SMART v.
SOLIDUM  January 26, 2009, The NLRC reversed the labor arbiter's
Doctrine:
Preventive suspension cannot go beyond 30 days for the same
offense, but the company can validly issue another preventive
suspension upon uncovering another offense.
Facts:
 April 26, 2004, Solidum was hired by Smart Communications,
Inc. as Department Head of Smart Prepaid/Buddy Activations
under the Product Marketing Group
 September 21, 2005, Solidum was charged with acts of
dishonesty and breach of trust and confidence, wherein he
supposedly created fictitious marketing events and submitting
fraudulent document to prove that the events have transpired
in the goal of defrauding Smart. Pending investigation, Solidum
will be suspended for 30 days.
 October 21, 2005, Solidum was charged again with different
cases, thus suspending him for another 20 days
 October 28, 2005, after Solidum requested pertinent
documents, he is now declaring that he shall no longer receive
or entertain notices or memorandum, except the final decision
resolving the administrative charges against him.
 November 11, 2005, Company decided to dismiss Solidum for
breach of trust.
 July 3, 2006, Labor Arbiter decided that the extended
suspension without pay was illegal and that Solidum was
unjustly dismissed from work without observance of procedural
due process. Ordered reinstatement with backwages.
decision. It ruled that the seriousness of Solidum 's infractions
justified the additional period of suspension. It added that the
labor arbiter erred in declaring Solidum' s dismissal illegal.
 April 4, 2011, CA declared the dismissal not illegal while the
extended suspension is illegal thus entitling Solidum for
backwages.
Issue and Holding:
1. WON the 2nd preventive suspension is illegal.
The 2nd preventive suspension is legal on all basis, since
it is not an extension to penalize the same offense,
rather the suspension is a result of the discovery of
another offense, and as such, Smart can validly issue
another preventive suspension.
Smart: Respondent was validly placed under second preventive
suspension for the reason that pending investigation of separate and
distinct set of offenses committed by the respondent as contained in
the second Notice to Explain, his continued presence in the company
premises during the investigation poses serious and imminent threat
to the life or property of the employer and co-workers.
Solidum: that his preventive suspension of 20 days is an extension of
his initial 30-day suspension and, hence, illegal and constitutes
constructive dismissal.
SC: The relevant provisions regarding preventive suspensions are
found in Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code (Omnibus Rules), as amended by
Department Order No. 9, Series of 1997, which read as follows:
Section 8. Preventive suspension. The employer may place the worker
concerned under preventive suspension only if his continued
employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers.
Section 9. Period of suspension. No preventive suspension shall last
longer than thirty (30) days. The employer shall thereafter reinstate
the worker in his former or in a substantially equivalent position or the
employer may extend the period of suspension provided that during
the period of extension, he pays the wages and other benefits due to
the worker. In such case, the worker shall not be bound to reimburse
the amount paid to him during the extension if the employer decides,
after completion of the hearing, to dismiss the worker
By a preventive suspension an employer protects itself from further
harm or losses because of the erring employee. This concept was
explained by the Court in Gatbonton v. National Labor Relations
Commission
Preventive suspension is a disciplinary measure for the protection
of the company's property pending investigation of any alleged
malfeasance or misfeasance committed by the employee. The
employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers.
However, when it is determined that there is no sufficient basis lo
justify an employee's preventive suspension, the latter is entitled to the
payment of salaries during the time of preventive suspension.
Such principle was applied by the Court in Bluer Than Blue Joint
Ventures/Mary Ann Dela Vega v. Esteban, where it was ruled:
“Preventive suspension is a measure allowed by law and afforded to
the employer if an employee's continued employment poses a serious
and imminent threat to the employer's life or property or of his co-
workers. It may be legally imposed against an employee whose alleged
violation is the subject of an investigation.”
As Applied: petitioner was acting well within its rights when it imposed
a 10-day preventive suspension on Esteban. While it may be that the
acts complained of were committed by Esteban almost a year
before the investigation was conducted, still, it should be pointed
out that Esteban was performing functions that involve handling
of the petitioner's property and funds, and the petitioner had
every right to protect its assets and operations pending Esteban's
investigation.
While the Omnibus Rules limits the period of preventive suspension to
thirty (30) days, such time frame pertains only to one offense by the
employee. For an offense, it cannot go beyond 30 days.
However, if the employee is charged with another offense, then the
employer is entitled to impose a preventive suspension not to exceed
30 days specifically for the new infraction. Indeed, a fresh preventive
suspension can be imposed for a separate or distinct offense. Thus, an
employer is well within its rights to preventively suspend an employee
for other wrongdoings that may be later discovered while the first
investigation is ongoing.
As in this case, Smart was able to uncover other wrongdoings
committed by Solidum during the investigation for the initial charges
against him. These newly discovered transgressions would, thus,
require an additional period to investigate. The first batch of offenses
was captured in the September 21, 2005 Notice to Explain issued by
Smart. The notice covers fraud or willful breach of trust in relation to
transactions was issued a preventive suspension without pay for 30
days.
On October 21, 2005, Smart, however, issued another notice to explain
to Solidum this time involving additional CEs. Solidum was again
preventively suspended for twenty (20) days. The preventive
suspension of 20 days is not an extension of the suspension issued in
relation to the September 21, 2005 Notice to Explain but is a totally
separate preventive suspension for the October 21, 2005 Notice to
Explain. As earlier pointed out, the transactions covered by the 30-day
preventive suspension are different from that covered by the 20-day
preventive suspension. Such being the case the court a quo was
incorrect when it treated said suspension as an "extension" and,
consequently, it is a miscue to award Solidum the payment of back
salaries and benefits corresponding to the 20-day preventive
suspension of Solidum
Ruling: This court affirmed the decision of the CA with modification,
that the award of salaries and benefits that accrued during the period
of extended preventive suspension is deleted.
ARELLANO et al, vs. POWERTECH DIGEST
DECEMBER 21, 2016 ~ VBDIAZ
ARELLANO et al, vs. POWERTECH
G.R. No. 150861
January 22, 2008
FACTS: The case stems from a complaint for illegal dismissal and
other money claims filed by the Nagkakaisang Manggagawa Ng
Powertech Corporation in behalf of its individual members and non-
union members against their employer, Powertech.
The Labor Arbiter rendered a Decision declaring illegal the
termination of 20 of petitioners and granting their monetary
claims of 2.5M. Powertech appealed to the NLRC.
During its pendency, Gestiada, for himself and on behalf of other
petitioners, executed a quitclaim, release and waiver in favor of
Powertech in consideration of 150k. (Earlier, Gestiada was appointed
by his co-petitioners as their attorney-in-fact. The appointment was
evidenced by an SPA.) The compromise amount was paid to Gestiada
by check.
Relying on the quitclaim and release, Powertech filed a motion for the
withdrawal of the appeal and cash bond. The NLRC granted the
motion, dismissed the appeal and ordered the release of the cash bond.
The check of Gestiada, however, bounced due to a stop payment order
of Powertech.
Aggrieved, petitioners moved to nullify the release and quitclaim for
lack of consideration. In a Resolution, the NLRC declared the
quitclaim, release and waiver void for lack of consideration,
reinstated the appeal and ordered Powertech to post a cash or surety
bond for the monetary judgment less the amount it had previously
posted.
Then, Gestiada terminated the services of their counsel,
Atty. Evangelista and, instead, retained Atty. Felipe of the Public
Attorney’s Office.
A day later, Powertech paid 150k to Gestiada purportedly as
compromise amount for all of petitioners. That same day, Gestiada,
through Atty. Felipe, and Powertech filed a joint MTD with the NLRC
based on the compromise agreement. Atty. Evangelista opposed the
motion, alleging that the compromise agreement is unconscionable,
that he was illegally terminated as counsel for the other petitioners
without their consent, and that the 150k was received by Gestiada as
payment solely for his backwages and other monetary claims.
The NLRC issued a resolution denying the joint MTD. In denying the
joint motion to dismiss, the NLRC held that the amount received by
Gestiada did not cover the monetary claim of petitioners against
Powertech. For failure of Powertech to post the required cash or surety
bond, the NLRC ruled that the Labor Arbiter decision had attained
finality.
Undaunted, Powertech elevated the matter to the CA via petition for
certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
The CA rendered a decision in favor of Powertech, ordering that the
Resolution of the NLRC declaring the Quitclaim and Release void ab
initio and denying the Joint MTD and dismissing the appeal of the
petitioners is ANNULLED and SET ASIDE.
The CA upheld the validity of the compromise agreement between
petitioners and Powertech
Petitioners moved to reconsider the CA decision but their motion was
denied. Hence, the present recourse.
ISSUE: WON THE COMPROMISE AGREEMENT IS VOID
HELD: WHEREFORE, the petition is GRANTED. The Decision of the
CA is REVERSED and SET ASIDE. The Resolution of the NLRC is
REINSTATED.
YES
We give credence to the admission of Gestiada that he received the
150k as payment for his own backwages. In his letter to
Atty. Evangelista, Gestiada said that he was pressured by Powertech
to sign the waiver and quitclaim for petitioners in order to receive his
share in the P2.5 million judgment. Having no stable job after his
dismissal, Gestiada had no other choice but to breach his fiduciary
obligation to petitioners. He succumbed to the pressure of Powertech
in signing the waiver, release and quitclaim in exchange for the
150k. In short, he colluded with Powertech to the detriment of
petitioners.
Powertech knew that Gestiada had plenary authority to act for
petitioners in the labor case. It had prior dealings with him. It also
knew that Gestiada was authorized to negotiate for any amount “he
may deem just and reasonable” and to sign waivers and quitclaims on
behalf of petitioners. Powertech obviously used that knowledge,
capitalized on the vulnerable position of Gestiada in entering into the
agreement and took advantage of the situation to the disadvantage of
petitioners.
To give effect to the collusion, Gestiada had to get rid of
Atty. Evangelista, who had previously succeeded in nullifying the
compromise agreement. He fired Atty. Evangelista without cause
basing his dismissal on his plenary authority as agent of
petitioners. He then procured the services of another lawyer,
Atty. Felipe.
In line with Our conclusion that Powertech colluded with Gestiada, the
CA gravely erred in upholding the compromise agreement. The
appellate court decision was premised on the compromise agreement
being entered into by Powertech and Gestiada in good faith. It is now
clear that there is ample evidence indicating that Powertech was
negotiating in bad faith and, worse, it colluded with Gestiada in
shortchanging, nay, fraudulently depriving petitioners of their just
share in the award.
Collusion is a species of fraud. Article 227 of the Labor Code empowers
the NLRC to void a compromise agreement for fraud, thus:
Any compromise settlement, including those involving labor standard
laws, voluntarily agreed upon by the parties with the assistance of the
Bureau or the regional office of the Department of Labor, shall be final
and binding upon the parties. The National Labor Relations
Commission or any court shall not assume jurisdiction over issues
involved therein except in case of non-compliance thereof or if there is
prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.[28] (Underscoring supplied)
In fine, We find that the CA erred in upholding the compromise
agreement between Powertech and Gestiada. The
NLRC justifiably declared the compromise agreement as void.
NOTES:
Addressing petitioners’ contention on the failure of Powertech to post
a surety bond, We agree with the NLRC resolution dismissing its
appeal. Said the NLRC on this point:
An appeal is neither a natural right nor is it part of due process but
purely a statutory privilege and may be exercised only in the manner
and in accordance with the provisions of law x x x Considering that
the Joint MTD remains unacted upon at the time respondents received
a copy of Our Resolution… respondents, in accordance with said
Resolution and with Article 223 Labor Code and with Section 6, Rule
VI, NLRC New Rules of Procedure should have posted a cash and
surety bond. Hence failing to do so the appealed Decision is
deemed final and executory…
The posting of a surety bond is mandatory and jurisdictional.