply as a painter with SAEI-
EEI, the general contractor of Pacific Plaza Towers. Since then he never reported back to work. Lastly, in the
case of Guillermo, he absented himself without leave on November 27, 2000, and so he was reprimanded
when he reported for work the following day. Because of the reprimand, he did not report for work anymore.

Hence, as between respondents general allegation of having been orally dismissed from the service vis-a-vis
those of petitioners which were found to be substantiated by the sworn statement of foreman Wenifredo, we
are persuaded by the latter. Absent any showing of an overt or positive act proving that petitioners had
dismissed respondents, the latters claim of illegal dismissal cannot be sustained. Indeed, a cursory
examination of the records reveal no illegal dismissal to speak of.

There was also no abandonment of work on the part of the respondents.

The Labor Arbiter is also correct in ruling that there was no abandonment on the part of respondents that
would justify their dismissal from their employment.

It is a settled rule that [m]ere absence or failure to report for work x x x is not enough to amount to
abandonment of work.[24] Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.[25]

In Northwest Tourism Corporation v. Former Special 3rd Division of the Court of Appeals[26] this Court held that
[t]o constitute abandonment of work, two elements must concur, [namely]:

(1) the employee must have failed to report for work or must have been absent without valid or justifiable
reason; and

(2) there must have been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act.

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It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to
resume his employment without any intention of returning.[27] It is therefore incumbent upon petitioners to
ascertain the respondents interest or non-interest in the continuance of their employment. However, petitioners
failed to do so.

Respondents must be reinstated and paid their holiday pay, service incentive leave pay, and 13thmonth pay.

Clearly therefore, there was no dismissal, much less illegal, and there was also no abandonment of job to
speak of. The Labor Arbiter is therefore correct in ordering that respondents be reinstated but without any
backwages.

However, petitioners are of the position that the reinstatement of respondents to their former positions, which
were no longer existing, is impossible, highly unfair and unjust. The project was already completed by
petitioners on September 28, 2001. Thus the completion of the project left them with no more work to
do. Having completed their tasks, their positions automatically ceased to exist. Consequently, there were no
more positions where they can be reinstated as painters.

Petitioners are misguided. They forgot that there are two types of employees in the construction industry. The
first is referred to as project employees or those employed in connection with a particular construction project
or phase thereof and such employment is coterminous with each project or phase of the project to which they
are assigned. The second is known as non-project employees or those employed without reference to any
particular construction project or phase of a project.

The second category is where respondents are classified. As such they are regular employees of petitioners. It
is clear from the records of the case that when one project is completed, respondents were automatically
transferred to the next project awarded to petitioners. There was no employment agreement given to
respondents which clearly spelled out the duration of their employment, the specific work to be performed and
that such is made clear to them at the time of hiring. It is now too late for petitioners to claim that respondents
are project employees whose employment is coterminous with each project or phase of the project to which
they are assigned.

Nonetheless, assuming that respondents were initially hired as project employees, petitioners must be
reminded of our ruling in Maraguinot, Jr. v. National Labor Relations Commission[28] that [a] project employee x
x x may acquire the status of a regular employee when the following [factors] concur:

1. There is a continuous rehiring of project employees even after cessation of a project; and

2. The tasks performed by the alleged project employee are vital, necessary and indespensable to the
usual business or trade of the employer

In this case, the evidence on record shows that respondents were employed and assigned continuously to the
various projects of petitioners. As painters, they performed activities which were necessary and desirable in the
usual business of petitioners, who are engaged in subcontracting jobs for painting of residential units,
condominium and commercial buildings. As regular employees, respondents are entitled to be reinstated
without loss of seniority rights.

Respondents are also entitled to their money claims such as the payment of holiday pay, service incentive
leave pay, and 13th month pay. Petitioners as the employer of respondents and having complete control over
the records of the company could have easily rebutted the monetary claims against it. All that they had to do
was to present the vouchers or payrolls showing payment of the same. However, they decided not to provide
the said documentary evidence. Our conclusion therefore is that they never paid said benefits and therefore
they must be ordered to settle their obligation with the respondents.

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Respondents are also entitled to the payment of attorneys fees.

Even though respondents were not represented by counsel in most of the stages of the proceedings of this
case, the award of attorneys fees as ruled by the Labor Arbiter, the NLRC and the CA to the respondents is
still proper. In Rutaquio v. National Labor Relations Commission,[29] this Court held that:

It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorneys fees is legally and morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals[30] this Court ruled that:

Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest
by reason of an unjustified act of the other party.

In this case, respondents filed a complaint for illegal dismissal with claim for payment of their holiday pay,
service incentive leave pay, and 13th month pay. The Labor Arbiter, the NLRC and the CA were one in ruling
that petitioners did not pay the respondents their holiday pay, service incentive leave pay, and 13th month pay
as mandated by law. For sure, this unjustified act of petitioners had compelled the respondents to institute an
action primarily to protect their rights and interests.

The CA erred when it ordered reinstatement of respondents with payment of full backwages.

It must be noted that the Labor Arbiters disposition directed petitioners to reinstate respondents without any
backwages and awarded the payment of service incentive leave pay, holiday pay, 13th month pay, and 10%
attorneys fees in the sum of P70,183.23.

On appeal to the NLRC, petitioners limited their appeal to the award of service incentive leave pay, holiday
pay, 13th month pay, and 10% attorneys fees. No appeal was made on the order of reinstatement.

In the proceedings before the CA, it is only the award of service incentive leave pay, holiday pay, 13th month
pay, and 10% attorneys fees that were raised by the petitioners. The CA in fact dismissed the
petition. However, the CA further concluded in its Decision that since there is no abandonment to speak about,
it is therefore indisputable that respondents were illegally dismissed. Therefore, they deserve not only
reinstatement but also the payment of full backwages.

We do not agree with this ruling of the CA.

In cases where there is no evidence of dismissal, the remedy is reinstatement but without backwages. In this
case, both the Labor Arbiter and the NLRC made a finding that there was no dismissal much less an illegal
one. It is settled that factual findings of quasi-judicial agencies are generally accorded respect and finality so
long as these are supported by substantial evidence.[31]

In Leonardo v. National Labor Relations Commission,[32] this Court held that:

In a case where the employees failure to work was occasioned neither by his abandonment nor by a
termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own
loss.

Thus, inasmuch as no finding of illegal dismissal had been made, and considering that the absence of such
finding is supported by the records of the case, this Court is bound by such conclusion and cannot allow an
award of the payment of backwages.

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Lastly, since there was no need to award backwages to respondents, the ruling of the CA that Javalera is
solidarily liable with Exodus International Construction Corporation in paying full backwages need not be
discussed

WHEREFORE, the instant petition for review on certiorari is PARTLY GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 79800 dated August 10, 2004, is AFFIRMED with MODIFICATION that the award
of full backwages is DELETED for lack of legal basis. SO ORDERED.

2. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Petitioner, versus INOCENCIO B.


BERBANO, JR., Respondent.
G.R. No. 165199 November 27, 2009

CARPIO, J.:

This is a petition for review[1] of the Court of Appeals Decision[2] dated 21 January 2004 and Resolution dated 9
September 2004 in CA-G.R. SP No. 75125. The Court of Appeals reversed the Decision[3] dated 29 May 2002
and Resolution dated 29 October 2002 of the National Labor Relations Commission (NLRC).

The Antecedent Facts

The facts, as summarized by the Labor Arbiter and adopted by the NLRC and the Court of Appeals, are as
follows:

In his position paper, complainant [Inocencio B. Berbano, Jr.] alleged that he was hired by the respondent
Philippine Long Distance [Telephone] Company (PLDT, for brevity) on June 1, 1988 as Engineering
Assistant. After his probationary period of three months, he was issued an appointment letter with a status of a
regular employee of respondent. After several promotions, complainant finally held the position of Computer
Assistant M-2 on June 16, 1993 in the Sampaloc Exchange Department/Operation and Maintenance Center of
the respondent. Although his function is Computer Assistant M-2, complainant further alleges that he
performed the functions of a Specialist for EWSD who was responsible for handling, operations and
maintenance of the whole EWSD Network handling network database, fault clearance, database modification
alarm monitoring, traffic routing, trunk administration, password and tariff administration and others.

Being trained as EW[S]D OMC Specialist, complainant claims that respondent expected him to have depth of
understanding in continuous painstaking research and study. Thus, he initiated a study of hi-tech EWSD
Switching Equipment, a part of which is the software installation of various subscriber service features and
control operation. It is at this time that complainant tapped his brother-in-laws number (911-8234) without the
latters knowledge and installed service features in it for study. Such service features included:

1. Security Code

2. Conference Call Three (Three-way calling)

3. Abbreviated Dialing

4. Hot Line Delayed

5. Call Diversion Immediate

6. Call Diversion Dont Answer

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7. Call Hold

8. Non-Changeable

Later, on April 21, 1994, complainant learned that the phone number 911-8234 is under investigation by the
Quality Control Inspection Office due to the unauthorized installation of service features thereto. Complainant
admitted that he was responsible for such installation for purposes of study and testing.

Formal investigation ensued on April 22, 1994 and subsequently, on July 6, 1994, complainant received a
Memorandum from the Department Head of the Sampaloc Exchange asking him to explain within 72 hours
upon receipt why an [a]dministrative [a]ction should not be taken against complainant regarding the matter of
the unauthorized installations mentioned at the phone number 911-8234.

On July 11, 1994, complainant submitted a written explanation claiming that the aforementioned installation of
service features was for purposes of study and research.

Finding unacceptable the complainants explanation, respondent PLDT dismissed complainant from the service
effective August 16, 1994.

On the other hand, respondent submits that upon discovery of the installation of service features to the phone
number 911-8234 without the authorization and approval of the respondent, and after investigation,
complainant readily admitted having programmed the said features and that this installation was without prior
authorization. Respondents position paper further avers that having worked as [a] Computer Assistant,
complainant took advantage of his position and his access to respondent companys computer to favor his
brother-in-laws telephone by irregularly providing it with special features. Such special features included the
following:

1. Push Button

2. Test Call Only

3. Malicious Call Identification

4. Non-chargeable (Calls to subscriber with this class of service are free of charge for the caller)

5. Three-way Calling (Allows a third party to be linked to an existing call)

6. Call Hold

7. Abbreviated dialing 90 numbers

8. Hotline delay

9. Pin Code

10. Call Diversion Immediate

11. Call Diversion to Fixed Announcement

12. Traffic Restr. Class Act Auth. (Authorization to activate traffic restriction classes)

13. Call Diversion Dont Answer (Authorization to enter a destination no. for call diversion on no answer)

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14. Traffic Restriction Class 1

15. Abbreviated Dial Number Mod. Auth. (Authorization for subs controlled entry and and modification of
abbreviated nos.)

16. Call Diversion Immediate (Modification Authorization)

17. Hotline Delay Mod. Auth.(Modification Authorization)

Respondent also found complainants explanation that the installment was for testing purposes, unmeritorious
and unjustified considering that said special features were only deleted upon discovery, two months after their
installations. Further, testings, according to the respondent companys rules should only last for one day. [4]

On 28 September 1998, the Labor Arbiter[5] rendered a Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the reinstatement of the
complainant to his previous position of Computer Assistant M-2 without loss of seniority rights. Furthermore,
respondent is hereby ordered to pay to the complainant the amount of FIVE HUNDRED THIRTY SEVEN
THOUSAND FOUR HUNDRED TWENTY PESOS (P537,420.00) representing the backwages of the
complainant from the time that he was terminated in August 1994 up to the present, minus any possible
income earned elsewhere since complainants dismissal. The equivalent ten (10%) percent attorneys fees of
the total award in the amount of P53,742.00 is also granted.

SO ORDERED.[6]

On 29 May 2002, the NLRC rendered a Decision reversing that of the Labor Arbiter, with the following
dispositive portion:

WHEREFORE, premises considered, the assailed decision is hereby reversed and set aside. Respondents are
adjudged not guilty of illegal dismissal. Accordingly, the award of backwages and attorneys fees is hereby
deleted from the decision.

SO ORDERED.[7]

On 15 August 2002, Berbano filed a Motion for Reconsideration, but this was denied by the NLRC in its
Resolution dated 29 October 2002.[8]

The Court of Appeals Ruling

Berbano filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of
Civil Procedure. On 21 January 2004, the Court of Appeals rendered judgment granting the petition
and reversing the NLRC decision. We quote the dispositive portion of the Court of Appeals decision below.

WHEREFORE, premises considered, the petition is GRANTED. The decision of the public respondent NLRC
promulgated on May 29, 2002 is REVERSED and SET ASIDE and the decision dated September 28, 1998 of
the Honorable Labor Arbiter Romulus S. Prota[s]io is hereby REINSTATED in all respect. Private respondent
PLDT is ordered to pay the backwages to which the petitioner is entitled from January 15, 2003, the date of his
dismissal, until his actual reinstatement.

SO ORDERED.[9]

PLDT filed a Motion for Reconsideration, but this was denied by the Court of Appeals in its Resolution of 9
September 2004.[10]
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Hence, this appeal.

The Issues

Petitioner PLDT raises the following issues for our consideration:

1. Whether the Court of Appeals erred in reversing the NLRC decision despite its finding that respondent
committed the infraction that caused his dismissal;

2. Whether the Court of Appeals erred in ordering petitioner to pay respondent backwages and attorneys
fees;

3. Whether respondent Inocencio Berbano, Jr. was denied due process of law; and

4. Whether the Court of Appeals had jurisdiction over the Petition for Certiorari filed by respondent.

The Courts Ruling

We find the appeal without merit.

On whether the Court of Appeals had jurisdiction

over the Petition for Certiorari filed by respondent

We first consider the issue on jurisdiction raised by petitioner. Petitioner contends that the NLRC Decision
dated 29 May 2002 was received by respondent on 29 June 2002; hence, respondent had only ten (10) days,
or up to 09 July 2002, to file a motion for reconsideration of the NLRC decision. Without a motion for
reconsideration timely filed, the NLRC decision would become final and executory, pursuant to Section 2,
paragraphs (a), (b) and (c) of Rule VIII [now Section 14 of Rule VII] of the New Rules of Procedure of the
NLRC. Petitioner claims that when respondent filed a motion for reconsideration of the NLRC decision on 15
August 2002, which was beyond the 10-day reglementary period imposed by law, the decision was already
final and executory. Consequently, the Court of Appeals had no jurisdiction over the petition for certiorari
(assailing the NLRC decision) filed by respondent on 10 February 2003.

The New Rules of Procedure of the NLRC mandate that a motion for reconsideration of the NLRC decision
must be filed within 10 calendar days from receipt of said decision, otherwise, the decision shall become final
and executory.[11] A motion for reconsideration of the NLRC decision must be filed before the remedy of a
petition for certiorari may be availed of, to enable the commission to pass upon and correct its mistakes without
the intervention of the courts.[12] Failure to file a motion for reconsideration of the decision is a procedural
defect that generally warrants a dismissal of the petition for certiorari.[13] However, in Surima v. NLRC,[14] we
held that despite procedural lapses, fundamental consideration of substantial justice may warrant this Court to
decide a case on the merits rather than dismiss it on a technicality. In so doing, we exercise our prerogative in
labor cases that no undue sympathy is to be accorded to any claim of procedural misstep, the idea being that
our power must be exercised according to justice and equity and substantial merits of the controversy. [15] In the
instant case, we are persuaded that the rigid rules of procedure must give way to the demands of substantial
justice, and that the case must be decided on the merits. Moreover, the petition filed with the Court of Appeals
sought the issuance of a writ of certiorari which is a prerogative writ, not demandable as a matter of right, but
issued in the exercise of judicial discretion.[16] Thus, the Court of Appeals committed no error when it admitted
the petition for certiorari filed by respondent, and had jurisdiction over said petition.

On whether the Court of Appeals erred in reversing

the NLRC decision despite its finding that respondent


12
committed the infraction that caused his dismissal

Petitioner contends that the Court of Appeals erred when it found respondent to have committed an infraction,
i.e., programming and installing special features in his (respondents) brother-in-laws telephone line without
prior authorization from petitioner, but nonetheless ruled that the infraction was not serious enough to warrant
respondents dismissal from service. Petitioner also asserts that, contrary to respondents claim, due process
was observed in the dismissal of respondent.

Well-settled is the rule that no employee shall be validly dismissed from employment without the observance of
substantive and procedural due process. The minimum standards of due process are prescribed under Article
277(b) of the Labor Code of the Philippines (Labor Code) to wit:

Art. 277. Miscellaneous Provisions.

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against
dismissal except for a just and authorized cause and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the cause for termination and shall afford the latter ample opportunity
to be heard and to defend himself with the assistance of his representative, if he so desires, in accordance with
company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment.

The above provision is implemented by Section 2, Rule XXIII of Book V of the Omnibus Rules Implementing
the Labor Code, which states:

Section 2. Standards of due process: requirements of notice. In all cases of termination of employment, the
following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to
said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence
presented against him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. x x x.

Thus, dismissal from service of an employee is valid if the following requirements are complied with: (a)
substantive due process which requires that the ground for dismissal is one of the just or authorized causes
enumerated in the Labor Code, and (b) procedural due process which requires that the employee be given an
opportunity to be heard and defend himself.[17] The employee must be furnished two written notices the first
notice apprises the employee of the particular act or omission for which his dismissal is sought, and the second
notice informs the employee of the employers decision to dismiss him.[18]

In this case, petitioner formally notified respondent of the complaint against him through an inter-office
memorandum dated 6 July 1994. The memorandum enumerated the service features allegedly installed by
respondent in his brother-in-laws telephone line (911-8234), and stated the acts of the respondent complained
of, viz:

13
You readily admitted to QCI that subscriber of subject telephone is your brother-in-law and that you installed
the features claiming it was for testing purposes.

Records show that subject telephone was temporarily disconnected last March 24, 1994 for non-payment,
reconnect order was faxed to Data Control Unit of OMCC at 1:30PM. In the process of reconnection at OMCC,
subject telephone was found already working.[19]

In the same memorandum, petitioner asked respondent to explain within 72 hours upon receipt thereof why an
administrative action should not be imposed against him.[20] On 11 July 1994, respondent submitted his written
explanation or reply to the complaint against him.[21] More than a month thereafter, or on 9 August 1994,
petitioner issued another inter-office memorandum informing respondent that his act of installing special
features in his brother-in-laws telephone line without authorization from petitioner constituted gross misconduct
and was grossly violative of existing company rules and regulations, hence, warranting his termination from
service.[22] Clearly, petitioner complied with the requirement of procedural due process.

As regards substantial due process, the grounds for termination of employment must be based on just or
authorized causes. Article 282 of the Labor Code enumerates the just causes for termination of employment by
the employer, to wit:

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. (Emphasis supplied)

The notice of termination sent by petitioner to respondent indicated that the latter was dismissed from service
due to unauthorized installation of service features in his brother-in-laws telephone line, which
allegedly constituted gross misconduct. Thus, we are left with the issue on whether the said unauthorized act
of the respondent constitutes a serious misconduct which warrants dismissal from service under Article 282(a)
of the Labor Code.

Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error of judgment.[23] Ordinary misconduct would not justify the termination of services of the
employee as the Labor Code is explicit that the misconduct must be serious.[24] To be serious, the misconduct
must be of such grave and aggravated character and not merely trivial and unimportant.[25] Such misconduct,
however serious, must nevertheless be in connection with the employees work to constitute just cause for his
separation.[26] As amplified by jurisprudence, misconduct, to be a just cause for dismissal, must (a) be serious;
(b) relate to the performance of the employees duties; and (c) show that the employee has become unfit to
continue working for the employer.[27] Moreover, in National Labor Relations Commission v. Salgarino,[28] this
Court stressed that [i]n order to constitute serious misconduct which will warrant the dismissal of an employee
under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of
has violated some established rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent.

14
We believe that the misconduct of respondent is not of serious nature as to warrant respondents dismissal
from service. The records of this case are bereft of any showing that the alleged misconduct was performed by
respondent with wrongful intent. On the contrary, respondent readily admitted having installed the service
features in his brother-in-laws telephone line for purposes of study and research which could have benefitted
petitioner. Respondent explained the installation of the service features in the written explanation he sent to
petitioner as follows:

There had been a time on that period where I conducted special study on service features of EWSD. It
includes testing the integrity of its actual operation in all digital exchanges connected to our OMC.

During which [sic] I conducted my study of these features for Cubao there was no available test number at
OMC for code 911 and 912. So to complete my study I decided to use the number 9118234 at home
temporarily and remove those features after the test.[29]

Moreover, as pointed out by the appellate court, respondents misconduct did not result in any economic loss
on the part of petitioner since the service features were not yet available in the market at the time respondent
caused its unauthorized installation.

We also note that respondents dedicated service to petitioner for almost six (6) years, prior to his commission
of the misconduct, is apparent from the records. His employment was untainted with any irregularity. He had
been promoted several times, and had been chosen by petitioner on several occasions to attend various
trainings to improve his craft. He conducted advance research based on his training background and technical
expertise, and had even compiled a service feature manual which served as quick reference guide of his
colleagues for inquiries regarding subscriber operation of special (or service) features.[30]

Based on the foregoing, we consider respondents offense to be a simple misconduct which does not merit
termination of his employment. The penalty of dismissal from service is not commensurate to respondents
offense. Although petitioner, as an employer, has the right to discipline its erring employees, exercise of such
right should be tempered with compassion and understanding. The magnitude of the infraction committed by
an employee must be weighed and equated with the penalty prescribed and must be commensurate thereto, in
view of the gravity of the penalty of dismissal or termination from the service.[31]The employer should bear in
mind that in termination cases, what is at stake is not simply the employees job or position but his very
livelihood.

On whether the Court of Appeals erred in ordering

petitioner to pay respondent backwages and attorneys fees

Since respondent was illegally dismissed, he is entitled to reinstatement without loss of seniority rights, and to
payment of backwages. Article 279 of the Labor Code, as amended by Section 34 of Rep. Act No. 6715,
provides as follows:

Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.

Thus, an illegally dismissed employee is entitled to the twin reliefs of (a) either reinstatement or separation pay,
if reinstatement is no longer viable, and (b) backwages.[32] These reliefs are given to alleviate the economic
damage suffered by the illegally dismissed employee.[33]

15
Finally, we find no error in the award of attorneys fees. In San Miguel Corporation v. Aballa,[34] we held that in
actions for recovery of wages or where an employee was forced to litigate and thus incur expenses to protect
his rights and interests, a maximum of 10% of the total monetary award by way of attorneys fees is justifiable
under Article 111 of the Labor Code;[35] Section 8, Rule VIII of Book III of the Omnibus Rules Implementing the
Labor Code;[36] and paragraph 7, Article 2208 of the Civil Code.[37] The award of attorneys fees is proper and
there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages.
There need only be a showing that the lawful wages were not paid accordingly.[38]

WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals Decision dated 21 January 2004 in
CA-G.R. SP No. 75125. SO ORDERED .

3. JONATHAN I. SANG-AN, Petitioner, vs. EQUATOR KNIGHTS DETECTIVE AND SECURITY AGENCY,
INC., Respondents
G.R. No. 173189 February 13, 2013

.BRION, J.:

Before the Court is the petition for review on certiorari1 filed by petitioner Jonathan I. Sang-an assailing the
decision2 dated September 29, 2005 and the resolution3 dated May 29, 2006 of the Court of Appeals (CA) in
CA-G.R. SP. No. 86677. TheCA set aside the decision4 dated December 15, 2003 of the National Labor
Relations Commission (NLRC) and reinstated the decision5 dated July 30, 200 I of Labor Arbiter Geoffrey P.
Villahermosa (LA).

Jonathan was the Assistant Operation Manager of respondent Equator Knights Detective and Security Agency,
Inc. (Equator). He was tasked, among others, with the duty of assisting in the operations of the security
services; he was also in charge of safekeeping Equator’s firearms.

On April 21, 2001, Equator discovered that two firearms were missing from its inventory. The investigation
revealed that it was Jonathan who might have been responsible for the loss.6 On April 24, 2001, Jonathan
was temporarily suspended from work pending further investigation.

On May 8, 2001, while Jonathan was under suspension, a security guard from Equator was apprehended by
policemen for violating the Commission on Elections’ gun ban rule. The security guard stated in his
affidavit7 that the unlicensed firearm had been issued to him by Jonathan.

On May 24, 2001, Jonathan filed with the NLRC a complaint for illegal suspension with prayer for
reinstatement.8 In his position paper, however, he treated his case as one for illegal dismissal and alleged
that he had been denied due process when he was dismissed.9 Equator, on the other hand, argued that
Jonathan’s dismissal was not illegal but was instead for a just cause under Article 282 of the Labor Code.10

On July 30, 2001, the LA rendered a decision11 dismissing the complaint. It declared that no illegal
dismissal took place as Jonathan’s services were terminated pursuant to a just cause. The LA found that
Jonathan was dismissed due to the two infractions he committed:

The basis for the termination of the complainant was first, when he was suspended when he issued a firearm
[to] a security guard and then replaced it with another one, then took the respondent[’s] firearm with him and
since then both firearms were lost. x x x.

His second offense which resulted in his being terminated was when he issued an unlicensed firearm to a
Security Guard stationed in one of the business establishment[s] in Bais City which is a client of the
respondents.

16
WHEREFORE, in the light of the foregoing, judgment is hereby rendered DISMISSING this case for lack of
legal and factual basis.12

Jonathan appealed the LA’s decision to the NLRC, contending that no charge had been laid against him; there
was no hearing or investigation of any kind; and he was not given any chance or opportunity to defend himself.

The NLRC sustained the findings of the LA that there had been just cause for his dismissal. However, it
found that Jonathan had been denied his right to due process when he was dismissed. It held that
Equator’s letter informing him of his temporary suspension until further notice did not satisfy the requirements
of due process for a valid dismissal. Thus, the NLRC modified the LA’s decision and ordered Equator to pay
Jonathan backwages from April 24, 2001 until the date of the NLRC’s decision. Equator moved for
reconsideration but the NLRC denied the motion, prompting the filing of a petition for certiorari under Rule 65
of the Rules of Court with the CA. Equator argued that the NLRC committed grave abuse of discretion when it
found that Jonathan had been denied procedural due process.

The CA reversed the decision of the NLRC, finding that Equator substantially complied with the procedural
requirements of due process. It found that the letter given to Jonathan did not mean that he had been
dismissed; rather, he was only suspended – the very reason for the case for illegal suspension Jonathan filed
before the LA.1âwphi1

The CA found that Jonathan filed his complaint for illegal suspension on May 2, 2001. During the pendency of
the illegal suspension case before the LA, Jonathan committed another offense on May 8, 2001 when he
issued the unlicensed firearm to Equator’s security guard. The CA found that Equator’s June 7, 2001 position
paper brought Jonathan’s second offense before the LA for resolution; thus, Jonathan was not denied due
process. The CA reinstated the LA’s decision dismissing Jonathan’s complaint. Jonathan filed a motion
for reconsideration which the CA denied. He thereafter filed the present petition.

The Parties’ Arguments

Jonathan contends that when Equator filed a petition for certiorari under Rule 65 of the Rules of Court alleging
grave abuse of discretion by the NLRC, it failed to post a cash or surety bond as required by Article 223 of the
Labor Code. Without complying with this condition, the petition for certiorari should have been dismissed
outright. Also, Jonathan contends that the CA’s findings of fact are contrary to the findings of fact by the NLRC.
Since the findings of fact of quasi-judicial agencies are accorded respect and finality, he argues that the
NLRC’s decision must be sustained.

Equator, on the other hand, submits that the rule on posting of cash or surety bond as required by Article 223
of the Labor Code is not applicable in a petition for certiorari under Rule 65 of the Rules of Court. It also
submits that both the LA and the NLRC concur in finding just cause for the dismissal of Jonathan; hence,
Jonathan’s subsequent dismissal is valid.

The Issues

Given the parties’ arguments, the case poses the following issues for the Court’s resolution:

1. whether the posting of a cash or surety bond is required for the filing of a petition for certiorari under
Rule 65 of the Rules of Court with the CA; and

2. whether Jonathan was validly dismissed.

The Court’s Ruling

We find the petition partially meritorious.


17
A cash/surety bond is not needed in a Petition for Certiorari under Rule 65

The requirement of a cash or surety bond as provided under Article 223 of the Labor Code only applies to
appeals from the orders of the LA to the NLRC. It does not apply to special civil actions such as a petition
for certiorari under Rule 65 of the Rules of Court. In fact, nowhere under Rule 65 does it state that a bond is
required for the filing of the petition.

A petition for certiorari is an original and independent action and is not part of the proceedings that resulted in
the judgment or order assailed before the CA. It deals with the issue of jurisdiction, and may be directed
against an interlocutory order of the lower court or tribunal prior to an appeal from the judgment, or to a final
judgment where there is no appeal or any plain, speedy or adequate remedy provided by law or by the rules.

Jonathan filed a complaint for illegal dismissal

Contrary to the findings of the CA, Jonathan was not merely suspended but was dismissed from the service.
While Jonathan initially filed an action for illegal suspension, the position papers both parties filed treated the
case as one for illegal dismissal. Jonathan alleged in his position paper that "the [r]espondent illegally
SUSPENDED (DISMISSED) the x x x complainant[,]" and claimed that his dismissal lacked the required due
process.13 Similarly, Equator’s position paper states that after the commission of the second offense on May 8,
2001, "[management] made up a decision to dismiss [Jonathan]."14 Even the LA treated the case before
him as "a case for illegal dismissal[.]"15 In Equator’s memorandum to this Court, it admitted that Jonathan was
dismissed.16

We also find that Jonathan did not file his complaint for illegal suspension on May 2, 2001. The records of the
case disclose that the receiving date stamped on the complaint is May 24, 2001. The date relied upon by the
CA, May 2, 2001, was the date when the complaint was subscribed and sworn to before a notary public.17 Due
to the second offense committed by Jonathan on May 8, 2001, Equator decided to dismiss him. Therefore,
when the LA tried the case, Jonathan had already been dismissed.

Equator failed to comply with the procedural due process

In order to validly dismiss an employee, it is fundamental that the employer observe both substantive and
procedural due process – the termination of employment must be based on a just or authorized cause and the
dismissal can only be effected, after due notice and hearing.18

This Court finds that Equator complied with the substantive requirements of due process when Jonathan
committed the two offenses.

Article 282(A) of the Labor Code provides that an employee may be dismissed on the ground of serious
misconduct or willful disobedience of the lawful orders of his employer or representative in connection with his
work. Misconduct is improper or wrongful conduct; it is the transgression of some established and definite rule
of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error of judgment. The misconduct, to be serious within the meaning of the Labor Code, must be of such grave
and aggravated character and not merely trivial or unimportant. It is also important that the misconduct be in
connection with the employee's work to constitute just cause for his separation.19

By losing two firearms and issuing an unlicensed firearm, Jonathan committed serious misconduct. He did not
merely violate a company policy; he violated the law itself (Presidential Decree No. 1866 or Codifying the Laws
on Illegal/Unlawful Possession, Manufacture, Dealing in, Acquisition or Disposition, of Firearms, Ammunition or
Explosives or Instruments Used in the Manufacture of Firearms, Ammunition or Explosives, and Imposing
Stiffer Penalties for Certain Violations Thereof and for Relevant Purposes),20 and placed Equator and its
employees at risk of being made legally liable. Thus, Equator had a valid reason that warranted Jonathan’s
dismissal from employment as Assistant Operation Manager.
18
The Court, however, finds that Equator failed to observe the proper procedure in terminating Jonathan’s
services. Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides that:

Section 2. Standard of due process: requirements of notice. – In all cases of termination of employment, the
following standards of due process shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence, or rebut the
evidence presented against him; and

(c) A written notice [of] termination served on the employee indicating that upon due consideration of all
the circumstances, grounds have been established to justify his termination.21

Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish the
employee with two written notices before termination of employment can be effected: a first written
notice that informs the employee of the particular acts or omissions for which his or her dismissal is sought,
and a second written notice which informs the employee of the employer's decision to dismiss him. In
considering whether the charge in the first notice is sufficient to warrant dismissal under the second notice, the
employer must afford the employee ample opportunity to be heard.

A review of the records shows that Jonathan was not furnished with any written notice that informed him of the
acts he committed justifying his dismissal from employment. The notice of suspension given to Jonathan only
pertained to the first offense, i.e., the loss of Equator’s firearms under Jonathan’s watch.1âwphi1 With respect
to his second offense (i.e., the issuance of an unlicensed firearm to Equator’s security guard – that became the
basis for his dismissal), Jonathan was never given any notice that allowed him to air his side and to avail of the
guaranteed opportunity to be heard. That Equator brought the second offense before the LA does not serve as
notice because by then, Jonathan had already been dismissed.

In order to validly dismiss an employee, the observance of both substantive and procedural due process by the
employer is a condition sine qua non. Procedural due process requires that the employee be given a notice of
the charge against him, an ample opportunity to be heard, and a notice of termination. 22

Since Jonathan had been dismissed in violation of his right to procedural due process but for a just cause,
Equator should pay him nominal damages of P30,000.00, in accordance with Agabon v. NLRC.23 The decision
of the NLRC, although final, was brought to CA on a petition for certiorari and was eventually nullified for grave
abuse of discretion. When the CA ruled on the case, this Court had abandoned the ruling in Serrano v.
NLRC24 in favor of the Agabon ruling.

WHEREFORE, we hereby PARTIALLY GRANT the petition. The decision dated September 29, 2005 and the
resolution dated May 29, 2006 of the Court of Appeals in CA-G.R. SP. No. 86677
are AFFIRMED with MODIFICATION. The employer, Equator Knights Detective and Security Agency, Inc.,
had sut1icient basis to terminate the employment of Jonathan I. Sang-an whose dismissal is thus declared to
be substantively valid. However, he was denied his right to procedural due process for lack of the required
notice of dismissal. Consequently, Equator Knights Detective and Security Agency, Inc. is ordered to pay
petitioner Jonathan I. Sang-an P30,000.00 as nominal damages for its non-compliance with procedural due
process. SO ORDERED.

19
4. TECHNOL EIGHT PHILIPPINES CORPORATION, Petitioner, versus NATIONAL LABOR RELATIONS
COMMISSION AND DENNIS AMULAR Respondents
G.R. No. 187605 April 13, 2010

BRION, J.:

For resolution is the present Petition for Review on Certiorari[1] addressing the decision[2] and resolution[3] of the
Court of Appeals (CA) of November 18, 2008 and April 17, 2009, respectively, in CA-G.R. SP No. 100406.[4]

THE ANTECEDENTS

The petitioner Technol Eight Philippines Corporation (Technol), located at 127 East Main Avenue, Laguna
Technopark, Bian, Laguna, manufactures metal parts and motor vehicle components. It hired the respondent
Dennis Amular (Amular) in March 1998 and assigned him to Technols Shearing Line, together with Clarence P.
Ducay (Ducay). Rafael Mendoza (Mendoza) was the lines team leader

On April 16, 2002 at about 5:30 p.m., Mendoza went to the Surf City Internet Caf in Balibago, Sta. Rosa,
Laguna. As Mendoza was leaving the establishment, he was confronted by Amular and Ducay who engaged
him in a heated argument regarding their work in the shearing line, particularly Mendozas report to Avelino S.
De Leon, Jr. (De Leon), Technols Production Control and Delivery (PCD) assistant supervisor, about Amulars
and Ducays questionable behavior at work. The heated argument resulted in a fistfight that required the
intervention of the barangay tanods in the area.

Upon learning of the incident, Technols management sent to Amular and Ducay a notice of preventive
suspension/notice of discharge dated May 18, 2002[5] advising them that their fistfight with Mendoza violated
Section 1-k of Technols Human Resource Department (HRD) Manual. The two were given forty-eight (48)
hours to explain why no disciplinary action should be taken against them for the incident. They were placed
under preventive suspension for thirty (30) days, from May 19, 2002 to June 17, 2002 for Ducay, and May 21,
2002 to June 20, 2002 for Amular. Amular submitted a written statement on May 20, 2002.[6]

Thereafter, Amular received a notice dated June 8, 2002[7] informing him that Technol management will
conduct an administrative hearing on June 14, 2002. He was also given two (2) days to respond in writing to
the statements attached to and supporting the notice. A day before the hearing or on June 13, 2002, Amular
filed a complaint for illegal suspension/constructive dismissal with a prayer for separation pay, backwages and
several money claims, against Technol. Amular failed to attend the administrative hearing.On July 4, 2002,
Technol sent him a notice of dismissal.[8]

Before the Labor Arbiter, Amular alleged that in the afternoon of April 16, 2002, while he and his co-employee
Ducay were walking around the shopping mall in Balibago, Sta. Rosa, Laguna, they incidentally saw Mendoza
with whom they wanted to discuss some personal matters. When they approached Mendoza, the latter raised
his voice and asked what they wanted from him; Amular asked Mendoza what the problem was
because Mendoza appeared to be always angry at him (Amular). Mendoza instead challenged Amular and
Ducay to a fistfight and then punched Amular who punched Mendoza in return. Thereafter, a full-blown fistfight
ensued until the barangay tanods in the area pacified the three.

Amular further alleged that he was asked by his immediate supervisor to submit a report on the incident, which
he did on April 18, 2002.[9] Subsequently, Amular, Mendoza and Ducay were called by Technol management to
talk to each other and to settle their differences; they agreed and settled their misunderstanding.

THE COMPULSORY ARBITRATION DECISIONS

On November 18, 2003, Executive Labor Arbiter Salvador V. Reyes rendered a decision[10] finding that
Amulars preventive suspension and subsequent dismissal were illegal. He ruled that Amulars preventive
20
suspension was based solely on unsubscribed written statements executed by Mendoza, Rogelio R. Garces
and Mary Ann Palma (subscribed only on August 8, 2002) and that Mendoza, Amular and Ducay had settled
their differences even before Amular was placed under preventive suspension. With respect to Amulars
dismissal, the Arbiter held that Technol failed to afford him procedural due process since he was not able to
present his side because he had filed a case before the National Labor Relations Commission (NLRC) at the
time he was called to a hearing; Technol also failed to substantiate its allegations against Amular; the fistfight
occurred around 200 to 300 meters away from the work area and it happened after office hours. Arbiter Reyes
awarded Amular separation pay (since he did not want to be reinstated), backwages, 13th month pay, service
incentive leave pay and attorneys fees in the total amount of P158,987.70.

Technol appealed to the NLRC. In its decision promulgated on March 30, 2005,[11] the NLRC affirmed the labor
arbiters ruling. It found that Amular was unfairly treated and subjected to discrimination because he was the
only one served with the notice to explain and placed under preventive suspension; his co-employee Ducay
who was also involved in the incident was not. Technol moved for reconsideration, but the NLRC denied the
motion in a resolution rendered on May 30, 2007.[12] Technol thereafter sought relief from the CA through a
petition for certiorari under Rule 65 of the Rules of Court.[13]

THE CA DECISION

In its decision promulgated on November 18, 2008, the CA found no grave abuse of discretion on the part of
the NLRC when it affirmed the labor arbiters ruling that Amular was illegally dismissed. While the appellate
court noted that Amular was dismissed on the ground of serious misconduct, a just cause for employee
dismissal under the Labor Code,[14] it opined that Technol failed to comply with the jurisprudential guidelines
that misconduct warranting a dismissal: (1) must be serious; (2) must relate to the performance of the
employees duties; and (3) must show that the employee has become unfit to continue working for the
employer.[15]

The appellate court pointed out that the mauling incident occurred outside the company premises and after
office hours; it did not in any manner disrupt company operations nor pose a threat to the safety or peace of
mind of Technol workers; neither did it cause substantial prejudice to the company. It explained that although it
was not condoning Amulars misconduct, it found that the penalty of dismissal imposed by Technol on Amular
was too harsh and evidently disproportionate to the act committed.[16] The CA denied the motion for
reconsideration Technol subsequently filed;[17] hence, the present petition.[18]

THE PETITION

Technol posits that the CA gravely erred in ruling that Amular was illegally dismissed, contending that Amular
was discharged for violation of Section 1-k of its HRD Manual which penalizes the commission of a crime
against a co-employee. It submits that Section 1-k of the HRD Manual is a reasonable company rule issued
pursuant to its management prerogative. It maintains that the case should have been examined from the
perspective of whether the company rule is reasonable and not on the basis of where and when the act was
committed, or even whether it caused damage to the company. It adds that the manual does not distinguish
whether the crime was committed inside or outside work premises or during or after office hours. It insists that
if the rule were otherwise, any employee who wishes to harm a co-employee can just wait until the co-
employee is outside the company premises to inflict harm upon him, and later argue that the crime was
committed outside work premises and after office hours. It submits that the matter assumes special and utmost
significance in this case because Amular inflicted physical injuries on a supervisor. In any event, Technol
argues that even if the misconduct was committed outside company premises, the perpetrator can still be
disciplined as long as the offense was work-related, citing Oania v. NLRC[19] and Tanala v. NLRC[20] in support
of its position.

Technol bewails the CAs appreciation of the implication of Amulars misconduct in the workplace, especially the
courts observation that it did not cause damage to the company because it did not disrupt company operation,
that it did not create a hostile environment inside the company, and that the fight was nipped in the bud by the
21
timely intervention of those who saw the incident.[21] Technol insists that it had to order Amulars dismissal in
order to uphold the integrity of the company rules and to avoid the erosion of discipline among its
employees. Also, it disputes the CAs conclusion that the fact that Amulars liability should be mitigated because
the fight was nipped in the bud. It submits that Mendoza had already sustained grave injuries when the
mauling was stopped.

Further, Technol maintains that the CA gravely erred in going beyond the issues submitted to it, since the
NLRC decision only declared Amulars dismissal illegal on the ground that he was the only one subjected to
disciplinary action and that the company merely relied on the written statements of Amulars co-employees.

On the rejection by the CA of the statements of Amulars co-employees regarding the incident, Technol
contends that the statements of the witnesses, together with Amulars admission, constitute substantial
evidence of guilt. It points out that the statement of Mendoza on the matter submitted during the company
investigation and before the labor arbiter was not a stand alone statement; Mendozas statement was
corroborated by the statements of Rogelio R. Garces and Mary Ann Palma, verified under oath in the reply[22] it
submitted to the arbiter. The statements were all in their handwriting, indicating that they were not pro forma or
prepared on command; a medical certificate[23] and a barangay report[24] were likewise submitted.

Technol likewise disputes the NLRCs conclusion that Amular was discriminated against and unfairly treated
because he was the only one preventively suspended after the mauling incident. It maintains that from the
records of the case and as admitted by Amular himself in his position paper,[25] his co-employee Ducay was
also preventively suspended.[26] That Mendoza was not similarly placed under preventive suspension was
considered by Technol as an exercise of its management prerogative, since the circumstances surrounding the
incident indicated the existence of a reasonable threat to the safety of Amulars co-employees and that
Mendoza appeared to be the victim of Amulars and Ducays assault.

THE CASE FOR AMULAR In his Comment filed on August 12, 2009,[27] Amular asks that the petition be
dismissed for utter lack of merit. He admits that the mauling incident happened, but claims however that on
April 18, 2002, the Technols management called Mendoza, Ducay, and him to a meeting, asked them to
explain their sides and thereafter requested them to settle their differences; without hesitation, they agreed to
settle and even shook hands afterwards. He was therefore surprised that on May 18, 2002, he received a
memorandum from Technols HRD charging him and his co-employee Ducay for the incident. Without waiting
for an explanation, Technols management placed him under preventive suspension, but not Ducay. Adding
insult to injury, when Amular followed up his case while on preventive suspension, he was advised by the HRD
manager to simply resign and accept managements offer of P22,000.00, which offer was reiterated during the
mandatory conference before the labor arbiter.

Amular particularly laments that his employment was terminated while the constructive dismissal case he filed
against the company was still pending. He posits that his employment was terminated first before he was
informed of the accusations leveled against him an indication of bad faith on the part of Technol.

Amular asks: if it were true that the mauling incident was a serious offense under company policy, why did it
take Technol a month to give him notice to explain the mauling incident? He submits that the memorandum
asking him to explain was a mere afterthought; he was dismissed without giving him the benefit to be informed
of the true nature of his offense, thus denying him his right to be heard.

Finally, Amular questions the propriety of the present petition contending that it only raises questions of fact, in
contravention of the rule that only questions of law may be raised in a petition for review on certiorari.[28] He
points out that the findings of facts of the labor tribunals and the CA are all the same and therefore must be
given respect, if not finality.[29]

THE RULING OF THE COURT

22
The Procedural Issue

We find no procedural impediment to the petition. An objective reading of the petition reveals that Technol
largely assails the correctness of the conclusions drawn by the CA from the set of facts it considered. The
question therefore is one of law and not of fact, as we ruled in Cucueco v. Court of Appeals.[30] Thus, while
there is no dispute that a fight occurred between Amular and Ducay, on the one hand, and Mendoza, on the
other, the CA concluded that although Amular committed a misconduct, it failed to satisfy jurisprudential
standards to qualify as a just cause for dismissal the conclusion that Technol now challenges. We see no legal
problem, too, in wading into the factual records, as the tribunals below clearly failed to properly consider the
evidence on record.This is grave abuse of discretion on the part of the labor tribunals that the CA failed to
appreciate.

The Merits of the Case

The CA misappreciated the true nature of Amulars involvement in the mauling incident. Although it
acknowledged that Amular committed a misconduct, it did not consider the misconduct as work-related and
reflective of Amulars unfitness to continue working for Technol. The appellate courts benign treatment of
Amulars offense was based largely on its observation that the incident happened outside the company
premises and after working hours; did not cause a disruption of work operations; and did not result in a hostile
environment in the company. Significantly, it did not condone Amulars infraction, but it considered that Amulars
dismissal was a harsh penalty that is disproportionate with his offense. It found support for this liberal view
from the pronouncement of the Court in Almira v. B.F. Goodrich Philippines, Inc.,[31] that where a penalty less
punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a
consequence so severe.

The record of the case, however, gives us a different picture. Contrary to the CAs perception, we find a
work-connection in Amular's and Ducays assault on Mendoza. As the CA itself noted,[32] the underlying reason
why Amular and Ducay confronted Mendoza was to question him about his report to De Leon Technols PCD
assistant supervisor regarding the duos questionable work behavior. The motivation behind the confrontation,
as we see it, was rooted on workplace dynamics as Mendoza, Amular and Ducay interacted with one another
in the performance of their duties.

The incident revealed a disturbing strain in Amular's and Ducays characters the urge to get even for a
perceived wrong done to them and, judging from the circumstances, regardless of the place and time. The
incident could very well have happened inside company premises had the two employees found time to
confront Mendoza in the workplace as they intimated in their written statements.[33]Having been the subject of a
negative report regarding his work must have rankled on Amular that he resolved to do something about it;
thus, he confronted Mendoza.

From the records, Ducay appeared to have cooperated with Amular in the violent confrontation
with Mendoza. Ducay, however, resigned on June 7, 2002 a week before the filing of the complaint.[34] Hence,
Technol did not act against him a move that is within its prerogative to make.

In an obvious effort to mitigate his involvement in the mauling incident, Amular claimed in the administrative
proceedings that while he and Ducay were walking around the shopping mall in Balibago, Sta. Rosa, Laguna,
they incidentally saw their co-employee Mendoza with whom they wanted to clear some personal
matters.[35] We find this claim a clear distortion of what actually happened. Again, based on their written
statements,[36] Amular and Ducay purposely set out for the Balibago commercial area on April 16, 2002 looking
for Mendoza. It was not an incidental or casual encounter. They sought Mendoza out and confronted him
regarding what they perceived as Mendozas negative attitude towards them
or pamamarako as Mendoza described it.[37]Considering the subject Amular and Ducay raised with Mendoza, it
is not surprising that they had a heated verbal exchange (mostly between Amular and Mendoza) that
deteriorated into a fistcuff fight, with Mendoza at the losing end as he suffered injuries from the blows he
received
23
Amular and Ducay point to Mendoza as the proximate cause of the fight because he challenged them to a one-
on-one (isa-isa lang) bout.[38] Looking back at the reason why Amular and Ducay were at the mall in the first
place, this attributed causation hardly makes sense. To reiterate, they were purposely there to
confront Mendoza about their work-related problem. They waited for him at the place where they expected him
to be. When Mendoza appeared, they accosted him and put into motion the entire sorry incident.

Under these circumstances, Amular undoubtedly committed a misconduct or exhibited improper behavior that
constituted a valid cause for his dismissal under the law[39] and jurisprudential standards.[40] The circumstances
of his misdeed, to our mind, rendered him unfit to continue working for Technol; guilt is not diminished by his
claim that Technols management called the three of them to a meeting, and asked them to explain their sides
and settle their differences, which they did.[41] Mendoza significantly denied the alleged settlement, maintaining
that while they were summoned by De Leon after the incident, he could not shake hands and settle with
Amular and Ducay since they did not even apologize or ask forgiveness for what they did.[42] We do not
find Mendozas denial of Amulars claim unusual as Mendoza would not have stood his ground in this case if a
settlement had previously been reached.That a meeting had taken place does not appear disputed, but a
settlement cannot be inferred simply because a meeting took place.

Neither do we believe that Amular was discriminated against because he was not the only one preventively
suspended. As the CA itself acknowledged, Ducay received his notice of preventive suspension/notice of
charge[43] on May 19, 2002 while Amular received his on May 21, 2002. These notices informed them that they
were being preventively suspended for 30 days from May 19, 2002 to June 17, 2002 for Ducay, and May 21,
2002 for Amular.[44]

Thus, Amular was not illegally dismissed; he was dismissed for cause.

The Due Process Issue The labor arbiter ruled that Technol failed to afford Amular procedural due process,
since he was not able to present his side regarding the incident; at the time he was called to a hearing, he had
already filed the illegal dismissal complaint.[45] The NLRC, on the other hand, held that the memorandum
terminating Amulars employment was a mere formality, an afterthought designed to evade company liability
since Amular had already filed an illegal dismissal case against Technol.[46]

We disagree with these conclusions. The notice of preventive suspension/notice of discharge served on
Amular and Ducay required them to explain within forty-eight (48) hours why no disciplinary action should be
taken against them for their involvement in the mauling incident.[47] Amular submitted two written
statements: the first received by the company on May 19, 2002[48] and the other received on May 20,
2002.[49] On June 8, 2002, Technol management sent Amular a memorandum informing him of an
administrative hearing on June 14, 2002 at 10:00 a.m., regarding the charges against him. [50] At the bottom left
hand corner of the memorandum, the following notation appears: accept the copy of notice but refused to
receive, he will study first. A day before the administrative hearing or on June 13, 2002, Amular filed the
complaint for illegal suspension/dismissal[51] and did not appear at the administrative hearing. On July 4, 2002,
the company sent Amular a notice of dismissal.[52]

What we see in the records belie Amulars claim of denial of procedural due process. He chose not to present
his side at the administrative hearing. In fact, he avoided the investigation into the charges against him by filing
his illegal dismissal complaint ahead of the scheduled investigation. Under these facts, he was given the
opportunity to be heard and he cannot now come to us protesting that he was denied this opportunity. To
belabor a point the Court has repeatedly made in employee dismissal cases, the essence of due process is
simply an opportunity to be heard; it is the denial of this opportunity that constitutes violation of due process of
law.[53]

In view of all the foregoing, we find the petition meritorious.

24
WHEREFORE, premises considered, we hereby GRANT the petition. The assailed decision and resolution of
the Court of Appeals are REVERSED and SET ASIDE. The complaint for illegal dismissal is DISMISSED for
lack of merit. Costs against respondent AMULAR. SO ORDERED.

5. SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN), Petitioner, versus


HON. VOLUNTARY ARBITRATORBUENAVENTURA C. MAGSALIN and HOTEL ENTERPRISES OF THE
PHILIPPINES, INC., Respondents
G.R. No. 164939 G.R. No. 172303 June 6, 2011

VILLARAMA, JR., J.:

Before this Court are two consolidated petitions filed by petitioner Samahan ng mga Manggagawa sa Hyatt-
NUWHRAIN-APL under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The first petition, docketed
as G.R. No. 164939, assails the Resolutions dated October 3, 2003[1] and August 13, 2004[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 78364, which dismissed petitioners petition for review at the CA for being the
wrong remedy. The second petition, docketed as G.R. No. 172303, assails the Decision[3]dated December 16,
2005 and Resolution[4] dated April 12, 2006 of the CA in CA-G.R. SP No. 77478, modifying the judgment of the
Voluntary Arbitrator in NCMB-NCR-CRN-07-008-01.

Petitioner Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL is a duly registered union and the
certified bargaining representative of the rank-and-file employees of Hyatt Regency Manila, a five-star hotel
owned and operated by respondent Hotel Enterprises of the Philippines, Inc. On January 31, 2001, Hyatts
General Manager, David C. Pacey, issued a Memorandum[5] informing all hotel employees that hotel security
have been instructed to conduct a thorough bag inspection and body frisking in every entrance and exit of the
hotel. He enjoined employees to comply therewith. Copies of the Memorandum were furnished petitioner.

On February 3, 2001, Angelito Caragdag, a waiter at the hotels Cafe Al Fresco restaurant and a director of the
union, refused to be frisked by the security personnel. The incident was reported to the hotels Human
Resources Department (HRD), which issued a Memorandum[6] to Caragdag on February 5, 2001, requiring him
to explain in writing within forty-eight (48) hours from notice why no disciplinary action should be taken against
him. The following day, on February 6, 2001, Caragdag again refused to be frisked by the security
personnel. Thus, on February 8, 2001, the HRD issued another Memorandum[7] requiring him to explain.

On February 14, 2001, the HRD imposed on Caragdag the penalty of reprimand for the February 3,
2001 incident, which was considered a first offense, and suspended him for three days for the February 6,
2001 incident, which was considered as a second offense.[8] Both penalties were in accordance with the hotels
Code of Discipline.

Subsequently, on February 22, 2001, when Mike Moral, the manager of Hyatts Cafe Al Fresco and Caragdags
immediate superior, was about to counsel two staff members, Larry Lacambacal and Allan Alvaro, at the
training room, Caragdag suddenly opened the door and yelled at the two with an enraged look. In a disturbing
voice he said, Ang titigas talaga ng ulo nyo. Sinabi ko na sa inyo na huwag kayong makikipagusap sa
management habang ongoing pa ang kaso! (You are very stubborn. I told you not to speak to management
while the case is ongoing!) Moral asked Caragdag what the problem was and informed him that he was simply
talking to his staff. Moral also told Caragdag that he did not have the right to interrupt and intimidate him during
his counseling session with his staff.

On February 23, 2001, Moral issued a Memorandum[9] requiring Caragdag to explain his actions in the training
room. Caragdag submitted his written explanation on February 25, 2001[10] narrating that he was informed by
someone that Lacambacal and Alvaro were requesting for his assistance because Moral had invited them to
the training room. Believing that he should advise the two that they should be accompanied by a union officer
to any inquisition, he went to the training room. However, before he could enter the door, Moral blocked
him. Thus, he told Lacambacal and Alvaro that they should be assisted by a union representative before giving
25
any statement to management. Caragdag also prayed that Moral be investigated for harassing union officers
and union members.

On February 28, 2001, Moral found the explanations unsatisfactory. In a Memorandum[11] issued on the same
date, Moral held Caragdag liable for Offenses Subject to Disciplinary Action (OSDA) 3.01 of the hotels Code of
Discipline, i.e., threatening, intimidating, coercing, and provoking to a fight your superior for reasons directly
connected with his discharge of official duty. Thus, Caragdag was imposed the penalty of seven days
suspension in accordance with the hotels Code of Discipline.

Still later, on March 2, 2001, Caragdag committed another infraction. At 9:35 a.m. on the said date, Caragdag
left his work assignment during official hours without prior permission from his Department Head. He was
required to submit an explanation, but the explanation[12] he submitted was found unsatisfactory. On March 17,
2001, Moral found Caragdag liable for violating OSDA 3.07, i.e., leaving work assignment during official
working hours without prior permission from the department head or immediate superior, and suspended him
for three days.[13]

Because of the succession of infractions he committed, the HRD also required Caragdag to explain on May 11,
2001 why the hotels OSDA 4.32 (Committing offenses which are penalized with three [3] suspensions during a
12-month period) should not be enforced against him.[14] An investigation board was formed after receipt of
Caragdags written explanation, and the matter was set for hearing on May 19, 2001. However, despite notice
of the scheduled hearing, both Caragdag and the Union President failed to attend.Thereafter, the investigating
board resolved on the said date to dismiss Caragdag for violation of OSDA 4.32.[15] Caragdag appealed but the
investigating board affirmed its resolution after hearing on May 24, 2001.

On June 1, 2001, the hotel, through Atty. Juancho A. Baltazar, sent Caragdag a Notice of Dismissal, [16] the
pertinent portion of which reads:

Based on the findings of the Investigation Board dated May 19, 2001 which was approved by the General
Manager Mr. David Pacey on the same day and which did not merit any reversal or modification after the
hearing on your appeal on May 24, 2001, the penalty of DISMISSAL is therefore affirmed to take effect on
June 1, 2001.

Caragdags dismissal was questioned by petitioner, and the dispute was referred to voluntary arbitration upon
agreement of the parties. On May 6, 2002, the Voluntary Arbitrator rendered a decision,[17] the dispositive
portion of which reads:

WHEREFORE, premises considered, this Arbiter rules that the three separate suspensions of Mr. Caragdag
are valid, his dismissal is legal and OSDA 4.32 of Hyatts Code of Discipline is reasonable.

However, for humanitarian considerations, Hyatt is hereby ordered to grant financial assistance to Mr.
Caragdag in the amount of One Hundred Thousand Pesos (PhP100,000.00).

In finding the three separate suspensions of Caragdag valid, the Voluntary Arbitrator reasoned that the union
officers and members had no right to breach company rules and regulations on security and employee
discipline on the basis of certain suspicions against management and an ongoing CBA negotiation
standoff. The Voluntary Arbitrator also found that when Caragdag advised Lacambacal and Alvaro not to give
any statement, he threatened and intimidated his superior while the latter was performing his duties. Moreover,
there is no reason why he did not arrange his time-off with the Department Head concerned. Thus, Caragdag
was validly dismissed pursuant to OSDA 4.32 of Hyatts Code of Discipline, which states that an employee who
commits three different acts of misconduct within a twelve (12)-month period commits serious misconduct.

Petitioner sought reconsideration of the decision while respondent filed a motion for partial reconsideration.
However, the Voluntary Arbitrator denied both motions on May 26, 2003.[18]

26
On August 1, 2003, petitioner assailed the decision of the Voluntary Arbitrator before the CA in a petition
for certiorari which was docketed as CA-G.R. SP No. 78364.[19] As mentioned at the outset, the CA dismissed
the petition outright for being the wrong remedy.The CA explained:

Rule 43, Section 5 of the 1997 Rules of Civil Procedure explicitly provides that the proper mode of appeal from
judgments, final orders or resolution of voluntary arbitrators is through a Petition for Review which should be
filed within fifteen (15) days from the receipt of notice of judgment, order or resolution of the voluntary
arbitrator.

Considering that petitioner intends this petition to be a Petition for Certiorari, the Court hereby resolves to
dismiss the petition outright for being an improper mode of appeal.

Even if this Court treats the instant petition as a Petition for Review, still the Court has no alternative but to
dismiss the same for having been filed out of time. As admitted by the petitioner it received the Order dated 26
May 2003 denying their motion for reconsideration on 02 June 2003. The fifteen (15) day period within which to
appeal through a Petition for Review is until June 17, 2003. The petitioner filed the present petition on August
1, 2003, way beyond the reglementary period provided for by the Rules.[20]

Petitioner duly filed a motion for reconsideration of the dismissal, but the motion was denied by the CA. Thus,
petitioner filed before this Court a petition for review on certiorari which was docketed as G.R. No. 164939.

In the meantime, on June 30, 2003, respondent also filed a petition for review[21] with the CA on the ground that
the Voluntary Arbitrator committed a grievous error in awarding financial assistance to Caragdag despite his
finding that the dismissal due to serious misconduct was valid. On December 16, 2005, the CA promulgated a
decision in CA-G.R. SP. No. 77478 as follows:

WHEREFORE, the Decision dated May 6, 2002 of Voluntary Arbitrator Buenaventura C. Magsalin is
AFFIRMED with MODIFICATION by DELETING the award of financial assistance in the amount of
P100,000.00 to Angelito Caragdag.

SO ORDERED.[22]

In deleting the award of financial assistance to Caragdag, the CA cited the case of Philippine Commercial
International Bank v. Abad,[23] which held that the grant of separation pay or other financial assistance to an
employee dismissed for just cause is based on equity and is a measure of social justice, awarded to an
employee who has been validly dismissed if the dismissal was not due to serious misconduct or causes that
reflected adversely on the moral character of the employee. In this case, the CA agreed with the findings of the
Voluntary Arbitrator that Caragdag was validly dismissed due to serious misconduct. Accordingly, financial
assistance should not have been awarded to Caragdag. The CA also noted that it is the employers prerogative
to prescribe reasonable rules and regulations necessary or proper for the conduct of its business or concern, to
provide certain disciplinary measures to implement said rules and to ensure compliance therewith.

Petitioner sought reconsideration of the decision, but the CA denied the motion for lack of merit. Hence,
petitioner filed before us a petition for review on certiorari docketed as G.R. No. 172303.

Considering that G.R. Nos. 164939 and 172303 have the same origin, involve the same parties, and raise
interrelated issues, the petitions were consolidated.

Petitioner raises the following issues:

In G.R. No. 164939

27
THE COURT OF APPEALS ERRED IN DISMISSING OUTRIGHT THE PETITION FOR CERTIORARI ON
THE GROUND THAT THE SAME IS AN IMPROPER MODE OF APPEAL.[24]

In G.R. No. 172303

THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF FINANCIAL ASSISTANCE IN THE
AMOUNT OF P100,000.00 TO ANGELITO CARAGDAG.[25]

The issues for our resolution are thus two-fold: first, whether the CA erred in dismissing outright the petition
for certiorari filed before it on the ground that the same is an improper mode of appeal; and second, whether
the CA erred in deleting the award of financial assistance in the amount of P100,000.00 to Caragdag.

On the first issue, petitioner argues that because decisions rendered by voluntary arbitrators are issued under
Title VII-A of the Labor Code, they are not covered by Rule 43 of the 1997 Rules of Civil Procedure, as
amended, by express provision of Section 2 thereof. Section 2, petitioner points out, expressly provides that
Rule 43 shall not apply to judgments or final orders issued under the Labor Code of the Philippines. Hence, a
petition for certiorari under Rule 65 is the proper remedy for questioning the decision of the Voluntary
Arbitrator, and petitioner having availed of such remedy, the CA erred in declaring that the petition was filed out
of time since the petition was filed within the sixty (60)-day reglementary period.

On the other hand, respondent maintains that the CA acted correctly in dismissing the petition for certiorari for
being the wrong mode of appeal. It stresses that Section 1 of Rule 43 clearly states that it is the governing rule
with regard to appeals from awards, judgments, final orders or resolutions of voluntary arbitrators. Respondent
contends that the voluntary arbitrators authorized by law include the voluntary arbitrators appointed and
accredited under the Labor Code, as they are considered as included in the term quasi-judicial
instrumentalities.

Petitioners arguments fail to persuade.

In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,[26]we repeated the


well-settled rule that a decision or award of a voluntary arbitrator is appealable to the CA via petition for review
under Rule 43. We held that:

The question on the proper recourse to assail a decision of a voluntary arbitrator has already been settled
in Luzon Development Bank v. Association of Luzon Development Bank Employees, where the Court held that
the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the
Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95 (now
embodied in Rule 43 of the 1997 Rules of Civil Procedure), just like those of the quasi-judicial agencies,
boards and commissions enumerated therein, and consistent with the original purpose to provide a uniform
procedure for the appellate review of adjudications of all quasi-judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia v. Court of
Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the Court held that notwithstanding Section
2 of Rule 43, the ruling in Luzon Development Bank still stands. The Court explained, thus:

The provisions may be new to the Rules of Court but it is far from being a new law. Section 2, Rules 42 of the
1997 Rules of Civil Procedure, as presently worded, is nothing more but a reiteration of the exception to the
exclusive appellate jurisdiction of the Court of Appeals, as provided for in Section 9, Batas Pambansa Blg. 129,
as amended by Republic Act No. 7902:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional
Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and
Exchange Commission, the Employees Compensation Commission and the Civil Service Commission, except
28
those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act and
of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.

The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the
decisions of voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit x x x

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended, provide:

SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of Tax
Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency
in the exercise of its quasi-judicial functions. Among these agencies are the x x x, and voluntary
arbitrators authorized by law.

xxxx

SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals within the
period and in the manner therein provided, whether the appeal involves questions of fact, of law, or mixed
questions of fact and law.

SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award,
judgment, final order or resolution, or from the date of its last publication, if publication is required by law for
its effectivity, or of the denial of petitioners motion for new trial or reconsideration duly filed in accordance with
the governing law of the court or agency a quo. x x x. (Emphasis supplied.)

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution denying petitioners motion for
reconsideration, petitioner should have filed with the CA, within the fifteen (15)-day reglementary period, a
petition for review, not a petition for certiorari.

Petitioner insists on a liberal interpretation of the rules but we find no cogent reason in this case to deviate from
the general rule. Verily, rules of procedure exist for a noble purpose, and to disregard such rules in the guise of
liberal construction would be to defeat such purpose. Procedural rules are not to be disdained as mere
technicalities. They may not be ignored to suit the convenience of a party. Adjective law ensures the effective
enforcement of substantive rights through the orderly and speedy administration of justice. Rules are not
intended to hamper litigants or complicate litigation. But they help provide for a vital system of justice where
suitors may be heard following judicial procedure and in the correct forum. Public order and our system of
justice are well served by a conscientious observance by the parties of the procedural rules.[27]

On the second issue, petitioner argues that Caragdag is entitled to financial assistance in the amount
of P100,000 on humanitarian considerations. Petitioner stresses that Caragdags infractions were due to his
being a union officer and his acts did not show moral depravity. Petitioner also adds that, while it is true that
the award of financial assistance is given only for dismissals due to causes specified under Articles 283 and
284 of the Labor Code, as amended, this Court has, by way of exception, allowed the grant of financial
assistance to an employee dismissed for just causes based on equity.

Respondent on the other hand, asserts that the CA correctly deleted the award of financial assistance
erroneously granted to Caragdag considering that he was found guilty of serious misconduct and other acts
adversely reflecting on his moral character.Respondent stresses that Caragdags willful defiance of the hotels
security policy, disrespect and intimidation of a superior, and unjustifiable desertion of his work assignment
during working hours without permission, patently show his serious and gross misconduct as well as amoral
character.[28]

29
Again, petitioners arguments lack merit.

The grant of separation pay or some other financial assistance to an employee dismissed for just causes is
based on equity.[29]In Phil. Long Distance Telephone Co. v. NLRC,[30] we ruled that severance compensation,
or whatever name it is called, on the ground of social justice shall be allowed only when the cause of the
dismissal is other than serious misconduct or for causes which reflect adversely on the employees moral
character. The Court succinctly discussed the propriety of the grant of separation pay in this wise:

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting
on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an
offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not
be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it
is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing
the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that
the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted separation pay even as he is validly dismissed, it is not
unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like
leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any
good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of
the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion
for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity
be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their
hands are clean and their motives blameless and not simply because they happen to be poor. This great
policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like
the workers who have tainted the cause of labor with the blemishes of their own character.[31]

Here, Caragdags dismissal was due to several instances of willful disobedience to the reasonable rules and
regulations prescribed by his employer. The Voluntary Arbitrator pointed out that according to the hotels Code
of Discipline, an employee who commits three different acts of misconduct within a twelve (12)-month period
commits serious misconduct. He stressed that Caragdags infractions were not even spread in a period of
twelve (12) months, but rather in a period of a little over a month. Records show the various violations of the
hotels rules and regulations were committed by Caragdag. He was suspended for violating the hotel policy on
bag inspection and body frisking. He was likewise suspended for threatening and intimidating a superior while
the latter was counseling his staff. He was again suspended for leaving his work assignment without
permission. Evidently, Caragdags acts constitute serious misconduct.

In Piedad v. Lanao del Norte Electric Cooperative, Inc.,[32]we ruled that a series of irregularities when put
together may constitute serious misconduct, which under Article 282 of the Labor Code, as amended, is a just
cause for dismissal.

Caragdags dismissal being due to serious misconduct, it follows that he should not be entitled to financial
assistance. To rule otherwise would be to reward him for the grave misconduct he committed. We must
emphasize that social justice is extended only to those who deserve its compassion.[33]

30
WHEREFORE, the petitions for review on certiorari are DENIED. The October 3, 2003 and August 13,
2004 Court of Appeals Resolutions in CA-G.R. SP No. 78364, as well as the Court of Appeals December 16,
2005 Decision and April 12, 2006 Resolution in CA-G.R. SP No. 77478, are AFFIRMED and UPHELD.

With costs against the petitioner. SO ORDERED.

6. SCHOOL OF THE HOLY SPIRIT OF QUEZON CITY and/or SR. CRISPINA A. TOLENTINO,
S.Sp.S., Petitioners, versus CORAZON P. TAGUIAM, Respondent
G.R. No. 165565 July 14, 2008

QUISUMBING, J.:

This petition assails the Decision[1] dated June 7, 2004 of the Court of Appeals in CA-G.R. SP No. 81480,
which reversed the Resolution[2] dated September 20, 2002 of the National Labor Relations Commission
(NLRC) in NLRC NCR CA No. 031627-02. The NLRC had affirmed the Decision[3] dated March 26, 2002 of the
Labor Arbiter dismissing respondents complaint for illegal dismissal. This petition likewise assails the
Resolution[4] dated September 30, 2004 of the Court of Appeals denying petitioners motion for reconsideration.

The antecedent facts are as follows:

Respondent Corazon P. Taguiam was the Class Adviser of Grade 5-Esmeralda of the petitioner, School of the
Holy Spirit of Quezon City. On March 10, 2000, the class president, wrote a letter[5] to the grade school
principal requesting permission to hold a year-end celebration at the school grounds. The principal authorized
the activity and allowed the pupils to use the swimming pool. In this connection, respondent distributed the
parents/guardians permit forms to the pupils.

Respondent admitted that Chiara Mae Federicos permit form[6] was unsigned. Nevertheless, she concluded
that Chiara Mae was allowed by her mother to join the activity since her mother personally brought her to the
school with her packed lunch and swimsuit.

Before the activity started, respondent warned the pupils who did not know how to swim to avoid the deeper
area. However, while the pupils were swimming, two of them sneaked out. Respondent went after them to
verify where they were going.

Unfortunately, while respondent was away, Chiara Mae drowned. When respondent returned, the maintenance
man was already administering cardiopulmonary resuscitation on Chiara Mae. She was still alive when
respondent rushed her to the GeneralMalvar Hospital where she was pronounced dead on arrival.

On May 23, 2000, petitioners issued a Notice of Administrative Charge[7] to respondent for alleged gross
negligence and required her to submit her written explanation. Thereafter, petitioners conducted a clarificatory
hearing which respondent attended. Respondent also submitted her Affidavit of Explanation.[8]

On July 31, 2000, petitioners dismissed respondent on the ground of gross negligence resulting to loss of trust
and confidence.[9]Meanwhile, Chiara Maes parents filed a P7 Million damage suit against petitioners and
respondent, among others. They also filed against respondent a criminal complaint for reckless imprudence
resulting in homicide.

On July 25, 2001, respondent in turn filed a complaint[10] against the school and/or Sr. Crispina Tolentino for
illegal dismissal, with a prayer for reinstatement with full backwages and other money claims, damages and
attorneys fees.

In dismissing the complaint, the Labor Arbiter declared that respondent was validly terminated for gross
neglect of duty. He opined that Chiara Mae drowned because respondent had left the pupils without any adult
31
supervision. He also noted that the absence of adequate facilities should have alerted respondent before
allowing the pupils to use the swimming pool. The Labor Arbiter further concluded that although respondents
negligence was not habitual, the same warranted her dismissal since death resulted therefrom.

Respondent appealed to the NLRC which, however, affirmed the dismissal of the complaint.

Aggrieved, respondent instituted a petition for certiorari before the Court of Appeals, which ruled in her
favor. The appellate court observed that there was insufficient proof that respondents negligence was both
gross and habitual. The Court of Appeals disposed, thus:

WHEREFORE, the Court hereby GRANTS the petition. The assailed September 20, 2002 Resolution of the
National Labor Relations Commission entitled Corazon Taguiam vs. School of the Holy Spirit and/or Sister
Crispina Tolentino[,] NLRC NCR Case No. 00-07-03877-01[,] NLRC NCR CA No. 031627-02 is
hereby REVERSED and SET ASIDE, and a new one is hereby ENTERED directing the private respondent the
School of the Holy Spirit to:

(1) Pay the petitioner full backwages, plus all other benefits, bonuses and general increases to which she
would have been normally entitled, had she not been dismissed and had she not been forced to stop working
computed up to the finality of this decision;

(2) Pay the petitioner separation pay equivalent to one (1) month for every year of service in addition to full
backwages;

(3) Pay the petitioner an amount equivalent to 10% of the judgment award as attorneys fees;

(4) Pay the cost of this suit.

In this petition, petitioners contend that the Court of Appeals erred in:

REVERSING AND SETTING ASIDE THE DECISION AND RESOLUTION OF THE NATIONAL LABOR
RELATIONS COMMISSION AFFIRMING THE DECISION OF THE LABOR ARBITER DISMISSING THE
COMPLAINT FOR LACK OF MERIT.[12]

Simply stated, the sole issue presented for our resolution is whether respondents dismissal on the ground of
gross negligence resulting to loss of trust and confidence was valid.

The issue of whether a party is negligent is a question of fact. As a rule, the Supreme Court is not a trier of
facts and this applies with greater force in labor cases.[13] However, where the issue is shrouded by a conflict
of factual perception, we are constrained to review the factual findings of the Court of Appeals. In this case, the
findings of facts of the appellate court contradict those of the Labor Arbiter and the NLRC. [14]

Under Article 282[15] of the Labor Code, gross and habitual neglect of duties is a valid ground for an employer
to terminate an employee. Gross negligence implies a want or absence of or a failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting
any effort to avoid them.[16] Habitual neglect implies repeated failure to perform ones duties for a period of time,
depending upon the circumstances.[17]

Our perusal of the records leads us to conclude that respondent had been grossly negligent. First, it is
undisputed that Chiara Maes permit form was unsigned. Yet, respondent allowed her to join the activity
because she assumed that Chiara Maes mother has allowed her to join it by personally bringing her to the
school with her packed lunch and swimsuit.

32
The purpose of a permit form is precisely to ensure that the parents have allowed their child to join the school
activity involved. Respondent cannot simply ignore this by resorting to assumptions. Respondent admitted that
she was around when ChiaraMae and her mother arrived. She could have requested the mother to sign the
permit form before she left the school or at least called her up to obtain her conformity.

Second, it was respondents responsibility as Class Adviser to supervise her class in all activities sanctioned by
the school.[18]Thus, she should have coordinated with the school to ensure that proper safeguards, such as
adequate first aid and sufficient adult personnel, were present during their activity. She should have been
mindful of the fact that with the number of pupils involved, it would be impossible for her by herself alone to
keep an eye on each one of them.

As it turned out, since respondent was the only adult present, majority of the pupils were left unsupervised
when she followed the two pupils who sneaked out. In the light of the odds involved, respondent should have
considered that those who sneaked out could not have left the school premises since there were guards
manning the gates. The guards would not have allowed them to go out in their swimsuits and without any adult
accompanying them. But those who stayed at the pool were put at greater risk, when she left them unattended
by an adult.

Notably, respondents negligence, although gross, was not habitual. In view of the considerable resultant
damage, however, we are in agreement that the cause is sufficient to dismiss respondent. This is not the first
time that we have departed from the requirements laid down by the law that neglect of duties must be both gross
and habitual. In Philippine Airlines, Inc. v. NLRC,[19] we ruled that Philippine Airlines (PAL) cannot be legally
compelled to continue with the employment of a person admittedly guilty of gross negligence in the performance
of his duties although it was his first offense. In that case, we noted that a mere delay on PALsflight schedule due
to aircraft damage entails problems like hotel accommodations for its passengers, re-booking, the possibility of
law suits, and payment of special landing fees not to mention the soaring costs of replacing aircraft parts.[20] In
another case, Fuentes v. National Labor Relations Commission,[21] we held that it would be unfair to compel
Philippine Banking Corporation to continue employing its bank teller. In that case, we observed that although the
tellers infraction was not habitual, a substantial amount of money was lost. The deposit slip had already been
validated prior to its loss and the amount reflected thereon is already considered as current liabilities in the banks
balance sheet.[22] Indeed, the sufficiency of the evidence as well as the resultant damage to the employer should
be considered in the dismissal of the employee. In this case, the damage went as far as claiming the life of a
child.

As a result of gross negligence in the present case, petitioners lost its trust and confidence in respondent. Loss
of trust and confidence to be a valid ground for dismissal must be based on a willful breach of trust and
founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.[23] Otherwise stated, it must rest on substantial grounds and not on the employers arbitrariness,
whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the
employer. It should be genuine and not simulated; nor should it appear as a mere afterthought to justify earlier
action taken in bad faith or a subterfuge for causes which are improper, illegal or unjustified. It has never been
intended to afford an occasion for abuse because of its subjective nature. There must, therefore, be an actual
breach of duty committed by the employee which must be established by substantial evidence.[24]

As a teacher who stands in loco parentis to her pupils, respondent should have made sure that the children
were protected from all harm while in her company.[25] Respondent should have known that leaving the pupils
in the swimming pool area all by themselves may result in an accident. A simple reminder not to go to the
deepest part of the pool[26] was insufficient to cast away all the serious dangers that the situation presented to
the children, especially when respondent knew that Chiara Mae cannot swim.[27] Dismally, respondent created
an unsafe situation which exposed the lives of all the pupils concerned to real danger. This is a clear violation
not only of the trust and confidence reposed on her by the parents of the pupils but of the school itself.

33
Finally, we note that based on the criminal complaint filed by Chiara Maes parents, the Assistant City Prosecutor
found probable cause to indict respondent for the crime of reckless imprudence resulting in homicide. The
Assistant City Prosecutor held that respondent should have foreseen the danger lurking in the waters. By leaving
her pupils in the swimming pool, respondent displayed an inexcusable lack of foresight and precaution.[28] While
this finding is not controlling for purposes of the instant case, this only supports our conclusion that respondent
has indeed been grossly negligent.

All told, there being a clear showing that respondent was culpable for gross negligence resulting to loss of trust
and confidence, her dismissal was valid and legal. It was error for the Court of Appeals to reverse and set
aside the resolution of the NLRC.

WHEREFORE, the petition is GRANTED. The assailed Decision dated June 7, 2004 of the Court of Appeals in
CA-G.R. SP No. 81480 is SET ASIDE. The Resolution dated September 20, 2002 of the National Labor
Relations Commission in NLRC NCR CA No. 031627-02 is REINSTATED. No pronouncement as to costs.SO
ORDERED.

7. BIENVENIDO R. BATONGBACAL, petitioner vs. ASSOCIATED BANK and NATIONAL LABOR


RELATIONS COMMISSION, respondents.
G.R. No. 72977 December 21, 1988

FERNAN, C.J.:

The issue in this petition for certiorari is whether or not an employer bank may legally dismiss its assistant vice-
president for refusal to tender his courtesy resignation which the bank required in line with its reorganization
plan.

Petitioner Bienvenido R. Batongbacal, a lawyer who was admitted to the Bar in 1952, began his banking career
in 1961 as manager of the Second Rizal Development Bank. On November 2, 1966, he transferred to the
Citizens Bank and Trust Company. He was appointed assistant vice-president therein "to assist the Senior
Vice-President as directly in charge of the Loans and Discounts Department" and, concurrently, as acting
manager of the personnel and administration department in "lieu of the Vice-President and Treasurer." 1 Said
appointment was without a definite period.

On October 14, 1975, Citizens Bank and Trust Company merged with the Associated Banking Corporation.
The merged corporate entity later became known as Associated Bank. In the new bank, petitioner resumed his
position as assistant vice-president.

More than six years later or in March, 1982, petitioner learned that the salary and allowances he was receiving
were very much below the standard remuneration of the bank's other assistant vice presidents as in fact they
were even less than those paid for employees holding positions lower than the rank of assistant vice-president.

Consequently, he wrote the bank's board of directors requesting that he be paid "the accrued salary and
allowance arbitrarily withheld from him." 2 He later wrote the board of directors a follow-up letter on November
12, 1982.3 Since his letters were unanswered, on February 4, 1983, petitioner wrote the newly appointed vice-
president for administration about the glaring inequality in the salaries and allowances of the bank's assistant
vice-presidents. Thus, he stated therein that while he was the most senior of them all, he was receiving an
annual salary of P27,000 while the four other assistant vice-presidents were each receiving P42,000, P54,000,
P60,000 and P72,000 annual salaries. 4 Apparently, said letter fell on deaf ears.

Meanwhile, on March 15,1983, the bank's board of directors met and approved the following resolution:

BE IT RESOLVED that the new management be given the necessary flexibility in streamlining the operations
of the Bank and for the purpose it is hereby resolved that the Bank officers at the Head Office and the
34
Branches with corporate rank of Manager and higher be required, as they hereby are required to submit
IMMEDIATELY to the President their courtesy resignations.

IT IS FURTHER RESOLVED to authorize the President as he is hereby authorized to implement this


resolution. 5

Petitioner did not submit his courtesy resignation. On May 3, 1983, he received the following letter:

26 April 1983

Atty. Bienvenido Batongbacal


Acquired Assets Unit
Administrative Division
Present

Dear Atty. Batongbacal:

We have been given the task of advising you that the Board of Directors of our Bank has accepted your
resignation effective immediately.

Therefore, please arrange with the Personnel Administration Unit for the settlement of any accountabilities and
turn over all pending official matters to your respective division/department head as soon as possible.

We wish you all the best in your future endeavors.

Very truly yours,

For the Steering Committee:


(Sgd.)

RAMON F. CHANYUNGCO Exec. Vice-President 6

Shocked by this turn of events, petitioner on the same day wrote the bank's executive vice-president
requesting a reconsideration of the board of director's decision accepting his resignation. He stated therein that
he thought the call for the submission of courtesy resignations was only for erring "loathsome" officers and not
those like him who had served the bank honestly and sincerely for sixteen years; that although he was a
stockholder with the smallest investment in the bank, he had called the attention of higher officers on matters
that are of vital importance to the bank's financial stability; and that should there be evidence of any act of
dishonesty on his part, the bank should so inform him so that he could accordingly submit his voluntary
resignation. 7

Starting May 4, 1983, petitioner was not paid his usual salary and allowance. Nevertheless, he made repeated
requests for the reconsideration of the bank's decision to terminate his employment. His requests were
ignored. Hence, he filed a complaint for illegal dismissal and damages in the arbitration branch of the National
Labor Relations Commission (NLRC).

On January 31, 1984, the labor arbiter upheld the petitioner's arguments and claims in an Order the dispositive
portion of which states:

IN VIEW OF THE FOREGOING, judgment is rendered in the following tenor:

1. Respondent is hereby ordered to reinstate complainant to his former post with full backwages and other
fringe benefits until actually reinstated;
35
2. Respondent should make good the salary differential of complainant computed from his last rate up to
P42,000.00 per annum, the next rate of Asst. Vice President effective on the date said P42,000.00 was given
to the next higher salary rate Asst. Vice President up to the present;

3. Respondent is further ordered to pay the complainant the amount of P500,000.00 moral damages and
P200,000.00 exemplary damages.

4. Respondent is finally ordered to post this decision in at least two conspicous (sic) places in the bank for all
concerned to see, read and be informed for at least two months from receipt.

The bank filed a motion for reconsideration of said order. Its motion having been denied, the bank appealed to
the National Labor Relations Commission (NLRC) which, in its decision of July 12, 1985, ruled in favor of the
legality of petitioner's dismissal from employment. The dispositive portion of said decision states:

WHEREFORE, premises considered, the appealed Decision is as it is hereby SET ASIDE and another one
issued considering the dismissal valid but ordering respondent-appellant to pay complaint-appellee his
accumulative leave credits and separation pay equivalent to one (1) month for every year of service, a period
of at least six (6) months considered as one (1) year, as well as other benefits he is entitled to under existing
policies of respondent-appellant granted to any of its retiring personnel.

The Corporate Auditing Examiner of this Commission is directed to proceed to the premises of respondent-
appellant to compute the amount of accumulative leave credits and termination pay and such other benefits he
is entitled as above-mentioned.

Petitioner's motion for reconsideration of said decision was denied. Hence, the instant petition for certiorari.

We are aware of the circumstances surrounding the dismissal of the petitioner. Private respondent was, since
1981, in the throes of financial reverses due to the Dewey Dee scandal. It was through the infusion of capital
supplied by the Development Bank of the Philippines and the emergency loan provided by the Central Bank
that private respondent was able to redeem itself. Accordingly, to "streamline" its operation, the new
management of the bank called upon all its employees to submit their courtesy resignations and considered all
executive positions vacant. Private respondent claims that those who submitted letters of resignation were
allowed to re-apply for positions where their qualifications were best suited while those who did not submit
such letters were terminated from employment for their alleged deliberate refusal to cooperate in its
rehabilitation. 10

While it may be said that the private respondent's call for courtesy resignations was prompted by its
determination to survive, we cannot lend legality to the manner by which it pursued its goal. By directing its
employees to submit letters of courtesy resignation, the bank in effect forced upon its employees an act which
they themselves should voluntarily do. It should be emphasized that resignation per
se means voluntary relinquishment of a position or office. 11 Adding the word "courtesy" did not change the
essence of resignation. That courtesy resignations were utilized in government reorganization did not give
private respondent the right to use it as well in its own reorganization and rehabilitation plan. There is no
guarantee that all employers will not use it to rid themselves arbitrarily of employees they do not like, in the
guise of "streamlining" its organization. On the other hand, employees would be unduly exposed to outright
termination of employment which is anathema to the constitutional mandate of security of tenure.

Petitioner's dismissal was effected through a letter "accepting" his resignation. Private respondent rationalizes
that this was done, even if petitioner did not actually submit such letter, so as not to jeopardize his chances of
future employment. 12 But it is also clear from its pleadings that private respondent terminated petitioner's
employment for insubordination in view of his failure to comply with the order to submit his letter of courtesy
resignation. We hold, however, that insubordination may not be imputed to one who refused to follow an
unlawful order.

36
Private respondent asserts that petitioner's refusal to submit his letter of courtesy resignation was "sufficient
reason to distrust him." 13 Loss of confidence as a ground for dismissal must be supported by satisfactory
evidence. Even with respect to managerial employees who, under Policy Instructions No. 8, may be dismissed
for lack of confidence, loss of trust must be substantiated and clearly proven. 14

The record fails to show any valid reasons for terminating the employment of petitioner. There are no proofs of
malfeasance or misfeasance committed by petitioner which jeopardized private respondent's interest. The
latter's allegations that petitioner was "purged" because he sabotaged the bank 15 and that he "contributed,
directly or indirectly" to its downfall 16 are mere subjective conclusions unsubstantiated by hard facts. To clothe
with legality petitioner's dismissal for his failure to submit his letter of courtesy resignation is to add a ground
for termination of employment to the provisions of the Labor Code.

However, we agree with the Solicitor General and the NLRC that petitioner is not entitled to an award of the
difference between his actual salary and that received by the assistant vice-president who had been given the
salary next higher to his. There is a semblance of discrimination in this aspect of the bank's organizational set-
up but we are not prepared to preempt the employer's prerogative to grant salary increases to its employees.
In this connection, we may point out that private respondent's claim that it needed to trim down its employees
as a self-preservation measure is belied by the amount of salaries it was giving its other assistant vice-
presidents.

Notwithstanding the foregoing discussion, the Court cannot rule outright in favor of the petitioner. There are
factual issues which must be dealt with below.

A pivotal point to consider is whether petitioner is a managerial or a rank-and-file employee. Petitioner claims
that inspite of his pompous title of assistant vice-president, he is actually a rank-and-file employee. On the
other hand, private respondent asserts that petitioner is a managerial employee because he is "not only a
department/unit head but an assistant vice-president" who is ranked higher than a manager "by any standard"
and therefore, to consider him a rank-and-file employee is "to stretch one's imagination too far." 17

Article 212(k) of the Labor Code defines a managerial employee as "one who is vested with powers or
prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees, or to effectively recommend such managerial actions." The same
article provides that all employees not falling within said definition are considered rank-and-file employees.
Under Policy Instructions No. 8 which was issued by the then Secretary of Labor and which took effect on April
23, 1976, managerial employees are those (1) who have the power to lay down management policies; (2) who
have the power to hire, fire, demote. promote, etc.; and (3) who have the power to recommend effectively (1)
and (2).

With these definitions, a determination of whether petitioner is a managerial employee would have been easy
had the matter been properly threshed out below. The onus of proof on the matter fell on the private
respondent but, as correctly observed by the Solicitor General, it did not present substantial proof that
petitioner is vested with any of the powers and prerogatives of a managerial employee. 18 It merely relied upon
provisions of the bank's amended by-laws specifically Article V, Section 2 and Article VI, Section 5 thereof. 19

The only other evidence on record from which the functions of an assistant vice-president may be gleaned is
the copy of petitioner's original appointment as such. It is stated therein that petitioner would "assist" the vice-
president in the performance of his job. Said function implies that he was not actually a policy-determining
employee but one who had to wait for assignments from his superior. Notwithstanding that, both the labor
arbiter and the NLRC proceeded from the presumption that petitioner was a managerial employee.

A determination of the nature of the functions of an assistant vice-president gains importance in the face of the
variance of causes for the termination of employment ' of rank-and-file managerial employees. Much more so
in the instant petition wherein the parties present contradictory views on the status of petitioner. Of primordial

37
consideration also is the fact that it is the nature of the employee's functions and not the nomenclature or title
given to his job which determines whether the employee has rank-and-file or managerial status. 20

We are aware that to remand this case below would mean further delay in its disposition, particularly as the
petitioner is now around sixty-three years old. However, justice and equity demand that not only the factual
issue of whether or not an assistant vice-president is a managerial employee but also whether or not petitioner
is entitled to an award of moral and exemplary damages, should be considered. Indeed, the proceedings had
below leave much to be desired.

We note with dismay the impracticality of the position paper method of disposing labor cases. As exemplified
by this case, there are instances wherein claims of parties are not properly ventilated because they agree to
dispense with the hearing not knowing that more often than not both of them suffer adverse consequences. In
this case, had the parties agreed to a hearing and the concomitant presentation of evidence, private
respondent could have proven that petitioner was a managerial employee when he was dismissed and
petitioner could have proven the extent of damages he sustained thereby.

WHEREFORE, this case is hereby remanded to the National Labor Relations Commission for determination of
the factual issues of whether petitioner, as assistant vice-president of the respondent bank, is a managerial
employee and whether he is entitled to an award of moral and exemplary damages.

The respondent Commission is ordered to conduct with dispatch a hearing thereon and thereafter, to render a
decision in accordance with the guidelines set herein. This decision is immediately executory. No costs.
SO ORDERED.

8. PHILIPPINE NATIONAL BANK, Petitioner versus DAN PADAO Respondent


G.R. Nos. 180849 and 187143 November 16, 2011

MENDOZA, J.: These are two consolidated petitions for review on certiorari under Rule 45 of the Rules of
Court.

In G.R. No. 180849, petitioner Philippine National Bank (PNB) seeks the reversal of the December 14,
2006 Decision[1] and October 2, 2007 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 76584,
which upheld the ruling of the National Labor Relations Commission, Cagayan de Oro City (NLRC) in its
October 30, 2002 Resolution,[3] reversing the June 21, 2001 Decision[4] of the Executive Labor
Arbiter (ELA) which found the dismissal of respondent Dan Padao (Padao) valid.

In G.R. No. 187143, PNB seeks the reversal of the December 9, 2008 Decision[5] and February 24,
2009 Resolution[6] of the CA in CA-G.R. SP No. 00945, which allowed the execution of the October 30,
2002 NLRC Resolution.

A. G.R. No. 180849

On August 21, 1981, Padao was hired by PNB as a clerk at its Dipolog City Branch. He was later designated
as a credit investigator in an acting capacity on November 9, 1993. On March 23, 1995, he was appointed
regular Credit Investigator III, and was ultimately promoted to the position of Loan and Credit Officer IV.

Sometime in 1994, PNB became embroiled in a scandal involving behest loans. A certain Sih Wat Kai
complained to the Provincial Office of the Commission on Audit (COA) of Zamboanga del Norte that
anomalous loans were being granted by its officers: Assistant Vice President (AVP) and Branch Manager
Aurelio De Guzman (AVP de Guzman), Assistant Department Manager and Cashier Olson Sala (Sala), and
Loans and Senior Credit Investigator Primitivo Virtudazo (Virtudazo).

38
The questionable loans were reportedly being extended to select bank clients, among them Joseph Liong,
Danilo Dangcalan, Jacinto Salac, Catherine Opulentisima, and Virgie Pango. The expos triggered the conduct
of separate investigations by the COA and PNBs Internal Audit Department (IAD) from January to August
1995. Both investigations confirmed that the collateral provided in numerous loan accommodations were
grossly over-appraised. The credit standing of the loan applicants was also fabricated, allowing them to obtain
larger loan portfolios from PNB. These borrowers eventually defaulted on the payment of their loans, causing
PNB to suffer millions in losses.

In August 1995, Credit Investigators Rolando Palomares (Palomares) and Cayo Dagpin (Dagpin) were
administratively charged with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the
Best Interest of the Service, and violation of Republic Act (R.A.) No. 3019 (Anti-Graft and Corrupt Practices
Act), in connection with an anomalous loan granted to the spouses, Jaime and Allyn Lim (the Lims). These
charges, however, were later ordered dropped by PNB, citing its findings that Dagpin and Palomares signed
the Inspection and Appraisal Report (IAR) and the Credit Inspection Report (CIR) in support of the Lims loan
application in good faith, and upon the instruction of their superior officers. PNB also considered using Dagpin
and Palomares as prosecution witnesses against AVP de Guzman, Loan Division Chief Melindo
Bidad (Bidad) and Sala.

The following month, September 1995, administrative charges for Grave Misconduct, Gross Neglect of Duty
and Gross Violations of Bank Rules and Regulations and criminal cases for violation of R.A. No. 3019 were
filed against AVP de Guzman, Sala, Virtudazo, and Bidad. Consequently, they were all dismissed from the
service by PNB in November 1996. Later, Virtudazo was ordered reinstated.

On June 14, 1996, Padao and Division Chief Wilma Velasco (Velasco) were similarly administratively charged
with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to the Best Interest of the
Service, and violation of R.A. No. 3019.

The case against Padao was grounded on his having allegedly presented a deceptively positive status of the
business, credit standing/rating and financial capability of loan applicants Reynaldo and Luzvilla Baluma and
eleven (11) others. It was later found that either said borrowers businesses were inadequate to meet their loan
obligations, or that the projects they sought to be financed did not exist.

Padao was also accused of having over-appraised the collateral of the spouses Gardito and Alma Ajero, the
spouses Ibaba, and Rolly Pango.

On January 10, 1997, after due investigation, PNB found Padao guilty of gross and habitual neglect of duty
and ordered him dismissed from the bank. Padao appealed to the banks Board of Directors. On January 20,
1997, Velasco was also held guilty of the offenses charged against her, and was similarly meted the penalty of
dismissal. Her motion for reconsideration, however, was later granted by the bank, and she was reinstated.

On October 11, 1999, after almost three (3) years of inaction on the part of the Board, Padao instituted a
complaint[7] against PNB and its then AVP, Napoleon Matienzo (Matienzo), with the Labor Arbitration Branch of
the NLRC Regional Arbitration Branch (RAB) No. IX
in Zamboanga City for 1] Reinstatement; 2] Backwages; 3] Illegal Dismissal; and 4] Treachery/Bad Faith and
Palpable Discrimination in the Treatment of Employees with administrative cases. The case was docketed as
RAB 09-04-00098-01.

In a Decision dated June 21, 2001, the ELA found Padaos dismissal valid. Despite the finding of legality, the
ELA still awarded separation pay of one-half (1/2) months pay for every year of service, citing PLDT v. NLRC &
Abucay.[8] The ELA held that in view of the peculiar conditions attendant to Padaos dismissal, there being no
clear conclusive showing of moral turpitude, Padao should not be left without any remedy.

39
Padao appealed to the NLRC, which, in its Resolution[9] dated October 30, 2002, reversed and set aside the
ELA Decision and declared Padaos dismissal to be illegal. He was thereby ordered reinstated to his previous
position without loss of seniority rights and PNB was ordered to pay him full backwages and attorneys fees
equivalent to ten percent (10%) of the total monetary award.

PNBs Motion for Reconsideration[10] was denied by the NLRC in its Resolution[11] dated December 27, 2002.

Aggrieved, PNB filed a petition for certiorari[12] with the CA but it was dismissed in a
Decision[13] dated December 14, 2006. PNB moved for reconsideration[14] but the motion was denied in the CA
Resolution[15] dated October 2, 2007.

B. G.R. No. 187143

During the pendency of G.R. No. 180849 before the Court, the NLRC issued an entry of judgment on
September 22, 2003, certifying that on February 28, 2003, its October 30, 2002 Resolution had become final
and executory.[16]

On December 5, 2003, Padao filed a Motion for Execution of the NLRC Resolution dated October 30, 2002.
This was granted by the ELA on April 22, 2004.

On May 4, 2004, PNB and AVP Matienzo sought reconsideration of the ELAs Order based on the following
grounds: (1) the October 30, 2003 Resolution was inexistent and, thus, could not become final and executory;
and (2) Padaos motion for execution was granted without hearing.

Acting thereon, the ELA denied PNBs motion for reconsideration on the ground that motions for
reconsideration of an order are prohibited under Section 19, Rule V of the NLRC Rules of Procedure.

Thus, Padao filed his Motion to Admit Computation[17] dated July 14, 2004. In its Comment,[18] PNB alleged that
the computation was grossly exaggerated and without basis, and prayed for a period of thirty (30) days within
which to submit its counter-computation since the same would come from its head office in Pasay City.

On September 22, 2004, the ELA issued the Order[19] granting Padaos Motion to Admit Computation. The
order cited PNBs failure to submit its counter-computation within the two extended periods (totaling forty days),
which the ELA construed as a waiver to submit the same. Thus, the ELA ordered the issuance of a writ of
execution for the payment of backwages due to Padao in the amount of ₱2,589,236.21.

In a motion[20] dated September 29, 2004, PNB sought reconsideration of the order with an attached counter-
computation. The ELA denied the same in its Order[21] dated October 20, 2004 on the ground that the motions
for reconsideration of orders and decisions of the Labor Arbiter are prohibited under Section 19, Rule V of the
NLRC Rules of Procedure. The ELA further stated that PNB had been given more than ample opportunity to
submit its own computation in this case, and the belatedly submitted counter-computation of claims could not
be considered. Thus, a writ of execution[22] was issued on October 21, 2004.

On November 11, 2004 and January 19, 2005, PNB filed its Motion to Quash Writ of Execution and its Motion
to Dissolve Alias Writ of Execution, respectively. Both were denied by the ELA in an Order[23] dated February 8,
2005.

On February 18, 2005, PNB filed a Notice of Appeal with Memorandum on Appeal[24] with the NLRC.
On September 20, 2005, however, the NLRC issued a Resolution[25] dismissing the banks appeal. PNBs
Motion for Reconsideration[26] was also denied in the December 21, 2005 Resolution.[27]

Thus, on March 7, 2006, PNB filed a Petition for Certiorari[28] with the CA, assailing the findings of ELA Plagata
and the NLRC.
40
In a Decision[29] dated December 9, 2008, the CA dismissed the petition, and later denied PNBs motion for
reconsideration on February 24, 2009.

ISSUES

In G.R. No. 180849, PNB presents the following Assignment of Errors:[30]

A. THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT THE POSITION OF A CREDIT
INVESTIGATOR IS ONE IMBUED WITH [THE] TRUST AND CONFIDENCE OF THE EMPLOYER.

B. THE COURT OF APPEALS ERRED IN TREATING THE ACT OF FALSIFYING THE CREDIT AND
APPRAISAL REPORTS AND THAT OF MERELY AFFIXING ONES SIGNATURE IN A FALSE REPORT
PREPARED BY ANOTHER AS ONE AND THE SAME DEGREE OF MISCONDUCT WHICH WARRANTS
THE SAME PENALTY.

In G.R. No. 187143, PNB presents the following Assignment of Errors:[31]

THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN THEY INVARIABLY IGNORED
PNBS COUNTER-COMPUTATION AND MERELY RELIED ON RESPONDENT DAN PADAOS SELF-
SERVING COMPUTATION OF HIS MONEY AWARD.

THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN THEY ACCEPTED THE
COMPUTATION OF RESPONDENT PADAO WITHOUT REQUIRING PROOF TO SUPPORT THE SAME.

In G.R. No. 180849, PNB argues that the position of a credit investigator is one reposed with trust and
confidence, such that its holder may be validly dismissed based on loss of trust and confidence. In
disciplining employees, the employer has the right to exercise discretion in determining the individual liability of
each erring employee and in imposing a penalty commensurate with the degree of participation of each. PNB
further contends that the findings of the CA are not in accordance with the evidence on record, thus,
necessitating a review of the facts of the present case by this Court.[32]

On the other hand, Padao counters that local bank policies implemented by the highest-ranking branch officials
such as the assistant vice-president/branch manager, assistant manager/cashier, chief of the loans division
and legal counsel, are presumed to be sanctioned and approved by the bank, and a subordinate employee
should not be faulted for his reliance thereon. He argues that a person who acts in obedience to an order
issued by a superior for some lawful purpose cannot be held liable. PNB is bound by the acts of its senior
officers and he, like his fellow credit investigators, having acted in good faith in affixing his signature on the
reports based on the instruction, order and directive of senior local bank officials, should not be held liable. [33]

Padao also claims that PNB cruelly betrayed him by charging and dismissing him after using him as a
prosecution witness to secure the conviction of the senior bank officials, that he was never part of the
conspiracy, and that he did not derive any benefit from the scheme.[34]

The Courts Ruling

In the 1987 Constitution, provisions on social justice and the protection of labor underscore the importance and
economic significance of labor. Article II, Section 18 characterizes labor as a primary social economic force,
and as such, the State is bound to protect the rights of workers and promote their welfare. Moreover, workers
are entitled to security of tenure, humane conditions of work, and a living wage.[35]

The Labor Code declares as policy that the State shall afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers

41
and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security
of tenure, and just and humane conditions of work.[36]

While it is an employers basic right to freely select or discharge its employees, if only as a measure of self-
protection against acts inimical to its interest,[37] the law sets the valid grounds for termination as well as the
proper procedure to be followed when terminating the services of an employee.[38]

Thus, in cases of regular employment, the employer is prohibited from terminating the services of an employee
except for a just or authorized cause.[39] Such just causes for which an employer may terminate an employee
are enumerated in Article 282 of the Labor Code:

(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 family member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.

Further, due process requires that employers follow the procedure set by the Labor Code:

Art. 277. Miscellaneous provisions.

b. Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of notice
under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires
in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department
of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized
cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend
the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before whom such dispute is pending that the
termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended by
Section 33, Republic Act No. 6715, March 21, 1989)

In this case, Padao was dismissed by PNB for gross and habitual neglect of duties under Article 282 (b) of the
Labor Code.

Gross negligence connotes want of care in the performance of ones duties, while habitual neglect implies
repeated failure to perform ones duties for a period of time, depending on the circumstances.[40] Gross
negligence has been defined as the want or absence of or failure to exercise slight care or diligence, or the
entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid
them.[41]

42
In the case at bench, Padao was accused of having presented a fraudulently positive evaluation of the
business, credit standing/rating and financial capability of Reynaldo and Luzvilla Baluma and eleven other loan
applicants.[42] Some businesses were eventually found not to exist at all, while in other transactions, the
financial status of the borrowers simply could not support the grant of loans in the approved
amounts.[43] Moreover, Padao over-appraised the collateral of spouses Gardito and Alma Ajero, and that of
spouses Ihaba and Rolly Pango.[44]

The role that a credit investigator plays in the conduct of a banks business cannot be overestimated. The
amount of loans to be extended by a bank depends upon the report of the credit investigator on the collateral
being offered. If a loan is not fairly secured, the bank is at the mercy of the borrower who may just opt to have
the collateral foreclosed. If the scheme is repeated a hundredfold, it may lead to the collapse of the bank. In
the case of Sawadjaan v. Court of Appeals,[45] the Court stressed the crucial role that a credit investigator or an
appraiser plays. Thus:

Petitioner himself admits that the position of appraiser/inspector is "one of the most serious [and] sensitive
job[s] in the banking operations." He should have been aware that accepting such a designation, he is obliged
to perform the task at hand by the exercise of more than ordinary prudence. As appraiser/investigator,
the petitioner was expected to conduct an ocular inspection of the properties offered by CAMEC as
collaterals and check the copies of the certificates of title against those on file with the Registry of
Deeds. Not only did he fail to conduct these routine checks, but he also deliberately misrepresented in his
appraisal report that after reviewing the documents and conducting a site inspection, he found the CAMEC
loan application to be in order. Despite the number of pleadings he has filed, he has failed to offer an
alternative explanation for his actions. [Emphasis supplied]

In fact, banks are mandated to exercise more care and prudence in dealing with registered lands:

[B]anks are cautioned to exercise more care and prudence in dealing even with registered lands, than private
individuals, "for their business is one affected with public interest, keeping in trust money belonging to their
depositors, which they should guard against loss by not committing any act of negligence which amounts to
lack of good faith by which they would be denied the protective mantle of the land registration statute Act 496,
extended only to purchasers for value and in good faith, as well as to mortgagees of the same character and
description. It is for this reason that banks before approving a loan send representatives to the premises of the
land offered as collateral and investigate who are the true owners thereof.[46]

Padaos repeated failure to discharge his duties as a credit investigator of the bank amounted to gross and
habitual neglect of duties under Article 282 (b) of the Labor Code. He not only failed to perform what he was
employed to do, but also did so repetitively and habitually, causing millions of pesos in damage to PNB. Thus,
PNB acted within the bounds of the law by meting out the penalty of dismissal, which it deemed appropriate
given the circumstances.

The CA was correct in stating that when the violation of company policy or breach of company rules and
regulations is tolerated by management, it cannot serve as a basis for termination.[47] Such ruling, however,
does not apply here. The principle only applies when the breach or violation is one which neither amounts to
nor involves fraud or illegal activities. In such a case, one cannot evade liability or culpability based on
obedience to the corporate chain of command.

Padao cited Llosa-Tan v. Silahis International Hotel,[48] where the violation of corporate policy was held not per
se fraudulent or illegal. Moreover, the said violation was done in compliance with the apparent lawful orders of
the concerned employees superiors. Management-sanctioned deviations in the said case did not amount to
fraud or illegal activities. If anything, it merely represented flawed policy implementation.

In sharp contrast, Padao, in affixing his signature on the fraudulent reports, attested to the falsehoods
contained therein. Moreover, by doing so, he repeatedly failed to perform his duties as a credit investigator.

43
Further, even Article 11(6) of the Revised Penal Code requires that any person, who acts in obedience to an
order issued by a superior does so for some lawful purpose in order for such person not to incur criminal
liability. The succeeding article exempts from criminal liability any person who acts under the compulsion of
an irresistible force (Article 12, paragraph 6) or under the impulse of an uncontrollable fear of an equal or
greater injury (Article 12, paragraph 7).

Assuming solely for the sake of argument that these principles apply by analogy, even an extremely liberal
interpretation of these justifying or exempting circumstances will not allow Padao to escape liability.

Also, had Padao wanted immunity in exchange for his testimony as a prosecution witness, he should have
demanded that there be a written agreement. Without it, his claim is self-serving and unreliable.

That there is no proof that Padao derived any benefit from the scheme is immaterial.[49] What is crucial is that
his gross and habitual negligence caused great damage to his employer. Padao was aware that there was
something irregular about the practices being implemented by his superiors, but he went along with, became
part of, and participated in the scheme.It does not speak well for a person to apparently blindly follow his
superiors, particularly when, with the exercise of ordinary diligence, one would be able to determine that what
he or she was being ordered to do was highly irregular, if not illegal, and would, and did, work to the great
disadvantage of his or her employer.

PNB, as an employer, has the basic right to freely select and discharge employees (subject to the Labor Code
requirements on substantive and procedural due process), if only as a measure of self-protection against acts
inimical to its interests.[50] It has the authority to impose what penalty it deems sufficient or commensurate to an
employees offense. Having satisfied the requirements of procedural and substantive due process, it is thus left
to the discretion of the employer to impose such sanction as it sees befitting based on the circumstances.

Finally, Padao claims that he should be accorded the same treatment as his co-employees.[51] As the ELA,
however, correctly observed:

[A]s pointed out by the respondents, the case of the complainant was different, and his culpability, much more
than his aforementioned co-employees. In the case of Palomares and Dagpin, they were involved in only one
case of over-appraisal of collateral in the loan account of the spouses Jaime Lim and Allyn Tan (Respondents
Comments, p. 1), but in the case of complainant, his over-appraisals involved three (3) loan accounts and
amounting to ₱9,537,759.00 (Ibid.), not to mention that he also submitted falsified Credit Investigation
Reports for the loan accounts of seven (7) other borrowers of PNB (Ibid., pp. 1-2).

The number of over-appraisals (3) and falsified credit investigation reports (7) or countersigned by the
complainant indicates habituality, or the propensity to do the same. The best that can be said of his acts
is the lack of moral strength to resist the repeated commission of illegal or prohibited acts in loan transactions.
He thus cannot interpose undue pressure or coercion exerted upon [him] by his superiors, to absolve himself of
liability for his signing or countersigning the aforementioned falsified reports. It may have been allowable or
justifiable for him to give in to one anomalous loan transaction report, but definitely not for ten (10) loan
accounts. It is axiomatic that obedience to ones superiors extends only to lawful orders, not to unlawful orders
calling for unauthorized, prohibited or immoral acts to be done.

In the case of Wilma Velasco, PNB did not pursue legal action and even discontinued the administrative case
filed against her because, according to PNB, she appeared to have been the victim of the misrepresentations
and falsifications of the credit investigation and appraisal reports of the complainant upon which she had to
reply in acting on loan applications filed with the PNB and for which such reports were made. She was not
obliged to conduct a separate or personal appraisal of the properties offered as collaterals, or separate credit
investigations of the borrowers of PNB. These functions pertained to PNB inspectors/credit investigators, like
the complainant. Unfortunately, the latter was derelict in the performance of those duties, if he did not
deliberately misuse or abuse such duties.

44
As can be seen, therefore, the complainant and Wilma Velasco did not stand on the same footing relative to
their involvement or participation in the anomalous loan transactions earlier mentioned. Therefore, PNB cannot
be faulted for freeing her from liability and punishment, while dismissing the complainant from service.
[Emphases supplied]

Given the above ruling of the Court in G.R. No. 180849, the ruling of the CA in CA-G.R. SP No. 00945, an
action stemming from the execution of the decision in said case, must perforce be reversed.

However, Padao is not entitled to financial assistance. In Toyota Motor Phils. Corp. Workers Association v.
NLRC,[52] the Court reaffirmed the general rule that separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for causes other than serious
misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust,
commission of a crime against the employer or his family, or those reflecting on his moral
character. These five grounds are just causes for dismissal as provided in Article 282 of the Labor Code.

In Central Philippine Bandag Retreaders, Inc. v. Diasnes,[53] cited in Quiambao v. Manila Electric
Company,[54] we discussed the parameters of awarding separation pay to dismissed employees as a measure
of financial assistance:

To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation
pay based on social justice when an employees dismissal is based on serious misconduct or willful
disobedience; gross and habitual neglect of duty; fraud or willfull breach of trust; or commission of a crime
against the person of the employer or his immediate family grounds under Art. 282 of the Labor Code that
sanction dismissal of employees. They must be judicious and circumspect in awarding separation pay or
financial assistance as the constitutional policy to provide full protection to labor is not meant to be an
instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass
us from sustaining the employers when they are right, as here. In fine, we should be more cautions in awarding
financial assistance to the undeserving and those who are unworthy of the liberality of the law.[55] [Emphasis
original. Underscoring supplied]

Clearly, given the Courts findings, Padao is not entitled to financial assistance.

WHEREFORE, the petitions in G.R. No. 180849 and G.R. No. 187143 are GRANTED. In G.R. No. 180849, the
December 14, 2006 Decision and the October 2, 2007 Resolution of the Court of Appeals in CA-G.R. SP No.
76584 are REVERSED and SET ASIDE.

In G.R. No. 187143, the December 9, 2008 Decision and the February 24, 2009 Resolution of the Court of
Appeals in CA-G.R. SP No. 00945 are REVERSED and SET ASIDE.

The June 21, 2001 Decision of the Executive Labor Arbiter is hereby ordered REINSTATED, with
the MODIFICATION that the award of financial assistance is DELETED. SO ORDERED.

9. HOSPITAL MANAGEMENT SERVICES, INC. - MEDICALCENTER MANILA Petitioner,


versus HOSPITAL MANAGEMENT SERVICES, INC. MEDICALCENTER MANILA EMPLOYEES
ASSOCIATION-AFW and EDNA R. DE CASTRO Respondents
G.R. No. 176287 January 31, 2011

PERALTA, J.:

Before this Court is a petition for review on certiorari seeking to set aside the Decision[1] dated May 24, 2006
and Resolution[2]dated January 10, 2007 of the Court of Appeals (CA), Special First Division, in CA-G.R. SP
No. 73189, entitled Hospital Management Services, Inc.-Medical Center Manila Employees Association-AFW
and Edna R. De Castro v. National Labor Relations Commission, Hospital Management Services, Inc.-Medical
45
Center Manila and Asuncion Abaya-Morido, which reversed and set aside the Decision[3] dated February 28,
2002 of the National Labor Relations Commission (NLRC), Second Division, in NLRC NCR No. 00-07-07716-
99 (CA No. 027766-01), and its Resolution[4] dated May 31, 2002. The assailed CA decision ordered petitioner
Hospital Management Services, Inc.-Medical Center Manila to reinstate respondent Edna R. De Castro to her
former position without loss of seniority rights or by payroll reinstatement, pursuant to the Labor Arbiter's
Decision dated January 18, 2001, but with payment of full backwages and other benefits or their monetary
equivalent, computed from the expiration of the 14-day suspension period up to actual reinstatement.

Respondent De Castro started working as a staff nurse at petitioner hospital since September 28, 1990, until
she was dismissed on July 20, 1999.

Between 2:00 a.m. to 3:00 a.m. of March 24, 1999, while respondent De Castro and ward-clerk orientee Gina
Guillergan were at the nurse station on night duty (from 10:00 p.m. of March 23, 1999 to 6:00 a.m. of March
24, 1999), one Rufina Causaren, an 81-year-old patient confined at Room 724-1 of petitioner hospital for
gangrenous wound on her right anterior leg and right forefoot and scheduled for operation on March 26, 1999,
fell from the right side of the bed as she was trying to reach for the bedpan. Because of what happened, the
niece of patient Causaren staying in the room was awakened and she sought assistance from the nurse
station.Instead of personally seeing the patient, respondent De Castro directed ward-clerk orientee Guillergan
to check the patient. The vital signs of the patient were normal. Later, the physician on duty and the nursing
staff on duty for the next shift again attended to patient Causaren

Chief Nurse Josefina M. Villanueva informed Dr. Asuncion Abaya-Morido, president and hospital director,
about the incident and requested for a formal investigation. On May 11, 1999, the legal counsel of petitioner
hospital directed respondent De Castro and three other nurses on duty, Staff Nurse Janith V. Paderes and
Nursing Assistants Marilou Respicio and Bertilla T. Tatad, to appear before the Investigation Committee on
May 13, 1999, 2:00 p.m., at the conference room of petitioner hospital. During the committee investigation,
respondent De Castro explained that at around 2:30 a.m. to 3:00 a.m., she was attending to a newly-admitted
patient at Room 710 and, because of this, she instructed Nursing Assistant Tatad to check the vital signs of
patient Causaren, with ward-clerk orientee Guillergan accompanying the latter. When the two arrived at the
room, the patient was in a squatting position, with the right arm on the bed and the left hand holding on to a
chair.

In the Investigation Report[5] dated May 20, 1999, the Investigation Committee found that the subject incident
happened between 11:00 a.m. to 11:30 a.m. of March 23, 1999. The three other nurses for the shift were not at
the nurse station. Staff Nurse Paderes was then in another nurse station encoding the medicines for the
current admissions of patients, while Nursing Assistant Respicio was making the door name tags of admitted
patients and Nursing Assistant Tatad delivered some specimens to the laboratory. The committee
recommended that despite her more than seven years of service, respondent De Castro should be terminated
from employment for her lapse in responding to the incident and for trying to manipulate and influence her staff
to cover-up the incident.As for Staff Nurse Paderes and Nursing Assistants Respicio and Tatad, the committee
recommended that they be issued warning notices for failure to note the incident and endorse it to the next
duty shift and, although they did not have any knowledge of the incident, they should be reminded not to
succumb to pressure from their superiors in distorting the facts.

On July 5, 1999, Janette A. Calixijan, HRD Officer of petitioner hospital, issued a notice of termination, duly
noted by Dr. Abaya-Morido, upon respondent De Castro, effective at the close of office hours of July 20, 1999,
for alleged violation of company rules and regulations, particularly paragraph 16 (a), Item 3, Chapter XI of the
Employee's Handbook and Policy Manual of 1996 (Employee's Handbook):[6] (1) negligence to follow company
policy on what to do with patient Rufina Causaren who fell from a hospital bed; (2) failure to record and refer
the incident to the physician-[on- duty and] allow[ing] a significant lapse of time before reporting the
incident; (3) deliberately instructing the staff to follow her version of the incident in order to cover up the lapse;
and(4) negligence and carelessness in carrying out her duty as staff nurse-on-duty when the incident
happened.

46
On July 21, 1999, respondent De Castro, with the assistance of respondent Hospital Management Services
Inc.-Medical Center Manila Employees Association-AFW, filed a Complaint[7] for illegal dismissal against
petitioners with prayer for reinstatement and payment of full backwages without loss of seniority
rights, P20,000.00 moral damages, P10,000.00 exemplary damages, and 10% of the total monetary award as
attorney's fees.

On January 18, 2001, the Labor Arbiter rendered a Decision,[8] ordering petitioner hospital to reinstate
respondent De Castro to her former position or by payroll reinstatement, at the option of the former, without
loss of seniority rights, but without backwages and, also, directing petitioners to notify her to report to work. Her
prayer for damages and attorney's fees was denied. The Labor Arbiter concluded that although respondent De
Castro committed the act complained of, being her first offense, the penalty to be meted should not be
dismissal from the service, but merely 7 to 14 days suspension as the same was classified as a less serious
offense under the Employees Handbook.

On appeal by respondent De Castro, the NLRC rendered a Decision dated February 28, 2002, reversing the
findings of the Labor Arbiter and dismissing the complaint against the petitioners. It observed that respondent
De Castro lacked diligence and prudence in carrying out her duty when, instead of personally checking on the
condition of patient Causaren after she fell from the bed, she merely sent ward-clerk orientee Guillergan to do
the same in her behalf and for influencing her staff to conceal the incident.

On May 31, 2002, the NLRC denied respondent De Castro's Motion for Reconsideration dated April 16, 2002.

On May 24, 2006, the CA reversed and set aside the Decision of the NLRC and reinstated the Decision of the
Labor Arbiter, with modification that respondent De Castro should be entitled to payment of full backwages and
other benefits, or their monetary equivalent, computed from the expiration of the 14-day-suspension period up
to actual reinstatement. The CA ruled that while respondent De Castro's failure to personally attend to patient
Causeran amounted to misconduct, however, being her first offense, such misconduct could not be
categorized as serious or grave that would warrant the extreme penalty of termination from the service after
having been employed for almost 9 years. It added that the subject infraction was a less serious offense
classified under commission of negligent or careless acts during working time or on company property that
resulted in the personal injury or property damage causing expenses to be incurred by the company stated in
subparagraph 11, paragraph 3 (B), Chapter XI [on the Rules on Discipline] of the Employee's Handbook[9] of
petitioner hospital. The CA did not sustain the NLRC's ruling that respondent De Castro's dismissal was proper
on the ground that her offense was aggravated to serious misconduct on account of her alleged act of asking
her co-employees to lie for her as this fact was not proven.

Petitioners' motion for reconsideration was denied by the CA in the Resolution dated January 10, 2007.

Hence, this present petition.

Petitioners allege that the deliberate refusal to attend to patient Causaren after the latter fell from the bed
justifies respondent De Castro's termination from employment due to serious misconduct. They claim that
respondent De Castro failed to: (a) personally assist the patient; (b) check her vital signs and examine if she
sustained any injury; (c) refer the matter to the patient's attending physician or any physician-on-duty; and (d)
note the incident in the report sheet for endorsement to the next shift for proper monitoring. They also aver that
respondent De Castro persuaded her co-nurses to follow her version of what transpired so as to cover up her
nonfeasance

In her Comment, respondent De Castro counters that there was no serious misconduct or gross negligence
committed, but simple misconduct or minor negligence which would warrant the penalty of 7 to 14 days of
suspension under the Employee's Handbook of petitioner hospital. She denies exerting influence over the four
nursing personnel, but points out that it was Chief Nurse Villanueva, a close friend of patient Causaren's niece,
who persuaded the four nursing staff to retract their statements appearing in the incident reports as to the

47
approximate time of occurrence, from 2:00 a.m. to 3:00 a.m. of March 24, 1999 to 11:00 p.m. to 11:30 p.m. of
March 23, 1999, so as to pin her for negligence. She appeals for leniency, considering that the subject
infraction was her first offense in a span of almost nine years of employment with petitioner hospital.

We affirm with modification the CA ruling which declared petitioners guilty of illegal dismissal.

Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross and
habitual neglect by the employee of his duties. The CA ruled that per the Employees Handbook of petitioner
hospital, respondent De Castros infraction is classified as a less serious offense for commission of negligent
acts during working time as set forth in subparagraph 11, paragraph 3 (B) of Chapter XI[10] thereof. Petitioners
anchor respondent De Castros termination of employment on the ground of serious misconduct for failure to
personally attend to patient Causaren who fell from the bed as she was trying to reach for the bedpan. Based
on her evaluation of the situation, respondent De Castro saw no necessity to record in the chart of patient
Causaren the fact that she fell from the bed as the patient did not suffer any injury and her vital signs were
normal. She surmised that the incident was not of a magnitude that would require medical intervention as even
the patient and her niece did not press charges against her by reason of the subject incident.

It is incumbent upon respondent De Castro to ensure that patients, covered by the nurse station to which she
was assigned, be accorded utmost health care at all times without any qualification or distinction. Respondent
De Castros failure to personally assist patient Causaren, check her vital signs and examine if she sustained
any injury, refer the matter to the patient's attending physician or any physician-on-duty, and note the incident
in the report sheet for endorsement to the next shift for proper monitoring constitute serious misconduct that
warrants her termination of employment. After attending to the toxic patients under her area of responsibility,
respondent De Castro should have immediately proceeded to check the health condition of patient Causaren
and, if necessary, request the physician-on-duty to diagnose her further. More importantly, respondent De
Castro should make everything of record in the patients chart as there might be a possibility that while the
patient may appear to be normal at the time she was initially examined, an injury as a consequence of her fall
may become manifest only in the succeeding days of her confinement. The patients chart is a repository of
ones medical history and, in this regard, respondent De Castro should have recorded the subject incident in
the chart of patient Causaren so that any subsequent discomfort or injury of the patient arising from the
incident may be accorded proper medical treatment.

Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes
want of care in the performance of one's duties. Habitual neglect implies repeated failure to perform one's
duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not
constitute a just cause for the dismissal of the employee.[11]Despite our finding of culpability against respondent
De Castro; however, we do not see any wrongful intent, deliberate refusal, or bad faith on her part when,
instead of personally attending to patient Causaren, she requested Nursing Assistant Tatad and ward-clerk
orientee Guillergan to see the patient, as she was then attending to a newly-admitted patient at Room 710. It
was her judgment call, albeit an error of judgment, being the staff nurse with presumably more work
experience and better learning curve, to send Nursing Assistant Tatad and ward-clerk orientee Guillergan to
check on the health condition of the patient, as she deemed it best, under the given situation, to attend to a
newly-admitted patient who had more concerns that needed to be addressed accordingly.Being her first
offense, respondent De Castro cannot be said to be grossly negligent so as to justify her termination of
employment.Moreover, petitioners allegation, that respondent De Castro exerted undue pressure upon her co-
nurses to alter the actual time of the incident so as to exculpate her from any liability, was not clearly
substantiated.

Negligence is defined as the failure to exercise the standard of care that a reasonably prudent person would
have exercised in a similar situation.[12] The Court emphasizes that the nature of the business of a hospital
requires a higher degree of caution and exacting standard of diligence in patient management and health care
as what is involved are lives of patients who seek urgent medical assistance. An act or omission that falls short
of the required degree of care and diligence amounts to serious misconduct which constitutes a sufficient
ground for dismissal.
48
However, in some cases, the Court had ruled that sanctioning an erring employee with suspension would
suffice as the extreme penalty of dismissal would be too harsh.[13] Considering that this was the first offense of
respondent De Castro in her nine (9) years of employment with petitioner hospital as a staff nurse without any
previous derogatory record and, further, as her lapse was not characterized by any wrongful motive or deceitful
conduct, the Court deems it appropriate that, instead of the harsh penalty of dismissal, she would be
suspended for a period of six (6) months without pay, inclusive of the suspension for a period of 14 days which
she had earlier served. Thereafter, petitioner hospital should reinstate respondent Edna R. De Castro to her
former position without loss of seniority rights, full backwages, inclusive of allowances and other benefits, or
their monetary equivalent, computed from the expiration of her suspension of six (6) months up to the time of
actual reinstatement

WHEREFORE, the petition is DENIED. The Decision dated May 24, 2006 and Resolution dated January 10,
2007 of the Court of Appeals, Special First Division, in CA-G.R. SP No. 73189, which reversed and set aside
the Decision dated February 28, 2002 and Resolution dated May 31, 2002 of the National Labor Relations
Commission, Second Division, are AFFIRMED WITH MODIFICATION insofar as respondent Edna R. De
Castro is found guilty of gross negligence and is SUSPENDED for a period of SIX (6) MONTHS without pay,
inclusive of the suspension for a period of 14 days which she had earlier served. Petitioner Hospital
Management Services, Inc.-Medical Center Manila is ORDERED to reinstate respondent Edna R. De Castro to
her former position without loss of seniority rights, full backwages, inclusive of allowances and other benefits,
or their monetary equivalent, computed from the expiration of her suspension of six (6) months up to the time
of actual reinstatement. SO ORDERED.

10. SAMPAGUITA AUTO TRANSPORT CORPORATION, Petitioner, vs. NATIONAL LABOR


RELATIONS COMMMISSION and EFREN I. SAGAD, Respondents
G.R. No. 197384 January 30, 2013

BRION, J.:

Before the Court is the petition for review on certiorari1 in caption, assailing the decision2 dated March 4, 2011
and the resolution3 dated June 13, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 112760.

In a complaint4 dated August 10, 2007, respondent Efren I. Sagad charged the petitioner Sampaguita Auto
Transport Corporation (company); Andy Adagio, President and General Manager; Monina Ariola Adagio, Vice-
President and Finance Manager; Virgilio Olunan (referred to as Olonan by Sagad), Operations Manager; and
Gerry Dimate, HRO Officer, with illegal dismissal and damages plus attorney's fees.

Sagad alleged that on May 14, 2006, the company hired him as a regular bus driver, not as a probationary
employee as the company claimed. He disowned his purported signature on the contract of probationary
Employment5 submitted in evidence by the company. He maintained that his signature was forged. He further
alleged that on November 5, 2006, he was dismissed by the company for allegedly conniving with conductor
Vitola in issuing tickets outside their assigned route.

The company countered that it employed Sagad as a probationary bus driver (evidenced by a probationary
employment contract6) from May 14, 2006 to October 14, 2006; he was duly informed of his corresponding
duties and responsibilities.7 He was further informed that during the probationary period, his attendance,
performance and work attitude shall be evaluated to determine whether he would qualify for regular
employment. For this purpose and as a matter of company policy, an evaluator was deployed on a company
bus (in the guise of a passenger) to observe the driver’s work performance and attitude.

Allegedly, on September 21, 2006, an evaluator boarded Sagad’s bus. The evaluator described Sagad’s
manner of driving as "reckless driver, nakikipaggitgitan, nakikipaghabulan, nagsasakay sa gitna ng kalsada,
sumusubsob ang pasahero."8 Sagad disputed the evaluator’s observations. In an explanation (rendered in
Filipino),9 he claimed that he could not have been driving as reported because his wife (who was pregnant)
49
and one of his children were with him on the bus. He admitted though that at one time, he chased an
"Everlasting" bus to serve warning on its driver not to block his bus when he was overtaking. He also admitted
that once in a while, he sped up to make up for lost time in making trips.

The company further alleged that on October 13, 2006, it conducted a thorough evaluation of Sagad’s
performance. It requested conductors who had worked with Sagad to comment on his work. Conductors A.
Hemoroz and Israel Lucero revealed that Sagad proposed that they cheat on the company by way of an
unreported early bus trip.10 Dispatcher E. Castillo likewise submitted a negative report and even recommended
the termination of Sagad’s employment.11 The company also cited Sagad’s involvement in a hit-and-run
accident on September 9, 2006 along Commonwealth Avenue in Quezon City while on a trip (bus with Plate
No. NYK-216 and Body No. 3094).12 Allegedly, Sagad did not report the accident to the company.

On October 15, 2006, upon conclusion of the evaluation, the company terminated Sagad’s employment for his
failure to qualify as a regular employee.13

The Compulsory Arbitration Rulings

In her decision dated May 8, 2008,14 Labor Arbiter Marita V. Padolina dismissed the complaint for lack of merit.
She ruled that the company successfully proved that Sagad failed to qualify as a regular employee. Labor
Arbiter Padolina stressed that on October 15, 2006, the company ordered Sagad not to work anymore as his
probationary employment had expired. While Sagad claimed that he worked until November 5, 2006, she
pointed out that "there is no record to show that he worked beyond October 14, 2006."15

Sagad appealed the Labor Arbiter’s ruling. On July 10, 2009, the National Labor Relations Commission
(NLRC) rendered a decision16 declaring that Sagad had been illegally dismissed. It held that Sagad was not a
probationary employee as the company failed to prove by substantial evidence the due execution of Sagad’s
supposed probationary employment contract. It found credible Sagad’s submission that his signature on the
purported contract was a forgery. It opined that his signature on the contract was "extremely different" from his
signatures in his pleadings and in other documents on record. Further, the NLRC brushed aside the company
memorandum dated October 15, 200617 supposedly terminating Sagad’s probationary employment as there
was no showing that the memorandum had been served on him.

The NLRC disregarded Sagad’s alleged infractions that served as grounds for the termination of his
employment, holding that his dismissal was not based on these infractions but on his alleged connivance with
a conductor in defrauding the company. The NLRC awarded Sagad backwages of P559,050.00 and separation
pay of P45,000.00 in lieu of reinstatement, in view of the strained relations between the parties resulting from
the filing of the complaint.

Both parties moved for reconsideration of the NLRC decision, to no avail. The company then elevated the case
to the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA Decision

The CA, in its currently assailed decision,18 affirmed the NLRC rulings in toto, finding no grave abuse of
discretion in the labor tribunal’s reversal of the labor arbiter’s dismissal of the complaint. It found the
"genuineness of respondent’s signature on the employment contract is tainted with doubt."19 It agreed with the
NLRC that Sagad had been illegally dismissed considering, as it noted, that the grounds the company relied
upon for the termination of Sagad’s employment were not among the causes for a valid dismissal enumerated
under Article 282 of the Labor Code. It added that even if it had been otherwise, the company failed to comply
with the twin-notice requirement in employee dismissals.

The Petition

50
The company seeks the reversal of the appellate court’s decision through the present appeal,20 and raises the
following issues:

1. Whether it dismissed Sagad illegally; and

2. Whether Sagad is entitled to backwages and separation pay, totaling P604,050.00, after working with
the company for barely five months.

The company insists that Sagad entered into a contract of probationary employment with it. It was thus
surprised with Sagad’s allegation that his signature appearing in the contract was a forgery. It explained that
his signature on the contract is the same as his signatures on his employment papers (which include the
probationary employment contract). In any event, it faults the NLRC for not considering other pieces of
evidence indicating Sagad’s actual employment status.

The company points out that one such piece of competent and compelling evidence is Sagad’s admission of
the nature of his employment expressed in his letter dated October 16, 2006, addressed to Adagio and
Olunan.21 In this letter, he asked for another chance to work with the company.

The company posits that with the letter, Sagad acknowledged that his probationary employment had expired.22

The company maintains that it terminated Sagad’s employment in good faith. They are not expected to follow
the procedure for dismissing a regular employee, as the NLRC opined, considering that Sagad was merely on
probation. Lastly, it contends that the award of backwages and separation pay to Sagad amounting
to P604,050.00 is unwarranted and confiscatory since he worked for only five months. It laments that the
award would put a premium on reckless driving and would encourage other drivers to follow Sagad’s example.

The company disputes the NLRC‘s basis for the award — Sagad’s purported average daily commission
of P1,000.00 — as non-existent. They contend in this respect that the payslips Sagad submitted to the NLRC
rarely showed his daily commission to reach P1,000.00. It explains that Sagad presented only one (1) payslip
for November 2006, five (5) for October 2006, one (1) each for July, August and September 2006. It posits that
the company payrolls from June 29, 2006 to October 8, 2006 showed that his daily commissions were
below P1,000.00.

The Case for Sagad

Through his Comment (on the Petition),23 Sagad asks that the petition be denied due course. He presents the
following arguments:

1. He was not a probationary employee. The signature on the alleged probationary employment
contract attributed to him was not his; it was a forgery, as confirmed by the NLRC and the CA. The
same thing is true with the supposed letter (dated October 16, 2006)24 in which he allegedly appealed
to be given another chance to work for the company. Not only was the letter not in his handwriting (it
allegedly belonged to Vitara, a bus conductor of the company), the signature on the letter attributed to
him was also falsified.

2. On the assumption that he was a probationary employee, it is not correct to say that he failed to
qualify for regular employment. The written statements of bus conductors Hemoroz and
Lucero25 regarding his alleged attempt to cheat on the company are without probative value. The
statements were not under oath and the irregular acts he allegedly proposed could only be done by the
conductors.

The company’s claim that he figured in a "hit-and-run" accident on September 9, 2006, which he allegedly did
not report to management, is not also correct. It was not his bus that was involved in the accident that he duly
51
reported to the management. Further, the company’s contention that he drove recklessly on September 16,
2006 cannot be used to support his dismissal as he had already been penalized for the incident with a five-day
suspension.26

Also, the company grounds in Castillo’s evaluation report27 (that the company relied upon to justify the non-
renewal of his contract) are not just causes for the termination of his employment as the CA correctly ruled.

3. He was a regular employee. He continued to work as driver until November 4, 2006. The company’s
notice of termination of his Employment28 was not served on him because no such letter existed. If his
probationary employment was to expire on October 14, 2006, he asks: why was he evaluated only on
October 13 and 14, 2006 and why did the company serve him the termination notice only on October
15, 2006, when he was supposed to have been separated the previous day, October 14, 2006? He
adds: when was the notice served on him that would have prompted him to write the company a letter
on October 16, 2006 to ask for a second chance? All these nagging questions, he stresses,
demonstrate the incredibility of the company’s claim that he was a probationary employee.

4. He does not have to prove his denial that the signatures on the above-mentioned documents were
not really his. He posits that evidence need not be given in support of a negative allegation and this is
particularly true in dismissal cases where the burden of proof is on the employer.

5. The petition suffers from a procedural defect as it raises only questions of fact and not of law, in
violation of Rule 45 of the Rules of Court.

The Court’s Ruling

The procedural issue

This Court, as a rule, only reviews questions of law in a Rule 45 petition for review. In labor cases, the factual
findings of the labor arbiter and of the NLRC are generally respected and, if supported by substantial evidence,
accorded finality. This rule, however, is not absolute. When the factual findings of the CA conflict with those of
the labor authorities, the Court is forced to review the evidence on record.29

In this case, the labor arbiter’s factual conclusions, on the one hand, and those of the NLRC and the CA, on
the other hand, differ. The labor arbiter found that Sagad was a probationary employee and was validly
dismissed for his failure to qualify for regular employment, whereas the NLRC and the CA concluded that he
was a regular employee and was illegally dismissed. We thus find the need to review the facts in the present
labor dispute.

The merits of the case

After a review of the records, we are convinced that Sagad was dismissed, not as a probationary employee,
but as one who had attained regular status. The company’s evidence on Sagad’s purported hiring as a
probationary employee is inconclusive. To start with, Sagad denied that he entered into a probationary
employment contract with the company, arguing that the signature on the supposed contract was not his.30 He
also denied receiving the alleged notice31 terminating his probationary employment. The same thing is true with
his purported letter32asking that he be given another chance to work for the company. He asserts that not only
is the letter not in his handwriting, the signature on the letter was also not his.

The submissions of the parties on the issue created a doubt on whether Sagad really entered into a
probationary employment contract with the company. The NLRC resolved the doubt in Sagad’s favor, ruling
that Sagad’s signature on the contract was not his, because it was a forgery. It declared that his signature on
the contract "is extremely different from those in his pleadings and from the other documents on
record,"33 without explaining how and why the two sets of signatures were vastly different. Lending further
52
support to the NLRC conclusion, which the CA upheld, is its finding that the company failed to refute Sagad’s
denial of his signature in the contract, which the labor tribunal considered as an admission of the veracity of
Sagad’s statement, pursuant to the Rules of Court.34

Independently of the above discussion and even if we were to consider that Sagad went through a
probationary period, the records indicate that he was retained even beyond the expiration of his supposed
probationary employment on October 14, 2006. As the NLRC noted, Sagad claimed that he was dismissed by
the company on November 5, 2006, after he was accused of conniving with conductor Vitola in issuing tickets
outside their assigned route.

The company never refuted this particular assertion of Sagad and its silence can only mean that Sagad
remained in employment until November 4, 2006, thereby attaining regular status as of that date. Under the
law, "an employee who is allowed to work after a probationary period shall be considered a regular
employee."35

Further, when the company questioned the payslips submitted by Sagad to substantiate his claim that he
earned on the average a daily commission of P1,000.00, it pointed out that Sagad presented only one (1)
payslip for the whole month of November 2006, five (5) payslips for the month of October 2006, and one (1)
payslip each for the months of July, August and September 2006.36 This seemingly harmless allegation is
significant in that it revealed that Sagad continued working until the first week of November 2006 and was paid
his salary for at least one payroll period. Sagad, therefore, had become a regular employee when he was
dismissed on November 5, 2006.

Is Sagad’s dismissal illegal?

The NLRC and the CA ruled in the affirmative. The labor tribunal opined that the infractions which Sagad
allegedly committed and which disqualified him from attaining regular status are "unavailing" with respect to his
dismissal because the dismissal was not based on those infractions but on his alleged connivance with
conductor Vitola to cheat on the company.

The CA concurred with the NLRC but for a different reason. It declared that the "grounds upon which
petitioners based respondent’s termination from employment, viz: ‘hindi lahat ng schedule nailalabas,’ ‘mababa
ang revenue ng bus, laging kasama ang asawa sa byahe’ and ‘maraming naririnig na kwento tungkol sa
kanya, nag-uutos ng conductor para kumita sa hindi magandang paraan,’ xxx are not among those
enumerated under Article 282 of the Labor Code as just causes for termination of employment." 37 The CA
added that on the assumption that the cited grounds can be considered just causes, the company nonetheless
failed to comply with the twin-notice requirement for the termination of Sagad’s employment.

We disagree with the finding that Sagad’s dismissal had no basis.

First. It is not disputed that the company called Sagad’s attention to his negative actuations as a bus driver,
which were reported by a company evaluator38 who boarded his bus on September 21, 2006. The evaluator
reported that he was driving recklessly, racing and jostling for position on the road, thereby jarring the
passengers on their seats, and picking up passengers on the middle of the road. He disputed the evaluator’s
observations,39 claiming that he could not have been driving as reported because his pregnant wife and one of
his children were with him on the bus at the time. He admitted, however, that on one occasion, he chased an
"Everlasting" bus to warn its driver not to block him. He also admitted that once in a while, he sped up to
compensate for lost time in his trips.

Sagad’s explanation reveals more than what it stated. During his brief employment with the company, he
exhibited the tendency to speed up when he finds the need for it, very obviously in violation of traffic rules,
regulations and company policy. Instead of negating the evaluator’s observations, his admissions make them
credible.

53
Second. He was also asked to react to the comments of conductors who had worked with him (Hemoroz and
Lucero) to the effect that he proposed to them that they cheat on the company by making early (but not to be
reported) bus trips.40 Further, there was Castillo’s evaluation dated

October 13, 2006,41 rating Sagad’s work performance as poor on account of: (1) the low revenue of Sagad’s
bus; (2) his inability to make all his scheduled trips; and (3) his habit of bringing his wife with him on his trips.
Castillo also heard of talks of Sagad’s orders to the conductors to earn money in a questionable way.

During the arbitration, Sagad disputed the conductors’ comments, maintaining that they were not under oath
and that the fraudulent proposal they mentioned could only be committed by conductors. With respect to
Castillo’s evaluation, Sagad invoked the CA’s pronouncement that the infractions mentioned in the report are
not just causes for the termination of his employment.

Sagad’s position fails to convince us. We find no evidence that Hemoroz and Lucero had an ax to grind against
Sagad so that they would lie about their impression of him as a bus driver. Significantly, their statements
validate Castillo’s own observation that he heard talks of Sagad’s orders to the conductors for them to cheat on
the company. The scheme, contrary to Sagad’s explanation, can only be committed with the cooperation, or
even at the behest, of the driver, as the proposed scheme is for the bus to make unscheduled, but unreported,
early trips.

Lastly, the company cites Sagad’s involvement in a hit-and-run incident on September 9, 2006 while driving his
assigned bus (with Plate No. NYK-216 and Body No. 3094).42 Once more, he denies the charge, claiming that
it was not his bus, but two other vehicles, a Honda City and an Elf truck, which figured in the incident. 43 To
prove his point, he submitted the "SALAYSAY"44 of his replacement driver, Carlito Laude, for September 10,
2006, saying that there was no dents or scratches on the bus.

Again, Sagad’s stance fails to persuade us. Sagad’s statements vis-à-vis the incident, as well as those of
Laude, are belied by the Traffic Accident Investigation Report45 which mentioned the "Unidentified driver of
Public Utility Bus with plate No. NYK-216 and Body No. 3094." The report was corroborated by the sworn
statements of Ronald Apura, driver of the Elf truck, UFF-597, the second party in the incident,46 and Bibiana
Fuentes, driver of the White Honda City, WDV-422 (owned by Purefoods Hormel Co.), the first party in the
vehicular accident. There was also the letter to the company of Standard Insurance Co., Inc. dated February
14, 200747 demanding the reimbursement of P24,667.54 it paid to Purefoods Hormel Co. by way of damages
sustained by the Honda City.

Third. The CA misappreciated the law when it declared that the grounds relied upon by the company in
terminating Sagad’s employment are not among those enumerated under Article 282 of the Labor Code as just
causes for employee dismissals.1âwphi1 Article 282 of the Code 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

54
(e) Other causes analogous to the foregoing. [emphasis supplied]

The irregularities or infractions committed by Sagad in connection with his work as a bus driver constitute a
serious misconduct or, at the very least, conduct analogous to serious misconduct, under the above-cited
Article 282 of the Labor Code. To be sure, his tendency to speed up during his trips, his reckless driving, his
picking up passengers in the middle of the road, his racing with other buses and his jostling for vantage
positions do not speak well of him as a bus driver. While he denies being informed, when he was hired, of the
duties and responsibilities of a driver — contained in a document submitted in evidence by the company48 —
the requirement "3. to obey traffic rules and regulations as well as the company policies. 4. to ensure the safety
of the riding public as well as the other vehicles and motorist (sic)"49 is so fundamental and so universal that
any bus driver is expected to satisfy the requirement whether or not he has been so informed.

Sagad tries to minimize the adverse effect of the evaluator’s report of September 21, 2006 about his conduct
as a driver with the argument that he had already been penalized with a five-day suspension for chasing an
"Everlasting" bus at one time. The suspension is of no moment. He was penalized for one reckless driving
incident, but it does not erase all the other infractions he committed. The conductors’ comments and the
dispatcher’s evaluation, together with the earlier on-board evaluation, all paint a picture of a reckless driver
who endangers the safety of his passengers, other motorists and the general public. With this record, it is not
surprising that he figured in a hit-and-run accident on September 9, 2006.

Under the circumstances, Sagad has become a liability rather than an asset to his employer, more so when we
consider that he attempted to cheat on the company or could have, in fact, defrauded the company during his
brief tenure as a bus driver. This calls to mind Castillo’s report on the low revenue of Sagad’s bus, an
observation which is validated by the company’s Daily Operation Reports from June to October 2006.50

All told, we find substantial evidence supporting Sagad’s removal as a bus driver. Through his reckless driving
and his schemes to defraud the company, Sagad committed serious misconduct and breach of the trust and
confidence of his employer, which, without doubt, are just causes for his separation from the service. It is well
to stress, at this point, an earlier pronouncement of the Court "that justice is in every case for the deserving, to
be dispensed in the light of the established facts and applicable law and doctrine."51

The twin-notice requirement

Even as we find a just cause for Sagad’s dismissal, we agree with the CA that the company failed to comply
with the two-notice rule. It failed to serve notice of: (1) the particular acts for which Sagad was being dismissed
on November 5, 2006 and (2) his actual dismissal. Consistent with our ruling in Agabon v. NLRC, 52 we hold
that the violation of Sagad's right to procedural due process entitles him to an indemnity in the form of nominal
damages. Considering the circumstances in the present case, we deem it appropriate to award
Sagad P30,000.00.

WHEREFORE, premises considered, the appeal is granted. The assailed decision and resolution of the Court
of Appeals are SET ASIDE. The complaint is DISMISSED for lack of merit. Efren I. Sagad is awarded nominal
damages of P30,000.00 for violation of his right to procedural due process. SO ORDERED.

11.QUIRICO LOPEZ, Petitioner, versus ALTURAS GROUP OF COMPANIES and/or MARLITO UY,
Respondents
G.R. No. 191008 April 11, 2011

CARPIO MORALES, J.:

Quirico Lopez (petitioner) was hired by respondent Alturas Group of Companies in 1997 as truck driver. Ten
years later or sometime in November 2007, he was dismissed after he was allegedly caught by respondents
security guard in the act of attempting to smuggle out of the company premises 60 kilos of scrap iron
55
worth P840 aboard respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271 that was then
assigned to him. When questioned, petitioner allegedly admitted to the security guard that he was taking out
the scrap iron consisting of lift springs out of which he would make axes.

Petitioner, in compliance with the Show Cause Notice[1] dated December 5, 2007 issued by respondent
companys Human Resource Department Manager, denied the allegations by a handwritten explanation written
in the Visayan dialect.

Finding petitioners explanation unsatisfactory, respondent company terminated his employment by Notice of
Termination[2]effective December 14, 2007 on the grounds of loss of trust and confidence, and of violation of
company rules and regulations. In issuing the Notice, respondent company also took into account the result of
an investigation showing that petitioner had been smuggling out its cartons which he had sold, in conspiracy
with one Maritess Alaba, for his own benefit to thus prompt it to file a criminal case for Qualified Theft[3] against
him before the Regional Trial Court (RTC) of Bohol. It had in fact earlier filed another criminal case for
Qualified Theft[4] against petitioner arising from the theft of the scrap iron.

Petitioner thereupon filed a complaint against respondent company for illegal dismissal and underpayment of
wages. He claimed that the smuggling charge against him was fabricated to justify his illegal dismissal; that the
filing of the charge came about after he reported the loss of the original copy of his pay slip, which report, he
went on to claim, respondent company took to mean that he could use the pay slip as evidence for filing a
complaint for violation of labor laws; and that on account of the immediately stated concern of respondent, it
forced him into executing an affidavit that if the pay slip is eventually found, it could not be used in any
proceedings between them.

By Decision[5] of June 30, 2008, the Labor Arbiter, holding that the pendency of the criminal case involving the
scrap iron did not warrant the suspension of the proceedings before him, held that petitioners dismissal was
justified, for he, a truck driver, held a position of trust and confidence, and his act of stealing company property
was a violation of the trust reposed upon him.

Respecting the charge of underpayment of wages, the Labor Arbiter noted that on the basis of the records,
petitioner had been paid the correct wages and benefits mandated by law.

The Labor Arbiter accordingly dismissed petitioners complaint.

On appeal, the National Labor Relations Commissions (NLRC) Fourth Division (Cebu City) set aside the Labor
Arbiters Decision by Decision[6] dated December 22, 2008, finding that respondents evidence did not suffice to
warrant the termination of petitioners services; and that petitioners alleged admission of taking the scrap iron
was belied by his vehement denial, as even the security guard, one Gerardo Luega, who allegedly witnessed
the asportation and before whom the alleged admission was made, did not even execute an affidavit in support
thereof.

Citing Salaw v. NLRC,[7] the NLRC went on to hold that petitioner should have been afforded, or at least
advised of the right to counsel. It thus held that any evaluation which was based only on the explanation to the
show-cause letter and any so-called investigation but without confrontation of the vital witnesses, do[es] not
suffice.

Respondent companys motion for reconsideration was denied by Resolution[8] of April 30, 2009, hence, it
appealed to the Court of Appeals.

By Report[9] of December 18, 2009, the appellate court reversed the NLRC ruling. It held that respondent
company was justified in terminating petitioners employment on the ground of loss of trust and confidence, his
alleged act of smuggling out the scrap iron having been sufficiently established through the affidavits of
Patrocinio Borja and Zalde Tare, supervisor and junior supervisor, respectively, of its Supermarket Motorpool.
56
The appellate court further held that the evidence supporting the criminal charge, found after preliminary
investigation are [sic] sufficient to show prima facie guilt, which constitutes just cause for [petitioners dismissal]
based on loss of trust and confidence; and that petitioners subsequent acquittal in the criminal case did not
automatically preclude a determination that he is guilty of acts inimical to the employers interest resulting in
loss of trust and confidence.Albeit the appellate court found that petitioners dismissal was for a just cause, it
held that due process was not observed when respondent company failed to give him a chance to defend his
side in a proper hearing. Following Agabon v. NLRC,[10] the appellate court thus ordered respondent to pay
nominal damages of P30,000.

Thus the appellate court disposed:

WHEREFORE, in view of the foregoing, the Decision of the NLRC dated December 22, 2008 is
hereby MODIFIED. Private respondents dismissal from employment is upheld on the ground of loss of trust
and confidence, a just cause for termination. However, for failure to comply fully with the procedural due
process, petitioner is ORDERED to pay private respondent the amount of P30,000.00 as nominal
damages.[11] (underscoring supplied)

Hence, the present petition for review on certiorari.

Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due process, and
the legality of the manner of dismissal which constitutes procedural due process.[12]

As to substantive due process, the Court finds that respondent companys loss of trust and confidence arising
from petitioners smuggling out of the scrap iron, conpounded by his past acts of unauthorized selling cartons
belonging to respondent company, constituted just cause for terminating his services.

Loss of trust and confidence as a ground for dismissal of employees covers employees occupying a position of
trust who are proven to have breached the trust and confidence reposed on them. Apropos is Cruz v. Court of
Appeals[13] which explains the basis and quantum of evidence of loss of trust and confidence, viz:

In addition, the language of Article 282(c) of the Labor Code states that the loss of trust and confidence must
be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if
it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based
on substantial evidence and not on the employers whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately
used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order
to constitute a just cause for dismissal, the act complained of must be work-related and shows that the
employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a
just cause for termination of employment is premised on the fact that the employee concerned holds
a position of responsibility, trust and confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as the handling or care and protection of the property
and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is
penalized. (emphasis and underscoring supplied)

Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent
companys goods and property, and consequently with its handling and protection, hence, even if he did not
occupy a managerial position, he can be said to be holding a position of responsibility. As to his actprincipal
ground for his dismissal his attempt to smuggle out the scrap iron belonging to respondent company, the same
is undoubtedly work-related.

Respondent companys charge against petitioner was amply proven by substantial evidence consisting of the
affidavits of various employees of respondent. Contrary to the NLRCs observation, the security guard who

57
apprehended petitioner, Gerardo Luega, actually executed a statement[14] relative to the smuggling out of scrap
iron, which was attached to, and served as basis for the filing of, the corresponding complaint for Qualified
Theft. Petitioners claim that he was framed up after he allegedly lost his pay slip to draw respondent company
to suspect that he might file a labor complaint for underpayment does not inspire credence.

It is, however, with respect to the appellate courts finding that petitioner was not afforded procedural due
process that the Court deviates from. Procedural due process has been defined as giving an opportunity to be
heard before judgment is rendered.[15]In termination cases, Perez v. Philippine Telegraph and Telephone
Company,[16] illuminates on the correct proceedings to be followed therein in order to comply with the due
process requirement:

The above rulings are a clear recognition that the employer may provide an employee with ample opportunity
to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal
hearing. The employee can be fully afforded a chance to respond to the charges against him, adduce his
evidence or rebut the evidence against him through a wide array of methods, verbal or written.

After receiving the first notice apprising him of the charges against him, the employee may submit a
written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer
evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and
the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or
with the assistance of a representative or counsel. He may also ask the employer to provide him copy
of records material to his defense. His written explanation may also include a request that a formal
hearing or conference be held.In such a case, the conduct of a formal hearing or conference becomes
mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or
practice requires an actual hearing as part of employment pretermination procedure. (emphasis and
underscoring supplied)

Petitioner was given the opportunity to explain his side when he was informed of the charge against him and
required to submit his written explanation with which he complied. That there might have been no hearing is of
no moment, for as Autobus Workers Union v. NLRC[17] holds:

This Court has held that there is no violation of due process even if no hearing was conducted, where
the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of
the opportunity to be heard. (emphasis supplied)

Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner should have been
afforded counsel or advised of the right to counsel. The right to counsel and the assistance of one in
investigations involving termination cases is neither indispensable nor mandatory, except when the employee
himself requests for one or that he manifests that he wants a formal hearing on the charges against him. In
petitioners case, there is no showing that he requested for a formal hearing to be conducted or that he be
assisted by counsel. Verily, since he was furnished a second notice informing him of his dismissal and the
grounds therefor, the twin-notice requirement had been complied with to call for a deletion of the appellate
courts award of nominal damages to petitioner.

As for the subsequent dismissal of the criminal cases[18] filed against petitioner, criminal and labor proceedings
are distinct and separate from each other. Each requires a different quantum of proof, arising though they are
from the same set of facts or circumstances. As Vergara v. NLRC[19] holds:

An employees acquittal in a criminal case does not automatically preclude a determination that he has been
guilty of acts inimical to the employers interest resulting in loss of trust and confidence. Corollarily, the ground
for the dismissal of an employee does not require proof beyond reasonable doubt; as noted earlier, the
quantum of proof required is merely substantial evidence. More importantly, the trial court acquitted petitioner
not because he did not commit the offense, but merely because of the failure of the prosecution to prove his

58
guilt beyond reasonable doubt.. In other words, while the evidence presented against petitioner did not
satisfy the quantum of proof required for conviction in a criminal case, it substantially proved his
culpability which warranted his dismissal from employment.(emphasis supplied)

WHEREFORE, the petition is DENIED. The Report dated December 18, 2009 of the Court of Appeals
dismissing petitioners complaint is AFFIRMED with MODIFICATION in that the award of nominal damages in
the amount of P30,000 is DELETED Costs against petitioner. SO ORDERED.

12. FUNCTIONAL, INC. Petitioner versus SAMUEL C. GRANFIL, Respondent. G.R. No. 176377
November 16, 2011

PEREZ, J.:

Assailed in this petition for review[1] filed under Rule 45 of the 1997 Rules of Civil Procedure is the Decision
dated 22 November 2006 rendered by the then Tenth Division of the Court of Appeals (CA) in CA-G.R. SP No.
94851,[2] the dispositive portion of which states:

WHEREFORE, premises considered, the petition is GRANTED. The Resolution dated April 20, 2005 and the
order dated January 26, 2006 of public respondent NLRC, First Division in NLRC NCR Case No. 09-07126-02
NLRC NCR CA No. 035887-03 sustaining the findings of the Labor Arbiter are hereby REVERSED and SET
ASIDE. Private respondent Functional, Inc. is hereby ORDERED to reinstate petitioner Granfil without loss of
seniority rights and other privileges, and to pay the latter his full backwages, inclusive of allowances and other
benefits, from July 31, 2002 up to the time of his actual reinstatement.

Sometime in 1992, respondent Samuel C. Granfil was hired as key operator by petitioner Functional, Inc. (FI),
a domestic corporation engaged in the business of sale and rental of various business equipments, including
photocopying machines. As Key Operator, Granfil was tasked to operate the photocopying machine rented by
the National Bookstore (NBS) at its SM Megamall Branch. There is no dispute regarding the fact that, in the
evening of 30 July 2002, Granfil attended to a customer by the name of Cosme Cavaldeja (Cavaldeja) who,
together with his wife, asked to have their flyers photocopied. It appears that Bonnel Dechavez, the security
guard assigned at said establishment, saw Cavaldeja handing money to Granfil after the transaction was
finished.[4]After investigating the matter, Dechavez submitted the following incident report to NBS Branch
Manager Lucy Genegaban (Genegaban), to wit:

At around 1940 on July 30, 2002 at NBS SM Megamall Dona Julia Vargas Ave., Mandaluyong City, I checked
one customer and asked if he already paid for his xerox[ed] items (sic) and he said yes. Upon asking for a
receipt, he pointed to Sammy the Xerox operator [to] whom he g[a]ve payment, instead of paying to the
cashier. Sammy came and it was only then that he brought the customer to the counter 09 for payment [of] the
amount of [the] xerox[ed] items (sic) is P250.[5]

On 3 September 2002, Granfil filed a complaint against FI, its President, Romeo Bautista (Bautista), its
Marketing Manager, Freddie Tenorio (Tenorio), its Office Supervisor, Julius Ballesteros (Ballesteros), and its
Area Supervisor, Joel Dizon (Dizon), for illegal dismissal, unpaid 13th month pay, moral and exemplary
damages and attorneys fees. In support of his complaint which was docketed as NLRC NCR Case No. 09-
07126-2002 before the arbitral level of the National Labor Relations Commission (NLRC),[6]Granfil alleged,
among other matters, that the money which Dechavez saw him receive from Cavaldeja was a P200 tip said
customer gave him in appreciation of his assistance in xeroxing and organizing the batches of voluminous
materials he asked to be photocopied; that payment for the materials was, however, already paid per batch by
Cavaldejas wife who, by that time, had already left the premises; and, that rather than listening to his
explanation and simply verifying the meter of the photocopy machine as well as the paper allotted to it,
Dechavez submitted his incident report which, in turn, caused Tenorio to tell him, Mr. Granfil, magpahinga ka
muna. Mabuti pa, pumirma ka nalang ng resignation letter para may makuha ka pa.[7]

59
Granfil further asseverated that, with said incident report having been telefaxed to FIs head office, he was
asked to report thereat in the morning of 31 July 2002; that instead of allowing him to explain, however,
Ballesteros peremptorily ordered his termination from employment; that wishing to explain his side, he sought
out Dizon who merely ignored and tersely advised him, Magpahinga ka na lang; that refused entry when he
tried to report for work on 1 August 2002, he subsequently sought out Cavaldeja whose corroboration of his
version of the incident also fell on deaf ears; that having been terminated without just cause and observance of
due process, he was constrained to file the 3 September 2002 complaint from which the instant suit originated;
that aside from the reinstatement to which he is clearly entitled as an illegally dismissed employee, he should
be paid full backwages and 13th month pay for the year 2002; and, that in view of the malice and bad faith
which characterized his dismissal from employment, Bautista, Tenorio, Ballesteros and Dizon should be held
jointly and severally liable with FI for the payment of said indemnities as well as his claims for moral and
exemplary damages and attorneys fees.[8]

In their position paper, FI and its corporate officers, in turn, averred that having been apprised of the incident,
Genegaban requested for Granfils relief as Key Operator of the photocopying machine installed at the NBS SM
Megamall Branch; that for the good of all concerned, FI informed Granfil that he was going to be transferred to
a different assignment, without demotion in rank or diminution of his salaries, benefits and other privileges; that
required to report to FIs main office to act as emergency reliever to other Key Operators while waiting for his
new assignment, Granfil misconstrued his transfer as a punishment for his guilt and refused to heed said
directive which was within the managements prerogative to issue; that an employees right to security of tenure
does not give him such vested right to his position as would deprive his employer of its prerogative to change
his assignment or transfer him where he will be most useful; and, that aside from being guilty of
insubordination, Granfil clearly abandoned his employment rather than illegally dismissed therefrom. [9]

On 29 April 2003, Labor Arbiter Eduardo Carpio rendered a decision discounting Granfils illegal dismissal from
employment in view of his failure to prove with substantial evidence overt acts of termination on the part of FI
and its officers. Simply awarded the sum of P3,966.65 as proportionate 13th month pay for services rendered
from January to July 2002,[10] Granfil perfected the appeal which was docketed before the First Division of the
NLRC as NLRC NCR CA No. 035887-03. With the affirmance of the Labor Arbiters decision in the 20 April
2005 Resolution issued by the NLRC[11] and the subsequent denial of his motion seeking the reconsideration of
said decision,[12] Granfil elevated the case through the Rule 65 petition for certiorari docketed before the CA as
CA-G.R. SP No. 94851. On 22 November 2006, the CA rendered the herein assailed 22 November 2006
Decision, reversing the NLRCs 20 April 2005 Resolution on the ground that FI failed to satisfactorily prove
Granfils supposed abandonment of his employment which, by itself, was negated by his filing of a case for
illegal employment. Ordering FI to reinstate Granfil and to pay his full backwages, allowances and other
benefits from 31 July 2002 until his actual reinstatement, the CA denied said employees claims for moral and
exemplary damages as well as attorneys fees for lack of factual basis.[13]

FIs motion for reconsideration of the CAs 22 November 2006 decision was denied for lack of merit in said
courts 22 January 2007 resolution,[14] hence, this petition.

The Issues

FI prays for the reversal and setting aside of the assailed decision on the following grounds, to wit:

A.The Honorable Court erred in holding that [Granfil] was illegally dismissed by FI.

B.The Honorable Court erred in not giving credence to the factual findings of both the NLRC and Labor
Arbiter before wh[om] the case was tried.[15]

The Courts Ruling

We find the petition bereft of merit.

60
The rule is long and well settled that, in illegal dismissal cases like the one at bench, the burden of proof is
upon the employer to show that the employees termination from service is for a just and valid cause.[16] The
employers case succeeds or fails on the strength of its evidence and not the weakness of that adduced by the
employee,[17] in keeping with the principle that the scales of justice should be tilted in favor of the latter in case
of doubt in the evidence presented by them.[18] Often described as more than a mere scintilla,[19] the quantum
of proof is substantial evidence which is understood as such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably opine
otherwise.[20]Failure of the employer to discharge the foregoing onus would mean that the dismissal is not
justified and therefore illegal.[21]

Denying the charge of illegal dismissal, FI insists that Granfil abandoned his employment after he was
transferred from his assignment at the NBS Megamall Branch as a consequence of the latters request for his
relief.[22] In the same manner that it cannot be said to have discharged the above-discussed burden by merely
alleging that it did not dismiss the employee, it has been ruled that an employer cannot expediently escape
liability for illegal dismissal by claiming that the former abandoned his work.[23] This applies to FI which
adduced no evidence to prove Granfils supposed abandonment beyond submitting copies of NBS 31 July 2002
request for said employees transfer[24] and its 1 August 2002 written acquiescence thereto.[25] While these
documents may have buttressed the claim that Granfil was indeed recalled from his assignment, however, we
find that the CA correctly discounted their probative value insofar as FIs theory of abandonment is concerned.

Being a matter of intention, moreover, abandonment cannot be inferred or presumed from equivocal acts. [26] As
a just and valid ground for dismissal, it requires the deliberate, unjustified refusal of the employee to resume
his employment,[27] without any intention of returning.[28] Two elements must concur: (1) failure to report for
work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee
relationship, with the second element as the more determinative factor and being manifested by some overt
acts.[29] The burden of proving abandonment is once again upon the employer[30] who, whether pleading the
same as a ground for dismissing an employee or as a mere defense, additionally has the legal duty to observe
due process.[31] Settled is the rule that mere absence or failure to report to work is not tantamount to
abandonment of work.[32]

Viewed in the light of the foregoing principles, we find that the CA correctly ruled out FIs position that Granfil
had abandoned his employment. Aside from the fact that Bautista, Tenorio, Ballesteros and Dizon did not even
execute sworn statements to refute the overt acts of dismissal imputed against them, the record is wholly
bereft of any showing that FI required Granfil to report to its main office or, for that matter, to explain his
supposed unauthorized absences. Absence must be accompanied by overt acts unerringly pointing to the fact
that the employee simply does not want to work anymore.[33] Even then, FIs theory of abandonment was
likewise negated by Granfils filing the complaint for illegal dismissal[34] which evinced his desire to return to
work. In vigorously pursuing his action against FI before the Labor Arbiter, the NLRC and the CA, Granfil
clearly manifested that he has no intention of relinquishing his employment. In any case, the fact that
Granfil prayed for his reinstatement speaks against any intent to sever the employer-employee
relationship[35] with FI.

FI next faults the CA for not giving credence to the factual findings of Labor Arbiter Eduardo Carpio which was
affirmed in the NLRCs 20 April 2005 resolution.[36] As may be gleaned from the above disquisition, however,
both the Labor Arbiter and the NLRC clearly erred in directing the dismissal of the complaint by unduly shifting
the burden of proving the illegality of his dismissal to Granfil. While administrative findings of fact are,
concededly, accorded great respect, and even finality when supported by substantial evidence, nevertheless,
when it can be shown that administrative bodies grossly misappreciated evidence of such nature as to compel
a contrary conclusion, this court had not hesitated to reverse their factual findings.[37] Indeed, said rule does not
apply when, as here, it is clear that a palpable mistake was committed by the quasi-judicial tribunal which
needs rectification.[38]

WHEREFORE, premises considered, the petition is DENIED for lack of merit and the assailed Decision
dated 22 November 2006 is, accordingly, AFFIRMED in toto. SO ORDERED.
61
13. PHILIPPINE AIRLINES, INC., Petitioner, versus NATIONAL LABOR RELATIONS
COMMISSION and AIDA M. QUIJANO, Respondents
G.R. No. 123294 October 20, 2010

LEONARDO-DE CASTRO, J.:

This is a Petition for Certiorari under Rule 65 of the Rules of Court seeking to annul, reverse and set aside the
following issuances of public respondent National Labor Relations Commission (NLRC): (1)
Decision[1] dated September 29, 1995 in NLRC NCR CA 007860-94 (NLRC NCR 00-03-01859-
91), entitled Aida M. Quijano v. Philippine Airlines, Inc., which set aside the Decision[2] of Labor Arbiter Roberto
I. Santos and ordered petitioner Philippine Airlines, Inc. (PAL) to pay private respondent Aida M. Quijano
(Quijano) her separation pay in accordance with petitioners Special Retirement & Separation Program, and (2)
Resolution[3] dated November 14, 1995 denying petitioners Motion for Reconsideration thereof.

It bears stressing that pursuant to St. Martin Funeral Home v. National Labor Relations Commission[4] and In
Re: Dismissal of Special Civil Actions in NLRC Cases,[5] all special civil actions arising out of any decision, final
resolution or order of the NLRC must be filed with the Court of Appeals. However, since both parties of this
case had filed their respective Memoranda prior to the promulgation of our decision in St. Martin Funeral
Home, this case was no longer referred to the Court of Appeals.

The following are the pertinent facts, as summarized by the NLRC:

Complainant Quijano rose from the ranks starting as accounting clerk in December 1967 until she became
effective September 1, 1984, Manager-Agents Services Accounting Division (ASAD), vice Josefina Sioson.

ASAD, the specific unit in PAL charged with the processing, verification, reconciliation, and validation of all
claims for commission filed by agents worldwide, is under the direct supervision and control of the Vice
President-Comptroller, and within the scope of the audit program of the Vice President-Internal Audit & Control.

On May 5, 1989, an investigating committee chaired by Leslie W. Espino (hereinafter referred to as the Espino
Committee) formally charged Quijano as Manager-ASAD in connection with the processing and payment of
commission claims to Goldair Pty. Ltd. (Goldair for short) wherein PAL overpaid commissions to the latter
amounting to several million Australian dollars during the period 1984-1987. Specifically, Quijano was charged
as Manager-ASAD with the following:

Failure on the job and gross negligence resulting in loss of trust and confidence in that you failed to:

a. Exercise the necessary monitoring, control and supervision over your Senior Accounts Analyst to
ensure that the latter was performing the basic duties and responsibilities of her job in checking and verifying
the correctness and validity of the commission claims from Goldair.

b. Adopt and perform the necessary checks and verification procedures as demanded by your position in
order to ensure that the commission claims of Goldair which you were approving for payment were correct and
valid claims thus resulting in consistent substantial overpayments to Goldair over a period of more than three
years.

c. Require or otherwise cause a final reconciliation of the remaining balance due as commission claims to
Goldair for a particular month such that a claim for a particular month was never liquidated in a final amount
and thus contributing to consistent overpayments to Goldair.

The Senior Accounts Analyst referred to in the charge was Dora Jane Prado Curammeng who was included as
a respondent. Curammeng was specifically assigned to handle and process commissions of agents in, among
others, the Australia Region, and Goldair was among the travel agents whose production reports and
62
commission claims were handled by her. Curammeng was accused of failing to verify the completeness of the
documents supporting the claims; to trace and match each ticket in the production report submitted by Goldair
with the IATA, BSP and CTO sales report; and to perform a complete verification of the net/net amounts
claimed in the production reports against the approved marketing arrangements. However, Curammeng had
already resigned and became a resident of Canada at the time of the investigation conducted by the Espino
Committee.

Pending further investigation, the Espino Committee placed Quijano under preventive suspension and at the
same time required her to submit her answer to the charges. As directed, Quijano submitted her answer
wherein, among others, she explained as follows:

My staff processes production reports submitted by both passenger and cargo agents. In 1984, they were only
seven (7) people (with one on loan to Financial Analysis Division) and yet they process commission claims of
an average of PHP four billion annually. My colleagues who are responsible for processing and recording
gross passenger and cargo sales have around 51 people. Just the ratio of my staff to accounting sales staff,
which is one to seven, would indicate the heavy load our unit experience.

I wish to emphasize however, that the staff assigned under my division have been selected on the basis of
their judgment competence considering the very nature of marketing arrangements with agents are strictly
private and confidential. Under the circumstances I have just mentioned, my staffs judgment and competence
is heavily relied on particularly when random checking of commission claims for traffic documents and airway
bills against sales reports is being performed by them. I also seek your appreciation of the work environment
we are in and the intermittent conflicts we experience due to the pressure of prompt settlement of claims to
agents and yet having the satisfaction that the processing procedures are adequate.

May I reiterate to the Committee that when my staff informed me of their findings of double claims on the
production reports for the months of October and November 1987, I followed this up with a representative of
Goldair. On June 1988, I received a handwritten note from the representative of Goldair signed by its General
Manager Aleco Papazoglou, a xerox copy of it is hereto attached as Annex A. Mr. Papazoglou, in this note,
guaranteed to me that he will undertake to collect any excessive payments on the agent fees from his agents
and pay these to us afterwards.

At this point, I would like to emphasize that ASAD, before known as Confidential Staff under the Office of the
VP-Comptroller, became a unit since 1976. Due to the confidential nature of its functions, the accounting
procedures were not written. The procedures being performed by the staff were mainly practices handed down
from their predecessors. Further, the procedures were tailored to adopt to the market environment of the
country which were based on the approved marketing arrangements. But of course, there were inherent
internal controls.

A final check whether accounting procedures being observed were appropriate in accordance with accounting
standards, is the periodic examination of both our internal and external auditors.

During all these 4-1/2 years I have been with ASAD, I did not receive any feedback that there were
weaknesses or lapses in accounting controls and procedures being followed.

In 1985, Cressop Mccormick & Paget made a study of the CMAs. They conducted an interview of all key
personnel including me who were involved in handling CMAs. It was of course necessary for them to observe
and evaluate the existing accounting procedures and controls. Their report, however, did not mention any
adverse findings concerning my division.

In 1986, Sycip, Gorres, Velayo & Co. were engaged to look into the CMA functional specifications and to
propose the best method of allocating commission expenses to flown revenues. To be able for them to render
a report, it is, of course, necessary for them to delve into the reports we receive and the records we maintain. It

63
is safe to surmise that they walked through our accounting procedures. No mention, however, of weaknesses
on our accounting procedures and controls was made in their report.

Again, during the early part of 1987, all the production reports from Australia for the period April to September
1986 were borrowed and audited by Internal Audit and control. We apprised the auditor then of the various
procedures we observed in processing these production reports. We did not receive any adverse feedback
about their audit. Our confidence that the AMAs were properly enforced by Australian agents and that there
were no irregularities committed were thus regained. We shifted our concentration to the other agents
particularly those under Nett-Nett settlement arrangements and tried to recall any commission that should be
disallowed.

In the middle of 1987, a special team from the Commission on Audit conducted a fraud audit and again,
interviewed my staff and I on our accounting procedures. Incentive commission figures by agent by country
were also furnished to them. I wasnt informed of any flaws in our accounting procedures and control nor
existence of any fraud.

My division underwent scrutiny of three (3) prestigious consulting firms and of our own internal audit. I relied
heavily on the absence of any unfavorable findings on accounting procedures and controls from them since
their studies were quite extensive and lengthy. It is quite surprising at times why I am now asked how I could
have failed to observe that certain accounting procedures were not being followed by my staff.

Also, Internal Audit & Control made a regular audit in Australia in November, 1986 headed by no less than the
Vice President-Internal Audit & Control. They did not discover any fraud nor report any questionable
transaction on Passenger but on Cargo transaction only. If they, the auditors, did not find any discrepancy
when their concentration is on Australia alone, how much more with us when our concentration is on the whole
system? The production reports of Goldair was borrowed and assessed by the auditor before and after the
regular audit.

The other members of the Espino Committee were Ricardo G. Paloma, then Senior Vice President-Strategic
Planning & Corporate Services wrote a dissenting opinion to the Final Draft Majority Report in the following
manner, to wit:

A new set of procedures was apparently installed by Romeo Ines and Josefina Sioson in April, 1984 (without
any evident formal authorization by the Comptroller Dept.) upon receipt of Aleco Papazoglous letter that
automatic payment be made upon presentation of his production reports in Manila Gold Air gained immunity
against any possibility of cross of their production reports: it was simply impossible to cross check the
production reports against sales reports are not yet in by the time the hand carried production reports arrive in
ASAD.

Upon assumption of office by Aida Quijano this new set of procedure was carried over. She was made to
understand that these were the OFFICIAL PROCEDURES, contrary to the actual procedure which called for
production reports being initially checked by PAL Melbourne during the 1981 to 1983 period. This initial check
which had until them been handled by the Regional Office was combined with the secondary check and were
all dumped on ASAD.

A mitigating factor in Quijanos favor is that UNSEEN HANDS designed or allowed this new procedures to be
put in place. Ines, who became the VP Internal Audit should have known the prescribed procedures (or at the
very least the actual practice during the period 1981 to 1983 when he was the VP Comptroller) and yet, did not
alert her. Unknowingly, Quijano allowed the by-pass and the automatic payment of 80% upon presentation of
production reports because Sioson assured her that was the procedure previously followed. Trustingly, she
became a participant in this mess.

64
It should be noted that the Romeo Ines mentioned in the dissenting opinion is the same Romeo R. Ines who
was one of the members of the Espino Committee and who was later named a respondent in the second
Goldair charge, together with Chairman Espino. Romeo R. Ines was the VP-Comptroller for the period 1981-
1983 and VP-Internal Audit for the period 1984-1987. While Josefina Sioson, as earlier shown, was the
Manager-ASAD during the period 1981-1983 until she was replaced by Quijano on September 1, 1984.
Incidentally, as found by respondents witness Benigno Datoc, the Goldair fraud started in 1981 and continued
until its discovery sometime in the latter part of 1987. And as of that year, Goldair had been PALs agent for
about seventeen (17) years already.

On July 2, 1990, another Administrative charge involving the same Goldair anomaly was filed, this time
including Committee Chairman Leslie W. Espino and Committee Member Romeo R. Ines and several others,
for gross incompetence and inefficiency, negligence, imprudence, mismanagement, dereliction of duty, failure
to observe and/or implement administrative and executive policies, and related acts or omissions. Pending the
result of investigation by another committee chaired by Judge Martin S. Ocampo, the PAL Board of Directors
suspended respondents Leslie W. Espino, Executive Vice-President and Chief Operating Officer; Ramon C.
Lozon, Senior Vice-President-Finance; Romeo R. Ines, Vice President-Internal Audit & Control; Josefina
Sioson, Manager-Staff Pricing; except respondents VP-Comptroller Robin C. Dui and Manager-ASAD Aida
Quijano who were already suspended by the Espino Committee, and respondent Juan Yoga, former Regional
Vice President-Australia who has already retired.

Meantime, PAL filed a civil case in Australia against Goldair seeking to recover AUD 11 million. Twice, Quijano
went to Australia as witness for PAL. Thereafter, a settlement was reached whereby Goldair was to pay PAL a
total of around AUD 7 million inclusive of court costs. A criminal case was nevertheless filed against Goldairs
owner, Alexandro Papazoglou, by the Fraud Squad Victorian Police.

The Ocampo Committee having submitted its findings to the PAL Board of Directors, the latter, in a resolution
dated January 18, 1991, considered respondents Leslie W. Espino, Ramon C. Lozon, Romeo R. Ines, Robin
C. Dui, Josefina Sioson, and Aida M. Quijano, resigned from the service effective immediately, for loss of
confidence and for acts inimical to the interest of the company.

The Board found as follows:

This is the extended Resolution

The Goldair fraud has caused a total loss to PAL as of August 1990 in the amount of AUD 14.6 million (PHP
204 million). Goldair is a company that served then as the General Sales Agent of PAL in Australia against
Goldair, a settlement was reached whereby Goldair was to pay PAL a total of around AUD 7 million inclusive of
court costs. This settlement is said to be the most practical and realistic under the circumstances. A criminal
case was nevertheless filed against Goldairs owner, Alexandro Papazoglou, by the Fraud Squad Victorian
Police. Hearings are still going on.

According to the evidence received and evaluated by the investigating committee, PAL lost the above huge
sum of money to Goldair as a result of false, padded, erroneous or irregular claims for commissions submitted
by Goldair and unwittingly paid by PAL. The Agents Services Accounting Division (ASAD), one of the divisions
under the Comptroller Department, is the specific unit in the company charged with the processing, verification,
and validation of all claims for commissions filed by the companys agents worldwide (excluding the U.S. which
is processed by the San Francisco Regional Office). Consequently, responsibility for the Goldair fraud has
been attributed mainly to the failure of ASAD to properly process and validate Goldairs commission claims
prior to payment.

Thus, the following lapses or irregularities were uncovered in the course of the investigations that have been
conducted:

65
1. No adequate effort was exerted to see to it that the supporting documents (photocopies of tickets
submitted and attached to the production report were complete). Neither was a verification or comparison
made between the tickets and the production report.

2. The simple and basic step of verifying the names of the passengers and their ticket numbers
against ticket numbers, even on a check basis, to see whether they were reported more than once was not
accomplished. If done, double or multiple reporting of tickets could have been readily detected.

3. Validation of the correctness of prorate values, by performing the proration, was not undertaken.

4. No reconciliation was made of all the amounts due the agent for a particular month. Such
reconciliation would have disclosed whether or not the account for a particular month could be closed.

5. Production reports were not cross-checked against sales report or flight coupon registers.

6. Superiors failed to adequately monitor the activities of their subordinates to ensure that the latter
were performing their duties.

7. The policy that cash vouchers could be approved only by duly authorized persons was in several
cases violated.

Resolving the case of Quijano, the Board said:

The charge against Ms. Quijano is that:

Quijano was the Manager-ASAD (Agents Services Accounting Division) in 1984-87, and responsible for the
final scrutiny of agents Production Reports and final recommendation for payment of travel agents
commissions.

As Manager-ASAD from 1984 to 1987 (when the fraud was discovered), she failed to uncover or detect and
report or grossly disregarded the fraud although the commissions vis--vis production were scandalously high.

Ms. Quijano claims that she relied heavily on Ms. Curammengs judgment competence to perform her work,
particularly the completeness of the documents check. She argues that if she were to do the completeness
check herself, there would be no need for the analyst. This argument, however, wittingly or unwittingly,
misconceives the nature of her job. Precisely, her basic role and duty as a manager was to make sure that the
analysts in her division were performing the tasks assigned to them. But Ms. Quijano did not see to it that the
completeness check was actually being performed by Ms. Curammeng. This lapse in control,
contributed materially to the double, multiple and fictitious reporting of tickets, and double claims for
commissions perpetrated by Goldair. Ms. Quijano was certainly not expected to personally do and perform the
completeness check herself. But as manager, it was clearly incumbent upon her to see to it that this
completeness check was being done by her subordinates competently and efficiently. Yet, Ms. Quijano even
failed to adopt ways and means of keeping herself sufficiently informed of the activities of her staff members so
as to prevent or at least discover at an early stage the fraud being perpetrated on a massive scale by Goldair
against her company.

Her incompetence at her job is patent.

Her motion for reconsideration having been denied by the Board in a Resolution dated February 19, 1991,
Quijano filed on March 25, 1991 the instant case against PAL for illegal suspension and illegal dismissal. [6]

The Labor Arbiter dismissed private respondents complaint in a Decision dated September 7, 1994, the
dispositive portion of which reads:
66
WHEREFORE, in conformity with the opinion above-expressed, judgment is hereby rendered dismissing the
above-captioned case for lack of merit and, consequently, the respondent is absolved from any liability. [7]

Undeterred, private respondent filed an appeal before the NLRC which rendered the assailed Decision dated
September 29, 1995, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing considerations, the decision appealed from should be, as it is
hereby, VACATED and SET ASIDE and another one entered, directing the Philippine Airlines, Inc., thru its
responsible officials, to pay Aida M. Quijano her separation pay in accordance with its Special Retirement &
Separation Program dated February 15, 1988, plus ten percent (10%) of the total amount by way of attorneys
fee.[8]

Petitioner filed a Motion for Reconsideration but this was denied by the NLRC in its Resolution dated
November 14, 1995, the dispositive portion of which reads:

After due consideration of the Motion for Reconsideration filed by respondent-appellee on October 20, 1995,
from the Decision of September 29, 1995, the Commission (Second Division) RESOLVED to deny the same
for lack of merit.[9]

Hence, this petition for certiorari.

Both parties submitted their respective Memoranda[10] in late 1997, however, on September 11, 1998,
petitioner filed a Motion for Suspension of Proceedings[11] based on Presidential Decree No. 902-A which
reads, in part:

That upon appointment of management committee, rehabilitation receiver, board or body, pursuant to this
Decree, all actions for claimsagainst corporations, partnerships or associations under management or
receivership pending before any court, tribunal, board or body shall be suspended
accordingly.[12] (Underscoring supplied.

The said motion referred to an Order[13] dated June 23, 1998 of the Securities and Exchange Commission
(SEC) which appointed an Interim Rehabilitation Receiver for petitioner pursuant to Presidential Decree No.
902-A that was followed by the issuance of another Order[14] dated July 1, 1998 which commanded that all
claims against PAL are deemed suspended.

After hearing both parties on the question of whether or not the Court should render judgment during the state
of suspension of claims, we ruled in the negative in a Resolution[15] dated September 4, 2000, the dispositive
portion of which reads:

IN VIEW THEREOF, the Motion for Suspension of Proceedings of petitioner is GRANTED. [16]

Private respondent filed a Motion for Reconsideration[17] on October 3, 2000 of the above Resolution but we
denied the same in a Resolution[18] dated November 13, 2000.

Since then petitioner was required by this Court to submit periodic status reports on the rehabilitation
proceedings, the last of which was dated October 22, 2007,[19] declaring that the petitioners request to exit from
rehabilitation had been granted by the SEC via an Order[20] issued on September 28, 2007, the dispositive
portion of which reads:

WHEREFORE, in the light of the foregoing, and considering PALs firm commitment to settle its outstanding
obligations as well as the fact that its operations and its financial condition have
been normalized and stabilized in conformity with the Amended and Restated Rehabilitation Plan

67
exemplifying a successful corporate rehabilitation, the PALs request to exit from rehabilitation is
hereby GRANTED.

The PRR is likewise directed to furnish all creditors and parties concerned with copies of this Order at the
expense of the Petitioner and submit proof of service thereof to the Commission, within fifteen (15) days from
date of receipt of this Order.[21]

Considering the foregoing and the fact that both parties have long submitted their respective Memoranda in the
instant case, private respondent filed a Motion to Resume Proceedings and to Render Judgment[22] on
December 11, 2007. In compliance with this Courts Resolution[23] dated January 21, 2008 requiring petitioner
to comment on private respondents motion, petitioner filed a Comment/Manifestation[24] on February 28, 2008
which confirmed that with the issuance of the Securities and Exchange Commissions September 28, 2007
Order granting PALs request to exit from rehabilitation, there is no longer any legal impediment to the
resumption of the instant proceedings.

In the instant petition, petitioner puts forward a singular argument, to wit:

ASSUMING ARGUENDO (WITHOUT ADMITTING) THAT THE EQUITABLE CONSIDERATIONS CITED BY


THE NLRC DID EXIST, THE SAME CANNOT JUSTIFY THE AWARD OF SEPARATION PAY TO MRS.
QUIJANO (despite the finding that she was legally suspended and thereafter legally dismissed) IN THE FACE
OF OVERWHELMING EVIDENCE SUBMITTED BY PETITIONER WHICH CLEARLY SHOW THAT
PHILIPPINE AIRLINES, INC. LOST SEVERAL MILLION AUSTRALIAN DOLLARS AS A RESULT OF THE
FRAUD COMMITTED BY GOLDAIR AND THAT SAID FRAUD COULD ONLY HAVE BEEN MADE POSSIBLE
BY MRS. QUIJANOS PATENT MISMANAGEMENT AND GROSS INCOMPETENCE AS ASAD MANAGER IN
FAILING TO DETECT THE IRREGULARITY. IN AWARDING SEPARATION PAY TO MRS. QUIJANO, THE
NLRC COMMITTED A GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION. [25]

We affirm the NLRC ruling with modification.

At the onset, it should be noted that the parties do not dispute the validity of private respondents dismissal from
employment for loss of confidence and acts inimical to the interest of the employer. The assailed September
29, 1995 Decision of the NLRC was emphatic in declaring that it was not prepared to rule as illegal the
preventive suspension and eventual dismissal from the service of [private respondent][26] and rightfully so
because the last position that private respondent held, Manager-ASAD (Agents Services Accounting Division),
undeniably qualifies as a position of trust and confidence.

Loss of confidence as a just cause for termination of employment is premised from the fact that an employee
concerned holds a position of trust and confidence. This situation holds where a person is entrusted with
confidence on delicate matters, such as the custody, handling, or care and protection of the employers
property. But, in order to constitute a just cause for dismissal, the act complained of must be work-related such
as would show the employee concerned to be unfit to continue working for the employer.[27]

The January 18, 1991 Resolution of the PAL Board of Directors, the relevant portions of which are discussed in
the narration of the facts of this case as culled from the assailed September 29, 1995 NLRC Decision, clearly
laid out the reasons why it considered private respondent along with her other co-employees in PAL resigned
from the service effective immediately for loss of confidence and for acts inimical to the interest of the
company. In private respondents case, the Resolution underscored her acts of mismanagement and gross
incompetence which made her fail to detect the irregularities in the Goldair account that resulted in huge
financial losses for petitioner. Admittedly, the said findings are not backed by proof beyond reasonable doubt
but are, nevertheless, given credence since they have been adopted by both the labor arbiter and the NLRC
and are supported by substantial evidence. As we have consistently held, the degree of proof required in labor
cases is not as stringent as in other types of cases.[28]

68
As a general rule, employers are allowed a wider latitude of discretion in terminating the employment of
managerial personnel or those who, while not of similar rank, perform functions which by their nature require
the employers full trust and confidence. This must be distinguished from the case of ordinary rank and file
employees, whose termination on the basis of these same grounds requires a higher proof of involvement in
the events in question; mere uncorroborated assertions and accusations by the employer will not suffice.[29]

Having succinctly disposed of the issue of the validity of private respondents dismissal, we now delve into the
true crux of this controversy which is the legality of the award of separation pay to private respondent despite
having been lawfully terminated for a just cause.

Petitioner argues that, in light of the fact that a just cause forms the basis for her lawful termination from the
job, private respondent is not entitled to separation pay. Likewise, petitioner insists that even assuming that the
equitable considerations cited by the NLRC did exist, the same cannot justify the award of separation
pay. And, in awarding the same, the NLRC committed grave abuse of discretion amounting to lack of
jurisdiction.

We do not agree.

Grave abuse of discretion is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law
or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on
caprice, whim and despotism.[30]This Court holds that the NLRC did not gravely abuse its discretion in granting
separation pay to private respondent as the same is not characterized by caprice or arbitrariness being rooted
in established jurisprudence.

The language of Article 279 of the Labor Code is pregnant with the implication that a legally dismissed
employee is not entitled to separation pay, to wit:

An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.

However, in exceptional cases, this Court has granted separation pay to a legally dismissed employee as an
act of social justice or based on equity. In both instances, it is required that the dismissal (1) was not for
serious misconduct; and (2) does not reflect on the moral character of the employee[31] or would involve moral
turpitude. This equitable and humanitarian principle was first discussed by the Court in the landmark case
of Philippine Long Distance Telephone Co. (PLDT) v. National Labor Relations Commission,[32] wherein it was
held:

Strictly speaking, however, it is not correct to say that there is no express justification for the grant of
separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is
that our Constitution is replete with positive commands for the promotion of social justice, and particularly the
protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the
present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II
on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to
the promotion of social justice and human rights with a separate sub-topic for labor. Article XIII expressly
recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy
and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of
the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even
if the dismissal be for cause.

There should be no question that where it comes to such valid but not iniquitous causes as failure to comply
with work standards, the grant of separation pay to the dismissed employee may be both just and

69
compassionate, particularly if he has worked for some time with the company. For example, a subordinate who
has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated
loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because
she has also to take care of her child may also be removed because of her poor attendance, this being another
authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on
the other hand the company cannot be required to maintain him just the same at the expense of the efficiency
of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award
to the employee of separation pay would be sustainable under the social justice policy even if the separation is
for cause.

But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must
be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is
dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is
misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A
security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay
since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a
prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not
only inefficiency but immorality and the grant of separation pay would be entirely unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be
required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is
called, on the ground of social justice.[33]

In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,[34] we
clarified that the grant of separation pay may still be precluded even if the ground for the employees dismissal
is not serious misconduct under Article 282(a) of the Labor Code but other just causes under the same article
and/or other authorized causes provided for under the Labor Code. However, the TMPCWA case still
recognized the social justice exception prescribed in Philippine Long Distance Telephone Company. To quote
the relevant portions of that decision:

Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based on
social justiceserious misconduct (which is the first ground for dismissal under Art. 282) or acts that reflect on
the moral character of the employee. What is unclear is whether the ruling likewise precludes the grant of
separation pay when the employee is validly terminated from work on grounds laid down in Art. 282 of the
Labor Code other than serious misconduct.

A recall of recent cases decided bearing on the issue reveals that when the termination is legally justified on
any of the grounds under Art. 282, separation pay was not allowed. x x x.

In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal
recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or
wrongful intent or they reflected adversely on the moral character of the employees. We therefore find
that in addition to serious misconduct, in dismissals based on other grounds under Art. 282 like willful
disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime
against the employer or his family, separation pay should not be conceded to the dismissed employee.

In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts
may opt to grant separation pay anchored on social justice in consideration of the length of service of the
employee, the amount involved, whether the act is the first offense, the performance of the employee and the
like, using the guideposts enunciated in PLDT on the propriety of the award of separation
pay.[35] (Emphases supplied.
70
In other words, under the present jurisprudential framework, the grant of separation pay as a matter of equity to
a validly dismissed employee is not contingent on whether the ground for dismissal is expressly under Article
282(a) but whether the ground relied upon is akin to serious misconduct or involves willful or wrongful intent on
the part of the employee.

It, thus, becomes pertinent to examine the ground relied upon for the dismissal of private respondent and to
determine if the special circumstances described in PLDT are present in the case at bar.

Serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper or wrong
conduct. It is a transgression of some established and definite rule of action, a forbidden act, a dereliction of
duty, willful in character, and implies wrongful intent and not mere error of judgment. To be serious within the
meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not
merely trivial or unimportant. However serious such misconduct, it must, nevertheless, be in connection with
the employees work to constitute just cause for his separation. The act complained of must be related to the
performance of the employees duties such as would show him to be unfit to continue working for the
employer.[36]On the other hand, moral turpitude has been defined as everything which is done contrary to
justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties
which a man owes his fellowmen, or to society in general, contrary to justice, honesty, modesty, or good
morals.[37]

In the case at bar, the transgressions imputed to private respondent have never been firmly established as
deliberate and willful acts clearly directed at making petitioner lose millions of pesos. At the very most, they can
only be characterized as unintentional, albeit major, lapses in professional judgment. Likewise, the same
cannot be described as morally reprehensible actions. Thus, private respondent may be granted separation
pay on the ground of equity which this Court had defined as justice outside law, being ethical rather than jural
and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any
sanction of positive law, for equity finds no room for application where there is law.[38]

A perusal of the assailed September 29, 1995 NLRC Decision would show that the following equitable
considerations were relied upon by the NLRC to arrive at its assailed ruling, to wit:

a) The Goldair fraud was found to have started in 1981. Private respondent became the Manager-
ASAD only on September 1, 1984. The former Manager-ASAD from 1981 to August 1984 was Josefina
Sioson.[39]

b) ASAD is under the direct supervision and control of the Vice President-Comptroller and within the
scope of the audit program of the Vice President-Internal Audit and Control. The VP-Comptroller for the period
1981 to 1983 and the VP-Internal Audit for the period 1984 to 1987 was Romeo Ines.[40]

c) The accounting procedures and controls inherited by private respondent when she took over
ASAD were subjected to the scrutiny of prestigious accounting firms like Cressop, McCormick & Paget in 1985,
the Sycip, Gorres, Velayo & Co., Inc. in 1986, including a special team from the Commission on Audit in 1987
all of which made no adverse findings concerning ASAD.[41]

d) No less than the VP-Internal Audit made a regular audit in Australia in November 1986 and in the
early part of 1987, by borrowing all production reports covering April to September 1986, but found no
irregularities nor made any adverse feedback against ASAD.[42]

e) Private respondent was the first to discover the overpayment of commission claims to Goldair in
1984 in rate differences in net/net settlement which, after her intervention, did not recur. She was also the one
who first discovered the fraud in double and fictitious commission claims and promptly took action when she
withheld all provisional payments due Goldair.[43]

71
f) Even after the Goldair anomaly was discovered, private respondent could have availed of PALs
Special Retirement and Separation Program, but she stayed put and had gone twice to Australia, while under
preventive suspension, to attend court proceedings as a witness for petitioner enabling the said company to
recover and minimize its economic loss.[44]

g) Private respondent has no derogatory record during the entire period of her employment with
petitioner for more than two decades. She steadily rose from the ranks until she became the ASAD
Manager.[45]

h) In the dissenting opinion of Ricardo Paloma, Vice Chairman of the Espino Committee and PAL
Senior VP Strategic Planning and Corporate Service, to the Final Draft Majority Report, he observed that a
mitigating factor in [private respondents] favor is that UNSEEN HANDS designed or allowed this new
procedures to be put in place. Ines, who became the VP Internal Audit should have known the prescribed
procedures (or at the very least the actual practice during the period 1981 to 1983 when he was the VP
Comptroller) and yet, did not alert her. Unknowingly, [private respondent] allowed the by-pass and the
automatic payment of 80% upon presentation of production reports because Sioson assured her that was the
procedure previously followed. Trusting, she became a participant in this mess.[46]

Considering the foregoing uncontroverted special circumstances, we rule that the NLRC did not commit grave
abuse of discretion amounting to lack of jurisdiction in ordering petitioner to pay private respondent separation
pay for equitable considerations

However, we do not agree with the NLRC that private respondents separation pay should be awarded in
accordance with PALs Special Retirement & Separation Program dated February 15, 1988 plus ten percent
(10%) of the total amount by way of attorneys fees.

At the risk of stating the obvious, private respondent was not separated from petitioners employ due to
mandatory or optional retirement but, rather, by termination of employment for a just cause. Thus, any
retirement pay provided by PALs Special Retirement & Separation Program dated February 15, 1988 or, in the
absence or legal inadequacy thereof, by Article 287 of the Labor Code[47] does not operate nor can be made to
operate for the benefit of private respondent. Even private respondents assertion that, at the time of her lawful
dismissal, she was already qualified for retirement does not aid her case because the fact remains that private
respondent was already terminated for cause thereby rendering nugatory any entitlement to mandatory or
optional retirement pay that she might have previously possessed.

Likewise, attorneys fees are not proper in this case because the same can only be awarded when the
employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by
reason of the unjustified act of his employer.[48] The aforementioned conditions do not obtain in this case.

As to the matter of the proper amount of separation pay to be awarded to private respondent on the basis of
equitable considerations, our pronouncement in Yrasuegui v. Philippine Airlines, Inc.[49] is instructive, to wit:

Here, We grant petitioner separation pay equivalent to one-half (1/2) months pay for every year of service. It
should include regular allowances which he might have been receiving. We are not blind to the fact that he was
not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also
recognize that his employment with PAL lasted for more or less a decade.

Private respondents circumstances are more or less identical to the above-cited case in the sense that, as
previously discussed, her dismissal was neither for serious misconduct nor for an offense involving moral
turpitude. Furthermore, her employment with petitioner spanned more than two decades unblemished with any
derogatory record prior to the infractions at issue in the case at bar.

72
WHEREFORE, the assailed NLRC Decision dated September 29, 1995 as well as the Resolution dated
November 14, 1995 are AFFIRMED with the MODIFICATION that petitioner Philippine Airlines, Inc. pay
private respondent Aida Quijano one-half (1/2) month salary for every year of service as separation pay on
equitable grounds. SO ORDERED.

14. COSMOS BOTTLING CORP., Petitioner, versus WILSON FERMIN, Respondent


G.R. No. 193676 & G.R. No. 194303 June 20, 2012

SERENO, J.:

Before this Court are two consolidated cases, namely: (1) Petition for Review dated 26 October 2010 (G.R. No.
193676) and (2) Petition for Review on Certiorari under Rule 45 dated 14 October 2010 (G.R. No.
194303).[1] Both Petitions assail the Decision dated 20 May 2009[2] and Resolution dated 8 September
2010[3] issued by the Court of Appeals (CA). The dispositive portion of the Decision reads:

WHEREFORE, the August 31, 2005 Decision and October 21, 2005 Resolution of the National Labor Relations
Commission in NLRC NCR CA No. 043301-05 are hereby SET ASIDE. Respondent Cosmos Bottling
Corporation is, in light of the foregoing discussions, hereby ORDERED to pay Petitioner his full retirement
benefits.

There being no data from which this Court can properly assess Petitioners full retirement benefits, the case is,
thus, remanded to the Labor Arbiter only for that purpose.

SO ORDERED.

Wilson B. Fermin (Fermin) was a forklift operator at Cosmos Bottling Corporation (COSMOS), where he started
his employment on 27 August 1976.[4] On 16 December 2002, he was accused of stealing the cellphone of his
fellow employee, Luis Braga (Braga).[5] Fermin was then given a Show Cause Memorandum, requiring him to
explain why the cellphone was found inside his locker.[6] In compliance therewith, he submitted an affidavit the
following day, explaining that he only hid the phone as a practical joke and had every intention of returning it to
Braga.[7]

On 21 December 2002, Braga executed a handwritten narration of events stating the following:[8]

(a) At around 6:00 a.m. on 16 December 2002, he was changing his clothes inside the locker room,
with Fermin as the only other person present.

(b) Braga went out of the locker room and inadvertently left his cellphone by the chair. Fermin was left
inside the room.

(c) After 10 minutes, Braga went back to the locker room to retrieve his cellphone, but it was already
gone.

(d) Braga asked if Fermin saw the cellphone, but the latter denied noticing it.

(e) Braga reported the incident to the security guard, who thereafter conducted an inspection of all the
lockers.

(f) The security guard found the cellphone inside Fermins locker.

(g) Later that afternoon, Fermin talked to Braga to ask for forgiveness. The latter pardoned the former
and asked him not to do the same to their colleagues.

73
After conducting an investigation, COSMOS found Fermin guilty of stealing Bragas phone in violation of
company rules and regulations.[9] Consequently, on 2 October 2003,[10] the company terminated Fermin from
employment after 27 years of service,[11] effective on 6 October 2003.[12]

Following the dismissal of Fermin from employment, Braga executed an affidavit, which stated the belief that
the former had merely pulled a prank without any intention of stealing the cellphone, and withdrew from
COSMOS his complaint against Fermin.[13]

Meanwhile, Fermin filed a Complaint for Illegal Dismissal,[14] which the Labor Arbiter (LA) dismissed for lack of
merit on the ground that the act of taking a fellow employees cellphone amounted to gross
misconduct.[15] Further, the LA likewise took into consideration Fermins other infractions, namely: (a)
committing acts of disrespect to a superior officer, and (b) sleeping on duty and abandonment of duty. [16]

Fermin filed an appeal with the National Labor Relations Commission (NLRC), which affirmed the ruling of the
LA[17] and denied Fermins subsequent Motion for Reconsideration.[18]

Thereafter, Fermin filed a Petition for Certiorari with the Court of Appeals (CA),[19] which reversed the rulings of
the LA and the NLRC and awarded him his full retirement benefits.[20] Although the CA accorded with finality
the factual findings of the lower tribunals as regards Fermins commission of theft, it nevertheless held that the
penalty of dismissal from service was improper on the ground that the said violation did not amount to serious
misconduct or wilful disobedience, to wit:

[COSMOS], on which the onus of proving lawful cause in sustaining the dismissal of [Fermin] lies, failed to
prove that the latters misconduct was induced by a perverse and wrongful intent, especially in the light of
Bragas Sinumpaang Salaysay which corroborated [Fermins] claim that [Fermin] was merely playing a prank
when he hid Bragas cellular phone. Parenthetically, the labor courts dismissed Bragas affidavit of desistance
as a mere afterthought because the same was executed only after [Fermin] had been terminated.

It must be pointed out, however, that in labor cases, in which technical rules of procedure are not to be strictly
applied if the result would be detrimental to the workingman, an affidavit of desistance gains added importance
in the absence of any evidence on record explicitly showing that the dismissed employee committed the act
which caused the dismissal. While We cannot completely exculpate [Fermin] from his violation at this point, We
cannot, however, turn a blind eye and disregard Bragas recantation altogether. Bragas recantation all the more
bolsters Our conclusion that [Fermins] violation does not amount to or borders on serious or willful misconduct
or willful disobedience to call for his dismissal.

Morever, [COSMOS] failed to prove any resultant material damage or prejudice on their part as a consequence
of [Fermins] questioned act. To begin with, the cellular phone subject of the stealth belonged, not to
[COSMOS], but to Braga. Secondly, the said phone was returned to Braga in due time. Under the
circumstances, a penalty such as suspension without pay would have sufficed to teach [Fermin] a lesson and
for him to realize his wrongdoing.

xxxxxxxxx

On another note, [COSMOS], in upholding the legality of [Fermins] termination from service, considered the
latters past infractions with [COSMOS], i.e. threatening, provoking, challenging, insulting and committing acts
of disrespect to a superior officer/defiance to an instruction and a lawful order of a superior officer; and,
sleeping while on duty and abandonment of duty or leaving assigned post with permission from immediate
supervisor, as aggravating circumstances to his present violation [stealth (sic) of a co-employees property].
We disagree with Public Respondent on this matter.

74
The correct rule is that previous infractions may be used as justification for an employees dismissal from work
in connection with a subsequent similar offense, which is obviously not the case here. x x x. [21] (Emphases in
the original.)

COSMOS and Fermin moved for reconsideration, but the CA likewise denied their motions.[22] Thus, both
parties filed the present Petitions for Review.

COSMOS argues, among other things, that: (a) Fermin committed a clear act of bad faith and dishonesty in
taking the cellphone of Braga and denying knowledge thereof; (b) the latters recantation was a mere
afterthought; (c) the lack of material damage or prejudice on the part of COSMOS does not preclude it from
imposing the penalty of termination; and (d) the previous infractions committed by Fermin strengthen the
decision of COSMOS to dismiss him from service.[23]

On the other hand, Fermin contends that since the CA found that the penalty of dismissal was not
proportionate to his offense, it should have ruled in favor of his entitlement to backwages.[24]

It must be noted that in the case at bar, all the lower tribunals were in agreement that Fermins act of taking
Bragas cellphone amounted to theft. Factual findings made by administrative agencies, if established by
substantial evidence as borne out by the records, are final and binding on this Court, whose jurisdiction is
limited to reviewing questions of law.[25] The only disputed issue left for resolution is whether the imposition of
the penalty of dismissal was appropriate. We rule in the affirmative.

Theft committed against a co-employee is considered as a case analogous to serious misconduct, for which
the penalty of dismissal from service may be meted out to the erring employee,[26] viz:

Article 282 of the Labor Code provides:

Article 282. Termination by Employer. - An employer may terminate an employment for any of the following
causes:

(a) Serious misconduct or willful disobendience by the employee of the lawful orders of his employer or his
representatives in connection with his work;

(e) Other causes analogous to the foregoing.

Misconduct involves the transgression of some established and definite rule of action, forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. For
misconduct to be serious and therefore a valid ground for dismissal, it must be:

1. of grave and aggravated character and not merely trivial or unimportant and

2. connected with the work of the employee.

In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole and used Yusecos
credit cards. But since the theft was not committed against petitioner itself but against one of its
employees, respondent's misconduct was not work-related and therefore, she could not be dismissed for
serious misconduct.

Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible
of comparison to another in general or in specific detail. For an employee to be validly dismissed for a cause
analogous to those enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission
of the employee.

75
A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an
employees moral depravity. Theft committed by an employee against a person other than his employer, if
proven by substantial evidence, is a cause analogous to serious misconduct.[27] (Emphasis supplied.)

In this case, the LA has already made a factual finding, which was affirmed by both the NLRC and the CA, that
Fermin had committed theft when he took Bragas cellphone. Thus, this act is deemed analogous to serious
misconduct, rendering Fermins dismissal from service just and valid.

Further, the CA was correct in ruling that previous infractions may be cited as justification for dismissing an
employee only if they are related to the subsequent offense.[28] However, it must be noted that such a
discussion was unnecessary since the theft, taken in isolation from Fermins other violations, was in itself a
valid cause for the termination of his employment.

Finally, it must be emphasized that the award of financial compensation or assistance to an employee validly
dismissed from service has no basis in law. Therefore, considering that Fermins act of taking the cellphone of
his co-employee is a case analogous to serious misconduct, this Court is constrained to reverse the CAs ruling
as regards the payment of his full retirement benefits. In the same breath, neither can this Court grant his
prayer for backwages.

WHEREFORE, the Petition in G.R. No. 194303 is DENIED, while that in G.R. No. 193676 is GRANTED. The
Decision dated 20 May 2009 and Resolution dated 8 September 2010 of the Court of Appeals are
hereby REVERSED and SET ASIDE. The Decision dated 20 August 2004 of the Labor Arbiter
is REINSTATED. SO ORDERED.

15. R.B. MICHAEL PRESS and ANNALENE REYES ESCOBIA, Petitioners, versus NICASIO C.
GALIT Respondent
G.R. No. 153510 February 13, 2008

VELASCO, JR., J.:

Year in, year out, a copious number of illegal dismissal cases reach the Court of Appeals (CA) and eventually
end up with this Court. This petition for review under Rule 45 registered by petitioners R.B. Michael Press and
Annalene Reyes Escobia against their former machine operator, respondent Nicasio C. Galit, is among them. It
assails the November 14, 2001 Decision of the CA in CA-G.R. SP No. 62959, finding the dismissal of
respondent illegal. Likewise challenged is the May 7, 2002 Resolution denying reconsideration.

On May 1, 1997, respondent was employed by petitioner R.B. Michael Press as an offset machine operator,
whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays to Saturdays, and he was paid PhP 230 a
day. During his employment, Galit was tardy for a total of 190 times, totaling to 6,117 minutes, and was absent
without leave for a total of nine and a half days.

On February 22, 1999, respondent was ordered to render overtime service in order to comply with a job order
deadline, but he refused to do so. The following day, February 23, 1999, respondent reported for work but
petitioner Escobia told him not to work, and to return later in the afternoon for a hearing. When he returned, a
copy of an Office Memorandum was served on him, as follows:

To : Mr. Nicasio Galit

From : ANNALENE REYES-ESCOBIA

Re : WARNING FOR DISMISSAL; NOTICE OF

HEARING
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This warning for dismissal is being issued for the following offenses:

(1) habitual and excessive tardiness

(2) committing acts of discourtesy, disrespect in addressing superiors

(3) failure to work overtime after having been instructed to do so

(4) Insubordination - willfully disobeying, defying or disregarding company authority

The offenses youve committed are just causes for termination of employment as provided by the Labor
Code. You were given verbal warnings before, but there had been no improvement on your conduct.

Further investigation of this matter is required, therefore, you are summoned to a hearing at 4:00 p.m.
today. The hearing wills determine your employment status with this company.

(SGD) ANNALENE REYES-ESCOBIA

Manager[1]

On February 24, 1999, respondent was terminated from employment. The employer, through petitioner
Escobia, gave him his two-day salary and a termination letter, which reads:

February 24, 1999

Dear Mr. Nicasio Galit,

I am sorry to inform you that your employment with this company has been terminated effective today,
February 24, 1999. This decision was not made without a thorough and complete investigation.

You were given an office memo dated February 23, 1999 warning you of a possible dismissal. You were given
a chance to defend yourself on a hearing that was held in the afternoon of the said date.

During the hearing, Mrs. Rebecca Velasquez and Mr. Dennis Reyes, were present in their capacity as
Production Manager and Supervisor, respectively.

Your admission to your offenses against the company and the testimonies from Mrs. Velasquez and Mr. Reyes
justified your dismissal from this company,

Please contact Ms. Marly Buita to discuss 13th-Month Pay disbursements.

Cordially,

(SGD) Mrs. Annalene Reyes-Escobia[2]

Respondent subsequently filed a complaint for illegal dismissal and money claims before the National Labor
Relations Commission (NLRC) Regional Arbitration Branch No. IV, which was docketed as NLRC Case No.
RAB IV-2-10806-99-C. On October 29, 1999, the labor arbiter rendered a Decision,

WHEREFORE, premises considered, there being a finding that complainant was illegally dismissed,
respondent RB MICHAEL PRESS/Annalene Reyes-Escobia is hereby ordered to reinstate complainant to his

77
former position without loss of seniority rights and other benefits, and be paid his full backwages computed
from the time he was illegally dismissed up to the time of his actual reimbursement.

All other claims are DISMISSED for lack of evidence.

On January 3, 2000, petitioners elevated the case to the NLRC and their appeal was docketed as NLRC NCR
CA No. 022433-00. In the April 28, 2000 Decision, the NLRC dismissed the appeal for lack of merit.

Not satisfied with the ruling of the NLRC, petitioners filed a Petition for Certiorari with the CA. On November
14, 2001, the CA rendered its judgment affirming with modification the NLRCs Decision, thus:

WHEREFORE, the petition is DISMISSED for lack of merit. The Decision of public respondent is accordingly
modified in that the basis of the computation of the backwages, 13th month pay and incentive pay should be
respondents daily wage of P230.00; however, backwages should be computed from February 22, 1999 up to
the finality of this decision, plus the 13th month and service incentive leave pay.[4]

The CA found that it was not the tardiness and absences committed by respondent, but his refusal to render
overtime work on February 22, 1999 which caused the termination of his employment. It ruled that the time
frame in which respondent was afforded procedural due process is dubitable; he could not have been afforded
ample opportunity to explain his side and to adduce evidence on his behalf. It further ruled that the basis for
computing his backwages should be his daily salary at the time of his dismissal which was PhP 230, and that
his backwages should be computed from the time of his dismissal up to the finality of the CAs decision.

On December 3, 2001, petitioners asked for reconsideration[5] but was denied in the CAs May 7, 2002
Resolution.

Persistent, petitioners instituted the instant petition raising numerous issues which can be summarized, as
follows: first, whether there was just cause to terminate the employment of respondent, and whether due
process was observed in the dismissal process; and second, whether respondent is entitled to backwages and
other benefits despite his refusal to be reinstated.

The Courts Ruling

It is well settled that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but
even finality if the findings are supported by substantial evidence. This is especially so when such findings of
the labor arbiter were affirmed by the CA.[6] However, this is not an iron-clad rule. Though the findings of fact
by the labor arbiter may have been affirmed and adopted by the NLRC and the CA as in this case, it cannot
divest the Court of its authority to review the findings of fact of the lower courts or quasi-judicial agencies when
it sees that justice has not been served, more so when the lower courts or quasi-judicial agencies findings are
contrary to the evidence on record or fail to appreciate relevant and substantial evidence presented before it. [7]

Petitioners aver that Galit was dismissed due to the following offenses: (1) habitual and excessive tardiness;
(2) commission of discourteous acts and disrespectful conduct when addressing superiors; (3) failure to render
overtime work despite instruction to do so; and (4) insubordination, that is, willful disobedience of, defiance to,
or disregard of company authority.[8] The foregoing charges may be condensed into: (1) tardiness constituting
neglect of duty; (2) serious misconduct; and (3) insubordination or willful disobedience.

Respondents tardiness cannot be considered condoned by petitioners

Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to work on
time everyday exhibit the employees deportment towards work. Habitual and excessive tardiness is inimical to
the general productivity and business of the employer. This is especially true when the tardiness and/or
absenteeism occurred frequently and repeatedly within an extensive period of time.
78
In resolving the issue on tardiness, the labor arbiter ruled that petitioners cannot use respondents habitual
tardiness and unauthorized absences to justify his dismissal since they had already deducted the
corresponding amounts from his salary.Furthermore, the labor arbiter explained that since respondent was not
subjected to any admonition or penalty for tardiness, petitioners then had condoned the offense or that the
infraction is not serious enough to merit any penalty. The CA then supported the labor arbiters ruling by
ratiocinating that petitioners cannot draw on respondents habitual tardiness in order to dismiss him since there
is no evidence which shows that he had been warned or reprimanded for his excessive and habitual tardiness.

We find the ruling incorrect.

The mere fact that the numerous infractions of respondent have not been immediately subjected to sanctions
cannot be interpreted as condonation of the offenses or waiver of the company to enforce company rules. A
waiver is a voluntary and intentional relinquishment or abandonment of a known legal right or privilege. [9] It has
been ruled that a waiver to be valid and effective must be couched in clear and unequivocal terms which leave
no doubt as to the intention of a party to give up a right or benefit which legally pertains to him. [10] Hence, the
management prerogative to discipline employees and impose punishment is a legal right which cannot, as a
general rule, be impliedly waived.

In Cando v. NLRC,[11] the employee did not report for work for almost five months when he was charged for
absenteeism.The employee claimed that such absences due to his handling of union matters were
condoned. The Court held that the employee did not adduce proof to show condonation coupled with the fact
that the company eventually instituted the administrative complaint relating to his company violations.

Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation or waiver
on the part of management to forego the exercise of its right to impose sanctions for breach of company rules.

In the case at bar, respondent did not adduce any evidence to show waiver or condonation on the part of
petitioners. Thus the finding of the CA that petitioners cannot use the previous absences and tardiness
because respondent was not subjected to any penalty is bereft of legal basis. In the case of Filipio v. The
Honorable Minister Blas F. Ople,[12] the Court, quoting then Labor Minister Ople, ruled that past infractions for
which the employee has suffered the corresponding penalty for each violation cannot be used as a justification
for the employees dismissal for that would penalize him twice for the same offense. At most, it was explained,
these collective infractions could be used as supporting justification to a subsequent similar offense. In
contrast, the petitioners in the case at bar did not impose any punishment for the numerous absences and
tardiness of respondent. Thus, said infractions can be used collectively by petitioners as a ground for
dismissal.

The CA however reasoned out that for respondents absences, deductions from his salary were made and
hence to allow petitioners to use said absences as ground for dismissal would amount to double jeopardy.

This postulation is incorrect.

Respondent is admittedly a daily wage earner and hence is paid based on such arrangement. For said daily
paid workers, the principle of a days pay for a days work is squarely applicable. Hence it cannot be construed
in any wise that such nonpayment of the daily wage on the days he was absent constitutes a penalty.

Insubordination or willful disobedience

While the CA is correct that the charge of serious misconduct was not substantiated, the charge of
insubordination however is meritorious.

For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the employees
assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the
79
order violated must have been reasonable, lawful, made known to the employee, and must pertain to the
duties which he had been engaged to discharge.[13]

In the present case, there is no question that petitioners order for respondent to render overtime service to
meet a production deadline complies with the second requisite. Art. 89 of the Labor Code empowers the
employer to legally compel his employees to perform overtime work against their will to prevent serious loss or
damage:

Art. 89. EMERGENCY OVERTIME WORK

Any employee may be required by the employer to perform overtime work in any of the following cases

(c) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid
serious loss or damage to the employer or some other cause of similar nature;

In the present case, petitioners business is a printing press whose production schedule is sometimes flexible
and varying. It is only reasonable that workers are sometimes asked to render overtime work in order to meet
production deadlines.

Dennis Reyes, in his Affidavit dated May 3, 1999, stated that in the morning of February 22, 1999, he
approached and asked respondent to render overtime work so as to meet a production deadline on a printing
job order, but respondent refused to do so for no apparent reason. Respondent, on the other hand, claims that
the reason why he refused to render overtime work was because he was not feeling well that day.

The issue now is, whether respondents refusal or failure to render overtime work was willful; that is, whether
such refusal or failure was characterized by a wrongful and perverse attitude. In Lakpue Drug Inc. v. Belga,
willfulness was described as characterized by a wrongful and perverse mental attitude rendering the
employees act inconsistent with proper subordination.[14]The fact that respondent refused to provide overtime
work despite his knowledge that there is a production deadline that needs to be met, and that without him, the
offset machine operator, no further printing can be had, shows his wrongful and perverse mental attitude; thus,
there is willfulness.

Respondents excuse that he was not feeling well that day is unbelievable and obviously an afterthought. He
failed to present any evidence other than his own assertion that he was sick. Also, if it was true that he was
then not feeling well, he would have taken the day off, or had gone home earlier, on the contrary, he stayed
and continued to work all day, and even tried to go to work the next day, thus belying his excuse, which is, at
most, a self-serving statement.

After a re-examination of the facts, we rule that respondent unjustifiably refused to render overtime work
despite a valid order to do so. The totality of his offenses against petitioner R.B. Michael Press shows that he
was a difficult employee. His refusal to render overtime work was the final straw that broke the camels back,
and, with his gross and habitual tardiness and absences, would merit dismissal from service.

Due process: twin notice and hearing requirement

On the issue of due process, petitioners claim that they had afforded respondent due process. Petitioners
maintain that they had observed due process when they gave respondent two notices and that they had even
scheduled a hearing where he could have had explained his side and defended himself.

We are not persuaded.

We held in Agabon v. NLRC:

80
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2)
if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his
separation.[15]

Under the twin notice requirement, the employees must be given two (2) notices before his employment could
be terminated: (1) a first notice to apprise the employees of their fault, and (2) a second notice to communicate
to the employees that their employment is being terminated. Not to be taken lightly of course is the hearing or
opportunity for the employee to defend himself personally or by counsel of his choice.

In King of Kings Transport v. Mamac,[16] we had the occasion to further elucidate on the procedure relating to
the twin notice and hearing requirement, thus

(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period.Reasonable opportunity under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order
to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein
the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against
them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by
the management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the employees
have been considered; and (2) grounds have been established to justify the severance of their employment.

In addition, if the continued employment poses a serious and imminent threat to the life or property of the
employers or of other employees like theft or physical injuries, and there is a need for preventive
suspension,[17] the employers can immediately suspend the erring employees for a period of not more than 30
days. Notwithstanding the suspension, the employers are tasked to comply with the twin notice requirement
under the law. The preventive suspension cannot replace the required notices.[18] Thus, there is still a need to
comply with the twin notice requirement and the requisite hearing or conference to ensure that the employees
are afforded due process even though they may have been caught in flagrante or when the evidence of the
commission of the offense is strong.

On the surface, it would seem that petitioners observed due process (twin notice and hearing requirement): On
February 23, 1999 petitioner notified respondent of the hearing to be conducted later that day. On the same
day before the hearing, respondent was furnished a copy of an office memorandum which contained a list of
his offenses, and a notice of a scheduled hearing in the afternoon of the same day. The next day, February 24,
1999, he was notified that his employment with petitioner R.B. Michael Press had been terminated.
81
A scrutiny of the disciplinary process undertaken by petitioners leads us to conclude that they only paid lip
service to the due process requirements.

The undue haste in effecting respondents termination shows that the termination process was a mere
simulationthe required notices were given, a hearing was even scheduled and held, but respondent was not
really given a real opportunity to defend himself; and it seems that petitioners had already decided to dismiss
respondent from service, even before the first notice had been given.

Anent the written notice of charges and hearing, it is plain to see that there was merely a general description of
the claimed offenses of respondent. The hearing was immediately set in the afternoon of February 23, 1999the
day respondent received the first notice.Therefore, he was not given any opportunity at all to consult a union
official or lawyer, and, worse, to prepare for his defense.

Regarding the February 23, 1999 afternoon hearing, it can be inferred that respondent, without any lawyer or
friend to counsel him, was not given any chance at all to adduce evidence in his defense. At most, he was
asked if he did not agree to render overtime work on February 22, 1999 and if he was late for work for 197
days. He was never given any real opportunity to justify his inability to perform work on those days. This is the
only explanation why petitioners assert that respondent admitted all the charges.

In the February 24, 1999 notice of dismissal, petitioners simply justified respondents dismissal by citing his
admission of the offenses charged. It did not specify the details surrounding the offenses and the specific
company rule or Labor Code provision upon which the dismissal was grounded.

In view of the infirmities in the proceedings, we conclude that termination of respondent was railroaded in
serious breach of his right to due process. And as a consequence of the violation of his statutory right to due
process and following Agabon, petitioners are liable jointly and solidarily to pay nominal damages to the
respondent in the amount of PhP 30,000.[19]

WHEREFORE, premises considered, the November 14, 2001 CA Decision in CA-G.R. SP No. 62959, the April
28, 2000 Decision of the NLRC in NLRC NCR CA No. 022433-00, and the October 29, 1999 Decision of the
Labor Arbiter in NLRC Case No. RAB IV-2-10806-99-C are hereby REVERSED and SET ASIDE. The Court
declares respondents dismissal from employment VALID and LEGAL. Petitioners are, however, ordered jointly
and solidarily to pay respondent nominal damages in the amount of PhP 30,000 for violation of respondents
right to due process No costs. SO ORDERED.

16. CALTEX (PHILIPPINES), INC., WILLIAM P. TIFFANY, E.C. CAVESTANY, and E.M. CRUZ,
Petitioners, Versus HERMIE G. AGAD and CALTEX UNITED SUPERVISORS ASSOCIATION,
Respondents
G.R. No. 162017 April 23, 2010

Before the Court is a petition for review on certiorari[1] assailing the Decision[2] dated 22 May 2003 and
Resolution[3] dated 27 January 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 74199, which reversed
the Decision[4] dated 6 June 2001 and Resolution[5] dated 24 September 2002 of the National Labor and
Relations Commission (NLRC) in NLRC NCR CA No. 018872-99.

On 1 September 1983, petitioner Caltex Philippines, Inc. (Caltex) employed respondent Hermie G. Agad
(Agad) as Depot Superintendent-A on a probationary basis for six months. On 28 February 1984, Agad
became a regular employee with a monthly salary of P2,560 and cost of living assistance of P380.

For the next eleven years, Agad obtained various commendations[6] and held the positions of Depot
Superintendent-A, Field Engineer, Senior Superintendent, and Bulk Depot Superintendent until his dismissal
on 8 August 1994. Agad received a monthly gross salary of P31,000, a mid-year bonus equivalent to one
months salary and 13th month pay at the time of his termination.
82
After Agad had served for two years since 1990 as Superintendent of the Tacloban Bulk Depot (Depot) in
Leyte, Caltex transferred Agad to Bauan Bulk Depot in Batangas effective 16 May 1992. [7]

To transfer his belongings from Leyte to Batangas, Agad secured the carpentry services of Alfredo Delda
(Delda), the owner of A.A. Delda Engineering Services (Delda Services) for the construction of two
crates. Agad paid Delda P15,500, evidenced byOfficial Receipt No. 0970[8] dated 12 May 1992. Agad
submitted the receipt sometime in August 1992 and Caltex reimbursed him the said amount.

On 13 April 1993, Caltex conducted its regular audit of employees account and expenses as of 31 December
1992.[9] The company auditor of Caltex verified the crating expense incurred by Agad with Delda. Delda,
through an Affidavit dated 5 May 1993,[10]disclosed that Delda Services did not perform any crating service for
Agad or receive the amount of P15,500 as stated in the official receipt. Delda alleged that he was forced by
Agad to issue the official receipt in order to get a favorable recommendation from the incoming superintendent
of the Depot.

Further investigations revealed that Arsenio Asperas (Asperas), a carpenter from Tacloban, was
commissioned by Agad to build two wooden crates on 12 May 1992. Asperas attested that Agad paid him the
amount of P400 and he completed the work in 2 days beside the quarters of Agad inside the Depot.[11] Basilia
Villalino (Villalino), a household staff of the Depot Staff House, corroborated Asperas statement in a Sworn
Testimony dated 24 May 1993 that Agad did hire Asperas to make two wooden crates inside the Depot before
he left for his next post.12]

In another audit report dated 12 May 1993,[13] the company auditor declared that 190 pieces of 11 kg. liquefied
petroleum gas (LPG) cylinders from the Depot were allegedly withdrawn for scrap and repair purposes without
proper documentation on 8 February 1991 when Agad was still depot superintendent. Isidro B. Millanes
(Millanes), the depots LPG cylinder repair/reconditioning contractor and owner of IBM Enterprises, claimed that
the LPG cylinders were hauled to his compound and allegedly later sold, upon the express instructions of
Agad, to Leyte Development Corporation and Ernesto Mercado, a service station dealer.

On 5 July 1993, petitioner E.C. Cavestany (Cavestany), the Regional Manager of Caltex, issued a
Memorandum[14] to Agad directing him to explain the following audit review findings: (1) the questionable
reimbursement of crating expense; and (2) the alleged unauthorized withdrawal and sale of 190 pieces of LPG
cylinders.

On 29 July 1993, Agad sent his reply[15] answering all the charges against him. Agad stated: (1) that Delda
Services constructed the two crates worth P15,500 as evidenced by an official receipt issued by Delda; and (2)
that the withdrawal of the scrap LPG cylinders formed part of his housekeeping duties as depot
superintendent. The scrap materials consisting of tanks, pumps and pipelines of Gebarin, a logging account of
Caltex located in Marabut, Samar, were bidded out to a certain Rogelio Boy H. Bato on an as is, where is
basis.[16] However, the scrap materials went missing and Boy Bato demanded that such be replaced with
equivalent materials. The scrap LPG cylinders were released instead after Agad secured the approval of his
superiors as evidenced in a Memorandum dated 12 February 1992.[17] After the approval, Boy Batos buyer, a
certain Mr. Ang, allegedly acquired the scrap cylinders from IBM Enterprises.

Caltex created an investigating panel chaired by Cavestany to look into the offenses allegedly committed. On
17 August 1993, the investigating panel held its first formal inquiry.[18] The transcript of the investigation was
dated 2 September 1993.[19]

On 29 April 1994, Caltex placed Agad under preventive suspension. On 26 May 1994 or almost 10 months
after the first formal inquiry, the investigating panel conducted another hearing. [20] Two other hearings were
held on 14 June and 6 July 1994.

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In a Confidential Memorandum dated 8 August 1994,[21] Cavestany informed Agad of his dismissal on the
grounds of serious misconduct and loss of trust and confidence, both just causes for termination of
employment. Agad received the memorandum on 25 August 1994.

On 1 September 1994, respondents Agad and Caltex United Supervisors Association filed a complaint[22] with
the Labor Arbiter (LA) for illegal dismissal, illegal suspension with prayer for full backwages of P31,000 per
month from 25 August 1994 until reinstatement, moral damages of P5,000,000, exemplary damages
of P5,000,000 and 10% of the total monetary award as attorneys fees against petitioners Caltex and its officers
William P. Tiffany, President and Chief Executive Officer; E.M. Cruz, General Manager for Distribution; and
Cavestany.

On 16 November 1998, the LA rendered a decision in favor of Agad.[23] The LA held that there were no just
causes for Agads termination of employment. On the charge of fraudulent reimbursement of crating expense,
the LA found no basis for this since Delda issued an official receipt which served as best evidence that the
crating expense was actually incurred. According to the LA, Deldas claim that he was only forced by Agad to
issue the receipt for fear of losing his job as a contractor does not appear to be credible. In the administrative
inquiry held on 26 May 1994, it was clearly established that Delda held a grudge against Agad since Agad did
not recommend him to be a contractor of Caltex for failure to meet the minimum capital required of aspiring
contractors.Also, the LA did not give any weight to the testimonies of Asperas and Villalino since they were not
presented for cross-examination during the investigation.

As to the charge of unauthorized withdrawal and sale of the LPG cylinders, the LA ruled that Agad was denied
the right to present his witnesses and other evidence in support of his defense which constitutes a denial of
due process. Thus, the LA ruled that Agad had been illegally dismissed by Caltex. The dispositive portion of
the LAs decision states:

Since there was no just cause for termination of the services of the complainant; and since the complainant
was not given due process in the proceedings to terminate his services; and since he was illegally placed
under preventive suspension, we therefore rule that the complainant is entitled to the twin remedies of
reinstatement, with full backwages, from the time of his dismissal until his reinstatement to his former position
as Depot Superintendent of the Bauan Bulk Depot, or to a similar position, without any loss of seniority rights.

By reason of the arbitrary nature of the termination of the service of the complainant, and the denial of due
process in the denial of his right to present evidence in his defense in the administrative inquiry prior to the
termination of his services, we hold further the respondents liable to the complainant for moral damages, in the
sum of P5,000,000.00; exemplary damages in the sum of P5,000,000.00; and attorneys fees in the sum of ten
(10%) percent of the total monetary awards. SO ORDERED.[24]

Caltex filed an appeal with the NLRC.

The Ruling of the NLRC

On 6 June 2001, the NLRC reversed the decision of the LA. The NLRC held that there existed just causes
which justified Agads dismissal. With regard to the first allegation, the NLRC ruled that the amount of crating
expense reimbursed by Agad was fictitious.The fact that a receipt was issued by Delda does not conclusively
prove that the crating service was performed by Delda. At the most, the existence of the receipt only proves its
execution. The NLRC declared that Deldas testimony, made under oath, enjoys the presumption of regularity
and good faith. Corroborated by two other witnesses, Asperas and Villalino, Deldas testimony clearly
established that Agad was dishonest in his dealings. The NLRC added that even if the amount involved was
only worth P15,500, the same was of no moment since what was involved was Agads propensity to commit
dishonesty against the company. As a supervisor, a greater degree of diligence, honesty and trust was
expected of him. The NLRC further stated that Caltex had no bad motive to pick on Agad and tell lies about

84
him if indeed he was trustworthy since Agad was given awards and commendations before the discovery of the
questioned acts.

On the second allegation, the NLRC ruled that Agad had no authority to withdraw the LPG cylinders from the
Depot. The NLRC declared that Agad did not observe existing company rules and regulations in procuring the
required forms, in the submission of periodic LPG cylinders inventory and in selling the LPG cylinders without
the requisite bidding. Thus, the NLRC concluded that Caltex validly dismissed Agad. The dispositive portion of
the NLRCs decision states:

WHEREFORE, finding sufficient reasons/grounds to warrant reversal of the findings of the Arbiter a quo, the
assailed decision is hereby SET ASIDE and a new one entered ordering the DISMISSAL of the complaint for
lack of basis both in fact and in law.

Agad filed a Motion for Reconsideration which was denied in a Resolution dated 24 September 2002.

Agad then filed a petition for certiorari under Rule 65 with the CA. Agad sought the nullification of the decision
of the NLRC.

The Ruling of the Court of Appeals

On 22 May 2003, the CA modified the judgment of the NLRC and ruled in favor of Agad. On the issue of
fraudulent reimbursement of crating expense, the CA concurred with the LA. According to the CA, the
regularity of the official receipt remained untarnished since the only other proof relied upon by petitioners,
Deldas affidavit, failed to substantiate his allegations. Delda never assailed the due execution of the receipt
and even admitted that he actually issued the receipt. The supporting affidavits of Asperas and Villalino, since
they were not cross-examined, must be rejected for being hearsay. Thus, no sufficient evidence was presented
to prove that the amount in the receipt was fictitious. Further, the CA indicated that Caltex did not make any
limitations to the crating expense to be reimbursed such that Agad was entitled to move his personal and
household effects at reasonable costs.

On the second issue of unauthorized withdrawal and sale of LPG cylinders, the CA agreed with the NLRC that
Agad did not comply with company rules and regulations. Nonetheless, the CA held that the penalty of
dismissal imposed upon Agad was too harsh considering that this was his first infraction and that Agad had
been awarded several commendations in the past and had worked for Caltex for more than 10 years. The
dispositive portion of the CAs decision states:

WHEREFORE, premises considered, the petition is hereby GRANTED, and the judgment of the NLRC is
hereby MODIFIED. Accordingly, finding no just cause for the termination of employment of the petitioner
Hermie G. Agad, we therefore rule that the petitioner was illegally dismissed; he should be entitled
to reinstatement, with full backwages, from the time of his illegal dismissal until his reinstatement to his former
position as Depot Superintendent of the Bauan Bulk Depot, or to a similar position without any loss of seniority
rights.

Caltex filed a Motion for Reconsideration which was denied in a Resolution dated 27 January 2004.

Hence, the instant petition.

The Issue

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The main issue is whether Caltex legally terminated Agads employment on just causes: (1) acts tantamount to
serious misconduct and willful violation of company rules and regulations; and (2) willful breach of trust and
confidence as Depot Superintendent.

The Courts Ruling

Article 282 of the Labor Code states:

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

In termination cases, the burden of proof rests on the employer to show that the dismissal is for just cause.
When there is no showing of a clear, valid, and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination
was for a valid or authorized cause.[27]

The quantum of proof which the employer must discharge is substantial evidence. An employees dismissal due
to serious misconduct and loss of trust and confidence must be supported by substantial evidence. Substantial
evidence is that amount of relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.[28]

In the present case, petitioners terminated Agads employment based on these acts: (1) Agads submission of a
fictitious crating expense amounting to P15,1500; and (2) the unauthorized withdrawal and sale of 190 pieces
of 11 kg. LPG cylinders for his personal gain and profit.

Crating expense is reasonable

Petitioners insist that the CA erred in ruling that the crating expense of P15,500 was justifiable without however
stating the basis for such a ruling. According to petitioners, the records prove that there were more than ample
evidence to show that the crating expense was fictitious. Petitioners reiterate the sworn testimonies of Delda,
Esperas, and Villalino, and that of Augusto Cabugao, the Regional Audit Manager of Caltex, who testified that
the crating expense of P15,500 was unreasonably high considering that depot houses of Caltex were fully
furnished and expenses incurred in transferring personal effects were usually very small.

Respondents, on the other hand, maintain that the crating expense was necessary and reasonable under the
circumstances. First, Caltex readily approved the reimbursement claim when Agad submitted the official
receipt. It was only a year later, during a regular audit, when Caltex sought Deldas affidavit of denial when the
company questioned the authenticity and reasonableness of the amount of the crating expense. Second, of the
first three witnesses for the petitioners, only Delda was presented for cross-examination during the
administrative investigation. Thus, the affidavits of Esperas and Villalino remain hearsay and deserve scant
86
consideration. Last, George Taberrah, the former Manager for Distribution of Caltex, testified on 26 February
1996 that the amount of P15,500 for crating expense was reasonable. Even Roger San Jose, the former
auditor of Caltex, testified on the necessity and reasonableness of said amount.

In R & E Transport, Inc. v. Latag,[29] we held that factual issues may be reviewed by the CA when the findings
of fact of the NLRC conflict with those of the LA. By the same token, this Court may review factual conclusions
of the CA when they are contrary to those of the NLRC or of the LA.

In the present case, the evidence of the parties with respect to the crating expense reimbursed by Agad finds
discord on the official receipt issued by Delda vis-a-vis Deldas sworn testimony denying that he received the
amount stated in the receipt or rendered any crating service for Agad. The petitioners presented the affidavits
of Asperas and Villalino to corroborate Deldas testimony while Agad relied on the official receipt as the best
evidence that he contracted Deldas services and that Delda indeed issued said receipt.The decisions of the
CA and NLRC produced different factual conclusions on this issue.

After a careful review of the records, we find no cogent reason to disturb the findings of the CA.

First, the official receipt submitted by Agad serves as the best evidence of payment and is presumed regular
on its face absent any showing to the contrary.

Second, records show that the reimbursement of the crating expense was approved by Agads superior upon
presentment of the receipt. At the time, Agads superior did not mention that the amount of the crating expense
incurred was unreasonable.

Third, Delda, in his affidavit, disclosed that he was forced to issue the receipt in order to get a favorable
recommendation from the incoming superintendent who would replace Agad in the Depot. However, in the
same affidavit, Delda mentioned that he had been a standby worker at the Depot from 1956 to 1982 and a
piece-worker from 1982 up to 1993, the date he executed the affidavit. It appears then that Delda had
established a name for himself and his business with Caltex. Any favorable recommendation from Agad, as the
outgoing superintendent, would not provide much impact compared to the reputation he had built all those
years.

Fourth, the testimonies of the two corroborating witnesses, Esperas and Villalino, cannot be given credence
since Agad was not given an opportunity to cross-examine them. Their testimonies are considered as hearsay
evidence.

Last, petitioners did not present any other evidence to show that Agad violated company policy dealing with
crating expenses to be limited to a certain amount. Reasonableness was the only criterion given by the
employer.

Thus, all these taken into consideration, we conclude that petitioners were not able to fully substantiate the
alleged fictitious reimbursement of the crating expense. Deldas testimony alone, without any corroborating
evidence to prove otherwise, is insufficient to overcome the presumption of regularity in the issuance of his
own official receipt which he gave to Agad.

Withdrawal and sale of 190 pieces of LPG cylinders is unauthorized

Petitioners assert that Agad committed serious violation of internal control procedures and company policies
due to the following: (1) no Records of Materials Received/Delivered (RMRD) were issued to cover the
withdrawal of the empty cylinders for repair purposes; (2) the testimony of Millanes demonstrates that the
cylinders were initially stored at his premises on 8 February 1991 and later sold as good units without bidding,
upon the instructions of Agad, to Leyte Development and Ernesto Mercado; (3) no evidence was submitted to
show that the sales proceeds were turned over to Caltex and petitioners surmise that the total prevailing price
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of the LPG cylinders would have been from a low of P95,000 to a high of P133,000; (4) the periodic report of
inventory of the LPG cylinders, considered part of storehouse materials, to Head Office Accounting was not
submitted by the depot; and (5) the depot clerk acted beyond his authority when he approved the gate passes
for the withdrawal of the cylinders.[30]

Respondents, on the other hand, maintain the following: (1) that as depot superintendent, Agad had the
authority to transfer materials, including scrap, from one place to another; (2) Agad had specific authority, per
Memorandum dated 12 February 1992, to withdraw the scrap materials as replacement for the missing scrap
tanks, pumps and pipelines earlier sold to Boy Bato; (3) the withdrawal of the LPG cylinders was covered by
gate passes 8499 and 8500, negating any fraudulent intent on Agads part; and (4) petitioners own witness,
Millanes, testified that the LPG cylinders withdrawn were actually junk or scrap materials and of no accounting
value. In addition, even assuming that the withdrawal of the LPG cylinders was unauthorized, the penalty of
dismissal is too harsh a penalty.

We agree with petitioners.

The findings of the CA in the present case revealed:

With regard to the second issue, the petitioner contends that the withdrawal/sale of 190 LPG cylinders in the
Tacloban Bulk Depot was well within his authority as a Depot Superintendent and covered by an authority
stated in an instrument, as a consequence of a contract of sale with Mr. Bato. Furthermore, such cylinders
were already considered as scrap or without monetary value. Therefore, its withdrawal/sale could not
constitute just cause for dismissal.

The contention is without merit. Although his position as Depot Superintendent includes such authority, as part
of his housekeeping duties, it does not automatically justify his acts which were contrary to company rules and
regulations. The company rules required the issuance of RMRDs for any company properties with value to be
withdrawn from the Bulk Depot. Petitioner failed to comply with this rule.Furthermore, he ordered the sale of
the cylinders without bidding, and there were no evidence that the proceeds of such sale were turned over to
the company. Mere existence of authority does not justify his acts, he must show that he properly exercised
such authority as contemplated in the company rules and regulations, especially when the act is not within his
discretion.

His contention that such withdrawal mas merely a part of a contract of sale between the company and Mr.
Bato, is likewise erroneous. The instrument never mentioned of any LPG cylinders, what was mentioned
therein was 3,000 B.I. plates. And even if the contract involved LPG cylinders, still, its withdrawal must be
accounted for.

The petitioners assumption that the subject LPG cylinders were merely scrap materials is likewise erroneous.
The cylinders, although declared as scraps, still has monetary value because it can still be sold even as scrap
materials. Moreover, even if such cylinders were merely scrap, the petitioner cannot just appropriate them
without the companys consent. Being company property, its disposal is still within the discretion and
prerogative of the company.[31]

In the same manner, the NLRC, in its Decision dated 6 June 2001, held:

x x x It was sufficiently established that complainant Agad had no authority to withdraw the LPG cylinders from
the Tacloban Bulk Depot.Complainant Agads claim that he merely withdrew the LPG cylinders in view of the
loss of certain scrap materials earlier sold to Mr. Boy Bato is belied by the fact that the alleged loss was not
established. On the other hand, the records show that complainant Agads request for the withdrawal of scrap
materials only covered 3,000 kilograms of B.I. plates. This request, however, did not include the LPG cylinders,
numbering 190, which were withdrawn from the Tacloban Depot.

88
Complainant Agad also did not observe the existing company rules and regulations on the withdrawal of LPG
cylinders from the Tacloban Bulk Depot. According to the Audit Report, which was not controverted by
complainant Agad, no Records of Materials Received/Delivered were issued to cover the withdrawal of the
cylinders. Also, the periodic inventory of the LPG cylinders was not submitted by complainant Agad to the
accounting department. Further, the LPG cylinders were not sold through bidding, which was corroborated by
the statement of Mr. Isidro B. Millanes, who testified that the subject LPG cylinders were first stored at his
premises and later sold without bidding upon the express instructions of complainant Agad.

In this regards, it cannot be validly claimed that the LPG cylinders in question were mere scrap materials, i.e.
they had no monetary value anymore and therefore not subject to the strict requirement laid down by the
company rules and regulations. As testified to by Mr. Cabugao, and by no less than complainant Agad himself
and his own witnesses, Mr. George Taberrah, and Mr. Roger San Jose, Jr., the LPG containers have monetary
value as they can still be sold even as scrap.[32]

The findings of the CA and NLRC establish the following: (1) Agads request for withdrawal of the 190 pieces of
LPG cylinders as stated in a Memorandum dated 12 February 1992 cannot be given credence since the
Memorandum pertains to the replacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms
of black iron plates and not to the subject LPG cylinders; (2) Agad did not observe Caltexs rules and
regulations when he transferred the said cylinders to Millanes compound without the RMRD form as required
under Caltexs Field Accounting Manual; (3) Agad gave specific instructions to Millanes to sell the cylinders
without bidding to third parties in violation of company rules; (4) Agad failed to submit the periodic inventory
report of the LPG cylinders to the accounting department; (5) Agad did not remit the proceeds of the sale of the
LPG cylinders; and (6) even if considered as scrap materials, the LPG cylinders still had monetary value which
Agad cannot appropriate for himself without Caltexs consent.

Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company
property. This act is akin to a serious misconduct or willful disobedience by the employee of the lawful orders
of his employer in connection with his work, a just cause for termination of employment recognized under
Article 282(a) of the Labor Code.

Misconduct has been defined as a transgression of some established and definite rule of action, a forbidden
act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be
serious, the misconduct must be of such grave and aggravated character.[33]

Further, Agads conduct constitutes willful breach of the trust reposed in him, another just cause for termination
of employment recognized under Article 282(c) of the Labor Code. Loss of trust and confidence, as a just
cause for termination of employment, is premised on the fact that the employee concerned holds a position of
responsibility, trust and confidence. The employee must be invested with confidence on delicate matters, such
as the custody, handling, care and protection of the employers property and funds.[34]

As a superintendent, Agad occupied a position tasked to perform key and sensitive functions which necessarily
involved the custody and protection of Caltexs properties. Consequently, Agad comes within the purview of the
trust and confidence rule.

In Sagales v. Rustans Commercial Corporation,[35] we held that in loss of trust and confidence, as a just cause
for dismissal, it is sufficient that there must only be some basis for the loss of trust and confidence or that there
is reasonable ground to believe, if not to entertain the moral conviction, that the employee concerned is
responsible for the misconduct and that his participation in the misconduct rendered him absolutely unworthy
of trust and confidence.

In sum, even if Agad did not commit the alleged charge of fictitious reimbursement of crating expense, he was
found to have acted without authority, a serious infraction amounting to theft of company property, in the
withdrawal and sale of the 190 pieces of LPG cylinders owned by the company. Caltex, as the employer, has

89
discharged the burden of proof necessary in terminating the services of Agad, who was ascertained to have
blatantly abused his position and authority. Thus, Agads dismissal from employment based on (1) acts
tantamount to serious misconduct or willful violation of company rules and regulations; and (2) willful breach of
trust and confidence as Depot Superintendent was lawful and valid under the circumstances as mandated by
Article 282 (a) and (c) of the Labor Code.

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 22 May 2003 and Resolution
dated 27 January 2004 of the Court of Appeals in CA-G.R. SP No. 74199. We DECLARE as valid the
termination from employment of respondent Hermie G. Agad for just causes prescribed under the law.
SO ORDERED.

17. THE ORCHARD GOLF AND COUNTRY CLUB, Petitioner, vs. AMELIA R.
FRANCISCO, Respondent
G.R. No. 178125 March 18, 2013

DEL CASTILLO, J.:

Constructive dismissal occurs not when the employee ceases to report for work, but when the unwarranted
acts of the employer are committed to the end that the employee's continued employment shall become so
intolerable. In these difficult times, an employee may he left with no choice but to continue with his employment
pespite abuses committed against him by the employer, and even during the pendency of a labor dispute
between them. This should not be taken against the employee. Instead, we must share the burden of his plight,
ever aware of the precept that necessitous men are not free men.

Assailed in this Petition for Review1 is the January 25, 2007 Decision2 of the Court of Appeals (CA) which
dismissed the Petition in CA-G.R. SP No. 80968 and affirmed the November 19, 2002 Resolution3 of the
National Labor Relations Commission (NLRC). Likewise assailed is the May 23, 2007 CA Resolution4 denying
petitioner's Motion for Reconsideration.

Factual Antecedents

Petitioner, The Orchard Golf and Country Club (the Club), operates and maintains two golf courses in
Dasmariñas, Cavite for Club members and their guests. The Club likewise has a swimming pool, bowling alley,
cinema, fitness center, courts for tennis, badminton and basketball, restaurants, and function rooms.

On March 17, 1997, respondent Amelia R. Francisco (Francisco) was employed as Club Accountant, to head
the Club’s General Accounting Division and the four divisions under it, namely: 1) Revenue and Audit Division,
2) Billing/ Accounts Receivable Division, 3) Accounts Payable Division, and 4) Fixed Assets Division. Each of
these four divisions has its own Supervisor and Assistant Supervisor. As General Accounting Division head,
respondent reports directly to the Club’s Financial Comptroller, Jose Ernilo P. Famy (Famy).

On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co. (SGV), the Club’s external auditor,
inquiring about the accounting treatment that should be accorded property that will be sold or donated to the
Club. Francisco failed to prepare the letter, even after Famy’s repeated verbal and written reminders, the last
of which was made on June 22, 2000.

On June 27, 2000, Famy issued a memorandum5 requiring Francisco’s written explanation, under pain of an
insubordination charge, relative to her failure to prepare the letter. Instead of complying with the memorandum,
Francisco went to the Club’s General Manager, Tomas B. Clemente III (Clemente), and personally explained to
the latter that due to the alleged heavy volume of work that needed her attention, she was unable to draft the
letter. Clemente assured her that he would discuss the matter with Famy personally. On this assurance,

90
Francisco did not submit the required written explanation. For this reason, Famy issued a June 29, 2000
memorandum6suspending Francisco without pay for a period of 15 days. The memorandum reads, as follows:

Considering the fact that you did [sic] explain in writing within 24 hours from the date and time of my
memorandum to you dated June 27, 2000 the reason why you should not be charged with "Insubordination" as
specified in Rule 5 Section 2a of our handbook, it has been found that:

Findings: You willfully refused to carry out a legitimate and reasonable instruction of your Department Head.

Act/Offense: Insubordination

Under the circumstances and pursuant to the rules and regulations of the Club, you are hereby suspended for
15 working days without pay. Effective dates of which shall be determined by the undersigned depending on
the exigency of your work.

(Signed)

Nilo P. Famy7

On July 1, 2000, Famy issued another memorandum8 informing Francisco that her suspension shall be
effective from July 3 to 19, 2000. On July 3, 2000 Francisco wrote to the Club’s General and Administrative
Manager, Ma. Irma Corazon A. Nuevo (Nuevo), questioning Famy’s act of charging, investigating, and
suspending her without coursing the same through the Club’s Personnel Department. Pertinent portions of her
memorandum to Nuevo read:

This has reference to the memoranda of the Financial Controller, Mr. Ernilo Famy of June 27, June 29 & July
1, 2000 x x x. I would like to know under what authority x x x a department head could issue a memorandum
and make decisions without the intervention of the Personnel Department.

I believe that if ever a department head or superior has complaints against his subordinate then he has to
course them through the Personnel Department which will be the one to initiate and conduct an inquiry and
investigation. A mere furnishing of the memorandum to the Personnel Department does not substitute [sic] the
actual authority and functions of the Personnel Department because there will be no due process x x x. Nilo
Famy decided on his own complaint without merit (sic) x x x. Also I believe x x x Nilo Famy abuse [sic] his
authority as superior with full disregard of the Personnel Department because he acted as the complainant, the
investigator and the judge, all by himself. For this I would like to file this complaint against him for abuse of
authority x x x.

x x x During our departmental meetings listed in his letter, I always made him aware of the lined-up priorities
that need to be given attention first and pending works which during the year-end audit by the auditors were
put on hold and were not x x x finished by the assigned staff. In fact, he commented that I should do something
about the pending work. Also, if he really feels [sic] the importance of that letter and [sic] cognizant of my
present work load, then why did he went [sic] on leave from June 23 until June 26. (his leave was cut because
of the board meeting. His leave [sic] supposed to be until June 30) x x x.

Also, I would like to formally inform you that whenever we have some disagreement or he has dissatisfaction
[sic] he is creating [sic] a feeling of job insecurity; it is very easy for Mr. Nilo Famy to directly tell me and the
staff to resign. The last time we had a talk prior to this issue, he made it clear that he can transfer me to lower
positions like the position of the cashier, cost controller and the like. He is confident he can do it because he
had done it to the former Club Accountant. What do you think is the kind of authority you expect from him if you
always hear these wordings [sic].9

91
That very same day, Nuevo replied,10 exonerating Famy and justifying the latter’s actions as falling within his
power and authority as department head. Nuevo said that Francisco was accorded due process when she was
given the opportunity to explain her side; that she deliberately ignored her superior’s directive when she did not
submit a written explanation, which act constitutes insubordination; that Famy acted prudently though he did
not course his actions through the Personnel Department, for ultimately, he would decide the case; and that
she was consulted by Famy and that she gave her assent to Famy’s proposed actions, which he later carried
out. Nuevo likewise brushed aside Francisco’s accusation of abuse of authority against Famy, and instead
blamed Francisco for her predicament.

On July 5, 2000, Francisco wrote a letter11 to Clemente requesting an investigation into Famy’s possible
involvement in the commission in 1997 of alleged fraudulent and negligent acts relative to the questionable
approval and release of Club checks in payment of Bureau of Internal Revenue (BIR) taxes, in which her
counter-signature though required was not obtained. Famy belied Francisco’s claims in a reply memorandum,
saying the charges were baseless and intended to malign him.

On July 20, 2000, or a day after Francisco’s period of suspension expired, Famy issued separate
memoranda12to Francisco and Clemente informing them of Francisco’s transfer, without diminution in salary
and benefits, to the Club’s Cost Accounting Section while the investigation on Famy’s alleged illegal activities
is pending. Relevant portions of these memoranda state:

MEMORANDUM TO CLEMENTE

In view of the recent developments, i.e. the suspension of Ms. Amelia Francisco and her letter of July 5, 2000 x
x x, I would like to formally inform you that effective today, July 20, 2000, Ms. Francisco shall be temporarily
given a new assignment in my department pending the result of the investigation she lodged against the
undersigned.

x x x. She shall remain directly reporting to the Financial Comptroller (Famy). 13

MEMORANDUM TO FRANCISCO

This is to inform you that effective today, July 20, 2000, Management has approved your temporary transfer of
assignment pending the completion of the investigation you lodged against the undersigned.

You shall be handling the Cost Accounting Section together with six (6) Accounting Staffs and shall remain
reporting directly to the undersigned.14

Yet again, in another memorandum15 dated August 1, 2000 addressed to Nuevo, Famy sought an investigation
into Francisco’s alleged insubordination, this time for her alleged unauthorized change of day-off from July 30
to August 4, 2000, and for being absent on said date (August 4, 2000) despite disapproval of her leave/offset
application therefor. In an August 2, 2000 memorandum,16 Francisco was required to explain these charges. In
another memorandum17 dated August 5, 2000, Francisco was asked to submit her explanation on the
foregoing charges of insubordination, negligence, inefficiency and violation of work standards relative to the
unauthorized change of day-off and disapproved offset/ leave. To these, Francisco replied on August 8, 2000
claiming that her presence on July 30, 2000 which was a Sunday and supposedly her day-off, was nonetheless
necessary because it was the Club’s scheduled month-end inventory, and she was assigned as one of the
officers-in-charge thereof. She added that her actions were in accord with past experience, where she would
take a leave during the first week of each month to make payments to Pag-Ibig, and Famy very well knew
about this. She accused Famy of waging a personal vendetta against her for her seeking an inquiry into
claimed anomalies embodied in her July 5, 2000 letter. She also took exception to her transfer to Cost
Accounting Section, claiming that the same was humiliating and demeaning and that it constituted constructive
dismissal, and threatened to take legal action or seek assistance from Club members to insure that Famy’s
impropriety is investigated.18

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On August 11, 2000, Francisco filed a Complaint for illegal dismissal against the Club, impleading Famy,
Clemente and Nuevo as additional respondents. The case was docketed as NLRC Case No. RAB-IV-812780-
00-C. She prayed, among others, for damages and attorney’s fees.

On August 16, 2000, Francisco received another memorandum requiring her to explain why she should not be
charged with betrayal of company trust, allegedly for the act of one Ernie Yu, a Club member, who was seen
distributing copies of Francisco’s letter to the Club’s Chairman of the Board of Directors.19 On August 18, 2000,
Francisco submitted her written explanation to the charges.20 On August 19, 2000, with the Club finding no
merit in her explanation, Clemente handed her a Notice of Disciplinary Action21 dated August 16, 2000 relative
to her July 30, 2000 unauthorized change of day-off and her August 4, 2000 unauthorized leave/absence. She
was suspended for another fifteen days, or from August 21 to September 6, 2000.22

Francisco amended her illegal dismissal Complaint to one for illegal suspension. Meanwhile, she continued to
report for work.

On September 7, 2000, or a day after serving her suspension, Francisco again received a September 6, 2000
memorandum from Nuevo, duly noted and approved by Clemente, this time placing her on forced leave with
pay for 30 days, or from September 7, 2000 up to October 11, 2000, for the alleged reason that the case filed
against her has strained her relationship with her superiors.23 On even date, Francisco wrote a letter to Nuevo
seeking clarification as to what case was filed against her, to which Nuevo immediately sent a reply
memorandum stating that the case referred to her alleged "betrayal of company trust". 24

After the expiration of her forced leave, or on October 12, 2000, Francisco reported back to work. This time she
was handed an October 11, 2000 memorandum25 from Clemente informing her that, due to strained relations
between her and Famy and the pending evaluation of her betrayal of company trust charge, she has been
permanently transferred, without diminution of benefits, to the Club’s Cost Accounting Section effective
October 12, 2000. Notably, even as Clemente claimed in the memorandum that Francisco’s transfer was
necessary on account of the strained relations between her and Famy, Francisco’s position at the Cost
Accounting Section was to remain under Famy’s direct supervision. The pertinent portion of the memorandum
in this regard reads:

Because of the strained relationship between you and your department head, Mr. Ernilo Famy, we deem it
necessary to transfer you permanently to Cost Accounting effective October 12, 2000. You shall however
continue to receive the same benefits and shall remain under the supervision of Mr. Famy. x x x26

In an October 13, 2000 memorandum27 to Clemente, Francisco protested her permanent transfer, claiming that
it was made in bad faith. She also bewailed Clemente’s inaction on her July 5, 2000 letter charging Famy with
irregularities relative to BIR tax payments. Likewise, on account of her transfer, Francisco once more amended
her Complaint to include illegal/constructive dismissal. And in her prayer, she sought to be reinstated to her
former position as Club Accountant.

On October 17, 2000, Clemente issued a memorandum28 addressed to Francisco denying that her transfer
was done in bad faith, and affirming instead that it was made in the proper exercise of management
prerogative. In addition, Clemente clarified the matter of Famy’s alleged wrongdoing, thus:

Secondly, I would also like to correct your assumptions that the case of Mr. Famy has not yet been acted upon.
For your information, the Committee composed of Club members and myself tasked by the Board of Directors
to investigate the case and make the necessary recommendations has already concluded its investigation and
has made its recommendations to the Board. The Board, likewise, has acted on the Committee’s
recommendation x x x the results of which have been given to Mr. Famy. Whatever that decision was, it is a
matter between the Board and Mr. Famy.29

Ruling of the Labor Arbiter

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After considering the parties’ respective Position Papers and evidence, Labor Arbiter Enrico Angelo C. Portillo
issued a Decision30 dated August 23, 2001 dismissing Francisco’s Complaint for lack of merit. The Labor
Arbiter noted the "belligerence and animosity" between Francisco and Famy, making short shrift of Francisco’s
accusations against her superior and dismissing them as nothing more than attempts to get back at Famy for
his reproach at her failure to draft the SGV letter. The Labor Arbiter further admonished Francisco, reminding
her that –

x x x A workplace is not a "bed of roses". While employers are expected to show respect and courtesy to its
employees, words and actions expectedly tend to get somewhat disrespectful, if not outright insulting, when
work remains undone. Common experience tells us that the scolding and trash talk bites harder as one climbs
higher in the organization ladder commensurate to the additional responsibility attached to the position. It is at
these times, when the fact [sic] and professionalism of an employee, particularly a managerial employee, is put
to test. x x x31

The Labor Arbiter further upheld Francisco’s two suspensions as valid exercises of the Club’s management
prerogative, justifying the measures taken as reasonable and necessary penalties for Francisco’s failure to
draft the SGV letter and her taking a leave with full awareness yet in disregard of her superior Famy’s
disapproval of her leave application. He added that in the conduct of proceedings leading to the decision to
suspend Francisco, the proper procedure was taken, and Francisco was afforded ample opportunity to defend
herself.

The Labor Arbiter likewise found Francisco’s claim of constructive dismissal to be baseless. On the contrary,
he found Francisco’s transfer as necessary and in furtherance of the Club’s interests. He also noted that the
transfer was lateral, or to a position of the same rank and pay scale based on the Club’s Organizational
Chart.32 Both Club Accountant and Cost Controller positions belonged to the same pay scale "9" and are rated
as "Supervisor V".

Finally, the Labor Arbiter held that the fact that Francisco continued to report for work belies her claim of
constructive dismissal.

Ruling of the National Labor Relations Commission

On September 17, 2001, Francisco appealed the Labor Arbiter’s Decision to the NLRC, which took a contrary
view. Thus, in its November 19, 2002 Resolution,33 the NLRC held that while Francisco’s suspensions were
valid, her subsequent permanent transfer on the ground of strained relations to the Club’s Cost Accounting
Section as Cost Controller on October 12, 2000 was without just cause. It resulted in Francisco’s demotion,
since the position of Cost Controller was merely of a supervisory character, while the position of Club
Accountant was of managerial rank. Besides, by admission of herein petitioner, Francisco held the rank of
"Manager 3" with her position as Club Accountant, while the Cost Controller is only a Supervisor position and is
precisely under the direct supervision and control of the Club Accountant.34 This unwarranted demotion,
according to the NLRC, is equivalent to constructive dismissal.

The NLRC added that strained relationship is not a valid ground for termination of employment under the Labor
Code. It ordered Francisco’s reinstatement to her former position as Club Accountant and awarded her
attorney’s fees in the amount of P50,000.00. However, the NLRC absolved Famy, Nuevo and Clemente of
wrongdoing. It also held that Francisco was not entitled to moral and exemplary damages because she failed
to show proof that her constructive dismissal was attended by bad faith. Thus, the NLRC held:

WHEREFORE, premises considered, Complainant’s appeal is partly GRANTED. The Labor Arbiter’s decision
in the above-entitled case is hereby MODIFIED. It is hereby declared that Complainant’s transfer resulted in a
demotion in level/rank, which is considered as illegal constructive dismissal. Respondent the Orchard Golf &
Country Club, Inc. is hereby ordered to immediately reinstate Complainant to her former position as Club

94
Accountant without loss of seniority rights and other privileges and to pay her attorney’s fees in the amount
of P50,000.00

SO ORDERED.35

Petitioner moved for reconsideration, to no avail. Francisco moved for partial reconsideration of the NLRC’s
Resolution with respect to its ruling declaring her suspensions as valid and the denial of her claim for
damages. Her motion was denied as well.

Ruling of the Court of Appeals

Petitioner went up to the CA via Petition for Certiorari,36 while respondent Francisco no longer took issue with
the denial of her motion.

In its January 25, 2007 Decision, the CA sustained the NLRC ruling. It held that while petitioner had the right or
prerogative to transfer the respondent from one office to another within the Club, there should be no demotion
in rank, salary, benefits and other privileges. The CA added that the right may not be used arbitrarily to rid the
employer of an undesirable worker. Proper notification and an opportunity to be heard or contest the transfer
must be given to the employee whose transfer is sought, conditions which were not observed in Francisco’s
case. She was notified only of the Club’s decision to permanently transfer her, without giving her the
opportunity to contest the same. The CA characterized Francisco’s permanent transfer as a demotion in the
guise of a lateral transfer.

The CA sustained as well the award of attorney’s fees, saying that Francisco was forced to litigate and hire the
services of counsel to protect her rights.

Thus, the Petition for Certiorari was dismissed. Petitioner filed a Motion for Reconsideration,37 which was
subsequently denied.

Issues

Hence, this Petition raising the following issues:

I WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND DECIDED A


QUESTION OF SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW AND WITH APPLICABLE
DECISIONS OF THIS HONORABLE COURT WHEN IT HELD THAT THE TRANSFER OF RESPONDENT
FROM THE POSITION OF CLUB ACCOUNTANT TO COST ACCOUNTANT WAS TANTAMOUNT TO A
DEMOTION.

II WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND DECIDED A


QUESTION OF SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW AND WITH APPLICABLE
DECISIONS OF THIS HONORABLE COURT WHEN IT AWARDED ATTORNEY’S FEES TO RESPONDENT
IN THE AMOUNT OF FIFTY THOUSAND PESOS (P50,000.00).38

Petitioner’s Arguments

In seeking the annulment and setting aside of the CA Decision, petitioner insists that respondent Francisco’s
transfer did not amount to a demotion, and that she suffered no diminution in rank, salary, benefits, and
position because the position of Club Accountant and Cost Controller/Accountant are of equal rank. Both
positions belong to pay grade "9" and rated as "Supervisor V"; a transfer from one of the positions to the other
is merely a lateral transfer and within the prerogative of Club management. Petitioner directs the Court’s
attention to its

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Organizational Chart39 which should bolster its claim in this regard.

Petitioner adds that Francisco’s transfer to the Cost Accounting Section was done in good faith, noting that the
deteriorating relationship between Famy and Francisco placed the Club’s business at risk. It had no choice but
to address this problem in order not to further jeopardize the Club’s day-to-day operations. Petitioner claims
further that Francisco’s transfer did not prejudice her. She continues to report to Famy and receive the same
benefits and privileges as the Club Accountant. It is of no consequence that as Cost Controller, she has a
lesser number of employees/staff (six) under her or that she is relegated to a very small office space, as
opposed to the position of Club Accountant, which has 32 employees under it and holds office at the bigger
offices reserved for use by the Club’s executives.

On the issue of constructive dismissal, petitioner claims that it did not commit any act which forced Francisco
to quit; she continues to be employed by the Club, and in fact continues to report for work.

Finally, petitioner argues that Francisco is not entitled to attorney’s fees, in the absence of an award of
exemplary damages and in the wake of the NLRC’s finding that she is not entitled to such damages. It believes
that if no exemplary damages are adjudged, then no attorney’s fees may be awarded as well. It adds that
Francisco could only blame herself for the fate she suffered, knowing very well that she is not entitled to her
claims; she should bear her own litigation expenses.

Respondent’s Arguments

Francisco insists that the issues raised in the Petition have been sufficiently addressed by the NLRC and the
CA, and their findings should bind the Court. Francisco stresses that petitioner’s own actions betrayed the fact
that the position of Cost Controller/Accountant is a mere Supervisor position and the same is directly under the
supervision of the Club Accountant. A reassignment from Club Accountant to Cost Controller is clearly an
unwarranted demotion in rank. She adds that per the Club’s latest actions, she has suffered not only a
demotion in rank, but also a diminution in salary and benefits. Petitioner illegally withheld her accrued salary
differential, merit increases and productivity bonuses since 2001.

Our Ruling

The Petition lacks merit.

At the outset, it must be emphasized that Francisco’s two suspensions, i.e., for her failure to draft the SGV
letter and for being absent without prior leave, is no longer at issue before this Court. Records show that after
the NLRC declared the same as valid in its November 19, 2002 Resolution, Francisco moved for
reconsideration but to no avail. After the denial of her motion, Francisco no longer brought the issue or
appealed the same to the CA. Hence, the only issues for our resolution are the propriety of Francisco’s transfer
to the position of Cost Controller and the award of attorney’s fees.

There was constructive dismissal when Francisco was transferred to the Cost Accounting Section.

We agree with the NLRC and the CA that Francisco’s transfer to the position of Cost Controller was without
valid basis and that it amounted to a demotion in rank. Hence, there was constructive dismissal.

Records show that when Francisco returned to work on July 20, 2000 fresh from her first suspension, she was
unceremoniously transferred by Famy, via his July 20, 2000 memorandum, to the Club’s Cost Accounting
Section. Famy stated the reason for her transfer:

This is to inform you that effective today, July 20, 2000, Management has approved your temporary transfer of
assignment pending the completion of the investigation you lodged against the undersigned.

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His memorandum of even date to his superior Clemente reveals the same cause:

In view of the recent developments, i.e. the suspension of Ms. Amelia Francisco and her letter of July 5, 2000 x
x x, I would like to formally inform you that effective today, July 20, 2000, Ms. Francisco shall be temporarily
given a new assignment in my department pending the result of the investigation she lodged against the
undersigned.

In other words, the cause of Francisco’s temporary transfer on July 20, 2000 was her pending complaint
against Famy.

And then again, on September 6, 2000, Nuevo issued another memorandum duly noted and approved by
Clemente, and personally delivered at Francisco’s residence on September 7, 2000 informing her this time that
she has been placed on forced leave with pay for 30 days, or from September 7, 2000 up to October 11, 2000,
for the reason that the case filed against her has strained her relationship with her superiors.

And just when her forced leave expired on October 11, or on October 12, 2000, Francisco was once more
handed an October 11, 2000 memorandum from Clemente informing her that, due to strained relations
between her and Famy and pending evaluation of her betrayal of company trust charge, she has been
permanently transferred, without diminution of benefits, to the Club’s Cost Accounting Section effective
October 12, 2000.

The Court shares the CA’s observation that when Francisco was placed on forced leave and transferred to the
Cost Accounting Section, not once was Francisco given the opportunity to contest these company actions
taken against her. It has also not escaped our attention that just when one penalty has been served by
Francisco, another would instantaneously take its place. And all these happened even while the supposed
case against her, the alleged charge of "betrayal of company trust", was still pending and remained
unresolved. In fact, one of the memoranda was served even at Francisco’s residence.

Not even the claim that her relations with her superiors have been strained could justify Francisco’s transfer to
Cost Accounting Section. Indeed, it appears that her charge was never resolved. And if Famy, Nuevo and
Clemente truly believed that their relations with Francisco have been strained, then it puzzles the Court why,
despite her transfer, she continues to remain under Famy’s direct supervision. Such is the tenor of the
memoranda relative to her temporary and subsequently, permanent, transfer to the Cost Accounting Section:

JULY 20, 2000 MEMORANDUM OF FAMY TO CLEMENTE

In view of the recent developments, i.e. the suspension of Ms. Amelia Francisco and her letter of July 5, 2000 x
x x, I would like to formally inform you that effective today, July 20, 2000, Ms. Francisco shall be temporarily
given a new assignment in my department pending the result of the investigation she lodged against the
undersigned.

x x x. She shall remain directly reporting to the Financial Comptroller (Famy). 42

JULY 20, 2000 MEMORANDUM OF FAMY TO FRANCISCO

This is to inform you that effective today, July 20, 2000, Management has approved your temporary transfer of
assignment pending the completion of the investigation you lodged against the undersigned.

You shall be handling the Cost Accounting Section together with six (6) Accounting Staffs and shall remain
reporting directly to the undersigned.43

OCTOBER 11, 2000 MEMORANDUM OF CLEMENTE TO FRANCISCO

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Because of the strained relationship between you and your department head, Mr. Ernilo Famy, we deem it
necessary to transfer you permanently to Cost Accounting effective October 12, 2000. You shall however
continue to receive the same benefits and shall remain under the supervision of Mr. Famy. 44

Interestingly, Francisco’s transfer was occasioned not by a past infraction or a present one which has just been
committed, but by her act of filing a complaint for impropriety against Famy.

For this reason, Francisco’s July 20, 2000 temporary transfer and her October 12, 2000 permanent transfer to
Cost Accounting Section must be invalidated. For one, there was no valid reason to temporarily transfer
Francisco to Cost Accounting Section on July 20, 2000. She had already served her penalty for her failure to
draft the SGV letter, through the 15-day suspension period which she just completed on July 20, 2000.
Secondly, the transfer was not even rooted in any new infraction she is accused of committing. There was thus
an absolute lack of basis for her July 20, 2000 temporary transfer.

As for her October 12, 2000 permanent transfer, the same is null and void for lack of just cause. Also, the
transfer is a penalty imposed on a charge that has not yet been resolved. Definitely, to punish one for an
offense that has not been proved is truly unfair; this is deprivation without due process. Finally, the Court sees
no necessity for Francisco’s transfer; on the contrary, such transfer is outweighed by the need to secure her
office and documents from Famy’s possible intervention on account of the complaint she filed against him.

We also agree with the findings of the NLRC, as affirmed by the CA, that Francisco’s transfer constituted a
demotion, viz:

x x x We however, hold that Complainant’s transfer resulted to a demotion in her level/rank. The level of Club
Accountant is not "Supervisor V" but "Managerial-3" as indicated in the Notice of Personnel Action issued to
Complainant on July 20, 2000, signed by her immediate superior Jose Ernilo P. Famy, Department Head of
Respondent company on July 10, 2000, and approved by Tomas B. Clemente III, Acting GM & COOO on July
11, 2000 x x x. Obviously, the alleged August 15, 1998 Company’s Organizational Chart showing the Club
Accountant and the Cost Controller occupying the same job grade level, which was attached to Respondent’s
February 21, 2001 Reply x x x was never implemented, otherwise, the Department Head and the Acting GM &
COO would not have specifically indicated "Managerial-3" for Complainant’s position of Club Accountant in the
Notice of Personnel Action issued to Complainant on July 10, 2000 or two (2) years after the date of the
alleged Organizational Chart. Clearly, Complainant was a manager when she occupied the position of Club
Accountant. However, when management transferred her to the position of Cost Controller/Accountant, she
was demoted to a mere supervisor.

Moreover, in Complainant’s December 3, 1997 Job Description as Club Accountant prepared by Jose Ernilo P.
Famy and approved by Ian Paul Gardner and Atty. Stellamar C. Flores of HR, it is specifically indicated therein
that as Club Accountant, Complainant directly supervises the Cost Controller x x x. Notably, Complainant was
never issued any amendment to her December 3, 1997 Job Description, which would have removed from her
supervision the Cost Controller. In fact, Respondents do not refute Complainant’s allegation that as Club
Accountant, she was responsible for the rating of the Cost Controller’s performance for the years 1998 to 2000.
It becomes clearer now that the alleged August 15, 1998 Company’s Organizational Chart showing the Club
Accountant and the Cost Controller occupying the same job grade level, which was attached to Respondent’s
February 22, 2001 Reply x x x was, indeed, never implemented, otherwise, management would have issued
Complainannt an amendment to her December 3, 1997 Job Description effectively removing from her
supervision the position of Cost Controller/Accountant and management would not have let Complainant rate
the performance of the Cost Controller/Accountant for the years 1998 to 2000. It is obvious, therefore, that
Complainant’s position of Club Accountant is higher in level/rank than that of Cost Controller/Accountant.
Patently, Complainant’s transfer from the position of Club Accountant to the position of Cost Accountant
resulted to her demotion in level/rank. Complainant’s transfer resulting to her demotion is, therefore,
tantamount to constructive dismissal. x x x45

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The fact that Francisco continued to report for work does not necessarily suggest that constructive dismissal
has not occurred, nor does it operate as a waiver. Constructive dismissal occurs not when the employee
ceases to report for work, but when the unwarranted acts of the employer are committed to the end that the
employee’s continued employment shall become so intolerable. In these difficult times, an employee may be
left with no choice but to continue with his employment despite abuses committed against him by the employer,
and even during the pendency of a labor dispute between them. This should not be taken against the
employee. Instead, we must share the burden of his plight, ever aware of the precept that necessitous men are
not free men.

"An employer is free to manage and regulate, according to his own discretion and judgment, all phases of
employment, which includes hiring, work assignments, working methods, time, place and manner of work,
supervision of workers, working regulations, transfer of employees, lay-off of workers, and the discipline,
dismissal and recall of work. While the law recognizes and safeguards this right of an employer to exercise
what are clearly management prerogatives, such right should not be abused and used as a tool of oppression
against labor. The company’s prerogatives must be exercised in good faith and with due regard to the rights of
labor. A priori, they are not absolute prerogatives but are subject to legal limits, collective bargaining
agreements and the general principles of fair play and justice. The power to dismiss an employee is a
recognized prerogative that is inherent in the employer’s right to freely manage and regulate his business. x x
x. Such right, however, is subject to regulation by the State, basically in the exercise of its paramount police
power. Thus, the dismissal of employees must be made within the parameters of the law and pursuant to the
basic tenets of equity, justice and fair play. It must not be done arbitrarily and without just cause."46

The award of attorney’s fees is proper.

With respect to the award of attorney’s fees, we find the same to be due and owing to respondent given the
circumstances prevailing in this case as well as the fact that this case has spanned the whole judicial process
from the Labor Arbiter to the NLRC, the CA and all the way up to this Court. Under Article 2208 of the Civil
Code, attorney’s fees and expenses of litigation other than judicial costs may be recovered if the claimant is
compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified
act or omission of the party from whom it is sought,47 and where the courts deem it just and equitable that
attorney’s fees and expenses of litigation should be recovered.

As for petitioner’s argument that in the absence of an award of exemplary damages, attorney’s fees may not
be granted, the Court finds this unavailing. An award of attorney’s fees is not predicated on a grant of
exemplary damages. Given the circumstances of this case, it is regretful that the Labor Arbiter and the NLRC
failed to award moral and exemplary damages prayed for by the respondent. But because respondent did not
appeal the denial, the Court may no longer modify the ruling in this regard.

Respondent is entitled to receive her accrued salary differential, merit increases and productivity bonuses
since 2001.

Respondent raises the side issue pertaining to petitioner’s alleged withholding of her accrued salary
differential, merit increases and productivity bonuses since 2001.48 She claims that during the pendency of this
case, petitioner effected salary adjustments, merit increases and productivity bonuses to other employees. As
proof, she submitted the Notice of Personnel Action-Salary Adjustment49 of Arsenio Rodrigo Neyra, the former
Cost Accountant which position she now occupies, and pertinent portions of the Collective Bargaining
Agreement.50She now seeks payment of these amounts.

Notably, petitioner does not refute its grant of salary increases, merit increases and productivity bonuses to
other employees. In its attempt to rebuff Francisco’s claim, petitioner merely argues that the same should no
longer be entertained because it was never raised before the proceedings below.51

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Interestingly, it never categorically denied that such salary increases, merit increases and productivity bonuses
have indeed been given to the other employees.

At this juncture, it must be stressed that "technical rules of procedure are not binding in labor cases. The
application of technical rules of procedure may be relaxed to serve the demands of substantial justice." 52 "It is
more in keeping with the objective of rendering substantial justice if we brush aside technical rules rather than
strictly apply its literal reading. There [being] no objective reason to further delay this case by insisting on a
technicality when the controversy could now be resolved."53 Moreover, "there is no need to remand this case to
the Labor Arbiter for further proceedings, as the facts are clear and complete on the basis of which a decision
can be made."54 Based on the foregoing, we find no reason to deprive herein respondent of the accrued salary
differential, merit increases and productivity bonuses due her since 2001.

WHEREFORE, the Petition is DENIED for lack of merit.1âwphi1 The January 25, 2007 Decision and May 23,
2007 Resolution of the Court of Appeals in CA-G.R. SP No. 80968 are AFFIRMED. Petitioner, The Orchard
Golf and Country Club, is ORDERED:

1. To immediately reinstate respondent Amelia R. Francisco to her former position as Club Accountant
without loss of seniority rights and other privileges;

2. Within 15 days from receipt of this Decision, to return and/or pay to the respondent, all her accrued
salary differential, merit increases and productivity bonuses due her, with 12o/o per annum interest55 on
outstanding balance from finality of this Decision until full payment; and

3. Within the same period, to pay the respondent attorney's fees in the amount of P50,000.00.
SO ORDERED.

18. PHILIPPINE LONG DISTANCE and TELEPHONE COMPANY, INC., Petitioner, vs. AMPARO
BALBASTRO and NATIONAL LABOR RELATIONS COMMISSION, Respondents
G.R. No. 157202 March 28, 2007

Before us is a Petition for Review on Certiorari filed by Philippine Long Distance and Telephone Company, Inc.
(petitioner) seeking to annul the Decision1 dated July 31, 2002 and the Resolution2 dated February 7, 2003 of
the Court of Appeals (CA) in CA-G.R. SP No. 51060.

Amparo Balbastro (private respondent) was employed by petitioner in 1978 as its telephone operator until her
questioned dismissal from employment on October 5, 1989. She was dismissed by petitioner for her absences
without authorized leave due to unconfirmed sick leave on June 28 to July 14, 1989, which constituted her third
offense3 punishable by dismissal under petitioner’s rules and regulations.4

On October 28, 1991, private respondent filed a Complaint5 with the Labor Arbiter against petitioner and its
President, Antonio Cojuangco, for illegal dismissal, non-payment of salary wage, premium pay for rest day,
13th month pay, and damages. In her position paper, she alleged that she was dismissed on the ground of
unconfirmed sick leave despite her presentation of medical certificates from her attending physicians which
were not considered by petitioner’s medical doctors; and that she has four minor children and it was not her
intention to habitually absent herself without reason considering that her loss of job which was based only on
opinions of petitioner’s doctors had caused her great deprivation and moral suffering. She prayed for
reinstatement, backwages, and damages.

Petitioner filed its position paper with Motion to Dismiss6 alleging that private respondent’s habitual and
unjustified absences was a just and valid cause for her termination under its rules and regulations; and that her
record of unauthorized absences for 1989 showed the following:

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First unauthorized absences, from March 19 to 29, 1989. Private respondent absented herself from work for
nine days excluding rest days on March 23 to 24, 1989 without notice to petitioner. She gave marital problem
as the reason for her absence. She was penalized with 18 days suspension for violating petitioner’s rules and
regulations regarding absences.

Second unauthorized absences, from June 11 to 13, 1989. Private respondent called in sick from Tanauan,
Batangas on June 5 that she was suffering from gastroenteritis. She absented herself from June 5 to 13, 1989.
On June 14, 1989, she presented herself to petitioner’s doctor, Dr. Melissa Musngi and submitted a medical
certificate where it was stated that she was under treatment from June 5 to 8, 1989 of gastroenteritis. Dr.
Musngi confirmed private respondent’s sick leave from June 5 to 10, 1989 but did not confirm her absences
from June 11 to 13, 1989 because her medical certificate covered only the period from June 5 to 8, 1989.
Furthermore, petitioner reasons out that if she really had such illness, certain normal logical medical
procedures should have been taken, such as stool examinations and hospitalization; and she bore no post-
illness manifestations of gastroenteritis. Private respondent’s unconfirmed leave of absence was considered by
petitioner unauthorized due to her patent abuse of sick leave privileges and treated it as her second offense
and was penalized with 15 days suspension.

Third unauthorized absences, from June 28 to July 14, 1989. On June 25, 1989, private respondent made a
sick call that she had sore eyes and absented herself from June 25 to July 14, 1989. On July 3, 1989, she was
outvisited at her given address in Makati but was not found home. On July 15, 1989, she reported for work and
presented herself to the clinic for confirmation. She had her medical certificate issued by her attending
physician showing that she had been under his professional treatment from June 25 to July 12, 1989 for
systemic viral infection. Petitioner’s doctor, Dr. Benito Dungo, confirmed her sick leave from June 25 to 27,
1989 but did not confirm as to the rest of the dates when she was absent from work. When asked to explain,
private respondent said that she had a viral infection during the said period; and that she was in Tanauan,
Batangas during the said dates so she was not found in Makati when outvisited. Petitioner’s doctor did not
confirm her leave of absence from June 28 to July 14, 1989 on the ground that such illness did not warrant a
very long time of rest; certain laboratory examinations should have been conducted by her attending physician;
and there was patent abuse of her sick leave privileges.

While private respondent’s third leave of absence was being deliberated upon, she absented herself from
August 6 to 12, 1989. She called in sick on August 6, 1989 informing her supervisor that she had a fever. The
medical certificate issued by her attending physician showed that she was under treatment from August 7 to
10, 1989 for influenza. Petitioner’s doctor, Dr. Eduardo Co, confirmed private respondent’s leave of absence
from August 6 to 8, 1989 but did not confirm the rest because her absences from August 9 to 12, 1989 were
not covered by a medical certificate; her illness did not warrant prolonged absence; and it was medically
impossible for her to contract the same illness which she contracted the previous month since it is a medical
fact that there is no such thing as an immediately recurrent viral infection.

In view of her repeated absences without authorized leave for the third time, petitioner terminated private
respondent’s service effective October 5, 1989.

The Labor Arbiter conducted a hearing where private respondent testified on her behalf, while petitioner
presented the three medical doctors who did not confirm portions of private respondent’s leave of absence,
and its Employee Relations and Service Department Manager.

On May 30, 1994, the Labor Arbiter issued its Decision,7 the dispositive portion of which reads:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the
respondent Philippine Long Distance [and] Telephone Co. to reinstate the complainant to her former position
as telephone operator with all the rights, privileges and benefits appertaining thereto, including seniority, plus
backwages equivalent to one (1) year salary in the sum of P78,000.00 (P6,500.00/mo. x 12 mos.).

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SO ORDRED.8

The Labor Arbiter held that private respondent’s first incident of absence from March 19 to 29, 1989 were
unauthorized but not as to the other succeeding absences. It found that private respondent, on her first day of
absence, called in sick and when she reported for work, she went to petitioner’s clinic for check-up and
submitted her medical certificates, thus she complied with the standard requirements on matters of sick leave;
that petitioner’s doctors did not confirm some portions of private respondent’s leave of absence based merely
on their medical opinions; that such justification was not warranted under Department Order No. ADM-79-02
wherein absences due to illness were considered unauthorized and without pay when the attending doctor’s
signature is forged, there is alteration as to the date and contents of the medical certificate, the certificate is
false as to the facts alleged therein, the doctor issuing the medical certificate is not qualified to attend to the
illness, there are falsities and misrepresentations, and when there is patent abuse of sick leave privileges; and
that these circumstances were not proven in this case.

The Labor Arbiter gave more credence to the doctor who actually attended to private respondent rather than to
the medical opinion of petitioner’s doctors. It concluded that petitioner’s doctors should have coordinated with
private respondent’s attending physicians to settle any doubts as to the medical certificates.

Petitioner filed its appeal with the National Labor Relations Commission (NLRC).9 On January 19, 1996, the
NLRC issued a

Resolution10 affirming the decision of the Labor Arbiter.

The NLRC found that company practice allows leave of absence due to sickness if supported by a medical
certificate issued by the attending physician; that a difference in opinion by the Medical Director from that of the
attending physician should not prejudice private respondent since the Medical Director can consider absences
unauthorized only in cases of forgery and patent abuse of sick leave privileges which were not proven in this
case; that if the Medical Director entertained doubts as to the medical certificate, he should have asked the
attending physician to submit himself for cross-examination and then present an independent physician for an
expert opinion on the matter.

Petitioner’s Motion for Reconsideration was denied in a Resolution11 dated March 14, 1996.

Undaunted, petitioner filed with us a Petition for Certiorari with prayer for the issuance of a Temporary
Restraining Order (TRO). A TRO was issued to enjoin the enforcement of the NLRC Resolution until further
orders.12

In a Resolution dated December 7, 1998,13 we referred the petition to

the CA in accordance with the St. Martin Funeral Home v. National Labor Relations Commission14 ruling.

On July 31, 2002, the CA issued its assailed Decision which dismissed the petition and affirmed the NLRC
Decision. The CA held that as long as the medical certificate presented did not fall under any of the infirmities
set forth in petitioner’s rules and regulations, the unconfirmed leave should be treated merely as absence
without leave and was not subject to disciplinary action; that petitioner may not rely on the previous absences
of respondents in 1978 and 1982 to show abuse of sick leave privileges because petitioner had acknowledged
that respondent had already been penalized with suspension, and those absences were committed beyond the
three-year period mentioned in their rules and regulations; that in its desire to clothe private respondent’s
dismissal with a semblance of legality, petitioner points to private respondent’s fourth unauthorized leave of
absence committed in August 1989 while the third unauthorized leave of absence was being deliberated upon;
and that the notice of dismissal referred only to her third unauthorized leave, thus she could not be faulted for
an infraction for which she was not charged.

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Petitioner’s Motion for Reconsideration was denied in a Resolution dated February 7, 2003.

Hence, petitioner filed the instant Petition for Review on Certiorari alleging the following grounds:

WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO CONSIDER THAT THE PETITION
HEREIN DOES NOT MERELY INQUIRE UPON THE RELATIVE WEIGHT OF THE EVIDENCE PRESENTED
BY THE PARTIES, BUT IS ANCHORED ON MANIFESTLY ERRONEOUS CONCLUSIONS ON THE PART
OF THE NLRC ARISING FROM GROSS MISAPPREHENSION OF THE FACTS OBTAINING IN THE CASE.
AMONG OTHERS, IT WAS GRAVE ERROR TO CONCLUDE THAT THERE WAS NO PATENT ABUSE OF
THE SICK LEAVE PRIVILEGE ON THE PART OF THE PRIVATE RESPONDENT BECAUSE THE MEDICAL
CERTIFICATES SHE PRESENTED WERE NOT FALSE, FORGED, OR ALTERED TOTALLY
DISREGARDING THE FACT THAT "ABUSE OF SICK LEAVE PRIVILEGE" IS A CAUSE SEPARATELY
ENUMERATED UNDER THE RULES AS A GROUND FOR DISCIPLINARY ACTION.

II

WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO CONSIDER THAT THE CONCLUSIONS
OF THE NLRC ARE BEREFT OF ANY LEGAL OR FACTUAL BASES AS THERE WERE LEGALLY NO
MEDICAL CERTIFICATES TO SPEAK OF, AND THE EXISTENCE THEREOF ARE PURE AND SIMPLE
HEARSAY, HENCE COULD NOT BE VALIDLY RELIED UPON OR INVOKED BY THE PRIVATE
RESPONDENT TO SUPPORT HER DEFENSE EVEN SUPPOSING TECHNICAL RULES ON EVIDENCE
COULD BE RELAXED IN LABOR PROCEEDINGS. 15

Petitioner argues that the NLRC’s conclusions that private respondent had not committed a patent abuse of
sick leave privileges and that her dismissal was illegal are utterly without any factual or legal basis; that the
NLRC’s conclusion that the dismissal was illegal was merely based: (1) on the evidence of private respondent;
(2) on medical certificates which are clearly hearsay and of no probative value whatsoever; and (3) on medical
certificates which, even supposing could be considered, simply failed to cover the period of the leave
requested and set forth implausible diagnoses.

Petitioner claims that the CA as well as the NLRC failed to resolve the issue of whether or not the medical
certificate should be given any credence at all; that it had presented four witnesses which included their three
medical doctors who were subjected to cross-examinations, and yet credence was given to private
respondent’s hearsay evidence consisting merely of a medical certificate by the latter’s attending physician
who was not even presented to testify; that since the content of the medical certificate had been rebutted and
refuted by petitioner’s witnesses, the burden of evidence is shifted to private respondent to show that the
medical certificate she submitted was competent, proper, and sound which she failed to do.

Petitioner further claims that the CA erred in not finding that private respondent committed a patent abuse of
sick leave privileges which does not arise solely from forgery or alteration of the medical certificate, but on the
fact that an employee had frequently and incorrigibly absented herself and then applied for sick leave with
absolute impunity armed with medical certificates which not only failed to cover the entire length of the leave
but also with implausible diagnoses; that excluding private respondent’s unauthorized absences in 1989, she
had accumulated 93 days of sick leave from January to July 1989 and 115 days of sick leave in 1988, thus,
how can the conclusion be drawn that there was no patent abuse of sick leave privileges; and that her
unauthorized absence for which she was terminated all occurred in 1989, thus, the CA erred in saying that
petitioner may not rely on the previous absences of respondent in 1978 and 1982 to justify private
respondent’s dismissal.

We find the petition meritorious. Private respondent was validly dismissed by petitioner. It must be borne in
mind that the basic principle in termination cases is that the burden of proof rests upon the employer to show

103
that the dismissal is for just and valid cause and failure to do so would necessarily mean that the dismissal was
not justified and, therefore, was illegal.16 For dismissal to be valid, the evidence must be substantial and not
arbitrary and must be founded on clearly established facts.17 We find that petitioner had discharged this
burden.

Under petitioner’s Department Order No. ADM-79-02, for the absence due to an alleged illness to be
considered unauthorized, without pay, and subject to disciplinary action, it must be shown that the medical
certificate is forged, altered as to the date and contents, false as to the facts stated therein, issued by a doctor
not qualified to attend to the patient’s illness, and there is patent abuse of sick leave privileges. The penalty for
three offenses of unauthorized absences committed within the three-year period is dismissal.

Private respondent’s unconfirmed absences from June 28 to July 14, 1989 is the crucial period in this particular
case.

The Labor Arbiter and the NLRC found that private respondent was illegally dismissed by petitioner. Such
finding was affirmed by the CA. They all concluded that the medical certificate which private respondent
presented did not fall under the circumstances enumerated in Department Order No. ADM-79-02, and there
was no patent abuse of sick leave privileges, thus, there was no basis for petitioner’s doctors not to confirm her
sick leave and consider the same unauthorized.

The jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only errors of law, not of
fact, unless the factual findings being assailed are not supported by evidence on record or the impugned
judgment is based on a misapprehension of facts.18 We find that those exceptions are present in the instant
case.

We find that petitioner had sufficiently established that private respondent committed a patent abuse of her sick
leave privileges which is one of the grounds listed in Department Order No. ADM-79-02 for disciplinary action.

Private respondent was absent on June 25, 1989 and the reason given was sore eyes. She was then absent
from June 25 to July 14, 1989. When she reported for work on July 15, 1989, she went to petitioner’s doctor,
Dr. Benito Dungo, for confirmation of her leave of absence and presented a medical certificate19 from her
attending physician, Dr. Manuel C. Damian of Tanauan Batangas, who certified that she had been under his
professional care from June 25 to July 12, 1989 for systemic viral disease.

Dr. Dungo confirmed private respondent’s leave of absence from June 25 to 27, 1989 only and did not confirm
her leave from June 28 to July 14, 1989 for the following reasons: (a) systemic viral disease indicated in the
medical certificate does not warrant such a very long time of rest and recuperation; (b) if she really had an
infection, the logical recourse is for the attending physician to conduct a chest x-ray and blood examination to
determine the cause of the prolonged fever, but such was not made; (c) if she was really ill for such a long
time, she would have already been confined in a hospital for treatment as petitioner has standing agreements
with various hospitals to provide immediate medical assistance free of charge; (d) she displayed no residue of
symptoms of flu, thus casting doubt on the veracity of her claim; (e) she called in sick on June 25, 1989 that
she was suffering from sore eyes but her medical certificate made no mention of such condition; and (f) her
medical records reveal a pattern of abuse of sick leave privileges.20

Private respondent’s reason for her absence on June 25, 1989 was sore eyes, however the medical certificate
that she presented for her prolonged absence from June 25 to July 14, 1989 was systemic viral disease and as
correctly observed by Dr. Dungo, sore eyes was never mentioned therein.

Moreover, in the medical progress note21 of Dr. Damian dated October 10, 1989 attached to private
respondent’s position paper submitted before the Labor Arbiter, it was shown that private respondent was seen
by Dr. Damian on June 25, 1989 at 9:00 a.m. and her temperature was 40 degrees and she was complaining
of severe headache and body pain. It would appear that there was a discrepancy between the reason given

104
when she called in sick on June 25, 1989 and her complaints when she consulted Dr. Damian on the same
day. In fact, when private respondent was asked on cross-examination why sore eyes was never mentioned in
her medical certificate, all that she could say was "the diagnosis was systemic viral disease, sama-sama na
lahat".22

The medical certificate issued by Dr. Damian showed that private respondent was under his professional care
from June 25 to July 12, 1989. However, the medical progress note dated October 10, 1989 of the same doctor
showed that private respondent consulted him only on June 25, 27, and 29, 1989. It was never mentioned that
Dr. Damian had seen private respondent after June 29, 1989. Thus, there was even a discrepancy between
the medical certificate dated July 13, 1989 and the medical progress note as to the time frame that private
respondent was seen by Dr. Damian. The medical certificate did not cover private respondent’s absences from
July 13 to 14, 1989 and she only reported for work on July 15, 1989.

It bears stressing that from the time private respondent called in sick on June 25, 1989 due to sore eyes, she
never called up petitioner again until she reported for work on July 15, 1989. She never went to petitioner’s
doctors for them to verify her sickness.

Private respondent had committed the first two offenses of unauthorized absences in the same year. First, she
did not report for work from March 19 to 29, 1989 without notice to petitioner, thus her absence was treated as
unauthorized and considered her first offense for which she was penalized with suspension. Second, she again
did not report for work from June 5 to 13, 1989 and when she reported for work and presented her medical
certificate, it covered the period from June 5 to 8, 1989 only but she did not report for work until June 14, 1989.
Petitioner’s doctor did not confirm her absences from June 11 to 13, 1989, thus, the same was considered
unauthorized and her second offense for which she was penalized again with suspension. These two
unauthorized absences together with her third unauthorized absences committed from June 28 to July 14,
1989 are sufficient bases for petitioner’s finding that private respondent patently abused her sick leave
privileges.

Previous infractions may be used as justification for an employee’s dismissal from work in connection with a
subsequent similar offense.23 Moreover, it is in petitioner’s rules and regulations that the same offense
committed within the three-year period merits the penalty of dismissal. The CA’s finding that petitioner may not
rely on the previous absences of private respondent in 1978 and 1982 to show abuse of sick leave privileges
has no basis since private respondent was dismissed for committing her three unauthorized absences all in
1989.

It had also been established by Dr. Dungo’s testimony that private respondent’s medical record showed that
she did not go to the clinic for consultation as she would only present a medical certificate and get a clearance
for her sick leave;24 that the same medical record showed her absences in 1989 as follows: (1) From April 27
to May 4 due to urinary tract infection and she submitted a medical certificate;25 (2) From May 5 to 14 due to
back pain;26(3) From May 20 to 21 due to migraine;27 (4) June 5 to 13 due to gastroenteritis (penalized as her
second offense); (5) June 15 to 24 due to conjunctivitis and submitted a medical certificate; 28 and (6) June 25
to July 14, 1989 due to systemic viral disease with medical certificate (her third offense penalized with
dismissal). Private respondent had incurred a total absence of 85 days from January to October 1989; 29 and
115 days in 1988.30 It had also been established that petitioner’s doctors confirmed most of her sick leave out
of compassion31 and that her medical records showed that there were several warnings given her regarding
her unconfirmed sick leave.32

As petitioner stated in its pleadings, it is a telecommunication service company which provides the country with
various telecommunication services and facilities. Its operations are a vital part to many transactions all over
the country and abroad, and private respondent was one of its telephone operators who used to connect all
these calls. Thus, her patent abuse of her sick leave privileges is detrimental to petitioner’s business.

While it is true that compassion and human consideration should guide the disposition of cases involving
termination of employment since it affects one's source or means of livelihood, it should not be overlooked that
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the benefits accorded to labor do not include compelling an employer to retain the services of an employee
who has been shown to be a gross liability to the employer. The law in protecting the rights of the employees
authorizes neither oppression nor self-destruction of the employer.33 It should be made clear that when the law
tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between
labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal
positions. There may be cases where the circumstances warrant favoring labor over the interests of
management but never should the scale be so tilted if the result is an injustice to the employer. Justitia nemini
neganda est (Justice is to be denied to none).34

WHEREFORE, the instant petition is GRANTED. The Decision dated July 31, 2002 and the Resolution dated
February 7, 2003 of the Court of Appeals in CA-G.R. SP No. 51060 are hereby REVERSED and SET ASIDE.
The complaint of Amparo Balbastro is DISMISSED. No costs. SO ORDERED.

19. ROQUE S. DUTERTE, petitioner, vs. KINGSWOOD TRADING CO., INC., FILEMON LIM and
NATIONAL LABOR RELATIONS COMMISSION, respondents
G.R. No. 160325 October 4, 2007

GARCIA, J.:

By this petition for review on certiorari, petitioner Roque S. Duterte seeks the review and setting aside of the
decision1 dated June 20, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 71729, as reiterated in its
resolution2 of October 5, 2003, affirming an earlier resolution3 of the National Labor Relations Commission
(NLRC) which ruled that petitioner was not illegally dismissed from employment due to disease under Article
284 of the Labor Code.

In September 1993, petitioner was hired as truck/trailer driver by respondent Kingswood Trading Company,
Inc. (KTC) of which co-respondent Filemon Lim is the President. Petitioner was on the 6:00 a.m. – 6:00 p.m.
shift. He averaged 21 trips per month, getting P700 per trip. When not driving, petitioner was assigned to clean
and maintain respondent KTC’s equipment and vehicles for which he was paid P125 per day. Regularly,
petitioner would be seconded by respondent Filemon Lim to drive for one of KTC’s clients, the Philippine
National Oil Corporation, but always subject to respondents’ convenience.

On November 8, 1998, petitioner had his first heart attack and was confined for two weeks at the Philippine
Heart Center (PHC). This was confirmed by respondent KTC which admitted that petitioner was declared on
sick leave with corresponding notification.

A month later, petitioner returned to work armed with a medical certificate signed by his attending physician at
the PHC, attesting to petitioner’s fitness to work. However, said certificate was not honored by the respondents
who refused to allow petitioner to work.

In February 1999, petitioner suffered a second heart attack and was again confined at the PHC. Upon release,
he stayed home and spent time to recuperate.

In June 1999, petitioner attempted to report back to work but was told to look for another job because he was
unfit. Respondents refused to declare petitioner fit to work unless physically examined by the company
physician. Respondents’ promise to pay petitioner his separation pay turned out to be an empty one. Instead,
petitioner was presented, for his signature, a document as proof of his receipt of the amount of P14,375.00 as
first installment of his Social Security System (SSS) benefits. Having received no such amount, petitioner
refused to affix his signature thereon and instead requested for the necessary documents from respondents to
enable him to claim his SSS benefits, but the latter did not heed his request.

On November 11, 1999, petitioner filed against his employer a complaint for illegal dismissal and damages.

106
In a decision4 dated September 26, 2000, the labor arbiter found for the petitioner. However, while
categorically declaring that petitioner’s dismissal was illegal, the labor arbiter, instead of applying Article
2795 of the Labor Code on illegal dismissals, applied Article 284 on Disease as ground for termination on the
rationale that since the respondents admitted that petitioner could not be allowed back to work because of the
latter’s disease, the case fell within the ambit of Article 284. We quote the fallo of the labor arbiter’s decision:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring complainant to have
been terminated from employment on the ground that he has been suffering from a disease.

Respondents are hereby directed to pay complainant as follows:

1. Separation pay equivalent to one-half (1/2) month salary for every year of service computed
at six (6) years of service in the amount of Forty-Two Thousand (P42,000.00) Pesos.

2. Holiday pay for three (3) years in the amount of Twenty-One Thousand (P21,000.00) Pesos;
and

3. Service Incentive Leave pay for three (3) years in the amount of Ten Thousand (P10,000.00)
Pesos.

All other claims herein sought are hereby denied for lack of merit and factual basis.

On respondents’ appeal, the NLRC, in its Resolution6 of April 24, 2002, set aside the labor arbiter’s decision,
ruling that Article 284 of the Labor Code has no application to this case, there being "no illegal dismissal to
speak of." The NLRC accordingly dismissed petitioner’s complaint for illegal dismissal, thus:

WHEREFORE, the decision appealed from is VACATED and SET ASIDE.7 A new one is hereby
entered DISMISSING the instant case for lack of merit.

Therefrom, petitioner went on certiorari to the CA in CA-G.R. SP No. 71729. In the herein assailed decision
dated June 20, 2003, the CA upheld the NLRC Resolution, saying that the Commission committed no grave
abuse of discretion in holding that petitioner was not illegally dismissed and could not be granted any relief.
With his motion for a reconsideration having been denied by the CA in its resolution of October 5, 2003,
petitioner is now with this Court via the present recourse.

We REVERSE.

At bottom, this case involves the simple issue of the legality of one’s termination from employment made
complicated, however, by over analysis. Simply put, the question at hand pivots on who has the onus of
presenting the necessary medical certificate to justify what would otherwise be classified as legal or illegal, as
the case may be, dismissal from the service. The following may be another formulation of the issue: For
purposes of Article 284 of the Labor Code, would the dismissal of an employee on the ground of disease under
the said Article 284 still require the employer to present a certification from a competent public health authority
that the disease is of such a nature that it could not be cured within a period of six months even with proper
medical treatment? To both the NLRC and the CA, a dismissal on the ground of disease under Article 284 of
the Code is illegal only if the employee himself presents the required certification from the proper health
authority. Since, as in this case, petitioner failed to produce such certification, his dismissal could not be illegal.

In the precise words of the NLRC which the CA effectively affirmed:

Neither can it be gainsaid that Article 284 of the Labor Code applies in the instant case since the
complainant [petitioner] failed to establish that he is suffering from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees
107
nor was he able to prove that his illness is of such nature or at such stage that it cannot be cured
within a period of six months even with proper treatment.8

In order for the complainant to be covered by Article 284 of the Labor Code, he must first
present a certification by a competent public health authority that his continued employment
will result in the aforesaid consequences, but unfortunately for the complainant, we find none in
the instant case. For the respondents to require the complainant to submit a medical certificate
showing that he is already physically fit as a condition of his continued employment under the prevailing
circumstance cannot be considered as neither harsh nor oppressive. xxx

Prescinding from the above, there is no illegal dismissal to speak of. This finding is further strengthened
by the fact that no termination letter or formal notice of dismissal was adduced to prove that
complainant’s services have been terminated. Considering that no illegal dismissal took place, the
complainant’s claim that his right to due process of law had been violated finds no application to the
case at bar. (Emphasis added).

The Court disagrees with the NLRC and CA.

Article 284 of the Labor Code explicitly provides:

Art. 284. DISEASE AS GROUND FOR TERMINATION. -- An employer may terminate the services of
an employee who has been found to be suffering from any disease and whose continued employment
is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.

Corollarily, in order to validly terminate employment on the basis of disease, Book VI, Rule I, Section 8 of the
Omnibus Implementing Rules of the Labor Code requires:

Disease as a ground for dismissal. -- Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the
employer shall not terminate his employment unless there is a certification by a competent public
health authority that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment. If the disease or ailment can
be cured within the period, the employer shall not terminate the employee but shall ask the employee to
take a leave. The employer shall reinstate such employee to his former position immediately upon the
restoration of his normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules)

In a very real sense, both the NLRC and the appellate court placed on the petitioner the burden of establishing,
by a certification of a competent public authority, that his ailment is such that it cannot be cured within a period
of six months even with proper medical treatment. And pursuing their logic, petitioner could not claim having
been illegally dismissed due to disease, failing, as he did, to present such certification.

To be sure, the NLRC’s above posture is, to say the least, without basis in law and jurisprudence. And when
the CA affirmed the NLRC, the appellate court in effect placed on the petitioner the onus of proving his
entitlement to separation pay and thereby validated herein respondents’ act of dismissing him from
employment even without proof of existence of a legal ground for dismissal.

The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease,
must adduce a certification from a competent public authority that the disease of which its employee is
suffering is of such nature or at such a stage that it cannot be cured within a period of six months even with
proper treatment.
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Here, the record does not contain the required certification. And when the respondents asked the petitioner to
look for another job because he was unfit to work, such unilateral declaration, even if backed up by the findings
of its company doctors, did not meet the quantum requirement mandated by the law, i.e., there must be a
certification by a competent public authority.9

For sure, the posture taken by both the NLRC and the CA is inconsistent with this Court’s pronouncement
in Tan v. National Labor Relations Commission,10 thus:

Consistent with the Labor Code state policy of affording protection to labor and of liberal construction of
labor laws in favor of the working class, Sec. 8, Rule 1, Book VI, of the Omnibus Rules Implementing
the Labor Code provides – Where the employee suffers from a disease and his continued employment
is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall
not terminate his employment, unless there is a certification by a competent public authority that the
disease is of such nature or at such a stage, that it cannot be cured within a period of six (6) months
even with proper medical treatment.. There is absolutely nothing on record to show that such a
certification was ever obtained by [the employer] much less that one was issued by a competent
public authority …[o]n the contrary, what appears on record is a Medical Certificate dated May 5,
1999 issued by Dr. Lenita C. de Castro certifying to the contrary, i.e., that [the employee] was in fact
already fit to return to work. However, [the employer] did not accept the certificate and insisted that [the
employee] present one issued by a government physician. For his failure to present such a certificate,
[the employee] was penalized with dismissal. Obviously, the condition imposed by [the employer]
finds no basis under the law. To reiterate, contrary to [the employer’s] insistence that [the
employee] first obtain a medical certificate attesting that he was already cured of pulmonary
tuberculosis, the abovequoted Sec. 9, Rule 1, Book VI, of the Omnibus Rules is clear that the
burden is upon [the employer] not [the employee] to justify the dismissal with a certificate
public authority that [the employee’s] disease is at such stage or of such nature that it cannot
be cured within six (6) months even with proper medical treatment. For [the employer’s] blatant
failure to present one, we can only rule that [the employee’s] dismissal, like that of Garrido, is
illegal, invalid and unjustified. (Emphasis and words in brackets supplied.)

In Triple Eight Integrated Services, Inc. v. NLRC,11 the Court explains why the submission of the requisite
medical certificate is for the employer’s compliance, thus:

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

In thus ruling out an illegal dismissal situation in the instant case, the CA effectively agreed with the NLRC’s
view that the fact of dismissal must be evidenced by positive and overt acts, citing Veterans Phil. Scout
Security Agency v. NLRC.12 Said case, however, is not on all fours with the present one. In Veterans, the
employer offered the complainant-employee a monthly cash allowance and other benefit pending a new
assignment. Therein, the employee was not forthrightly nor constructively dismissed. In fact, the employee
in Veterans was found to be in bad faith as he filed his complaint for illegal dismissal the day immediately after
he accepted the company’s offer of employment benefits. Hence, the Court’s ruling in Veterans that the fact of
dismissal must be evidenced by positive and overt acts indicating the intention to dismiss. These
considerations do not obtain here. Petitioner was not allowed back to work. Neither did he receive any
monetary assistance from his employer, and, worse, respondents refused to give him the necessary
documents to enable him to claim his SSS benefits.

Much was made by the NLRC – and the CA – about petitioner’s refusal to comply with respondents’ order to
submit a medical certificate – irresistibly implying that such refusal is what constrained them to refuse to take
petitioner back in.

We are not persuaded.


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Even assuming, in gratia argumenti, that petitioner committed what may be considered an act of
insubordination for refusing to present a medical certificate, such offense, without more, certainly did not
warrant the latter’s placement in a floating status, a veritable dismissal, and deprived of his only source of
livelihood.

We are not unmindful of the connection between the nature of petitioner’s disease and his job as a truck/trailer
driver. We are also fully aware that petitioner’s job places at stake the safety of the public. However, we do not
agree with the NLRC that petitioner was validly dismissed because his continued employment was prohibited
by the basic legal mandate that reasonable diligence must be exercised to prevent prejudice to the public,
which justified respondents in refusing work to petitioner. Petitioner could have been admitted back to work
performing other tasks, such as cleaning and maintaining respondent company’s machine and transportation
assets.

As a final consideration, the Court notes that the NLRC, as sustained by the CA, considered the petitioner as a
field worker and, on that basis, denied his claim for benefits under Articles 9413 to 9514 of the Labor Code, such
as holiday pay and service incentive leave pay. Article 82 of the Code lists personnel who are not entitled to
the benefits aforementioned.15 Among the excluded group are "field personnel," referring to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with reasonable certainty. As a
general proposition, field personnel are those whose job/service are not or cannot be effectively monitored by
the employer or his representative, their workplace being away from the principal office and whose hours and
days of work cannot be determined with reasonable certainty. Field personnel are paid specific amount for
rendering specific service or performing specific work.

If required to be at specific places at specific times, employees, including drivers, cannot be said to be field
personnel despite the fact that they are performing work away from the principal office of the employer. Thus,
to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work
in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made
as to whether or not the employee’s time and performance are constantly supervised by the employer. 16

Guided by the foregoing norms, petitioner was definitely a regular employee of respondent company and not
its field personnel, as the term is used in the Labor Code. As it were, he was based at the principal office of the
respondent company. His actual work hours, i.e., from 6:00 a.m. to 6:00 p.m., were ascertainable with
reasonable certainty. He averaged 21 trips per month. And if not driving for the company, he was paid P125.00
per day for cleaning and maintaining KTC’s equipment. Not falling under the category of field personnel,
petitioner is consequently entitled to both holiday pay and service incentive leave pay, as mandated by Articles
94 and 95 of the Labor Code.

All told, we rule and so hold that petitioner’s dismissal did not comply with both the substantive and procedural
aspects of due process. Clearly, his dismissal is tainted with invalidity.17

WHEREFORE, the assailed decision of the CA in CA-G.R. SP No. 71729 is REVERSED and SET
ASIDE. Respondents are declared guilty of illegal dismissal and are ordered to pay petitioner separation pay
equivalent to one (1) month pay for every year of service, in lieu of his reinstatement, plus his full backwages
from the time his employment was terminated up to the time this Decision becomes final. For this purpose, let
this case be REMANDED to the labor arbiter for the computation of petitioner’s separation pay, backwages
and other monetary awards due him. Costs against respondents. SO ORDERED.

20. SAMPAGUITA GARMENTS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS


COMMISSION (SECOND DIVISION) and EMILIA B. SANTOS, respondents.
G.R. No. 102406 June 17, 1994

CRUZ, J.:
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If in a labor case, an employee is absolved of an offense that led to her dismissal and is ordered reinstated, will
her subsequent conviction in a criminal prosecution for the same offense affect the administrative decision?

The offense subject of the two cases is theft, claimed to have been committed by private respondent Emilia B.
Santos, an employee of petitioner Sampaguita Garments Corporation.

It was alleged in both cases that on April 14, 1987, Santos attempted to bring out of the company premises,
without authorization or permission, a piece of cloth belonging to the petitioner. 1

Sampaguita dismissed her on this ground. She filed a complaint for illegal dismissal but the labor arbiter
sustained the company. 2 However, his decision was reversed by the NLRC, which ordered her reinstatement
with back wages from the time of her illegal suspension until her actual reinstatement. 3

Meantime, the petitioner had also filed a criminal action against Santos for the same offense in the Municipal
Trial Court of Caloocan City. After trial, she was found guilty and sentenced to an indeterminate penalty of 1
month and 1 day of arresto mayor as minimum to 4 months of arresto mayor as maximum. 4 This decision was
affirmed by the Regional Trial Court of Caloocan City. 5

In G.R. No. 89323, this Court dismissed the petition for certiorari against the decision of the NLRC for lack of a
showing that it was tainted with grave abuse of discretion. 6

In G.R. No. 100929, this Court saw no reversible error in the decision of the Court of Appeals sustaining the
petitioner’s conviction by the Municipal Trial Court as affirmed by the Regional Trial Court. 7

The decisions in both cases became final and executory and the corresponding entries of judgment were
eventually made.

Subsequently, Santos moved for the execution of the NLRC decision. The petitioner opposed, invoking her
conviction in the criminal case. However, the NLRC sustained her on the ground that its decision had been
affirmed by this Court and had long become final and executory. Sampaguita then came to this Court for relief.

It is asserted by the petitioner that, in view of the private respondent’s conviction, the decision of the NLRC
calling for her reinstatement and the payment to her of P63,908.00 in back wages should not now be enforced.
Otherwise, she would in effect be undeservedly rewarded when she should instead be punished for her
offense.

On the other hand, the private respondent argues that the decision of the NLRC is independent of the criminal
case and in any event can no longer be modified or reversed after having become final and executory on
August 7, 1990.

We hold for the petitioner.

It is true that once a judgment has become final and executory, it can no longer be disturbed except only for
the correction of clerical errors or where supervening events render its execution impossible or unjust. 8 In the
latter event, the interested party may ask the court to modify the judgment to harmonize it with justice and the
facts. 9

There is no dispute in the case at bar that the decision of the respondent NLRC ordering the private
respondent’s reinstatement with back wages had indeed become final and executory. Even so, we find, in light
of the subsequent developments, that the NLRC was not correct in sustaining the implementation of that
decision.

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In Heirs of Francisco Guballa, Sr. vs. Court of Appeals, 10 this Court held that "the power of the NLRC to issue
a writ of execution carries with it the right to look into the correctness of the execution of the decision and to
consider supervening events that may affect such execution."

The affirmance by the Regional Trial Court and the Court of Appeals of the private respondent’s conviction for
theft is justification enough for the NLRC to exercise this authority and suspend the execution of its decision.
Such conviction, which was also upheld by this Court in G.R. No. 100929, is a supervening cause that
rendered unjust and inequitable the decision mandating the private respondent’s reinstatement, and with back
wages to boot.

The Solicitor General agrees that reinstatement is no longer feasible in view of the subsequent conviction of
the private respondent and the already strained relationship between her and the petitioner. He suggests
instead the grant of separation pay to the private respondent.

We disagree. Even this award is not justifiable because Santos was found guilty of a crime involving moral
turpitude and so is disqualified from this benefit under the ruling in PLDT v. NLRC. 11 That case laid down the
rule as follows:

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be
required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is
called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect of rewarding rather than punishing the
erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the
separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee
who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that
he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is
again found out. This kind of misplaced compassion is not going to do labor in general any good as it will
encourage the infiltration of its ranks by those who do not deserve the protection and concern of the
Constitution.

The same rationale exists for not enforcing the respondent Commission’s award of back wages in favor of the
private respondent.

Conformably to Wenphil Corporation v. NLRC 12 and subsequent


cases, 13 the only award to which the private respondent may be entitled is for the amount of P1,000.00, to be
paid to her by the petitioner as a penalty for effecting her dismissal without complying with the procedural
requirements laid down in Sections 2 and 5 of Rule XIV, Book V, of the Omnibus Rules Implementing the
Labor Code.

The contention that the petition should be dismissed for lack of the certification on forum-shopping required
under Circular No. 28-91 is not well taken. The petition was filed on December 5, 1991, before the circular took
effect on January 1, 1992.

The private respondent’s conviction of the crime of theft of property belonging to the petitioner has affirmed the
existence of a valid ground for her dismissal and thus removed the justification for the administrative decision
ordering her reinstatement with back wages. Nevertheless, the petitioner is still subject to sanction for its failure
to accord the private respondent the right to an administrative investigation in conformity with the procedural
requirements of due process.

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WHEREFORE, the petition is GRANTED and the order of execution dated April 1, 1991, is SET ASIDE. The
petitioner is instead required to pay the private respondent an indemnity of P1,000.00 for its arbitrariness in
effecting her dismissal. SO ORDERED.

113