G.R. No.
211892 December 6, 2017
INNODATA KNOWLEDGE SERVICES, INC., Petitioner vs. SOCORRO D'MARIE T.
INTING, ISMAEL R. GARAYGAY, EDSON S. SOLIS, MICHAEL A. REBATO, JAMES
HORACE BALONDA, STEPHEN C. OLINGAY, DENNIS C. RIZON, JUNETH A.
RENTUMA, HERNAN ED NOEL I. DE LEON, JR., JESS VINCENT A. DELA PENA,
RONAN V. ALAMILLO, ENNOH CHENTIS R. FERNANDEZ, FRITZ J. SEMBRINO,
DAX MATTHEW M. QUIJANO, RODOLFO M. VASQUEZ, MA. NAZELLE B.
MIRALLES, MICHAEL RAY B. MOLDE, WENDELL B. QUIBAN, ALDRIN O.
TORRENTIRA, and CARL HERMES CARSKIT, Respondents
Remedial Law; Civil Procedure; Supreme Court; Jurisdiction; The Supreme Court
(SC) may take cognizance of factual issues when the findings of fact and conclusions
of law of the Labor Arbiter (LA) and/or the National Labor Relations Commission
(NLRC) are inconsistent with those of the Court of Appeals (CA).—It is true that factual
findings of administrative or quasi-judicial bodies which are deemed to have acquired
expertise in matters within their respective jurisdictions are generally accorded, not only
respect, but even finality, and bind the Court when supported by substantial evidence.
However, the Court may take cognizance of factual issues when the findings of fact
and conclusions of law of the LA and/or the NLRC are inconsistent with those of the
CA, as in the case at bar.
Labor Law; The employment status of a person is defined and prescribed by law
and not by what the parties say it should be.—The employment status of a person is
defined and prescribed by law and not by what the parties say it should be. Equally
important to consider is that a contract of employment is impressed with public interest
such that labor contracts must yield to the common good. Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are never at liberty to
insulate themselves and their relationships from the impact of labor laws and
regulations by simply entering into contracts with each other.
Same; Article 295 of the Labor Code contemplates four (4) kinds of employees:
(1) regular employees or those who have been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer; (2)
project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of
the engagement of the employee; (3) seasonal employees or those who work or
perform services which are seasonal in nature, and the employment is for the duration
of the season; and (4) casual employees or those who are not regular, project, or
seasonal employees.—The aforecited provision contemplates four (4) kinds of
employees: (1) regular employees or those who have been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer; (2) project employeesor those whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee; (3) seasonal employees or
those who work or perform services which are seasonal in nature, and the employment
is for the duration of the season; and (4) casual employees or those who are not
regular, project, or seasonal employees. Jurisprudence later added a fifth (5th) kind,
the fixed-term employee. Based on Article 295, the law determines the nature of the
employment, regardless of any agreement expressing otherwise. The supremacy of
the law over the nomenclature of the contract and its pacts and conditions is to bring
life to the policy enshrined in the Constitution to afford full protection to labor. Thus,
labor contracts are placed on a higher plane than ordinary contracts since these are
imbued with public interest and, therefore, subject to the police power of the State.
Same; Project Employees; Project employment contracts, which fix the
employment for a specific project or undertaking, are valid under the law.—Project
employment contracts, which fix the employment for a specific project or undertaking,
are valid under the law. By entering into such a contract, an employee is deemed to
understand that his employment is coterminous with the project. He may no longer be
employed after the completion of the project for which he was hired. But project
employment contracts are not lopsided agreements in favor of only one party. The
employer’s interest is equally important as that of the employees’. While it may be true
that it is the employer who drafts project employment contracts with its business interest
as overriding consideration, such contracts must not prejudice the employee.
Same; Fixed-term Employees; The decisive determinant in fixed-term
employment is not the activity that the employee is called upon to perform but the day
certain agreed upon by the parties for the commencement and termination of the
employment relationship.—While the CA erred in simply relying on the Court’s rulings
on previous cases involving Innodata Phils., Inc. since there is no substantial proof that
Innodata Phils., Inc. and herein petitioner, IKSI, are one and the same entity, it would
appear, however, that respondents indeed entered into fixed-term employment
contracts with IKSI, contracts with a fixed period of five (5) years. But project
employment and fixed-term employment are not the same. While the former requires a
particular project, the duration of a fixed-term employment agreed upon by the parties
may be any day certain, which is understood to be “that which must necessarily come
although it may not be known when.” The decisive determinant in fixed-term
employment is not the activity that the employee is called upon to perform but the day
certain agreed upon by the parties for the commencement and termination of the
employment relationship. The Court has previously recognized the validity of fixed-term
employment contracts, but it has consistently held that this is more of an exception
rather than the general rule. Aware of the possibility of abuse in the utilization of fixed-
term employment contracts, the Court has declared that where from the circumstances
it is apparent that the periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be struck down as contrary to public policy or
morals.
Same; Termination of Employment; Retrenchment; Retrenchment is the
severance of employment, through no fault of and without prejudice to the employee,
which management resorts to during the periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage
of materials, conversion of the plant to a new production program or the introduction of
new methods or more efficient machinery, or of automation.—Retrenchment is the
severance of employment, through no fault of and without prejudice to the employee,
which management resorts to during the periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage
of materials, conversion of the plant to a new production program or the introduction of
new methods or more efficient machinery, or of automation. In other words, layoff is an
act of the employer of dismissing employees because of losses in the operation, lack
of work, and considerable reduction on the volume of its business. However, a layoff
would amount to dismissal only if it is permanent. When it is only temporary, the
employment status of the employee is not deemed terminated, but merely suspended.
Article 298, however, speaks of permanent retrenchment as opposed to temporary
layoff, as in the present case. There is no specific provision of law which treats of a
temporary retrenchment or layoff and provides for the requisites in effecting it or a
specific period or duration. Notably, in both permanent and temporary layoffs, the
employer must act in good faith — that is, one which is intended for the advancement
of the employer’s interest and not for the purpose of defeating or circumventing the
rights of the employees under the law or under valid agreements.
Same; Suspension of Business Operation; The law set six (6) months as the
period where the operation of a business or undertaking may be suspended, thereby
also suspending the employment of the employees concerned; When the suspension
of the business operations, however, exceeds six months, then the employment of the
employees would be deemed terminated, and the employer would be held liable for the
same.—The law set six (6) months as the period where the operation of a business or
undertaking may be suspended, thereby also suspending the employment of the
employees concerned. The resulting temporary layoff, wherein the employees likewise
cease to work, should also not last longer than six (6) months. After the period of six
(6) months, the employees should either then be recalled to work or permanently
retrenched following the requirements of the law. Failure to comply with this
requirement would be tantamount to dismissing the employees, making the employer
responsible for such dismissal. Elsewise stated, an employer may validly put its
employees on forced leave or floating status upon bona fidesuspension of the operation
of its business for a period not exceeding six (6) months. In such a case, there is no
termination of the employment of the employees, but only a temporary displacement.
When the suspension of the business operations, however, exceeds six (6) months,
then the employment of the employees would be deemed terminated, and the employer
would be held liable for the same.
Same; Same; Management Prerogative; Cessation of Business Operation;
Closure or suspension of operations for economic reasons is recognized as a valid
exercise of management prerogative.—Indeed, closure or suspension of operations for
economic reasons is recognized as a valid exercise of management prerogative. But
the burden of proving, with sufficient and convincing evidence, that said closure or
suspension is bona fide falls upon the employer. In the instant case, IKSI claims that
its act of placing respondents on forced leave after a decrease in work volume, subject
to recall upon availability of work, was a valid exercise of its right to layoff, as an
essential component of its management prerogatives. The Court agrees with the LA’s
pronouncement that requiring employees on forced leave is one of the cost-saving
measures adopted by the management in order to prevent further losses. However,
IKSI failed to discharge the burden of proof vested upon it. Having the right should not
be confused with the manner in which that right is exercised; the employer cannot use
it as a subterfuge to run afoul of the employees’ guaranteed right to security of tenure.
The records are bereft of any evidence of actual suspension of IKSI’s business
operations or even of the ACT Project alone. In fact, while IKSI cited Article 301 to
support the temporary layoff of its employees, it never alleged that it had actually
suspended the subject undertaking to justify such layoff. It merely indicated changes in
business conditions and client requirements and specifications as its basis for the
implemented forced leave/layoff.
Same; Same; It is the employer’s duty to prove with clear and satisfactory
evidence that legitimate business reasons exist in actuality to justify any retrenchment.
Failure to do so would inevitably result in a finding that the dismissal is unjustified.—In
light of the well-entrenched rule that the burden to prove the validity and legality of the
termination of employment falls on the employer, IKSI should have established
the bona fidesuspension of its business operations or undertaking that could
legitimately lead to the temporary layoff of its employees for a period not exceeding six
(6) months, in accordance with Article 301. The LA severely erred when it sustained
respondents’ temporary retrenchment simply because the volume of their work would
sometimes decline, thus, several employees at the ACT Project stream experienced
unproductive time. Considering the grave consequences occasioned by retrenchment,
whether permanent or temporary, on the livelihood of the employees to be dismissed,
and the avowed policy of the State to afford full protection to labor and to assure the
employee’s right to enjoy security of tenure, the Court stresses that not every loss
incurred or expected to be incurred by a company will justify retrenchment. The losses
must be substantial and the retrenchment must be reasonably necessary to avert such
losses. The employer bears the burden of proving this allegation of the existence or
imminence of substantial losses, which by its nature is an affirmative defense. It is the
employer’s duty to prove with clear and satisfactory evidence that legitimate business
reasons exist in actuality to justify any retrenchment. Failure to do so would inevitably
result in a finding that the dismissal is unjustified. Otherwise, such ground for
termination would be susceptible to abuse by scheming employers who might be
merely feigning business losses or reverses in their business ventures to dispose of
their employees.
Same; Termination of Employment; Separation Pay; Under the Labor Code,
separation pay is payable to an employee whose services are validly terminated as a
result of retrenchment, suspension, closure of business or disease.—Even assuming
that the company had a valid reason to suspend operations and had filed the necessary
notice with the Department of Labor and Employment (DOLE), it still would not be a
legitimate excuse to cursorily dismiss employees without properly informing them of
their rights and status or paying their separation pay in case they were eventually laid
off. Under the Labor Code, separation pay is payable to an employee whose services
are validly terminated as a result of retrenchment, suspension, closure of business or
disease. Thus, the Court held that Consolidated Plywood’s employees should, at the
very least, have been given separation pay and properly informed of their status so as
not to leave them in a quandary as to how they would properly respond to such a
situation. Similarly, respondents never received any separation pay when they were
terminated in July of 2010 since IKSI had been denying the existence of a dismissal,
whether actual or constructive.
Same; Same; Notice of Termination; In both permanent and temporary layoffs,
jurisprudence dictates that the one (1)-month notice rule to both the Department of
Labor and Employment (DOLE) and the employee under Article 298 is mandatory.—
Withal, in both permanent and temporary layoffs, jurisprudence dictates that the one
(1)-month notice rule to both the DOLE and the employee under Article 298 is
mandatory. Here, both the DOLE and respondents did not receive any prior notice of
the temporary layoff. The DOLE Region VII Office was only informed on January 11,
2010 or four (4) days after the forced leave had already taken effect. On the other hand,
respondents received the notice of forced leave on January 7, 2010, after the business
day of which the same forced leave was to take effect. Respondents also pointed out
that when they received said notice, they were told to no longer report starting the next
day, made to completely vacate their workstations and surrender their company
identification cards, and were not even allowed to use their remaining unused leave
credits, which gave them the impression that they would never be returning to the
company ever again.
Same; Same; Since dismissal is the ultimate penalty that can be meted to an
employee, the requisites for a valid dismissal from employment must always be met,
namely: (1) it must be for a just or authorized cause; and (2) the employee must be
afforded due process, meaning he is notified of the cause of his dismissal and given an
adequate opportunity to be heard and to defend himself.—Since dismissal is the
ultimate penalty that can be meted to an employee, the requisites for a valid dismissal
from employment must always be met, namely: (1) it must be for a just or authorized
cause; and (2) the employee must be afforded due process, meaning, he is notified of
the cause of his dismissal and given an adequate opportunity to be heard and to defend
himself. Our rules require that the employer be able to prove that said requisites for a
valid dismissal have been duly complied with. Indubitably, IKSI’s intent was not merely
to put respondents’ employment on hold pending the existence of the unfavorable
business conditions and call them back once the same improves, but really to sever
the employer-employee relationship with respondents right from the very start. The
Court cannot just turn a blind eye to IKSI’s manifest bad faith in terminating respondents
under the guise of placing them on a simple floating status. It is positively aware of the
unpleasant practice of some employers of violating the employees’ right to security of
tenure under the pretense of a seemingly valid employment contract and/or valid
termination. We must abate the culture of employers bestowing security of tenure to
employees, not on the basis of the latter’s performance on the job, but on their ability
to toe the line. Unfortunately for IKSI, they chanced upon respondents who, unlike the
ordinary workingman who always plays an easy prey to these perfidious companies,
are fully aware of their rights under the law and simply refuse to ignore and endure in
silence the flagrant irruption of their rights, zealously safeguarded by the Constitution
and our labor laws.
Remedial Law; Civil Procedure; Forum Shopping; Those who failed to sign the
certification against forum shopping will not be dropped as parties to the case since
reasonable or justifiable circumstances are extant, as all respondents share a common
interest and invoke a common cause of action or defense; the signatures of some or
even only one of them substantially complies with the Rule.—In a similar case, the
Court found that the signing of the Verification by only 11 out of the 59 petitioners
already sufficiently assured the Court that the allegations in the pleading were true and
correct and not the product of the imagination or a matter of speculation; that the
pleading was filed in good faith; and that the signatories were unquestionably real
parties-in-interest who undoubtedly had sufficient knowledge and belief to swear to the
truth of the allegations in the petition. In the same vein, the twelve (12) respondents
who signed the Verification in the instant case had adequate knowledge to swear to the
truth of the allegations in their pleadings, attesting that the matters alleged therein have
been made in good faith or are true and correct. With respect to the failure of some of
respondents to sign the Certification Against Forum Shopping, IKSI cited the case
of Altres, et al. v. Empleo, 573 SCRA 583 (2008), which ruled that the non-signing
petitioners were dropped as parties to the case.
However, the reason of the Court for removing said petitioners from the case was
not because of the failure to sign per se, but actually because of the fact that they could
no longer be contacted or were indeed no longer interested in pursuing the case. Here,
as mentioned earlier, those who failed to sign the certification against forum shopping
will not be dropped as parties to the case since reasonable or justifiable circumstances
are extant, as all respondents share a common interest and invoke a common cause
of action or defense; the signatures of some or even only one of them substantially
complies with the Rule.
Same; Same; Verification; Verification, like in most cases required by the rules of
procedure, is a formal requirement, not jurisdictional.—Verification, like in most cases
required by the rules of procedure, is a formal requirement, not jurisdictional. Such
requirement is simply a condition affecting the form of pleading, the noncompliance of
which does not necessarily render the pleading fatally defective. It is mainly intended
to secure an assurance that matters which are alleged are done in good faith or are
true and correct and not of mere speculation. Thus, when circumstances so warrant,
as in this case, the court may simply order the correction of the unverified pleadings or
act on it and waive strict compliance with the rules in order that the ends of justice may
be served. Moreover, no less than the Labor Code directs labor officials to use all
reasonable means to ascertain the facts speedily and objectively, with little regard to
technicalities or formalities, while Section 10, Rule VII of the New Rules of Procedure
of the NLRC provides that technical rules are not binding. Indeed, the application of
technical rules of procedure may be relaxed in labor cases to serve the demand of
substantial justice. Labor cases must be decided according to justice and equity and
the substantial merits of the controversy. After all, the policy of our judicial system is to
encourage full adjudication of the merits of an appeal. Procedural niceties should be
avoided in labor cases in which the provisions of the Rules of Court are applied only in
suppletory manner. Indeed, rules of procedure may be relaxed to relieve a part of an
injustice not commensurate with the degree of noncompliance with the process
required. For this reason, the Court cannot indulge IKSI in its tendency to nitpick on
trivial technicalities to boost its self-serving arguments.
Labor Law; Termination of Employment; Reinstatement; Strained Relations;
Separation Pay; Reinstatement is no longer feasible in this case because of the
palpable strained relations between the parties and the possibility that the positions
previously held by respondents are already being occupied by new hires. Thus,
separation pay equivalent to one (1) month salary for every year of service should be
awarded in lieu of reinstatement.—Inasmuch as IKSI failed to adduce clear and
convincing evidence to support the legality of respondents’ dismissal, the latter is
entitled to reinstatement without loss of seniority rights and backwages computed from
the time compensation was withheld up to the date of actual reinstatement, as a
necessary consequence. However, reinstatement is no longer feasible in this case
because of the palpable strained relations between the parties and the possibility that
the positions previously held by respondents are already being occupied by new hires.
Thus, separation pay equivalent to one (1) month salary for every year of service should
be awarded in lieu of reinstatement.
Same; Same; Illegal Dismissals; Moral Damages; Exemplary Damages; Award
of moral and exemplary damages for an illegally dismissed employee is proper where
the employee had been harassed and arbitrarily terminated by the employer.—The
Court sustains the CA’s award of moral and exemplary damages. Award of moral and
exemplary damages for an illegally dismissed employee is proper where the employee
had been harassed and arbitrarily terminated by the employer. Moral damages may be
awarded to compensate one for diverse injuries such as mental anguish, besmirched
reputation, wounded feelings, and social humiliation occasioned by the unreasonable
dismissal. The Court has consistently accorded the working class a right to recover
damages for unjust dismissals tainted with bad faith, where the motive of the employer
in dismissing the employee is far from noble. The award of such damages is based, not
on the Labor Code, but on Article 2220 of the Civil Code. In line with recent
jurisprudence, the Court finds the amount of P50,000.00 for each of moral and
exemplary damages adequate.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
DECISION
PERALTA, J.:
This is a petition for review seeking the reversal of the Decision1 of the Court of
Appeals (CA), Cebu, Twentieth (20th) Division, dated August 30, 2013 and its
Resolution2 dated March 12, 2014 in CA-G.R. CEB-SP No. 06443 which reversed and
set aside Decision3 of the National Labor Relations Commission (NLRC) on May 31,
2011.
The factual and procedural antecedents, as evidenced by the records of the case, are
the following:
Petitioner Innodata Knowledge Services, Inc. (IKSI) is a company engaged in data
processing, encoding, indexing, abstracting, typesetting, imaging, and other processes
in the capture, conversion, and storage of data and information. At one time, Applied
Computer Technologies (ACT), a company based in the United States of America,
hired IKSI to review various litigation documents. Due to the nature of the job, ACT
required IKSI to hire lawyers, or at least, law graduates, to review various litigation
documents, classify said documents into the prescribed categories, and ensure that
outputs are delivered on time. For this purpose, IKSI engaged the services of
respondents Socorro D’Marie Inting, Ismael R. Garaygay, Edson S. Solis, Michael A.
Rebato, James Horace Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth A.
Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. dela Pefia, Ronan V.
Alamillo, Ennoh Chentis R. Fernandez, Wendell B. Quiban, Aldrin 0. Torrentira, Michael
Ray B. Molde, Fritz J. Sembrino, Dax Matthew M. Quijano, Rodolfo M. Vasquez, Ma.
Nazelle B. Miralles and Carl Hennes Carskit as senior and junior reviewers with a
contract duration of five (5) years.
On January 7, 2010, however, respondents received a Notice of Forced Leave from
IKSI informing them that they shall be placed on indefinite forced leave effective that
same day due to changes in business conditions, client requirements, and
specifications. Hence, respondents filed a complaint for illegal dismissal, reinstatement
or payment of separation pay, backwages, and damages against IKSI.
Subsequently, IKSI sent respondents separate notices dated May 27, 2010 informing
them that due to the unavailability of new work related to the product stream and
uncertainties pertaining to the arrival of new workloads, their project employment
contracts would have to be terminated.
On November 10, 2010, the Labor Arbiter (LA), in the consolidated cases of NLRC RAB
VII Case No. 01-0159-10, NLRC RAB VII Case No. O 1-0182-10, and NLRC RAB VII
Case No. 02-0301-10, declared that there was no illegal dismissal, thus:
WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring that
complainants were not constructively dismissed but were placed on forced leave as a
cost-saving measure. Consequently, herein respondents are directed to recall
complainants back to work as soon as work becomes available. Complainants are
likewise directed to report back to work within ten (10) days from receipt of the order of
respondents to report back to work, otherwise, their failure to do so would be construed
as an abandonment. In the event that reinstatement is no longer feasible, in lieu thereof,
separation pay is granted equivalent to one (1) month salary for every year of service,
a fraction of six (6) months is considered as one (1) whole year, sans backwages.
The claim for moral and exemplary damages as well as attorney’s fees are DISMISSED
for lack of merit.
SO ORDERED.4
WHEREFORE, the Decision of the Labor Arbiter is hereby AFFIRMED WITH
MODIFICATION, in that in lieu of reinstatement, to pay the twelve (12) complainants-
appellants namely: Michael A. Rebato, Hernan Ed Noel L. de Leon, Jr., Wendell B.
Quiban, Fritz Sembrino, Ismael R. Garaygay III, Edson S. Solis, Stephen Olingay,
Ronan Alamillo, Jess Vincent A. dela Pena, Dax Matthew M. Quijano, Juneth A.
Rentuma and Socorro D'Marie T. Inting, the total amount of Php563,500.00.
SO ORDERED.5
Undaunted, the employees elevated the matter to the CA Cebu, alleging grave abuse
of discretion on the NLRC’s part. On August 30, 2013, the CA granted their petition and
reversed the assailed NLRC ruling, thus:
WHEREFORE, premises considered, this petition is GRANTED. The
assailed Decision dated May 31, 2011 and Resolution dated August 26, 2011 of public
respondent in NLRC Case No. VAC-01-000042-2011 are REVERSED and SET
ASIDE. Petitioners Socorro D'Marie Inting, Ismael R. Garaygay, Edson S. Solis,
Michael A. Rebato, James Horace Balonda, Stephen C. Olingay, Dennis C. Rizon,
Juneth A. Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. dela Pena, Ronan
V. Alamillo, Ennoh Chentis R. Fernandez, Wendell B. Quiban, Aldrin 0. Torrentira,
Michael Ray B. Molde, Fritz J. Sembrino, Dax Matthew M. Quijano, Rodolfo M.
Vasquez, Ma. Nazelle B. Miralles and Carl Hermes Carskit are declared to have been
illegally dismissed by Innodata and hence, each of them is entitled to the payment of
the following:
(a) Backwages reckoned from the start of their employment up to the finality of this
Decision with interest as six percent (6%) per annum, and 12% legal interest
thereafter until fully paid;
(b) Separation pay equivalent to one (1) month salary for every year of service, with
a fraction of at least six (6) months to be considered as one (1) whole year, to be
computed from the date of their employment up to the finality of this decision;
(c) Moral damages of Php50,000 and exemplary damages of Php25,000; and
(d) Attorney's fees equivalent to 10 percent (10%) of the total award.
The case is hereby ordered REMANDED to the labor arbiter for the computation of the
amounts due each petitioner.
Costs on private respondent Innodata.
SO ORDERED.6
IKSI then filed a Motion for Reconsideration, but the same was denied in a Resolution
dated March 12, 2014. Hence, the instant petition.
The main issue in this case is whether or not the CA committed an error when it
reversed the NLRC, which declared that respondent employees, as mere project
employees, were validly placed on floating status and, therefore, were not illegally
dismissed.
The Court rules in the negative.
Substantive Issues
Nature of respondents’ employment contracts
It is true that factual findings of administrative or quasi-judicial bodies which are deemed
to have acquired expertise in matters within their respective jurisdictions are generally
accorded, not only respect, but even finality, and bind the Court when supp011ed by
substantial evidence. However, the Court may take cognizance of factual issues when
the findings of fact and conclusions of law of the LA and/or the NLRC are inconsistent
with those of the CA,7 as in the case at bar.
Here, the NLRC ruled that respondents were project employees. It ratiocinated that
their contracts specifically indicated that they were to hold their positions for the
duration of the project which was expected to be completed after a maximum of five (5)
years, or on or before July 2, 2013.8 But the CA found that respondents' employment
contracts are fixed-term, which are contrary to the Constitution and labor laws. It then
cited several cases9 that supposedly involved IKSI itself and would reveal that its fixed-
term employment contracts have been consistently held as a form of circumvention to
prevent employees from acquiring tenurial rights and benefits.
The employment status of a person is defined and prescribed by law and not by what
the parties say it should be. Equally important to consider is that a contract of
employment is impressed with public interest such that labor contracts must yield to the
common good. Thus, provisions of applicable statutes are deemed written into the
contract, and the parties are never at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply entering into
contracts with each other.10
Article 29511 of the Labor Code provides the distinction between a regular and a project
employment:
Art. 295. Regular and casual employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided,That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.
The aforecited provision contemplates four (4) kinds of employees: (1) regular
employees or those who have been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; (2) project
employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of
the engagement of the employee; (3) seasonal employees or those who work or
perform services which are seasonal in nature, and the employment is for the duration
of the season; and (4) casual employees or those who are not regular, project, or
seasonal employees. Jurisprudence later added a fifth (5th) kind, the fixed-term
employee. Based on Article 295, the law determines the nature of the employment,
regardless of any agreement expressing otherwise. The supremacy of the law over the
nomenclature of the contract and its pacts and conditions is to bring life to the policy
enshrined in the Constitution to afford full protection to labor. Thus, labor contracts are
placed on a higher plane than ordinary contracts since these are imbued with public
interest and, therefore, subject to the police power of the State.12
Project employment contracts, which fix the employment for a specific project or
undertaking, are valid under the law. By entering into such a contract, an employee is
deemed to understand that his employment is coterminous with the project. He may no
longer be employed after the completion of the project for which he was hired. But
project employment contracts are not lopsided agreements in favor of only one party.
The employer's interest is equally important as that of the employees'. While it may be
true that it is the employer who drafts project employment contracts with its business
interest as overriding consideration, such contracts must not prejudice the employee.13
As stated in IKSI’s petition itself, the following are the basic provisions of the
employment contracts which respondents signed with the company:
(a) the contracts are entitled "Project-Based Employment Contracts";
(b) the first Whereas clause states "the Company [IKSI] desires the services of a Project
Employee for the Content Supply Chain Project";
(c) Clause 1 on Term of Employment provides:
The Employee shall hold the position of [Junior/Senior] Reviewer and shall
perform the duties and responsibilities of such for the duration of the
Project, which is expected to be completed after a maximum of five (5) years, or
on or before___________, (the "Term").
. . . Further, the Employee is granted one Saturday-off per month on a scheduled basis
for the duration of this PROJECT-BASED EMPLOYMENT CONTRACT ...
(d) The second paragraph of Clause 2 on Work Description provides:
The Employee shall render work in accordance with the schedule and/or program to
which he/she may be assigned or reassigned from time to time, in accordance with
the operational requirements for the completion of the Project. In addition, the
Employee shall perform such other duties, functions, and services related or
incidental to the Project which, for purposes of expediency, convenience, economy,
customer interest, may be assigned by the Company.
(e) Clause 5 on Termination of Employment provides:
At any time during the Term of this Contract, or any extension thereof, the Company
may terminate this Contract, upon thirty (30) days' prior notice to the Employee...in the
following instances:
a. the services contracted for by the Company under the Project is completed
prior to the agreed upon completion date; or
b. the specific phase of the Project requiring the Employee’s services is sooner
completed; or
c. substantial decrease in the volume of work for the Project; or
d. the contract for the Project is cancelled, indefinitely suspended or
terminated;
(e) the first paragraph of Clause 6 on Compensation and Benefits provides:
The Employee shall receive a gross salary of ... In addition to his/her basic pay,
Management may grant an additional incentive pay should the Employee exceed
the Project quota.14
IKSI argued that based on the contract, it is undeniable that respondents’ employment
was fixed for a specific project or undertaking, with its completion or termination clearly
determined at the time of the employee’s engagement. Indeed, records would disclose
that respondents signed employment contracts specifically indicating the Content
Supply Chain Project,15 also known as the ACT Project, as the project for which they
were being hired, which was expected to be completed after a maximum of five (5)
years. However, sometime in November 2008, IKSI required respondents to work on
another project called "Bloomberg," which was not included in the original contracts
that they signed and without entering into a new project employment contracts. Such
fact was never refuted by IKSI. During that time, respondents were required to read
and review decided cases in the United States of America and they were no longer
called Senior or Junior Reviewers, but referred to as Case Classifiers. Respondents
initially opposed working on said project but eventually agreed, in fear of losing their
employment altogether. Months later, they were again required to work on the ACT
Project and reverted to their previous designation as Document Reviewers.16
In the case of ALU-TUCP v. NLRC, 17the Court made a pronouncement on the two (2)
categories of project employees. The project for which project employees are hired
would ordinarily have some relationship to the usual business of the employer. There
should be no difficulty in distinguishing the employees for a certain project from ordinary
or regular employees, as long as the duration and scope of the project were determined
or specified at the time of engagement of said project employees.18
In order to safeguard the rights of workers against the arbitrary use of the word "project" Juneth A. Rentuma July 17, ’08 July16,’13
which prevents them from attaining regular status, employers claiming that their Jess Vincent A. Dela Peña Aug. 12, ’08 Aug. 11, ‘13
workers are project employees have the burden of showing that: (a) the duration and
Dax Matthew M. Quijano Nov. 17, ’08 Nov. 16, ‘13
scope of the employment was specified at the time they were engaged; and (b) there
was indeed a project.19 Therefore, as evident in Article 295, the litmus test for Michael Ray B. Molde May 18, ’09 May 17, ‘14
determining whether particular employees are properly characterized as project Aldrin O. Torrentira May 25, ’09 May24, ‘14
employees, as distinguished from regular employees, is whether or not the employees Ennoh Chentis R. Fernandez May 28, ’09 May 27, ‘14
were assigned to carry out a specific project or undertaking, the duration and scope of Hernan Ed Noel L. De Leon, Jr. June 3, ’09 June 2, ‘14
which were specified at the time the employees were engaged for that project.20
This is precisely the reason why IKSI originally left a blank for the termination date
Here, while IKSI was able to show the presence of a specific project, the ACT Project, because it varied for each employee. If respondents were truly project employees, as
in the contract and the alleged duration of the same, it failed to prove, however, that IKSI claims and as found by the NLRC, then the termination date would have been
respondents were in reality made to work only for that specific project indicated in their uniform for all of them.
employment documents and that it adequately informed them of the duration and scope
of said project at the time their services were engaged. It is well settled that a party Thus, while the CA erred in simply relying on the Court's rulings on previous cases
alleging a critical fact must support his allegation with substantial evidence, as involving Innodata Phils., Inc. since there is no substantial proof that Innodata Phils.,
allegation is not evidence. The fact is IKSI actually hired respondents to work, not only Inc. and herein petitioner, IKSI, are one and the same entity, it would appear, however,
on the ACT Project, but on other similar projects such as the Bloomberg. When that respondents indeed entered into fixed-term employment contracts with IKSI,
respondents were required to work on the Bloomberg project, without signing a new contracts with a fixed period of five (5) years. But project employment and fixed-term
contract for that purpose, it was already outside of the scope of the particular employment are not the same. While the former requires a particular project, the
undertaking for which they were hired; it was beyond the scope of their employment duration of a fixed-term employment agreed upon by the parties may be any day
contracts. The fact that the same happened only once is inconsequential. What matters certain, which is understood to be "that which must necessarily come although it may
is that IKSI required respondents to work on a project which was separate and distinct not be known when." The decisive determinant in fixed-term employment is not the
from the one they had signed up for. This act by IKSI indubitably brought respondents activity that the employee is called upon to perform but the day certain agreed upon by
outside the realm of the project employees category. the parties for the commencement and termination of the employment relationship.22
IKSI likewise fell short in proving that the duration of the project was reasonably The Court has previously recognized the validity of fixed-term employment contracts,
determinable at the time respondents were hired. As earlier mentioned, the but it has consistently held that this is more of an exception rather than the general rule.
employment contracts provided for "the duration of the Project, which is expected to be Aware of the possibility of abuse in the utilization of fixed-term employment contracts,
completed after a maximum of five (5) years, or on or before______ ."The NLRC upheld the Court has declared that where from the circumstances it is apparent that the periods
the same, finding that the contracts clearly provided for the duration of the project which have been imposed to preclude acquisition of tenurial security by the employee, they
was expected to end after a maximum of five (5) years, or on or before July 2, 2013. It should be struck down as contrary to public policy or morals.23
is interesting to note, however, that the five (5)-year period is not actually the duration It is evident that IKSI’s contracts of employment are suspect for being highly
of the project but merely that of the employment contract. Naturally, therefore, not all of ambiguous. In effect, it sought to alternatively avail of project employment and
respondents' employment would end on July 2, 2013, as the completion of the five (5)- employment for a fixed term so as to preclude the regularization of respondents' status.
year period would depend on when each employee was employed, thus:21 The fact that respondents were lawyers or law graduates who freely and with full
Hiring Date Completion Date knowledge entered into an agreement with the company is inconsequential. The utter
disregard of public policy by the subject contracts negates any argument that the
Carl Hermes R. Carskit Nov. 1, ’07 May 31,’12 agreement is the law between the parties24 and that the fixed period was knowingly and
Ismael R. Garaygay III Mar. 5, ’08 Mar. 4, ‘13 voluntarily agreed upon by the parties. In the interpretation of contracts, obscure words
Socorro D’ Marie T. Inting Apr. 7, ’08 Apr. 6, ‘13 and provisions shall not favor the party that caused the obscurity. Consequently, the
James Horace A. Balonda May 12, ’08 May 11, ‘13 terms of the present contract should be construed strictly against the employer, for
being the party who prepared it.25 Verily, the private agreement of the parties can never
Wendell B. Quiban May 12, ’08 May 11, ‘13
prevail over Article 1700 of the Civil Code, which states:
Fritz J. Sembrino May 12, ’08 May 11, ‘13
Art. 1700. The relation between capital and labor are not merely contractual. They are
Edson S. Solis May 12, ’08 May 11, ‘13 so impressed with public interest that labor contracts must yield to the common good.
Rodolfo M. Vasquez, Jr. May 12, ’08 May 11, ‘13 Therefore, such contracts are subject to special laws on labor unions, collective
Stephen C. Olingay May 16, ’08 May 15, ‘13 bargaining, strikes and lockouts, closed shops, wages, working conditions, hours of
labor and similar subjects.
Michael A. Rebato May 19, ’08 May 18, ‘13
Thus, there were no valid fixed-term or project contracts and respondents were IKSI’s
Ma. Nazelle B. Miralles May 21, ’08 May 20, ‘13
regular employees who could not be dismissed except for just or authorized causes.
Dennis C. Rizon July 3, ’08 July 2, ‘13 Any ambiguity in said contracts must be resolved against the company, especially
Ronan V. Alamillo July 10, ’08 July 9, ‘13 because under Article 1702 of the Civil Code, in case of doubt, all labor contracts shall
be construed in favor of the worker. The Court cannot simply allow IKSI to construe
otherwise what appears to be clear from the wordings of the contract itself. The
interpretation which IKSI seeks to conjure is wholly unacceptable, as it would result in
the violation of respondents' right to security of tenure guaranteed in Section 3 of Article
XIII of the Constitution and in Article 29426 of the Labor Code.27
Presence of Just or Authorized Causes
for Termination of Employment
Here, IKSI placed respondents on forced leave, temporary lay-off, or floating status in
January 2010 for the alleged decline in the volume of work in the product stream where
they were assigned. When respondents filed a complaint for illegal dismissal, the LA
dismissed the same for having been filed prematurely, since placing employees on
forced leave or floating status is a valid exercise of management prerogative and IKSI
never really had an intention to terminate their employment. It relied on the
memoranda28 which IKSI issued to respondents, the tenor of which would show the
intention to recall the affected employees back to work once the company's condition
improves. The NLRC affirmed the LA’s ruling and declared that the fact of dismissal,
whether legal or illegal, is absent in this case.
Among the authorized causes for termination under Article 29829 of the Labor Code is
retrenchment, or what is sometimes referred to as a layoff, thus:
Art. 298. Closure of Establishment and Reduction of Personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (112) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.
Retrenchment is the severance of employment, through no fault of and without
prejudice to the employee, which management resorts to during the periods of business
recession, industrial depression, or seasonal fluctuations, or during lulls caused by lack
of orders, shortage of materials, conversion of the plant to a new production program
or the introduction of new methods or more efficient machinery, or of automation. In
other words, lay-off is an act of the employer of dismissing employees because of
losses in the operation, lack of work, and considerable reduction on the volume of its
business. However, a lay-off would amount to dismissal only if it is permanent. When it
is only temporary, the employment status of the employee is not deemed terminated,
but merely suspended.30
Article 298, however, speaks of permanent retrenchment as opposed to temporary lay-
off, as in the present case.1âwphi1There is no specific provision of law which treats of
a temporary retrenchment or lay-off and provides for the requisites in effecting it or a
specific period or duration.31 Notably, in both permanent and temporary lay-offs, the
employer must act in good faith - that is, one which is intended for the advancement of
the employer's interest and not for the purpose of defeating or circumventing the rights
of the employees under the law or under valid agreements.32
Certainly, the employees cannot forever be temporarily laid-off. Hence, in order to
remedy this situation or fill the hiatus, Article 30133 may be applied to set a specific
period wherein employees may remain temporarily laid-off or in floating status.34 Article
301 states:
Art. 301. When Employment not Deemed Terminated. The bona-fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months, or the
fulfillment by the employee of a military or civic duty shall not terminate employment. In
all such cases, the employer shall reinstate the employee to his former position without
loss of seniority rights if he indicates his desire to resume his work not later than one
(1) month from the resumption of operations of his employer or from his relief from the
military or civic duty.
The law set six (6) months as the period where the operation of a business or
undertaking may be suspended, thereby also suspending the employment of the
employees concerned. The resulting temporary lay-off, wherein the employees likewise
cease to work, should also not last longer than six (6) months. After the period of six
(6) months, the employees should either then be recalled to work or permanently
retrenched following the requirements of the law. Failure to comply with this
requirement would be tantamount to dismissing the employees, making the employer
responsible for such dismissal.35 Elsewise stated, an employer may validly put its
employees on forced leave or floating status upon bona fide suspension of the
operation of its business for a period not exceeding six (6) months. In such a case,
there is no termination of the employment of the employees, but only a temporary
displacement. When the suspension of the business operations, however, exceeds six
(6) months, then the employment of the employees would be deemed terminated,36 and
the employer would be held liable for the same.
Indeed, closure or suspension of operations for economic reasons is recognized as a
valid exercise of management prerogative. But the burden of proving, with sufficient
and convincing evidence, that said closure or suspension is bona fide falls upon the
employer. In the instant case, IKSI claims that its act of placing respondents on forced
leave after a decrease in work volume, subject to recall upon availability of work, was
a valid exercise of its right to lay-off, as an essential component of its management
prerogatives. The Court agrees with the LA's pronouncement that requiring employees
on forced leave is one of the cost-saving measures adopted by the management in
order to prevent further losses. However, IKSI failed to discharge the burden of proof
vested upon it. Having the right should not be confused with the manner in which that
right is exercised; the employer cannot use it as a subterfuge to run afoul of the
employees' guaranteed right to security of tenure. The records are bereft of any
evidence of actual suspension of IKSI's business operations or even of the ACT Project
alone. In fact, while IKSI cited Article 301 to support the temporary lay-off of its
employees, it never alleged that it had actually suspended the subject undertaking to
justify such lay-off. It merely indicated changes in business conditions and client
requirements and specifications as its basis for the implemented forced leave/lay-off.37
In light of the well-entrenched rule that the burden to prove the validity and legality of
the termination of employment falls on the employer, IKSI should have established
the bona fide suspension of its business operations or undertaking that could
legitimately lead to the temporary layoff of its employees for a period not exceeding six
(6) months, in accordance with Article 301.38 The LA severely erred when it sustained
respondents' temporary retrenchment simply because the volume of their work would
sometimes decline, thus, several employees at the ACT Project stream experienced
unproductive time.39 Considering the grave consequences occasioned by
retrenchment, whether permanent or temporary, on the livelihood of the employees to
be dismissed, and the avowed policy of the State to afford full protection to labor and
to assure the employee's right to enjoy security of tenure, the Court stresses that not
every loss incurred or expected to be incurred by a company will justify retrenchment.
The losses must be substantial and the retrenchment must be reasonably necessary
to avert such losses. The employer bears the burden of proving this allegation of the
existence or imminence of substantial losses, which by its nature is an affirmative
defense. It is the employer’s duty to prove with clear and satisfactory evidence that
legitimate business reasons exist in actuality to justify any retrenchment. Failure to do
so would inevitably result in a finding that the dismissal is unjustified. Otherwise, such
ground for termination would be susceptible to abuse by scheming employers who
might be merely feigning business losses or reverses in their business ventures to
dispose of their employees.40
Here, IKSI never offered any evidence that would indicate the presence of a bona
fide suspension of its business operations or undertaking. IKSI’s paramount
consideration should be the dire exigency of its business that compelled it to put some
of its employees temporarily out of work. This means that it should be able to prove that
it faced a clear and compelling economic reason which reasonably constrained it to
temporarily shut down its business operations or that of the ACT Project, incidentally
resulting in the temporary lay-off of its employees assigned to said particular
undertaking. Due to the grim economic repercussions to the employees, IKSI must
likewise bear the burden of proving that there were no other available posts to which
the employees temporarily put out of work could be possibly assigned.41 Unfortunately,
IKSI was not able to fulfill any of the aforementioned duties. IKSI cannot simply rely
solely on the alleged decline in the volume of work for the ACT Project to support the
temporary retrenchment of respondents. Businesses, by their very nature, exist and
thrive depending on the continued patronage of their clients. Thus, to some degree,
they are subject to the whims of clients who may suddenly decide to discontinue
patronizing their services for a variety of reasons. Being inherent in any enterprise,
employers should not be allowed to take advantage of this entrepreneurial risk and use
it in a scheme to circumvent labor laws. Otherwise, no worker could ever attain regular
employment status.42 In fact, IKSI still continued its operations and retained several
employees who were also working on the ACT Project even after the implementation
of the January 2010 forced leave. Much worse, it continued to hire new employees,
with the same qualifications as some of respondents, through paid advertisements and
placements in Suns tar Cebu, 43 a local newspaper, dated February 24, 2010 and
March 7, 2010. The placing of an employee on floating status presupposes, among
others, that there is less work than there are employees. But if IKSI continued to hire
new employees then it can reasonably be assumed that there was a surplus of work
available for its existing employees. Hence, placing respondents on floating status was
unnecessary. If any, respondents - with their experience, knowledge, and familiarity
with the workings of the company - should be preferred to be given new projects and
not new hires who have little or no experience working for IKSI.44
There being no valid suspension of business operations, IKSI’s act amounted to
constructive dismissal of respondents since it could not validly put the latter on forced
leave or floating status pursuant to Article 301. And even assuming, without admitting,
that there was indeed suspension of operations, IKSI did not recall the employees back
to work or place them on valid permanent retrenchment after the period of six (6)
months, as required of them by law. IKSI could not even use the completion of the
duration of the alleged project as an excuse for causing the termination of respondents’
employment. It must be pointed out that the termination was made in 2010 and the
expected completion of the project in respondents' contracts was still in 2012 to 2014.
Also, if the Court would rely on IKSI’s own Notice of Partial Appeal and Memorandum
on Partial Appeal45 before the NLRC dated December 10, 2010, respondents might
even had been put on floating status for a period exceeding the required maximum of
six (6) months. Evidence reveal that the assailed forced leave took effect on January
7, 2010 and IKSI eventually sent its termination letters four (4) months after, or on May
27, 2010, with the effectivity of said termination being on July 7, 2010. But as of
December 10, 2010, IKSI was still insisting that respondents were never dismissed and
were merely placed on forced leave. It was only in its Comment on Complainants’
Motion for Reconsideration dated August 3, 2011 did IKSI admit the fact of dismissal
when it appended its own termination letters dated May 27, 2010.
But even on May 27, 2010, there was still no basis for IKSI to finally make the
retrenchment permanent. While it acknowledged the fact that respondents could not be
placed on an indefinite floating status, it still failed to present any proof of a bona
fide closing or cessation of operations or undertaking to warrant the termination of
respondents' employment. The termination letter46 reads:
As you are probably already been aware by now, our Product Stream ACTDR of Project
CSP, have been experiencing a considerably downward trend in terms of workload.
The Company has undertaken every effort to obtain new commitments from its clients
abroad in order to proceed with the expected volume of work under the same product
stream.
Unfortunately, however, it has become evident that despite said efforts being exerted
by the Company, the prospect of new work related to the product stream coming in,
remains uncertain at this point. Management has already utilized all available options,
which include placing its project employees on forced leave. This, however, cannot go
on indefinitely.
It is therefore, with deep regret, that we inform you that in view of the unavailability
of work of the aforementioned product stream as well as the uncertainties
pertaining to the arrival of new worldoads thereof, we are constrained
to terminate your Project Employment Contract in accordance with the terms and
conditions stated under the Termination of Employment of your Project
Employment Contract, effective 7/7/2010.
xxx
It bears to point out that said termination letter did not even state any of the following
valid grounds under the law as anchor for the dismissal:
Art. 297. 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.47
Art. 298. Closure of Establishment and Reduction of Personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.
The NLRC likewise committed a grave error when it held that there was no basis for
respondents' reliance on the case of Bontia v. NLRc48 on the sole ground that, in the
present case, the employees were neither actually nor constructively dismissed. The
Court affirms respondents’ contention that when IKSI feigned suspension of operations
and placed respondents on forced leave, the same had already amounted to
constructive dismissal. And when IKSI sent letters informing them that they would be
terminated effective July 7, 2010, respondents then had been actually dismissed.
In Bontia, the manner by which the employer severed its relationship with its employees
was remarkably similar to the one in the case at bar, which was held to be an
underhanded circumvention of the law. Consolidated Plywood Industries summarily
required its employees to sign applications for forced leave deliberately crafted to be
without an expiration date, like in this case. This consequently created an uncertain
situation which necessarily discouraged, if not altogether prevented, the employees
from reporting, or determining when or whether to report for work. The Court further
ruled that even assuming that the company had a valid reason to suspend operations
and had filed the necessary notice with the Department of Labor and
Employment (DOLE), it still would not be a legitimate excuse to cursorily dismiss
employees without properly informing them of their rights and status or paying their
separation pay in case they were eventually laid off. Under the Labor Code, separation
pay is payable to an employee whose services are validly terminated as a result of
retrenchment, suspension, closure of business or disease. Thus, the Court held that
Consolidated Plywood's employees should, at the very least, have been given
separation pay and properly informed of their status so as not to leave them in a
quandary as to how they would properly respond to such a situation.49 Similarly,
respondents never received any separation pay when they were terminated in July of
2010 since IKSI had been denying the existence of a dismissal, whether actual or
constructive.
Withal, in both permanent and temporary lay-offs, jurisprudence dictates that the one
(1)-month notice rule to both the DOLE and the employee under Article 298 is
mandatory.50 Here, both the DOLE and respondents did not receive any prior notice of
the temporary lay-off. The DOLE Region VII Office was only informed on January 11,
201051 or four (4) days after the forced leave had already taken effect. On the other
hand, respondents received the notice52 of forced leave on January 7, 2010, after the
business day of which the same forced leave was to take effect. Respondents also
pointed out that when they received said notice, they were told to no longer report
starting the next day, made to completely vacate their workstations and surrender their
company identification cards, and were not even allowed to use their remaining unused
leave credits, which gave them the impression that they would never be returning to
the company ever again.
Since dismissal is the ultimate penalty that can be meted to an employee, the requisites
for a valid dismissal from employment must always be met, namely: (1) it must be for a
just or authorized cause; and (2) the employee must be afforded due
process,53 meaning, he is notified of the cause of his dismissal and given an adequate
opportunity to be heard and to defend himself. Our rules require that the employer be
able to prove that said requisites for a valid dismissal have been duly complied with.
Indubitably, IKSI’s intent was not merely to put respondents' employment on hold
pending the existence of the unfavorable business conditions and call them back once
the same improves, but really to sever the employer-employee relationship with
respondents right from the very start. The Court cannot just turn a blind eye to IKSI’s
manifest bad faith in terminating respondents under the guise of placing them on a
simple floating status. It is positively aware of the unpleasant practice of some
employers of violating the employees' right to security of tenure under the pretense of
a seemingly valid employment contract and/or valid termination. We must abate the
culture of employers bestowing security of tenure to employees, not on the basis of the
latter's performance on the job, but on their ability to toe the line.54 Unfortunately for
IKSI, they chanced upon respondents who, unlike the ordinary workingman who always
plays an easy prey to these perfidious companies, are fully aware of their rights under
the law and simply refuse to ignore and endure in silence the flagrant irruption of their
rights, zealously safeguarded by the Constitution and our labor laws.
Procedural Issues
Tested against the above-discussed considerations, the Court finds that the CA
correctly granted respondents’ certiorari petition before it, since the NLRC gravely
abused its discretion in ruling that respondents were merely IKSI’s project employees
and that they were validly put on floating status as part of management prerogative,
when they had satisfactorily established by substantial evidence that they had become
regular employees and had been constructively dismissed.55 Grave abuse of discretion
connotes judgment exercised in a capricious and whimsical manner that is tantamount
to lack of jurisdiction.56 In labor disputes, grave abuse of discretion may be ascribed to
the NLRC when, inter alia, its findings and conclusions, as in the case at bar, are not
supported by substantial evidence, or that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion.57
In the NLRC’s Decision, only the following petitioners were included: Michael A.
Rebato, Hernan Ed Noel L. de Leon, Jr., Wendell B. Quiban, Fritz Sembrino, Ismael R.
Garaygay III, Edson S. Solis, Stephen Olingay, Ronan Alamillo, Jess Vincent A. dela
Pefia, Dax Matthew M. Quijano, Juneth A. Rentuma and Socorro D'Marie T. Inting. On
the other hand, James Horace Balonda, Dennis C. Rizon, Ennoh Chentis R.
Fernandez, Aldrin 0. Torrentira, Michael Ray B. Molde, Rodolfo M. Vasquez, Ma.
Nazelle B. Miralles, and Carl Hermes Carskit were excluded. IKSI argued that those
eight (8) who were excluded did not sign the required Verification and Certification of
Non-Forum Shopping of the Appeal Memorandum before the NLRC, and some of them
also failed to execute the Verification in the Petition for Certiorari before the CA.
The Court has previously set the guidelines pertaining to non-compliance with the
requirements on, or submission of defective, verification and certification against forum
shopping:58
1) A distinction must be made between non-compliance with the requirement on or
submission of defective verification, and noncompliance with the requirement on or
submission of defective certification against forum shopping;
2) As to verification, non-compliance therewith or a defect therein does not necessarily
render the pleading fatally defective. The court may order its submission or correction,
or act on the pleading if the attending circumstances are such that strict compliance
with the Rule may be dispensed with in order that the ends of justice may be served;
3) Verification is deemed substantially complied with when one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or
are true and correct;
4) As to certification against forum shopping, non-compliance therewith or a defect
therein, unlike in verification, is generally not curable by its subsequent submission or
correction thereof, unless there is a need to relax the Rule on the ground of substantial
compliance or the presence of special circumstances or compelling reasons;
5) The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to
the case. Under reasonable or justifiable circumstances, however, as when all the
plaintiffs or petitioners share a common interest and invoke a common cause of action
or defense, the signature of only one of them in the certification against forum shopping
substantially complies with the Rule; and
6) Finally, the certification against forum shopping must be executed by the party-
pleader, not by his counsel.1âwphi1 If, however, for reasonable or justifiable reasons,
the party-pleader is unable to sign, he must execute a Special Power of Attorney
designating his counsel of record to sign on his behalf.
In the case at hand, only twelve (12) of respondents were able to sign the Verification
and Certification Against Forum Shopping since they were only given ten (10) days
from the receipt of the LA's decision to perfect an appeal. Some of them were even no
longer based in Cebu City. But it does not mean that those who failed to sign were no
longer interested in pursuing their case.
In view of the circumstances of this case and the substantive issues raised by
respondents, the Court finds justification to liberally apply the rules of procedure to the
present case. Rules of procedure should be viewed as mere tools designed to facilitate
the attainment of justice; their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always
be eschewed.59
In a similar case, the Court found that the signing of the Verification by only 11 out of
the 59 petitioners already sufficiently assured the Court that the allegations in the
pleading were true and correct and not the product of the imagination or a matter of
speculation; that the pleading was filed in good faith; and that the signatories were
unquestionably real parties-in-interest who undoubtedly had sufficient knowledge and
belief to swear to the truth of the allegations in the petition.60 In the same vein, the
twelve (12) respondents who signed the Verification in the instant case had adequate
knowledge to swear to the truth of the allegations in their pleadings, attesting that the
matters alleged therein have been made in good faith or are true and correct. With
respect to the failure of some of respondents to sign the Certification Against Forum
Shopping, IKSI cited the case of Altres, et al. v. Empleo61 which ruled that the non-
signing petitioners were dropped as parties to the case. However, the reason of the
Court for removing said petitioners from the case was not because of the failure to
sign per se, but actually because of the fact that they could no longer be contacted or
were indeed no longer interested in pursuing the case.62 Here, as mentioned earlier,
those who failed to sign the certification against forum shopping will not be dropped as
parties to the case since reasonable or justifiable circumstances are extant, as all
respondents share a common interest and invoke a common cause of action or
defense; the signatures of some or even only one of them substantially complies with
the Rule.
The Court previously held that the signature of only one of the petitioners substantially
complied with the Rules if all the petitioners share a common interest and invoke a
common cause of action or defense. In cases, therefore, where it is highly impractical
to require all the plaintiffs to sign the certificate of non-forum shopping, it is sufficient,
in order not to defeat the ends of justice, for one of the plaintiffs, acting as
representative, to sign the certificate, provided that the plaintiffs share a common
interest in the subject matter of the case or filed the case as a "collective" raising only
one common cause of action or defense.63 Thus, when respondents appealed their
case to the NLRC and the CA, they pursued the same as a collective body, raising only
one argument in support of their rights against the illegal dismissal allegedly committed
by IKSI. There was sufficient basis, therefore, for the twelve (12) respondents to speak
and file the Appeal Memorandum before the NLRC and the petition in the CA for and
in behalf of their co-respondents.
Clearly, verification, like in most cases required by the rules of procedure, is a formal
requirement, not jurisdictional.64 Such requirement is simply a condition affecting the
form of pleading, the non-compliance of which does not necessarily render the pleading
fatally defective.65 It is mainly intended to secure an assurance that matters which are
alleged are done in good faith or are true and correct and not of mere speculation.
Thus, when circumstances so warrant, as in this case, the court may simply order the
correction of the unverified pleadings or act on it and waive strict compliance with the
rules in order that the ends of justice may be served.66 Moreover, no less than the Labor
Code directs labor officials to use all reasonable means to ascertain the facts speedily
and objectively, with little regard to technicalities or formalities, while Section 10, Rule
VII of the New Rules of Procedure of the NLRC provides that technical rules are not
binding. Indeed, the application of technical rules of procedure may be relaxed in labor
cases to serve the demand of substantial justice. Labor cases must be decided
according to justice and equity and the substantial merits of the controversy. After all,
the policy of our judicial system is to encourage full adjudication of the merits of an
appeal. Procedural niceties should be avoided in labor cases in which the provisions of
the Rules of Court are applied only in suppletory manner. Indeed, rules of procedure
may be relaxed to relieve a part of an injustice not commensurate with the degree of
non-compliance with the process required. For this reason, the Court cannot indulge
IKSI in its tendency to nitpick on trivial technicalities to boost its self-serving
arguments.67
The CA, however, erred when it still considered Atty. Ennoh Chentis Fernandez as one
of the petitioners before it and included him in the dispositive portion of its decision. It
must be noted that Fernandez was one of those who filed the Motion for Execution of
Decision68 dated May 28, 2012, which prayed for the issuance of a writ of execution of
the LA and NLRC’s rulings. The movants likewise admitted therein that while some of
them elevated the case to the NLRC, they, however, did not. Corollarily, Fernandez
should have been dropped as one of the parties to the case before the CA since the
rulings of the labor tribunals had already attained finality with respect to him.
Award of Damages
Inasmuch as IKSI failed to adduce clear and convincing evidence to support the legality
of respondents' dismissal, the latter is entitled to reinstatement without loss of seniority
rights and backwages computed from the time compensation was withheld up to the
date of actual reinstatement, as a necessary consequence. However, reinstatement is
no longer feasible in this case because of the palpable strained relations between the
parties and the possibility that the positions previously held by respondents are already
being occupied by new hires. Thus, separation pay equivalent to one (1) month salary
for every year of service should be awarded in lieu of reinstatement.69

The Court sustains the CA’s award of moral and exemplary damages. Award of moral
and exemplary damages for an illegally dismissed employee is proper where the
employee had been harassed and arbitrarily terminated by the employer. Moral
damages may be awarded to compensate one for diverse injuries such as mental
anguish, besmirched reputation, wounded feelings, and social humiliation occasioned
by the unreasonable dismissal. The Court has consistently accorded the working class
a right to recover damages for unjust dismissals tainted with bad faith, where the motive
of the employer in dismissing the employee is far from noble. The award of such
damages is based, not on the Labor Code, but on Article 2220 of the Civil Code. In line
with recent jurisprudence, the Court finds the amount of ₱50,000.00 for each of moral
and exemplary damages adequate.70
The award of attorney's fees is likewise due and appropriate since respondents
incurred legal expenses after they were forced to file an action to protect their
rights.71 The rate of interest, however, has been changed to 6% starting July 1, 2013,
pursuant to the Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013.72
WHEREFORE, IN VIEW OF THE FOREGOING, the Court DISMISSES the petition,
and AFFIRMS with MODIFICATIONS the Decision of the Court of Appeals Cebu,
Twentieth (20th) Division, dated August 30, 2013 and Resolution dated March 12, 2014
in CA-G.R. CEB-SP No. 06443. Respondents Socorro D'Marie Inting, Ismael R.
Garaygay, Edson S. Solis, Michael A. Rebato, James Horace Balonda, Stephen C.
Olingay, Dennis C. Rizon, Juneth A. Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess
Vincent A. dela Pefia, Ronan V. Alamillo, Wendell B. Quiban, Aldrin 0. Torrentira,
Michael Ray B. Molde, Fritz J. Sembrino, Dax Matthew M. Quijano, Rodolfo M.
Vasquez, Ma. Nazelle B. Miralles and Carl Hermes Carskit are declared to have been
illegally dismissed by petitioner Innodata Knowledge Services, Inc. and hence, the
latter is hereby ORDERED to PAY each of them the following:
a) Backwages and all other benefits from the time compensation was withheld on
January 8, 2010 until finality of this Decision;
b) Separation pay equivalent to one (1) month salary for every year of service, with a
fraction of at least six (6) months to be considered as one (1) whole year, to be
computed from the date of their employment up to the finality of this Decision;
c) Moral and exemplary damages, each in the amount of ₱50,000.00;
d) Attorney’s fees equivalent to ten percent (10%) of the total awards; and
e) Legal interest of twelve percent (12%) per annum of the total monetary awards
computed from January 8, 2010 up to June 30, 2013 and six percent (6%) per
annum from July 1, 2013 until their full satisfaction.
The case is hereby ordered REMANDED to the labor arbiter for the computation of the
amounts due each respondent. Costs on petitioner Innodata Knowledge Services, Inc.
SO ORDERED.
Footnotes
7 Dael es v. Millenium Erectors Corporation, supra note 7, at 561.
Dacles v. Millenium Erectors Corporation, 763 Phil. 550 (2015).
9 Spouses Salise, et al. v. DARAB, G.R. No. 202830, June 20, 2016, citing Altres, et al. v.
Villanueva v. NLRC and Innodata, 356 Phil. 638 (1998); Servidad v. NLRC, 364 Phil. 5 I 8
(1999); Innodata Philippines, Inc. v. Quejada-Lopez, 535 Phil. 263 (2006); and Price v. Innodata
Phils., Inc., 588 Phil. 568 (2008).
10
Price v. Innodata Phils., Inc., supra, at 580.
11
Formerly Article 280, Department Advisory No. 01, Renumbering of the Labor Code of the
Philippines, as Amended, Series of 2015; pursuant to Section 5 of Republic Act No. 10151, entitled
"An Act Allowing the Employment of Night Workers, thereby Repealing Articles 130 and 131 of
Presidential Decree Number Four Hundred Forty-Two, as amended, otherwise known as The
Labor Code of the Philippines," July 26, 2010.
12
leyte Geothermal Power Progressive Employees-Union-ALU-TUCP v. Philippine National Oil
Company-Energy Development Corp., 662 Phil. 225, 234 (2011).
18
Dacles v. Millenium Erectors Corporation, supra note 7, at 560-561.
22
GMA Network, Inc. v. Pabriga, et al., 722 Phil. 161, 178 (2013).
23
Brent School, Inc. v. Zamora, 260 Phil. 747, 761 (1990).
24
Servidad v. NLRC, supra note 9, at 527.
25
lnnodata Philippines, Inc. v. Quejada-Lopez, supra note 9, at 272.
26
Formerly Article 279, Department Advisory No. 01, Renumbering of the Labor Code of the
Philippines, as Amended, Series of 2015; pursuant to Section 5 of Republic Act No. 10151, entitled
"An Act Allowing the Employment of Night Workers, thereby Repealing Articles 130 and 131 of
Presidential Decree Number Four Hundred Forty-Two, as amended, otherwise known as The
Labor Code of the Philippines," July 26, 2010.
27
Villanueva v. NLRC and Innodata, supra note 9, at 646.
28
Rollo, Vol. I, p. 145; IKSI's notice of the forced leave reads:
Please be informed that due to changes in business conditions, client requirements and
specifications, we regret to inform you that you shall be placed on forced leave effective end of
business day of January 7, 2010 until further notice. We shall be calling upon you once the
Company's condition relative to work requirements stabilizes, which may necessitate your
services anew. xxx
29
Formerly Article 283, Department Advisory No. 01, Renumbering of the Labor Code of the
Philippines, as Amended, Series of 2015; pursuant to Section 5 of Republic Act No. 10151, entitled
"An Act Allowing the Employment of Night Workers, thereby Repealing Articles 130 and 131 of
Presidential Decree Number Four Hundred Forty-Two, as amended, otherwise known as The
Labor Code of the Philippines," July 26, 2010.
30
Lopez v. Irvine Construction Corp., 741 Phil. 728, 740 (2014).
33
Formerly Article 286, Department Advisory No. 01, Renumbering of the Labor Code of the
Philippines, as Amended, Series of 2015; pursuant to Section 5 of Republic Act No. 10151, entitled
"An Act Allowing the Employment of Night Workers, thereby Repealing Articles 130 and 131 of
Presidential Decree Number Four Hundred Forty-Two, as amended, otherwise known as The
Labor Code of the Philippines," July 26, 2010.
34
PT&T v. NLRC, supra note 31.
36
Nasipit Lumber Company v. NOWM, 486 Phil. 348, 362 (2004).
37
Supra note 28:
Please be informed that due to changes in business conditions, client requirements and
specifications, we regret to inform you that you shall be placed on forced leave effective end of
business day of January 7, 2010 until further notice. We shall be calling upon you once the
Company's condition relative to work requirements stabilizes, which may necessitate your
services anew. xxx
42
Innodata Phils., Inc. v. Quejada-Lopez, supra note 25.
44
ICT Marketing Services, Inc. v. Sales, 769 Phil. 498, 523 (2015).
47
Formerly Article 282, Department Advisory No. 01, Renumbering of the Labor Code of the
Philippines, as Amended, Series of 2015; pursuant to Section 5 of Republic Act No. 10151, entitled
"An Act Allowing the Employment of Night Workers, thereby Repealing Articles 130 and 131 of
Presidential Decree Number Four Hundred Forty-Two, as amended, otherwise known as The
Labor Code of the Philippines," July 26, 2010.
50
lopez v. Irvine Construction Corp., supra note 30, at 741.
53
Visayan Electric Company Employees Union-ALU-TUCP v. VECO, 764 Phil. 608, 621 (2015).
54
ICT Marketing Services, inc. v. Sales, supra note 44.
55
58
Empleo, et al., 594 Phil. 246, 261-262 (2008).
59
Spouses Salise, et al. v. DARAB, supra.
60
Altres, et al. v. Empleo, et al., supra note 58, at 260.
63
Pacquing v. Coca-Cola Philippines, Inc., 567 Phil. 323, 333 (2008).
64
Heirs of Mesina v. Heirs of Fian, 708 Phil. 327, 336 (2013).
65
Pacquing v. Coca-Cola Philippines, inc., supra note 63, at 335.
66
Heirs of Mesina v. Heirs of Fian, supra note 64.
67
Pacquing v. Coca-Cola Philippines, inc., supra note 63.
69
ICT Marketing Services, Inc. v. Sales, supra note 44.
70
SPI Technologies, inc. v. Mapua, 731Phil.480, 500 (2014).
SECOND DIVISION
G.R. No. 117963 February 11, 1999
AZCOR MANUFACTURING INC., FILIPINAS PASO and/or ARTURO
ZULUAGA/Owner, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
(NLRC) AND CANDIDO CAPULSO, respondents.
Labor Law; Resignation; To constitute a resignation, it must be unconditional
and with the intent to operate as such. There must be an intention to relinquish a portion
of the term of office accompanied by an act of relinquishment.—To constitute a
resignation, it must be unconditional and with the intent to operate as such. There must
be an intention to relinquish a portion of the term of office accompanied by an act of
relinquishment. In the instant case, the fact that Capulso signified his desire to resume
his work when he went back to petitioner AZCOR after recuperating from his illness,
and actively pursued his case for illegal dismissal before the labor courts when he was
refused admission by his employer, negated any intention on his part to relinquish his
job at AZCOR.
Same; Same; Having introduced the resignation letters in evidence, it was
incumbent upon petitioners to prove clearly and convincingly their genuineness and
due execution, especially considering the serious doubts on their authenticity.—Even
assuming for the sake of argument that the signatures were genuine, we still cannot
give credence to those letters in the absence of any showing that Capulso was aware
that what he was signing then were in fact resignation letters or that he fully understood
the contents thereof. Having introduced those resignation letters in evidence, it was
incumbent upon petitioners to prove clearly and convincingly their genuineness and
due execution, especially considering the serious doubts on their authenticity.
Petitioners miserably failed in this respect.
Same; Dismissal; Reinstatement; An action for reinstatement by reason of illegal
dismissal is one based on an injury which may be brought within four (4) years from the
time of dismissal pursuant to Art. 1146 of the Civil Code.—An action for reinstatement
by reason of illegal dismissal is one based on an injury which may be brought within
four (4) years from the time of dismissal pursuant to Art. 1146 of the Civil Code. Hence,
Capulso’s case which was filed after a measly delay of four (4) months should not be
treated with skepticism or cynicism. By law and settled jurisprudence, he has four (4)
years to file his complaint for illegal dismissal. A delay of merely four (4) months in
instituting an illegal dismissal case is more than sufficient compliance with the
prescriptive period. It may betray an unlettered man’s lack of awareness of his rights
as a lowly worker but, certainly, he must not be penalized for his tarrying.
Same; Same; Due Process; The onus of proving that the dismissal of the
employee was for a valid and authorized cause rests on the employer and failure to
discharge the same would mean that the dismissal is not justified and therefore
illegal.—In illegal dismissal cases like the present one, the onus of proving that the
dismissal of the employee was for a valid and authorized cause rests on the employer
and failure to discharge the same would mean that the dismissal is not justified and
therefore illegal. Petitioners failed in this regard.
Same; Corporation Law; Law of Corporate Fiction; Doctrine that a corporation is
a legal entity or a person in law distinct from the persons composing it is merely a legal
fiction for purposes of convenience and to subserve the ends of justice.—The doctrine
that a corporation is a legal entity or a person in law distinct from the persons composing
it is merely a legal fiction for purposes of convenience and to subserve the ends of
justice. This fiction cannot be extended to a point beyond its reason and policy. Where,
as in this case, the corporate fiction was used as a means to perpetrate a social injustice
or as a vehicle to evade obligations or confuse the legitimate issues, it would be
discarded and the two (2) corporations would be merged as one, the first being merely
considered as the instrumentality, agency, conduit or adjunct of the other.
Same; Job-Contracting; The contract was only for six (6) months, which could
pass either as a probationary period or a job contracting, the completion of which
automatically terminated the employment.—As correctly observed by the NLRC, the
contract was only for six (6) months, which could pass either as a probationary period
or a job contracting, the completion of which automatically terminated the employment.
Observe further, however, that respondent continued working even after the lapse of
the period in the contract—for whom it was not clear. It may be asked: Was the six (6)-
month period probationary in nature, in which case, after the lapse of the period he
became a regular employee of Filipinas Paso? Or was the period job-contracting in
character, in which case, after the period he was deemed to have come back to
AZCOR?
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
BELLOSILLO, J.:
AZCOR MANUFACTURING, INC., Filipinas Paso and Arturo Zuluaga instituted this
petition for certiorari under Rule 65 of the Rules of Court to assail, for having been
rendered with grave abuse of discretion amounting to lack or excess of jurisdiction, the
Decision of the National Labor Relations Commission which reversed the decision of
the Labor Arbiter dismissing the complaint of respondent Candido Capulso against
petitioners. 1
Candido Capuslo file with the Labor Arbiter a complaint for constructive illegal dismissal
and illegal deduction of P50.00 per day for the period April to September 1989.
Petitioners Azcor Manufacturing, Inc. (AZCOR) and Arturo Zuluaga who were
respondents before the Labor Arbiter (Filipinas Paso was not yet a party then in that
case) moved to dismiss the complaint on the ground that there was no employer-
employee relationship between AZCOR and herein respondent Capulso; .that the latter
became an employee of Filipinas Paso effective 1 March 1996 but voluntarily resigned
there from a year after, Capulso later amended his complaint by impleading Filipinas
Paso as additional respondent before the Labor Arbiter.
On 14 January 1592, Labor Arbiter Felipe T. Garduque II denied the motion to dismiss
holding that the allegation of lack of employer-employee relationship between Capulso
and AZCOR was not clearly established. Thereafter, the Labor Arbiter ordered that
hearings be conducted for the presentation of evidence by both parties.
The evidence presented by Capulso showed that he worked for AZCOR as ceramics
worker for more than two (2) years starting from 3 April 1989 to 1 June 1991 receiving
a daily wage of P118.00 plus other benefits such as vacation and sick leaves. From
April to September 1989 the amount of P50.00 was deducted from his salary without
informing him of the reason therefor.
In the second week of February 1991, upon his doctor's recommendation, Capulso
verbally requested to go on sick leave due to bronchial asthma. It appeared that his
illness was, directly caused by his job as ceramics worker where, for lack of the
prescribed occupational safety gadgets, he inhaled and absorbed harmful ceramic
dusts. His supervisor, Ms. Emily Apolinaria, approved his request. Later, on 1 June
1991, Capulso went back to petitioner AZCOR to resume his work after recuperating
from his illness. He was not allowed to do so by his supervisors who informed him that
only the owner, Arturo Zuluaga, could allow him to continue in his job. He returned five
(5) times to AZCOR but when it became apparent that he would not be reinstated, he
immediately filed the instant complaint for illegal dismissal. 2
Capulso presented the following documentary evidence in support of his claim: (a) His
affidavit and testimony to prove that he was terminated without just cause and without
due process; 3 (b) Identification card issued by AZCOR which he continued to use even
after his supposed employment by Filipinas Paso; 4 (c) Certification of SSS premium
payments; 5 (d) SSS Member Assistance Form wherein he stated that he worked with
AZCOR from March 1989 to April 1991; 6 (e) Certification of Employee Contribution
with SSS; 7 and, (f) Payslips issued by AZCOR. 8
On the other hand, petitioners alleged that Capulso was a former employee of AZCOR
who resigned on 28 February 1990 as evidenced by a letter of resignation and joined
Filipinas Paso on 1 March 1990 as shown by a contract of employment; in February
1991 Capulso allegedly informed his supervisor, Ms. Emilia Apolinaria, that he intended
to go on terminal leave because he was not feeling well; on 1 March 1991 he submitted
a letter of resignation addressed to the President of Filipinas Paso, Manuel Montilla;
and, in the early part of June 1991 Capulso tried to apply for work again with Filipinas
Paso but there was no vacancy.
Petitioners submitted the following documentary evidence: (a) Sworn Statement of Ms.
Emilia Apolinaria and her actual testimony to prove that respondent indeed resigned
voluntarily from AZCOR to transfer to Filipinas Paso, and thereafter, from Filipinas Paso
hug to failing health; 9 (b) Contract of Employment between Filipinas Paso and
respondent which took effect 1 March 1991; 10 (c) Letter of resignation of respondent
from AZCOR dated 28 February 1990, to take effect on the same date; 11 (d) Undated
letter of resignation of respondent addressed to Filipinas Paso to take effect 1 March
1991; 12 (e) BIR Form No. W-4 filed 6 June 1990; 13 (f) Individual Income Tax Return of
respondent for 1990; 14 and, (g) BIR Form 1701-B which was an alphabetical list of
employees of Filipinas Paso for the year ending 31 December 1990.15
On 29 December 1992 the Labor Arbiter rendered a decision dismissing the complaint
for illegal dismissal for lack of merit, but ordered AZCOR and/or Arturo Zuluaga to
refund to Capulso the sum of P200.00 representing the amount illegally deducted from
his salary.
On appeal by Capulso, docketed as NLRC CA No. 004476-93 (NLRC NCR 00-09-
05271-91), "Capulso v. Azcor Manufacturing Inc., Filipinas Paso and/or Arturo
Zuluaga/owner," the NLRC modified the Labor Arbiter's decision by: (a) declaring the
dismissal of Capulso as illegal for lack of just and valid cause; (b) ordering petitioners
to reinstate Capulso to his former or equivalent position without loss of Seniority rights
and without diminution of benefits, and, (c) ordering petitioners to jointly and solidarily
pay Capulso his backwages computed from the time of his dismissal up to the date of
his actual reinstatement. The NLRC held in part-
. . . . the contract of employment (Exh. 2, p. 187, Rollo) issued to complainant
indicates that the work to be done during the period was contracted with Filipinas
Paso. The said contract was signed by, the Personnel Officer of Ascor Manufacturing
Inc. Likewise, the contract period is for six (6) months, which establishes a
presumption that the said contract could pass either as to cover the probationary
period, or job contracting, the completion of which automatically terminates
employment, whichever will work to respondent's advantage should the case be filed.
However, appellant continued working with respondent after the lapse of the contract
and until the alleged termination of employment of appellant.
Secondly, the two resignation letters allegedly executed by appellant are exactly
worded, which only shows that the same work were prepared by respondents-
appellees plus after the fact that complainant denied having executed and signed the
same.
. . . . the letter of resignation (Exh. "3", p. 188, Rollo) supposed to have been executed
by complainant-appellant shows that he resigned from Ascor Mfg., Inc. on February
28, 1990 while Exhibit "2", page 187, Rollo, which was the contract of Employment
issued to Candido Capulso by the personnel officer of Ascor Mfg., Inc. shows that
appellant was being hired from March 1, 1990 to August 31, 1990 by respondent
Ascor Mfg., Inc. to do jobs for Filipinas Paso; A run-around of events and dates.
The events that transpired clearly show that there was no interruption in the service
of complainant with Ascor Mfg., Inc. from April 13 1989 up to June 1, 1991 when
complainant was unceremoniously dismissed.
Considering that Ascor Mfg., Inc. and Filipinas Paso orchestrated the events that
appeared to be in order with the alleged execution of resignation letters which was
disputed by complainant and confirmed spurious as explained above, likewise
overwhelmingly show the bad faith of respondents in the treatment of their
employees.
Petitioners' motion for reconsideration was denied by the NLRC through its Resolution
of 14 October 1994; hence, the instant-petition. Meanwhile, during the pendency of the
case before this Court, Capulso succumbed to asthma and heart disease.
The issue to be resolved is whether the NLRC committed grave abuse of discretion in
declaring that private respondent Capulso was illegally dismissed and in holding
petitioners jointly and solidarily liable to Capulso for back wages.
As a rule the original and exclusive jurisdiction to review a decision or resolution of
respondent NLRC in a petition for certiorari under Rule 65 of the Rules of Court does
not include a correction of its evaluation of the evidence but is confined to issues of
jurisdiction or grave abuse of discretion. The NLRC factual findings, if supported by
substantial evidence, are entitled to great respect and even finality, unless petitioner is
able to show that it simply and arbitrarily disregarded the evidence before it or had
misappreciated the evidence to such an extent as to compel a contrary conclusion if
such evidence had been properly appreciated. 16 We find no cogent reason to disturb
the findings of the NLCR.
Petitioners insist that Capulso was not really dismissed but he voluntarily resigned from
AZCOR and Filipinas Paso, and that there was nothing illegal or unusual in the letters
of resignation he executed.
We disagree. To constitute a resignation, it must be unconditional and with the intent to
operate as such. There must be an intention to relinquish a portion of the term of office
accompanied by an act of relinquishment. 17 In the instant case, the fact that Capulso
signified his desire to resume his work when he went back to petitioner AZCOR after
recuperating from his illness, and actively pursued his case for illegal dismissal before
the labor courts when he was refused admission by his employer, negated any intention
on his part to relinquish his job at AZCOR.
Moreover, a closer look at the subject resignation letters readily reveals the following:
(a) the resignation letter allegedly tendered by Capulso to Filipinas Paso was identically
worded with that supposedly addressed by him to AZCOR; (b) both were pre-drafted
with blank spaces filled up with the purported dates of effectivity of his resignation; and,
(c) it was written in English, a language which Capulso was not conversant with
considering his low level of education. No other plausible explanation can be drawn
from these circumstances than that the subject letters of resignation were prepared by
a person or persons other than Capulso. And the fact that he categorically disowned
the signatures therein and denied having executed them clearly indicates that the
resignation letters were drafted, without his consent and participation.
Even assuming for the sake of argument that the signatures were, genuine, we still
cannot give credence to those letters in the absence of any showing that Capulso was
aware that what he was signing then were in fact resignation letters or that he fully
understood the contents thereof. Having introduced those resignation letters in
evidence, it was incumbent upon petitioners to prove clearly and convincingly their
genuineness and due execution, especially considering the serious doubts an their
authenticity. Petitioners miserably failed in this respect.
The Labor Arbiter held that Capulso's repudiation of the signatures affixed in the letters
of resignation was weakened by the fact that he filed the case only after almost four (4)
months from the date of his dismissal. But it should be noted that private respondent
still wanted his job and thus, understandably, refrained from filing the illegal dismissal
case against his employer so as not to jeopardize his chances of continuing with his
employment. True enough, when it became apparent that he was no longer welcome
at AZCOR he immediately instituted the instant case.
In addition, an action for reinstatement by reason of illegal dismissal is one based on
an injury which may be brought within four (4) years from the time of dismissal pursuant
to Art. 1146 of the Civil Code. Hence, Capulso's case which was filed after a measly
delay of four (4) months should not be treated with skepticism or cynicism. By law and
settled jurisprudence, he has four (4) years to file his complaint for illegal dismissal. A
delay of merely four (4) months in instituting an illegal dismissal case is more than
sufficient compliance with the prescriptive period. It may betray an unlettered man's
lack of awareness of his rights as a lowly worker but, certainly, he must not be penalized
for his tarrying.
In illegal dismissal cases like the present one, the onus of proving that the dismissal of
the employee was for a valid and authorized cause rests on the employer 18 and failure
to discharge the same would mean that the dismissal is not justified and therefore
illegal.19 Petitioners failed in this regard.
Petitioners also contend that they could not be held jointly and severally liable to
Capulso for back wages since AZCOR and Filipinas Paso are separate and distinct
corporations with different corporate personalities; and, the mere fact that the
businesses of these corporations are interrelated and both owned and controlled by a
single stockholder are not sufficient grounds to disregard their separate corporate
entities.
We are not persuaded. The doctrine that a corporation is a legal entity or a person in
law distinct from the persons composing it is merely a legal fiction for purposes of
convenience and to subserve the ends of justice. This fiction cannot be extended to a
point beyond its reason and policy. 20 Where, as in this case, the corporate fiction was
used as a means to perpetrate a social injustice or as a vehicle to evade obligations or
confuse the legitimate issues, it would be discarded and the two (2) corporations would
be merged as one, the first being merely considered as the instrumentality, agency,
conduit or adjunct of the other. 21
In this particular case, there was much confusion as to the identity of Capulso's
employer - whether it was AZCOR or Filipinas Paso; but, for sure, it was petitioners'
own making, as shown by the following: First, Capulso had no knowledge that he was
already working under petitioner Filipinas Paso since he contained to retain his AZCOR
Identification card; Second, his payslips contained the name of AZCOR giving the
impression that AZCOR was paying his salary; Third, he was paid the same salary and
he performed the same kind of job, in the same work area, in the same location, using
the same tools and under the same supervisor; Fourth, there was no gap in his
employment as he continued to work from the time he was hired up to the last day of
his work; Fifth, the casting department of AZCOR where Capulso was working was
abolished when he, together with six (6) others, transferred to Filipinas Paso; and Sixth,
the employment contract was signed by an AZCOR personnel officer, which showed
that Capulso was being hired from 1 March 1990 to 31 August 1990 by AZCOR to do
jobs for Filipinas Paso. The employment contract provided in part:
The contract is for a specific job contract only and shall be effective for the period
covered, unless sooner terminated when the job contract is completed earlier or
withdrawn by client, or when the employee is dismissed for just and lawful causes
provided by law and the company's rules and regulations, in which case the
employment contract will automatically terminate.
As correctly observed by the NLRC, the contract was only for six (6) months, which
could pass either as a probationary period or a job contracting, the completion of which
automatically terminated the employment. Observe further, however, that respondent
continued working even after the lapse of the period in the contract - for whom it was
not clear. It may be asked: Was the six (6)-month period probationary in nature, in which
case, after the lapse of the period he became a regular employee of Filipinas Paso? Or
was the period job-contracting in character, in which case, after the period he was
deemed to have come back to AZCOR?
Interestingly, petitioners likewise argue that it was grave abuse of discretion for the
NLRC to hold them solidarily, liable to Capulso when the latter himself testified that he
was not even an employee of Filipinas Paso. 22 After causing much confusion,
petitioners have the temerity to use as evidence the ignorance of Capulso in identifying
his true employer. It is evident from the foregoing discussion that Capulso was led into
believing that while he was working with Filipinas Paso, his real employer was AZCOR.
Petitioners never dealt with him openly and in good faith, nor was he informed of the
developments within the company, i.e., his alleged transfer to Filipinas Paso and the
closure of AZCOR's manufacturing operations beginning 1 March
1990. 23 Understandably, he sued AZCOR alone and was constrained to implead
Filipinas Paso as additional respondent only when it became apparent that the latter
also appeared to be his employer.
In fine, we see in the totality of the evidence a veiled attempt by petitioners to deprive
Capulso of what he had earned through hard labor by taking advantage of his low level
of education and confusing. him as to who really was his true employer - such a callous
and despicable treatment of a worker who had rendered faithful service to their
company.
However, considering that private respondent died during the pendency of the case
before this Court, reinstatement is no longer feasible. In lieu thereof, separation pay
shall be awarded. With respect to the amount of back wages, it shall be computed from
the time of private respondent's illegal dismissal up to the time of his death.
WHEREFORE, the petition is DISMISSED. The NLRC Decision of 12 September 1994
is MODIFIED. Petitioners AZCOR MANUFACTURING, INC., FILIPINAS PASO and
ARTURO ZULUAGA are ORDERED to pay, jointly and solidarily, the heirs of private
respondent Candido Capulso the amounts representing his back wages, inclusive of
allowances and other benefits, and separation pay to, be computed in accordance with
law.SO ORDERED.
FIRST DIVISION
G.R. No. 112963 July 20, 1999
PHILIPPINE WIRELESS INC. (Pocketbell) and/or JOSE LUIS
SANTIAGO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and
GOLDWIN LUCILA, respondents.
Labor Law; Dismissal; When is an employee deemed constructively
dismissed.—The Court has held that constructive dismissal is “an involuntary
resignation resorted to when continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay;
or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee.” In this particular case, respondent voluntarily resigned
from his employment. He was not pressured into resigning.
Same; Same; Definition of Voluntary Resignation.—Voluntary resignation is
defined as the act of an employee who “finds himself in a situation where he believes
that personal reasons cannot be sacrificed in favor of the exigency of the service and
he has no other choice but to disassociate himself from his employment.”
Same; Same; There is no demotion where there is no reduction in position, rank
or salary as a result of such transfer.—Respondent considered his transfer/promotion
as a demotion due to the fact that he had no support staff to assist him in his work and
whom he could supervise. There is no demotion where there is no reduction in position,
rank or salary as a result of such transfer. In fact, respondent Goldwin Lucila was
promoted three (3) times from the time he was hired until his resignation from work.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
PARDO, J.:
This petition for certiorari is to set aside the decision of the National Labor Relations
Commission 1 on the ground that it was rendered with grave abuse of its discretion. The
dispositive portion of the decision reads as follows:
WHEREFORE, finding the appeal to be meritorious the decision appealed from is
hereby REVERSED AND SET ASIDE and a new one ENTERED, declaring that the
complainant has been constructively dismissed and ordering the respondent to pay
him backn wages from his dismissal on December 28, 1990 up to the date of the
promulgation of this Resolution. And in lieu of reinstatement, respondent is likewise
hereby ordered to pay complainant his separation pay at the rate of one (1) month
pay for every year of service.1âwphi1.nêt
No Cost.
SO ORDERED.
(s/t) EDNA BONITO-PEREZ
Presiding Commissioner2
The facts are as follows:
On January 8, 1976, petitioner Philippine Wireless Inc. hired respondent Doldwin Lucila
as operator/encoder. On January 7, 1979, he was promoted as Head Technical and
Maintenance Department of the Engineering Department. On September 11, 1987, he
was promoted as Supervisor, Technical Services of the same department. On October
1, 1990, he was again promoted as Superintendent, Project Management.
On December 28, 1990, he tendered his resignation.
On December 3, 1991, he filed with the Arbitration Branch, National Labor Relations
Commission, a complaint for illegal/constructive dismissal. He alleged that he was
constructively dismissed inasmuch as his promotion from Supervisor, Technical
Services to Superintendent, Project Management is demeaning, illusory and
humiliating. The basis of his allegation was the fact that he was not give any secretary,
assistant and/or subordinates.
On June 29, 1992, Labor Arbiter Benigno Villarente Jr, rendered a decision declaring
that respondent actually resigned and dismissed the complaint for lack of merit. 3
On June 15, 1993, public respondent NLRC reversed the findings of the labor arbiter,
and ordered respondent's reinstatement with back wages or separation pay.
On August 27, 1993 petitioners filed a motion for reconsideration which the National
Labor Relations Commission denied for lack of merit in a resolution dated November
16, 1993.
Hence, this petition.
At issue is whether or not petitioner was constructively dismissed from the petitioner's
employment.
We find the petition meritorious.
The Court has held that constructive dismissal is "an involuntary resignation resorted
to when continued employment is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank and/or a diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee. 4 In this
particular case, respondent voluntarily resigned from his employment. He was not
pressured into resigning.
Voluntary resignation is defined as the act of an employee who "finds himself in a
situation where he believes that personal reasons cannot be sacrificed in favor of the
exigency of the service and he has no other choice but to disassociate himself from his
employment." 5
Respondent considered his transfer/promotion as a demotion due to the fact that he
had no support staff to assist him in his work and whom he could supervise. There is
no demotion where there is no reduction in position, rank or salary as a result of such
transfer. 6 In fact, respondent Goldwin Lucila was promoted three (3) times from the
time he was hired until his resignation from work.1âwphi1.nêt
WHEREFORE, the petition is hereby GRANTED. The questioned decision of the
National Labor Relations Commission, dated June 15, 1993, is SET ASIDE. The
decision of the Labor Arbiter dated June 29, 1992, is REINSTATED and AFFIRMED.
No costs.
SO ORDERED.
Davide, Jr., C.J., Melo, Kapunan and Ynares-Santiago, JJ., concur.
Footnotes
1 In NLRC-NCR Case No. 00-12-06869-91.
2 Rollo, pp. 20-28, Annex A of the petition.
3 Ibid pp. 55-57.
4 Escobin vs. NLRC, 289 SCRA 48; Eliseo Tan vs. NLRC, G.R. No. 128290, November
24, 1998.
5 Habana vs. NLRC, et al, G.R. No. 121486, November 16, 1998.
6 Juliana Brilliantes vs. Guevarra, 27 SCRA 138; Fernando vs. Patricia Sto. Tomas,
234 SCRA 546.
FIRST DIVISION
G.R. No. 165476 March 10, 2006
AGRIPINO V. MOLINA, Petitioner, vs.PACIFIC PLANS, INC., Respondent.
Interest Rates; The payment of legal interest becomes a necessary consequence
of the finality of the Court’s Decision, because reckoned from that time the said Decision
becomes a judgment for money which, under established jurisprudence, earns interest
at the rate of 12% per annum.—The payment of legal interest becomes a necessary
consequence of the finality of the Court’s Decision, because reckoned from that time
the said Decision becomes a judgment for money which, under established
jurisprudence, earns interest at the rate of 12% per annum.
Corporate Rehabilitation; All pending actions including the execution of the
judgment should be suspended pending termination of the rehabilitation
proceedings.—The Court finds that all pending actions in the instant case, including the
execution of the judgment in favor of petitioner, should be suspended pending
termination of the rehabilitation proceedings. The Court’s ruling in the more recent case
of Castillo v. Uniwide Warehouse Club, Inc., 619 SCRA 641 (2010), is instructive, thus:
An essential function of corporate rehabilitation is the mechanism of suspension of all
actions and claims against the distressed corporation, which operates upon the due
appointment of a management committee or rehabilitation receiver.
URGENT MANIFESTATION AND SUPPLEMENTAL MOTION to Implement the
January 14, 2009 Resolution of the Supreme Court.
DECISION
CALLEJO, SR.,J.:
Before us is a Petition for Review on Certiorari assailing the Decision1 and
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 81298 reversing the
Decision3 of the National Labor Relations Commission (NLRC) in NLRC-NCR (South)
Case No. 30-07-03393-01.
Pacific Plans, Inc. (PPI) is a domestic corporation engaged in the business of selling
pre-need plans, such as educational, pension, and memorial plans.4 It maintains
regional offices throughout the Philippines. At the time material to this case, Metro
Manila regional offices were divided into two sales divisions - the South Sales Division
and the North Sales Division. Metro Manila VI was part of the North Sales
Division.5 Among the corporate officers of PPI were Geoffrey Martinez, Executive Vice-
President for Finance; Luciano Abia, Senior Assistant Vice-President, Metro Manila
Marketing Division; and Atty. Manuel Reyes, the Head of the Legal Department.6 Roy
Padiernos then occupied the position of Regional Manager of Metro Manila VI.7
PPI solicited subscribers and buyers of its pre-need plans through clusters of sales
associates. One of them was Ruth Padiernos, wife of Roy Padiernos.8
Sometime in October 1994, PPI hired Agripino Molina as Regional Manager of Metro
Manila VI, replacing Roy Padiernos who was promoted as First Vice-President for
Marketing Operations. As Regional Manager, Molina performed both administrative
and marketing functions, whose duties and responsibilities included the following:
a. formulating and recommending short and long range marketing plans for the
Region and executing approved plans;
b. generating new and conserving existing pre-need plan businesses;
c. motivating, training, and developing a dedicated and effective counselor force;
d. conducting researches to determine sales potentials and share of the market,
pricing, and profitability of Company's products, competition and the directing of
product development for the Region;
e. hiring and terminating counselors, unit managers or group managers in
accordance with policies previously laid out;
f. recommending the creation of additional positions or termination of services of
any employee within the Region;
g. recommending promotions or changes in salaries of personnel within the Region
and lateral shifts of supervisor, their assistants, understudies of positions of equal
rank;
h. training and developing understudies for each position within the Region to
provide immediate replacement whenever vacated;
i. changing methods and procedures not affecting the other Regions, provided,
however, that radical changes should first be cleared with [the] superior;
j. controlling the operations of the Region and establishing a system of periodic work
reporting;
k. coordinating the Region’s activities with those of the other Regions;
l. keeping [the] superior informed of [the] Region's activities and specially of [the]
decision on matters for which he may be held responsible;
m. realizing the Company’s objective for service, growth, and profit;
n. establishing and maintaining harmonious and dignified relationship with plan
holders, counselors, employees, the public, government instrumentalities, other
pre-need plan companies; [and]
o. further enhancing the prestige of the Company and maintaining its position of
leadership in its field.9
Since Metro Manila VI was consistently on top in terms of nationwide sales and
productivity, Molina was promoted Assistant Vice-President with the same functions as
those of a regional manager of the same sales region.10
Caritas Health Shield, Inc. (Caritas for brevity), a health maintenance organization
(HMO) engaged in selling health and hospitalization plans, was established on
December 16, 1998. Geoffrey Martinez resigned as Executive Vice-President of PPI
and became the President and Chief Executive Officer of Caritas.11 Among the
incorporators and members of the Board of Directors were Luciano Abia and Atty.
Manuel Reyes.12 Molina was hired as Assistant Vice-President and Marketing Head of
Area 10. His wife, Fe Molina, was the head of a sales agency of Caritas.
In the meantime, from February 2000, there was a considerable decrease in the sales
output production of PPI’s Metro Manila Region VI.13
On March 21, 2000, Molina received a Memorandum from PPI, through its Senior
Assistant Vice-President for Human Relations, Patricio A. Picazo, informing him that,
based on written reports, he committed the following: 1) recruiting and pirating activities
in favor of Caritas, in particular, initiating talks and enticing associates to join Caritas,
and a number of associates have already signed up; 2) he called for a meeting with his
associates sometime in November 1999, and solicited contributions from them for the
bill but later asked for reimbursement from the company; and 3) acts of misdemeanor
on several occasions, such as coming to the office under the influence of liquor,
initiating a smear campaign against PPI, and other acts inimical to the company’s
interest.14 Molina was also required to submit, on March 23, 2000, a written explanation
why he should not be held administratively liable for said acts which, it opined, might
constitute conduct unbecoming of an officer, conflict of interest, and breach of trust and
confidence. Molina was also informed that he was preventively suspended pending
formal investigation effective immediately until April 24, 2000.15
In a letter addressed to Picazo dated March 22, 2000, Molina categorically denied the
acts attributed to him. He, however, requested that he be furnished with copies of the
alleged written reports to enable him to prepare the required written
explanation.16 However, instead of acceding to the request of copies of the written
reports, Picazo wrote a letter dated April 3, 2000, citing the particulars of the charges
against Molina, thus:
I. Conflict of Interest
1. Recruiting and pirating activities in favor of Caritas Health Shield, Inc.
* You have acted as conduit for Caritas in recruiting/pirating Mr. Restie Acosta on
March 04, 2000 and Ms. Eppie Acosta on March 06, 2000.
*Your failure to stop and/or tolerating your wife's activities in recruiting for Caritas
Ms. Lennie Gatmaitan who belongs to Ms. Celeste Villena, a PPI GA.
II. Misappropriation of Funds
1. Solicitation of associates' personal funds in the amount of P200.00 per person, to
which 12 persons contributed for a total P2,400.00, for payment of official function
during the meeting held at Barrio Fiesta last November 27, 1999. Amount solicited
was subsequently reimbursed from the company but not returned to the associates
concerned.
III. Dereliction of Duties
1. You failed to prevent associates from leaving the company in favor of competitors,
thus causing demoralization among your sales associates.
2. You even encouraged associates to transfer to Caritas.
IV. Conduct unbecoming of a Company Officer
1. Often reporting to office under the influence of liquor.
2. Sowing intrigue in the case of Vilma del Rosario which almost caused her early
retirement from the company and transfer to Caritas.
3. Sowing intrigues between Mr. Roy Padiernos and Mr. Abia.
4. Showing disrespect to immediate superior, Mr. Roy Padiernos, by shouting at him
and walking out in one of the meetings called by him after the retirement of Atty.
Haceta.17
During the investigation the following day, April 4, 2000, Molina reiterated his request
to be provided with a copy of the written reports.18 Picazo denied the request in a
Memorandum dated April 6, 2000, and reiterated his order for Molina to submit his
written explanation on April 11, 2000, and to address his concerns during the
investigation scheduled on April 14, 2000.19 Molina failed to submit any written
explanation. On April 24, 2000, PPI issued a Memorandum advising Molina that he
would be reinstated in the payroll effective April 25, 2000 without requiring him to report
for work during the pendency of his investigation.20
Molina filed a "Motion to Dismiss Complaints and Motion for Full Reinstatement" on
May 2, 2000.21 He asserted that the charges should be dismissed since he was
compelled to prepare a written explanation on the basis of "summarized specific acts,"
denying him the right to be informed of the exact charges and to confront those who
made written reports against him. As to the issue of reinstatement, he alleged that he
should be allowed to report for work, conformably with Rule XIV, Section 4 of the
Implementing Rules of the Labor Code.22
On May 11, 2000, Picazo wrote Molina that his motion to dismiss the charges would be
resolved after the investigation. He was warned that his non-appearance at the
investigation would be considered a waiver of his right to be heard.23
On the same day, May 11, 2000, Abia issued an inter-office Memorandum announcing
the appointment of Sercy F. Picache as the Officer-In-Charge (OIC) for Metro VI and
XVI effective May 6, 2000.24
Molina and his counsel attended the May 19, 2000 investigation and filed a Motion to
Suspend Proceedings,25praying that the administrative investigation be deferred until
the resolution of the "prejudicial" issues raised in his previous motion.26
When Picazo failed to respond, Molina filed, on June 1, 2000, a complaint for damages
with a prayer for a temporary restraining order and preliminary injunction based on
Article 19 of the New Civil Code. PPI filed a Motion to Dismiss, maintaining that the
courts have no jurisdiction over matters arising from employee-employer relationship.
The trial court denied the motion as well as PPI’s motion for reconsideration.27
Meanwhile, in letter dated June 13, 2000, Molina was notified of the termination of
administrative investigation. PPI considered his failure to submit a written explanation
as a waiver of his right to be heard, and as such, the investigating committee had
evaluated the evidence at hand and submitted its recommendations to the "higher
management" for decision. Also, it confirmed the denial of his Motion to Suspend
Proceedings.28
On June 23, 2000, the trial court issued an Order granting Molina's prayer for temporary
restraining order, which was later made permanent per its Order dated July 12, 2000.
The motion for reconsideration filed by PPI on July 26, 2000 was likewise denied.
Thereafter, it filed a petition for certiorari before the CA, assailing the writ of preliminary
injunction issued by the RTC and its order denying the motion to dismiss the complaint.
On July 16, 2001, the CA rendered judgment in favor of PPI and nullified the writ of
preliminary injunction issued by the RTC as well as the order denying the motion of PPI
for the dismissal of the complaint.29
On July 30, 2001, PPI resolved to dismiss Molina from employment on its finding that
the latter violated its standard operating procedure.30
Molina forthwith filed a complaint with the NLRC against PPI and Alfredo C. Antonio,
Patricio A. Picazo, and Certerio B. Uy, in their capacity as President, Senior Assistant
Vice-President of Human Resources Development, and Division Head, respectively,
for illegal dismissal and illegal suspension with claim for monetary benefits.
In his Position Paper,31 Molina principally argued that he was denied the right to due
process due to the failure of PPI to furnish him a copy of the written reports of the sales
associates and co-employees, the basis of the accusations against him. Since an OIC
for his position was already appointed even before all his pending motions were
resolved, he surmised that there were really no such reports, and that the alleged
accusations were merely concocted in order to replace him with someone close to
Picazo. Molina maintained that since he was denied the opportunity to dispute the
authenticity and substantive contents of the reports, his alleged violations of company
rules and policies were hearsay and, therefore, lacked probative value. Besides, the
termination of his employment was made without the 30-day prior notice; his dismissal
from employment took effect immediately, only six days after PPI received the CA
decision decreeing that the NLRC has the rightful jurisdiction over the case. Thus, he
prayed for the following relief:
1. Total Money Claims
a) Salary with (overriding) commission from March 21 to April 24, 2000 - suspended
w/o pay - P45,000.00 (P25,000[.00] mo. salary & P20,000[.00] [overriding])
b) Unpaid (overriding) commission from April 25, 2000 to present - P400,000[.00]
c) Unpaid salary from August 1, 2001 to present - P125,000[.00]
d) One mo. salary for every yr. of service in lieu of reinstatement - 7 years
= P175,000.00
2. Leave Credits - P100,000.00 for 7 years
3. Profit Bonus for Year 2000 & 2001 - P400,000.00
4. Moral Damages - P300,000.00
5. Exemplary Damages - P500,000.00
6. Actual Damages - for lifetime medical attendance and medicines at 16 more years
life expectancy - P1,249,384.00
7. Attorney's Fees - P300,000.00
8. Amount debited from complainant's ATM [as partial payment for hospitalization
expenses incurred by him which PPI had advanced] - P12,000.00
9. Retention of complainant's car, as additional penalty for illegal dismissal.32
For its part, PPI stressed that Caritas was its competitor in the pre-need plans business,
and that Molina and his wife recruited and enticed some of the sales associates of PPI
to work for Caritas, in violation of its policy against conflict of interest. Some of these
sales associates were the spouses Eppie and Restie Acosta, Lenita Gatmaitan, Lolita
Casaje, Lydia Magalso, Lydia San Miguel, and Alice Halili, and including Vilma del
Rosario, the secretary of Roy Padiernos. PPI, likewise, averred that Molina had the
habit of coming to the office under the influence of liquor; he constantly shouted to lady
employees and solicited money from his sales associates in connection with an official
company function without returning the same after PPI reimbursed him for the
expenses incurred; disseminated intrigues and created divisiveness among the
employees and PPI’s senior officers; and disrespected Padiernos, his superior, by
shouting at him during one of the meetings with other senior officers, and walked out of
the meeting afterwards. Supporting its claims that Molina committed breach of trust,
serious misconduct, fraud, and gross neglect of duty by reason thereof, PPI appended
to its position paper the statements/affidavits of Marivic Uy, Ruth and Roy Padiernos,
Eppie and Restie Acosta, Celeste Villena, and Vilma del Rosario.33
On the claim of Molina that he was denied due process, PPI averred that he was given
sufficient opportunity to present his personal submissions before finally issuing the
notice of dismissal but Molina persistently refused to submit his explanation.34 PPI
further argued that he was not entitled to the payment of 13th and 14th month salaries,
overriding commission, profit bonus, actual, moral or exemplary damages, and
attorney’s fees. PPI maintained that, under Article 217(a) of the Labor Code, as
amended, and the ruling of this Court in Bañez v. Valdevilla,35 Molina should be held
liable for P1,000,000 as moral damages and an amount not less than P428,400.00 for
the salary he received during the time when the restraining order/ writ of injunction was
erroneously enforced.36
In his Reply, Molina averred that the affidavits submitted by PPI were antedated since
he was never furnished copies of said reports/affidavits despite demands. PPI even
failed to present the reports/affidavits before the RTC where his complaint for damages
against PPI and its officers was pending. He and Roy Padiernos had been at odds
because the latter appointed his brother and wife as agency manager and group
manager of PPI to which he objected. Molina averred that the P200.00 collected from
each of the employees of PPI during their luncheon meeting was a voluntary
contribution, and that they spent P4,000.00, more than the amount collected from the
employees. He contended that he had no motive to recruit sales associates or
employees of PPI to be employed by Caritas because the depletion of sales associates
would diminish his effectiveness as an area manager, including his overriding
commission, profit bonus and fringe benefits. He admitted that he may have raised his
voice in the heat of arguing a point during meetings, but averred that it should not be
considered as disrespect or misdemeanor.
Molina further emphasized that Caritas was not a competitor of PPI, as the former was
engaged in selling health care and is supervised by the Department of Health (DOH),
while the latter is into the business of selling pre-need plans and supervised by the
Securities and Exchange Commission (SEC). Finally, he averred that the so-called
"associates" of PPI were not actually employees but "independent journeymen" who
derived income on commission basis, free to engage in any kind of selling activities not
in direct competition with PPI.
Molina admitted having had drinking sessions with Certerio Uy, Ilustre Acosta and
Reynaldo Villena, who provided the hard liquor and pulutan, but only after office hours.
He claimed that his officemates mistook him for being drunk when he went to his office
even after office hours because of his "mestizo complexion."
In its response, PPI averred that, based on the sales data, the acts of Molina caused
demoralization of the sales associates, resulting in a sudden decrease of the region's
output from P343,009,643.00 in 1998 to P263,099,773.00 in 1999,
and P228,752,090.00 in 2000.37 PPI insisted that he should be held liable for not less
than P507,348.00, P2,000,000, and P1,000,000 as actual, moral and exemplary
damages, and attorney's fees, respectively, and P273,600.00 which was the balance
on his car plan agreement with PPI.38
In his Rejoinder39 and Sur-Rejoinder40 Molina submitted the affidavit of Geoffrey
Martinez, who belied the reports of Uy, Villena, Del Rosario, and the spouses Padiernos
and Acosta.41 He also appended the affidavits of Natividad Gatchalian,42 San
Miguel,43 Gatmaitan,44 and Magalso,45 who all disputed, in one way or another,
Molina's alleged violations. To counter the imputations of conflict of interest, Molina also
alleged that Abia and Atty. Reyes were incorporators of Caritas,46 and that Villena had
in her possession a license to sell Caritas products.47 With regard to the declining sales
output of his region, Molina attributed the same to the Asian regional crisis that hit the
Philippines sometime in 1997. He noted, however, that the same records revealed that
despite the financial bane, Metro VI still managed to be on top from 1998 up to 2000 in
terms of its sales relative to the other regions.
Molina denied any liability for the car plan, claiming that he already settled the obligation
when PPI demanded full payment as, in fact, all the papers related thereto, including
the Release of Mortgage, were already in his possession.
In its Sur-Rejoinder,48 PPI stressed its claim that Caritas was a business competitor, as
may be inferred from the benefits available under its health care agreement and the
pre-need contract of PPI. Particularly with regard to the pension plan contract, it noted
the following similarities: (a) Caritas also provides Term Life Insurance, Accidental
Death Insurance, Credit Life Insurance, and Waiver of Installment Due to Disability; (b)
there are similarities in the provisions on contract price, grace period, cancellation,
reinstatement, and transfer and termination; and (c) unlike other health care programs
that provide a one-year coverage, renewable every year thereafter, Caritas offers a
continuous five year coverage and sells the same in units payable in five-year
installment basis, with maturity period and guaranteed return of investment in the form
of Full-Term Medical Expense Fund computed at P10,000.00 for every unit purchased
with increment of 10% yearly after the maturity period, which may be withdrawn in cash
by its member. It stressed that this was similar to the pension program offered by PPI
which was also sold in per unit basis, payable by installment in certain number of years
or lump sum payment, and upon maturity also gives P10,000.00 pension benefit per
unit purchased by the plan holder. With respect to the alleged interest of Atty. Reyes
with Caritas, PPI adduced in evidence a Deed of Sale to prove that as early as February
1999 he had already divested his stockholdings in Caritas.49
On November 18, 2002, Labor Arbiter Roma C. Asinas rendered a
Decision50 dismissing the complaint and the counterclaims for lack of merit. The labor
arbiter ruled that Molina was lawfully dismissed from his employment for serious
misconduct in office and fraud or willful breach of trust and confidence. It declared that
Molina’s mere denial of the charges against him did not overthrow the overwhelming
evidence against him tending to show that he committed the allegations against him.
Moreover, his wife was then an agency manager of Caritas, and some PPI sales
associates were with Caritas because they were recruited by Molina. The labor arbiter
also ruled that other employees of respondent attested to the fact that they were being
recruited and enticed by the complainant to join Caritas. This act of pirating constituted
serious misconduct in office, fraud or willful breach of trust and confidence, which are
just causes for termination of employment under Article 282 of the Labor Code, as
amended. As such, PPI could not legally be compelled to continue Molina’s
employment due to breach of trust.
The labor arbiter likewise held that Molina was afforded his right to due process, but
that he refused to give an answer to the charges leveled against him, and instead
insisted that he be furnished a copy of the alleged reports against him. Since he was
given ample opportunity to answer the charges and explain his side during the
investigation, and a formal or trial-type hearing is not at all times essential, Molina’s
right to due process was not violated. The labor arbiter stressed that the requirements
of due process are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand.51
Molina appealed the decision to the NLRC, which rendered judgment in his favor. The
NLRC reversed the decision of the Labor Arbiter and ordered Molina’s immediate
reinstatement to his former position as Assistant Vice President without demotion in
rank and salary; and the payment of his backwages from August 1, 2001 up to his
actual reinstatement, and other accrued monetary benefits. However, the NLRC denied
all other claims for damages.52
According to the NLRC, the charges of coming to the office under the influence of liquor
and making PPI reimburse the expenses already paid by Molina's co-employees were
not supported by the records. The "loss of trust and confidence" had no factual basis
since the alleged acts of Molina did not result to any loss in favor of PPI.
Anent Molina’s recruitment activities, the NLRC ratiocinated that PPI failed to show that
Caritas was a competitor of PPI. Caritas caters to the health care needs of its clients
while PPI to the pre-need (pension, educational, and memorial) requirements of its plan
holders. Any similarity between PPI and Caritas’ extra features like term life insurance,
accidental death insurance, credit life insurance, and waiver of installment due to
disability, did not ipso facto make Caritas a competitor of PPI. Thus, there was no
conflict of interest in Molina’s act of trying to recruit counselors for Caritas to help his
wife. Moreover, PPI failed to establish that recruiting for Caritas affected Molina’s
decisions in the performance of his duties with PPI. According to the NLRC, the drop
in the sales and productivity of complainant’s area of responsibility may be due to
market forces and depressed economic condition at that time; absent any clear and
convincing proof, it cannot be attributed to the alleged acts of Molina which constituted
willful breach of trust or confidence.53
PPI filed a motion for reconsideration, and appended a Letter dated June 13, 2002 from
the SEC to Caritas, indicating that its HMO Plan was similar to the previous plans
offered by pre-need companies, hence, under the regulatory suspension of the
SEC;54 another letter of SEC ordering Caritas to immediately desist from selling its
HMO plan with the full term medial expense fund;55 and the letter of Caritas, through
counsel, endorsing the objectionable features of the HMO plan.56
The NLRC, however, was not persuaded, and resolved to deny PPI’s motion in its Order
dated September 30, 2003.57 On November 19, 2003, the NLRC declared its Decision
final and executory as of November 14, 2003.58
PPI filed a Petition for Certiorari with the CA for the nullification of the decision and
resolution of the NLRC and the reinstatement of the decision of the Labor Arbiter.59
On August 13, 2004, the CA rendered a decision reversing the Decision and Resolution
of the NLRC, and reinstating the November 18, 2002 Decision of the Labor
Arbiter.60 Later, the CA denied Molina’s Motion for Reconsideration61 in its Resolution
dated September 27, 2004.62
The issues for resolution are the following: whether the decision of the NLRC was
already final and executory when PPI filed its petition for certiorari in the CA; and
whether the NLRC committed grave abuse of discretion amounting to excess or lack of
jurisdiction in issuing the assailed decision and resolution.
On the first issue, we find and so hold that the decision of the NLRC had become final
and executory when PPI filed its Petition for Certiorari in the CA. PPI received a copy
of the NLRC Decision on July 11, 2003 and filed the Motion for Reconsideration thereof
on July 18, 2003, which motion was denied on September 30, 2003. Under Rule VII,
Section 2 of the NLRC Omnibus Rules of Procedure, the decision of the NLRC
becomes final and executory after ten (10) calendar days from receipt of the same. PPI
received a copy of the NLRC decision on November 30, 2003; hence, such decision
became final and executory on December 3, 2003. Nonetheless, the Court ruled in St.
Martin Funeral Home v. NLRC63 that, although the 10-day period for finality of the NLRC
decision may have elapsed as contemplated in the last paragraph of Section 223 of the
Labor Code, the CA may still take cognizance of and resolve a petition for certiorari for
the nullification of the decision of the NLRC on jurisdictional and due process
considerations. Indeed, the remedy of the aggrieved party from an adverse decision of
the NLRC is to timely file a motion for reconsideration as a precondition for any further
or subsequent remedy, and if the motion is denied, such party may file a special civil
action in accordance with law and jurisprudence considering that these matters are
inseparable in resolving the main issue of whether the NLRC committed grave abuse
of discretion.
The Labor Arbiter and the NLRC act in quasi-judicial capacity in resolving cases after
hearing and on appeal, respectively. On the presumption that they have already
acquired expertise in their jurisdiction, which is confined on specific matters, their
findings of facts are oftentimes accorded not only with respect but even finality if
supported by substantial evidence. However, in spite of the statutory provision making
"final" the decision of the NLRC, the Court has taken cognizance of petitions
challenging such decision where there is a clear showing that there is want of
jurisdiction, grave abuse of discretion, violation of due process, denial of substantial
justice, or erroneous interpretation of law.64
In this case, the Labor Arbiter declared that there is substantial evidence on record
warranting the dismissal of petitioner as Assistant Vice President for serious
misconduct in office, fraud or willful breach of trust and confidence. The NLRC
disagreed with the Labor Arbiter and reversed the latter’s findings. The CA, for its part,
concurred with the findings of the Labor Arbiter. In view of the discordance between the
findings of the Labor Arbiter and the CA on one hand, and the NLRC on the other, there
is a need for the Court to review the factual findings and the conclusions based on the
said findings. As this Court held in Diamond Motors Corporation v. Court of Appeals:65
A disharmony between the factual findings of the Labor Arbiter and the National Labor
Relations Commission opens the door to a review thereof by this Court. Factual findings
of administrative agencies are not infallible and will be set aside when they fail the test
of arbitrariness. Moreover, when the findings of the National Labor Relations
Commission contradict those of the labor arbiter, this Court, in the exercise of its equity
jurisdiction, may look into the records of the case and reexamine the questioned
findings.66
Article 282 of the Labor Code of the Philippines 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 his duties 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.
Misconduct has been defined as improper or wrong conduct; the transgression of some
established and definite rule of action; a forbidden act, a dereliction of duty, unlawful in
character and implies wrongful intent and not mere error of judgment. The misconduct
to be serious must be of such grave and aggravated character and not merely trivial
and unimportant. Such misconduct, however, serious, must nevertheless, be in
connection with the employee’s work to constitute just cause for his separation.67
The loss of trust and confidence, in turn, must be based on the willful breach of the trust
reposed in the employee by his employer. Ordinary breach will not suffice. A breach of
trust is willful if it is done intentionally, knowingly and purposely without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.68
The Court has laid down the guidelines for the application of the doctrine for loss of
confidence, thus:
1. the loss of confidence must not be simulated;
2. it should not be used as a subterfuge for causes which are illegal, improper or
unjustified;
3. it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary;
4. it must be genuine, not a mere afterthought, to justify earlier action taken in bad
faith; and
5. the employee involved holds a position of trust and confidence.69
In Samson v. Court of Appeals,70 the Court enumerated the conditions for one to be
considered a managerial employee:
(1) Their primary duty consists of the management of the establishment in which
they are employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the
promotion or any other change of status of other employees are given particular
weight.71
As a general rule, employers are allowed wide latitude of discretion in terminating the
employment of managerial personnel.72 The mere existence of a basis for believing that
such employee has breached the trust and confidence of his employer would suffice
for his dismissal.73
In this case, petitioner was not a mere employee of respondent. He was the Assistant
Vice-President with the same functions of a regional manager of the same sales region,
Metro Manila VI. Taking into account his job description, he was one of the top
managers of the respondent, tasked to perform key and sensitive functions in the
interest of his employer and, thus, bound by the more exacting work ethic.
We find, however, that the charge of misappropriation of funds was not proven with
substantial evidence. As gleaned from the handwritten statement of Ilustre Acosta, the
General Manager of the Springs and Blessings General Agency under Metro Manila
VI, it appears that, aside from him and petitioner, there were 10 other attendees during
the luncheon conference on November 27, 1999 at the Barrio Fiesta, Cubao, Quezon
City. Petitioner received the amount of only P2,386.00 from respondent to pay for the
cost of the luncheon for the conference, based on Petty Cash Voucher signed by
petitioner,74 but the conferees spent more than P4,000.00. Upon petitioner’s
suggestion, the conferees agreed to contribute P200.00 each, or the total amount
of P2000.00 to answer for the difference. Petitioner had no obligation to return the
contributions of the conferees, nor was he liable for said amount. Significantly, except
for Ilustre Acosta, the other attendees in the conference never complained against
petitioner or requested him to return their respective contributions of P200.00.
Regarding the charge that the petitioner peddled false and malicious informations
against Abia and Padiernos, Abia has not executed any affidavit to confirm paragraph
9 of the affidavit of Roy Padiernos. As admitted by del Rosario, the informations
allegedly relayed to her by the petitioner pertaining to Roy Padiernos were confirmed
by Zita Domingo.75
The petitioner does not deny having had a heated exchange of words with Roy
Padiernos in the course of a meeting. However, such incident does not constitute proof
that the petitioner thereby showed disrespect to Roy Padiernos, nor a valid cause for
petitioner’s dismissal. It does happen that in the course of exchange of views during a
meeting, participants may become so assertive to the point of being overbearing or
unyielding and in the process lose their temper, on their sincere belief of being right.
There is no evidence on record that petitioner committed the same or similar acts
thereafter.
To prove its charge of conduct unbecoming of a company officer, more specifically of
drinking alcoholic beverages within the premises of the company during office hours or
going to work drunk, respondent relied on the statement/affidavit of Celeste Villena, the
Agency Manager of the Wondrous and Miraculous General Agency under Metro Manila
VI;76 and Marivic Uy, the General Manager of the D’MBP General Agency under Metro
Manila VI. Both claimed that they always saw petitioner drunk during office hours, most
especially during cut-offs when many sales counselors were present.77 Petitioner
admitted having had drinking sessions with Certerio Uy, the husband of Marivic Uy,
Ilustre Acosta and Reynaldo Villena, the husband of Celeste Villena, and who,
according to petitioner, provided the hard liquor and the pulutan.78 He, however, denied
reporting to office drunk and insisted that he reported for work sober.
We are inclined to give credence to petitioner’s claim, noting that in her handwritten
letter-report to Norman Gonzales dated March 10, 2000, Villena made no mention of
the petitioner going to office drunk.79 It was only in her affidavit dated January 16, 2002
that Villena made such declaration.80 Villena did not explain her failure to report the
matter to Gonzales on March 10, 2000, and why she made the charge for the first time
in her Affidavit dated January 16, 2002. Uy is the wife of no less than Certerio Uy, the
Senior Vice-President of the Manila North Sales Division of respondent. If petitioner’s
"drinking problem" had any ring of truth, she should have immediately reported the
matter to her husband or to other officials concerned. Uy’s unexplained silence until
March 10, 2000 thus renders her report implausible.
Respondent avers that petitioner served directly as agent of Caritas, a business
competitor of the respondent, when he connived with his wife in recruiting Sales
Associates of the Metro Sales Division VI to transfer to Caritas as sales associates.
Respondent claims that, by his acts, petitioner failed to dedicate his full time on the job
with respondent and prevented said sales associates from doing the same. Aside from
violating its policy against conflict of interest, petitioner’s acts adversely affected his
decisions in the performance of his duties and obligations to respondent.81
Loyalty of an employee to his employer consists of certain very basic and common
sense obligations. An employee must not, while employed, act contrary to the
employer’s interest.82 The scope of the duty of loyalty that an employee owes to his
employer may vary with the nature of their relationship. Employees occupying a position
of trust and confidence owe a higher duty than those performing low-level tasks.
Assisting an employee’s competitor can even constitute a breach of the employee’s
duty of loyalty. An employee’s self-dealing may breach that duty.83However, it has been
ruled that
A reality of contemporary life is that many families will consist of two wage earners, one
wage earner with two jobs, or both. For some employees, particularly those earning low
or modest incomes, second sources of income are an economic necessity. For them,
a second job or "moonlighting" is the only way to make ends meet. Conversely,
employers need the assurance that employees will not disserve them by furthering their
own interests or those of competitors at the employers’ expense.84
A slight assistance to a direct competitor could constitute a breach of the employee’s
duty of loyalty. However, when competition is indirect or minimal, the employer may be
required to show that the employee received substantial assistance from the
competitor. If an employee usurped a corporate opportunity or secretly profited from a
competitive activity, the employer may receive the value of the lost opportunity or the
secret profit.85
An employee’s skill, aptitude, and other subjective knowledge obtained in the course of
employment are not the property of his employer.86 However, an employee occupying
a managerial position or office is obliged to protect the trade secret of his employer
consisting of formula, process, device or compilation which it uses in its business and
gives it an opportunity to obtain an advantage over competitors who do not know of
such trade secret. However, the rule does not apply to a matter of public knowledge or
of general knowledge within the industry.87 Moreover, an employer has a protectible
interest in the customer relationships of its former employee established and/or
nurtured while employed by the employer, and is entitled to protect itself from the risk
that a former employee might appropriate customers by taking unfair advantage of the
contract developed while working for the employer.88 While acting as an agent of his
employer, an employee owes the duty of fidelity and loyalty. Being a fiduciary, he
cannot act inconsistently with his agency or trust. He cannot solicit his employer’s
customers or co-employees for himself or for a business competitor of his employer. If
such employee or officer connives with and induces another to betray his employer in
favor of a business competitor of his employer, he is held accountable for his mischief.89
In this case, we are not persuaded that Caritas is the business competitor of
respondent. The evidence on record shows that while Abia, the Senior Vice-President
of respondent’s Metro Manila Marketing, is one of the incorporators of Caritas and is
even a member of the Board of Directors, respondent did not dismiss him from
employment. The Head of the Legal Division of the respondent, Atty. Reyes, was also
an incorporator of Caritas and a member of its Board of Directors, and although he
appears to have sold his shares to Herminigildo C. Belen for P127,312.34, he only did
so on March 7, 1999. There is no evidence on record whether the transfer of such
shares of stocks has already been reflected in the books of Caritas. Celeste Villena,
one of the Sales Associates of respondent, is herself licensed by Caritas to sell plans
for the latter. Villena has likewise not been prohibited from selling pre-need plans for
Caritas. Fe Molina, who is the head of a sales agency of Caritas, is also a sales agency
head of respondent. Petitioner, his wife, and Villena were not charged nor meted any
sanction by the respondent for conflict of interest. Petitioner was the Assistant Vice-
President, Marketing Head, Area 10, of Caritas, and for a while, without any protest
from respondent. If Caritas is a business competitor of the respondent, it should have
meted sanctions not only on petitioner but also on Abia, Reyes, Fe Molina and Villena
as well.
The truth of the matter is that, as averred by Caritas President Geoffrey Martinez,
Caritas is engaged in health care and hospitalization package, whereas respondent
sells educational, pension, and pre-need plans. Caritas is an HMO and is directly
supervised by the DOH, while respondent is under the supervision of the SEC. The so-
called sales associates of the respondent are non-salaried employees and are paid on
commission basis only. Their commissions are based on their individual initiative and
industry. That the contracts executed by the beneficiaries of both corporations have
similar provisions regarding contract price, grace period, cancellation, reinstatement,
transfer and termination, do not constitute proof that Caritas and respondent are
business competitors. There is also no proof that the two corporations compete with
each other in the same or similar business; in fact, the business of Caritas and that of
the respondent complement each other.
Respondent relied on the declarations of Ruth Padiernos, Spouses Eppie and Ilustre
Acosta, Celeste Villena, and Marivic Uy to prove its charge that Fe Molina pirated sales
associates working for respondent and that petitioner tolerated the actuations of his
wife and even connived with her.
The Court finds, however, that the evidence adduced by respondent insufficient to
warrant the petitioner’s dismissal from employment.
Ruth Padiernos, wife of Roy Padiernos, averred in her written statement dated March
8, 2000, that as far back as July 1999, she had a conference with her husband and
Abia where she reported that petitioner connived with his wife in pirating sales
associates. She was assured that something would be done to arrest the
problem.90 However, Ruth Padiernos failed to name any such sales associate who was
recruited by Fe Molina. There is likewise no evidence that Abia ever confronted
petitioner relative to the charge. Roy Padiernos confronted petitioner, but the latter
denied the charge. Since then, no further action was taken against the petitioner by
respondent, until the letter of Picazo dated March 21, 2000 was sent to him. Roy
Padiernos did not explain why he executed his affidavit regarding the matter almost
three years later, only on January 18, 2002. In an Affidavit dated January 18, 2002, it
was made to appear that Ruth Padiernos claimed that petitioner’s wife, the Unit
Manager of the Ark Group under Metro Manila Sales Group VI and also an Agency
Manager of Caritas, recruited sales associates under respondent to work for Caritas,
and that petitioner did the same; and that she (Padiernos) learned that almost all the
productive Sales Associates in Metro Manila VI were already connected with Caritas,
using "different names."91 Although notarized, the affidavit has no probative weight
because it was unsigned.
Celeste Villena, for her part, declared in her handwritten statement dated March 10,
2000 that Fe Molina recruited Lenie Gatmaitan to join Caritas and that she confronted
petitioner.92 In her Affidavit dated January 16, 2002, she alleged that petitioner and his
wife, Fe Molina, recruited Gatmaitan to join Caritas.93 However, the signature of the
notary public does not appear in said affidavit. For his part, Ilustre Acosta, averred in
 34
his handwritten statement dated March 11, 2000, that on March 4, 2000, petitioner Id. at 70.
35
informed him that Geoffrey Martinez called petitioner to inquire if petitioner would have G.R. No. 128024, May 9, 2000, 331 SCRA 584.
36
CA rollo, pp. 76-79.
no objection for him (Ilustre) to be with Caritas and that petitioner replied that he had 37
Id. At 178-180.
no objection if that was Ilustre’s decision.94 Ilustre maintained this claim in his Affidavit 38
Id. at 165-180, 188-193
dated January 16, 2002.95Eppie Acosta, the wife of Ilustre Acosta, averred in her 39
Id. at 199-204.
40
handwritten statement of March 12, 2000, that on March 6, 2000, petitioner commented Id. at 249-251.
41
about their low sales production, and she retorted that he was the cause, hence, may Id. at 205-206.
42
Id. at 252-253.
have grudges against him. Petitioner replied that he and his wife did not interfere with 43
Id. at 254.
each other’s business dealings, and that petitioner even declared "Mare, for all you 44
Id. at 255.
know, ikaw na lang ang hindi nag-ca-Caritas." She reiterated her claim in her affidavit 45
Id. at 256.
46
dated January 16, 2000.96 Marivic Uy averred that the wife of petitioner had been Id. at 258-259.
47
pirating sales associates of respondent since 1999 to join Caritas and that she tried to Id. at 202, 206.
48
Id. at 213-220.
recruit Morena Siasoco, one of the Group Managers. Petitioner failed to stop his wife, 49
Id. at 248.
but rather tolerated her actuations.97 She reiterated her claim in her Affidavit dated 50
Id. at 265-276.
January 16, 2002.98 51
Id. at 273-275.
52
Id. at 273-275.
However, there is no evidence on record to prove that respondent expressly prohibited 53
Id. at 47-48.
its Sales Associates from selling for Caritas. Neither is there evidence on record to 54
Rollo, pp. 196-197.
prove that Caritas prohibited its sales associates from selling pre-need plans of 55
Id. at 198-199.
respondent. 56
Id. at 201.
57
CA rollo, pp. 52-53.
Respondent likewise failed to present the affidavits of Siasoco, Casaje, Magalso, San 58
Id. at 389.
Miguel and Halili. In contrast to the evidence of respondent, Gatchalian, San Miguel, 59
Id. at 2-37.
Siasoco, and Gatmaitan executed their respective affidavits declaring that neither 60
Id. at 511-519.
petitioner nor his wife ever recruited them.99 They admitted that they sold plans for 61
Id. at 520-531.
62
Caritas, but without any prodding from petitioner and his wife. Geoffrey Martinez Id. at 551.
63
G.R. No. 130866, September 16, 1998, 295 SCRA 494, 500-501.
declared, in his affidavit, that Siasoco, San Miguel, Casaje, Magalso, and Halili joined 64
See National Steel Corporation v. Court of Appeals, 436 Phil. 656, 670 (2002).
Caritas voluntarily and individually, through him, and he was not aware that petitioner 65
G.R. No. 151981, December 1, 2003, 417 SCRA 46.
and his wife recommended them to Caritas. Lenita Gatmaitan called him and inquired 66
Supra, at 50.
if she could join Caritas, and he replied in the affirmative. He never called petitioner 67
Samson v. National Labor Relations Commission, 386 Phil. 669, 682 (2000).
68
concerning Ilustre Acosta; on the contrary, it was the latter who called to inquire if he Diamond Motors Corporation v. Court of Appeals, supra note 65, at 50-51.
69
Ramos v. Court of Appeals, G.R. No. 145405, June 29, 2004, 433 SCRA 177, 183.
was entitled to a discount if he purchased a Caritas health plan. He talked to Vilma Del 70
Supra note 67.
Rosario and convinced her to apply as Branch Manager of Caritas, which she did, but 71
Id.
backed out later on. 72
Gonzales v. National Labor Relations Commission, G.R. No. 131653, March 26, 2001, 355 SCRA 195,
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby GRANTED. The 208.
73
Asia Pacific Chartering (Phils.), Inc. v. Farolan, 441 Phil. 776, 791.
August 13, 2004 Decision and September 27, 2004 Resolution of the Court of Appeals 74
CA rollo, p. 119.
are REVERSED AND SET ASIDE. The decision and resolution of the NLRC are 82
Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285, 770 A.2d 1158 (2001).
reinstated. 83
Platinum Management, Inc. v. Dahms, 285 N.J. Super 276, 666 A.2d 1028 (1995).
84
Cameco, Inc. v. Gedicke, 157 N.J. 504, 724 A.2d. 783, (1999).
SO ORDERED. 85
Id.
Footnotes 86
American Buildings Company v. Pascoe Building System, Inc., 392 S.E.2d 860, 260 Ga. 346 (1990).
87
1
Penned by Associate Justice Delilah Vidallon-Magtolis, with Associate Justices Eliezer R. Delos Santos Sun Dial Corporation v. Rideout, 16 N.J. 252, 108 A.2d 442 (1954).
88
and Arturo D. Brion, concurring. American Software US A., Inc.. v. Moore, 448 S.E.2d 206, 264 Ga. 480 (1994).
89
2
CA rollo, p. 551. Corroon & Black of Illinois, Inc. v. Magner, 494 N.E.2d 785 (1986).
3
Penned by Presiding Commissioner Roy V. Señeres, with Commissioners Romeo L. Go and Vicente
S.E. Veloso, concurring.
24
Id. at 153.
25
Id. at 59, 131.
26
Id. at 108-111, 154-157.
27
Id. at 131.
28
Id. at 112.
29
Id. at 60.
30
Id. at 130-134.
31
Id. at 130-138.
32
Id. at 136-137.
33
Id. at 54-81.
G.R. No. 213748 November 27, 2017
RICARDO G. SY and HENRY B. ALIX, Petitioners vs. NEAT, INC., BANANA PEEL
and PAUL VINCENT NG, Respondents
Labor Law; Termination of Employment; In illegal dismissal cases, the burden of
proof is upon the employer to show that the employee’s termination from service is for
a just and valid cause.—It is well-settled that in illegal dismissal cases, “the burden of
proof is upon the employer to show that the employee’s termination from service is for
a just and valid cause. The employer’s case succeeds or fails on the strength of its
evidence and not on the weakness of that adduced by the employee, in keeping with
the principle that the scales of justice should be tilted in favor of the latter in case of
doubt in the evidence presented by them. Often described as more than a mere
scintilla, the quantum of proof is substantial evidence which is understood as such
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other equally reasonable minds might conceivably opine otherwise.
Failure of the employer to discharge the foregoing onus would mean that the dismissal
is not justified and therefore illegal.”
Same; Same; Principle of Totality of Infractions; In determining the sanction
imposable on an employee, the employer may consider the former’s past misconduct
and previous infractions.—In determining the sanction imposable on an employee, the
employer may consider the former’s past misconduct and previous infractions. Also
known as the principle of totality of infractions, the Court explained such concept
in Merin v. National Labor Relations Commission, et al., 569 SCRA 576 (2008), thus:
The totality of infractions or the number of violations committed during the period of
employment shall be considered in determining the penalty to be imposed upon an
erring employee. The offenses committed by petitioner should not be taken singly and
separately. Fitness for continued employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct and ability separate and independent of
each other. While it may be true that petitioner was penalized for his previous
infractions, this does not and should not mean that his employment record would be
wiped clean of his infractions. After all, the record of an employee is a relevant
consideration in determining the penalty that should be meted out since an employee’s
past misconduct and present behavior must be taken together in determining the proper
imposable penalty. Despite the sanctions imposed upon petitioner, he continued to
commit misconduct and exhibit undesirable behavior onboard. Indeed, the employer
cannot be compelled to retain a misbehaving employee, or one who is guilty of acts
inimical to its interests. It has the right to dismiss such an employee if only as a measure
of self-protection.
Same; Same; Same; Previous offenses may be used as valid justification for
dismissal only if they are related to the subsequent offense upon which the basis of
termination is decreed, or if they have a bearing on the proximate offense warranting
dismissal.—Contrary to respondents’ contention, however, the past 3 infractions in
2009 for wearing of improper uniform can no longer be taken against Sy, because he
was already warned and penalized for them, and he has, in fact, reformed his errors in
that regard. Notably, in the Performance Appraisal dated August 3, 2011 for the criteria
of “Personal Appearance — personal impression of an individual makes on others.
(Consider cleanliness, grooming, neatness and appropriateness of dress on the job,”
Operations Manager Jamlid gave Sy a grade of 80 points for “Good-Competent and
dependable level of performance. Meets standards at the job,” and commented that Sy
report[s] to work in complete uniform) Where an employee had already suffered the
corresponding penalties for his infraction, to consider the same offenses as justification
for his dismissal would be penalizing the employee twice for the same offense.
Significantly, the infractions of Sy for wearing of improper uniform are not related to his
latest infractions of insubordination and purported poor performance evaluation.
Previous offenses may be used as valid justification for dismissal only if they are related
to the subsequent offense upon which the basis of termination is decreed, or if they
have a bearing on the proximate offense warranting dismissal.
Same; Same; Insubordination; Serious Misconduct; Requisites to Justify the
Termination from Service.—Misconduct is defined as 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 in judgment.” In order for
serious misconduct to justify dismissal, these requisites must be present: (a) it must be
serious; (b) it must relate to the performance of the employee’s duties, showing that the
employee has become unfit to continue working for the employer; and (c) it must have
been performed with wrongful intent. On the other hand, to be considered as a just
cause for terminating an employee’s services, “insubordination” requires that the
orders, regulations or instructions of the employer or representative must be (a)
reasonable and lawful; (b) sufficiently known to the employee; (c) in connection with
the duties which the employee has been engaged to discharge; and (d) the employee’s
assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude.
Same; Same; Same; Sy’s insubordination of changing his delivery utility without
permission from the operations manager is no doubt a misconduct, but not a serious
and willful one as to cost him his livelihood.—Sy’s insubordination of changing his
delivery utility without permission from the operations manager is no doubt a
misconduct, but not a serious and willful one as to cost him his livelihood. Concededly,
Sy’s act of unilaterally assigning to himself another delivery utility in lieu of the one
designated to him, reflects his attitude problem and disregard of a lawful order of a
representative of the employer. Be that as it may, such willful disobedience cannot be
deemed to depict a wrongful attitude, because it was prompted by his desire to carry
out his duty without distractions. It is not farfetched that Sy’s annoyance with the
delivery utility assigned to him, who annoyed him earlier in the day by blocking his way
to the daily time record, could have prevented him from performing his task, or worst,
could have resulted in fisticuffs with the said co-worker.
Same; Same; Gross and Habitual Negligence; By no stretch of reasoning can the
five (5) infractions — wearing of improper uniform, insubordination and poor
performance evaluation — imputed against Sy be collectively deemed as gross and
habitual negligence.—As a just cause for termination of employment, on the other hand,
the neglect of duties must not only be gross but habitual as well. Gross negligence
means an absence of that diligence that a reasonably prudent man would use in his
own affairs, and 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. Suffice it to state that by no stretch of
reasoning can the 5 infractions — wearing of improper uniform, insubordination and
poor performance evaluation — imputed against Sy be collectively deemed as gross
and habitual negligence.
Same; Same; Granted that the employer enjoys a wide latitude of discretion in
the promulgation of policies, rules and regulations on work-related activities of the
employees, those directives must always be fair and reasonable, and the
corresponding penalties, when prescribed, must be commensurate to the offense
involved and to the degree of the infraction.—Granted that the employer enjoys a wide
latitude of discretion in the promulgation of policies, rules and regulations on work-
related activities of the employees, those directives must always be fair and reasonable,
and the corresponding penalties, when prescribed, must be commensurate to the
offense involved and to the degree of the infraction. To be lawful, the cause for
termination must be a serious and grave malfeasance to justify the deprivation of a
means of livelihood. This is merely in keeping with the spirit of our Constitution and
laws which lean over backwards in favor of the working class, and mandate that every
doubt must be resolved in their favor. After all, an employment is not merely a
contractual relationship, since in the life of most workers it may spell the difference of
whether or not a family will have food on their table, roof over their heads and education
for their children.
Same; Same; Habitual Tardiness; Punctuality is a reasonable standard imposed
on every employee, whether in government or private sector, whereas habitual
tardiness is a serious offense that may very well constitute gross or habitual neglect of
duty, a just cause to dismiss a regular employee.—Habitual tardiness alone, as aptly
noted by the CA, is a just cause for termination of Alix’s employment. Punctuality is a
reasonable standard imposed on every employee, whether in government or private
sector, whereas habitual tardiness is a serious offense that may very well constitute
gross or habitual neglect of duty, a just cause to dismiss a regular employee. Habitual
tardiness manifests lack of initiative, diligence and discipline that are inimical to the
employer’s general productivity and business interest. Respondents have
substantiated habitual tardiness by presenting Alix’s daily time card, showing that in
2011 alone prior to his dismissal, he was late fourteen (14) times in January, seven (7)
times in February, eight (8) times in March, and five (5) times in April.
Same; Same; Serious Misconduct; A series of irregularities when put together
may constitute serious misconduct, which under Article 283 [now Art. 297] of the Labor
Code, is a just cause for dismissal.—Having in mind the work productivity-related
infractions he incurred in a span of 5 months from January to May 2011 — consisting
of habitual tardiness, 2 warnings for wasting time during working hours and 2 more
warnings for poor performance evaluation — the Court must agree with the CA that
respondents have a just cause to terminate Alix’s employment. As held in Piedad v.
Lanao del Norte Electric Coop., Inc., 153 SCRA 500 (1987), “fitness for continued
employment cannot be compartmentalized into tight little cubicles of aspects of
character, conduct and ability separate and independent of each other. A series of
irregularities when put together may constitute serious misconduct, which under Article
283 [now Art. 297] of the Labor Code, is a just cause for dismissal.”
Same; Same; Management Prerogative; Although the State affords the
constitutional blanket of affording protection to labor, the rule is settled that it must also
protect the right of employers to exercise what are clearly management prerogatives,
so long as the exercise is without abuse of discretion.—More than the fact that an
employee’s right to security of tenure does not give him a vested right to his position,
Alix would also do well to bear in mind the prerogative of the employer to prescribe
reasonable rules and regulations necessary or proper for the conduct of its business
and to provide certain disciplinary measures in order to implement said rules and to
assure that the same would be complied with. Although the State affords the
constitutional blanket of affording protection to labor, the rule is settled that it must also
protect the right of employers to exercise what are clearly management prerogatives,
so long as the exercise is without abuse of discretion.
Same; Same; It bears emphasis that notice to the employee should embody the
particular acts or omissions constituting the grounds for which the dismissal is sought,
and that an employee may be dismissed only if the grounds cited in the pre-dismissal
notice were the ones cited for the termination of employment.—As for Alix, the last
warning given to him was received on the very day of his termination, May 31, 2011,
for poor performance evaluation sans any reference to his past infractions of
negligence in performing work, wearing of improper uniform, wasting time during
working hours, tardiness, and poor performance evaluation. While they were given
several warnings for separate offenses committed, petitioners were not given
opportunity to be heard why they should not be terminated on account of the totality of
their respective infractions against company rules and regulations. It bears emphasis
that notice to the employee should embody the particular acts or omissions constituting
the grounds for which the dismissal is sought, and that an employee may be dismissed
only if the grounds cited in the pre-dismissal notice were the ones cited for the
termination of employment.
Same; Same; An employee who is dismissed without just cause and due process
is entitled to either reinstatement if viable or separation pay if reinstatement is no longer
viable, and payment of full backwages and other benefits.—An employee who is
dismissed without just cause and due process is entitled to either reinstatement if viable
or separation pay if reinstatement is no longer viable, and payment of full backwages
and other benefits. Specifically prayed for by petitioner Sy, the NLRC correctly awarded
separation pay, which is proper when reinstatement is no longer viable due to the
antagonism and strained relationship between the employer and the employee as a
consequence of the litigation, not to mention the considerable length of time that the
latter has been out of the former’s employ. Nevertheless, the Court limits the award of
separation pay, backwages and other benefits, because Sy is not entirely faultless.
Since the latest infraction of Sy relating to attitude problem at work does not constitute
serious misconduct, willful disobedience to lawful orders of the employer or gross and
habitual negligence in the performance of duties, as to merit the harsh penalty of
dismissal, the Court holds that Sy is entitled to the award of (1) separation pay
equivalent to 1 month salary for every year of service computed from May 5, 2008 when
he was hired up to December 27, 2012 when the NLRC ruled that he was illegally
dismissed; and (2) backwages and other benefits, computed from the time of his
termination on August 4, 2012 until December 27, 2012.
Same; Same; Quitclaims; While quitclaims are, at times, considered as valid and
binding compromise agreements, the rule is settled that the burden rests on the
employer to prove that the quitclaim constitutes a credible and reasonable settlement
of what an employee is entitled to recover, and that the one accomplishing it has done
so voluntarily and with a full understanding of its import.—Anent the Waiver and
Release dated June 10, 2011 where Alix stated that he has no claim of whatever kind
and nature against Neat, Inc., the Court sustains the CA that such quitclaim does not
bar an employee from demanding what is legally due him, especially when it is made
under circumstances where the voluntariness of such agreement is questionable. While
quitclaims are, at times, considered as valid and binding compromise agreements, the
rule is settled that the burden rests on the employer to prove that the quitclaim
constitutes a credible and reasonable settlement of what an employee is entitled to
recover, and that the one accomplishing it has done so voluntarily and with a full
understanding of its import. Respondents failed to discharge such burden. Recognizing
that the subordinate position of individual rank-and-file employees vis-à-
vismanagement renders the former vulnerable to the latter’s blandishments,
importunings and even intimidation that may well result in the improvident if reluctant
signing over of benefits to which the employees are entitled, the Court has consistently
held that quitclaims of workers’ benefits will not bar them from asserting these benefits
on the ground that public policy prohibits such waivers.
 Same; Same; Notice and Hearing; Nominal Damages; Considering that
petitioners were deprived of their right to notice and hearing prior to their termination,
the Supreme Court (SC) affirms the Court of Appeals’ (CA’s) award of P30,000.00 as
nominal damages.—The Court likewise upholds the award of nominal damages
awarded in favor of petitioners Sy and Alix. Nominal damages are “adjudicated in order
that a right of the plaintiff, which has been violated or invaded by the defendant, may
be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.” Jurisprudence holds that such indemnity to be imposed should
be stiffer to discourage the abhorrent practice of dismiss now, pay later. The sanction
should be in the nature of indemnification or penalty and should depend on the facts of
each case, taking into special consideration the gravity of the due process violation of
the employer. Considering that petitioners were deprived of their right to notice and
hearing prior to their termination, the Court affirms the CA’s award of P30,000.00 as
nominal damages.
Same; Same; Moral Damages; Moral damages are recoverable only where the
dismissal or suspension of the employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to morals,
good customs or public policy.—To be entitled to an award of moral damages, it is not
enough for an employee to prove that he was dismissed without just cause or due
process. Moral damages are recoverable only where the dismissal or suspension of
the employee was attended by bad faith or fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs or public policy. “The
person claiming moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith.” Awarded in accordance
with the sound discretion of the court, on the other hand, exemplary damages are
imposed as a corrective measure when the guilty party has acted in a wanton,
fraudulent, reckless and oppressive manner. In this case, apart from petitioners’ bare
allegation of entitlement thereto, no proof was presented to justify an award of moral
and exemplary damages. At any rate, all the damages awarded to petitioners shall incur
interest at the rate of six percent (6%) per annum from finality of this Decision until fully
paid, in line with Nacar v. Gallery Frames, Inc., 703 SCRA 439 (2013).
Same; Same; Attorney’s Fees; 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 monetary award by way of attorney’s fees is justifiable under Article III of
the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph
7, Article 2208 of the New Civil Code.—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 monetary award by way of attorney’s fees is justifiable under Article III of
the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph
7, Article 2208 of the New Civil Code. Considering that petitioners were compelled to
engage the services of the Public Attorney’s Office to protect their rights and interests,
the attorney’s fees equivalent to 10% of the monetary award to which they are entitled
should be deposited to the National Treasury in accordance with Republic Act No.
9406.
Same; Same; Liability of Corporate Officers; In labor cases, corporate directors
and officers are solidarily liable with the corporation for the termination of employment
of employees only if such is done with malice or in bad faith.—As to the liability of
respondent Paul Vincent Ng as President and Chief Executive Officer of Neat, Inc., for
the illegal dismissal of petitioner Sy and the dismissal of Alix without due process, it has
been held that a corporation, being a juridical entity, may act only through its directors,
officers and employees, and that obligations incurred by these officers, acting as such
corporate agents, are not theirs but the direct accountability of the corporation they
represent. Solidary liability may at times be incurred, but only under exceptional
circumstances. In labor cases, corporate directors and officers are solidarily liable with
the corporation for the termination of employment of employees only if such is done
with malice or in bad faith. There being no proof that he was guilty of malice and bad
faith in Sy’s illegal dismissal, respondent Ng, as its President and CEO, cannot be held
solidarily liable with Neat, Inc.
PETITION for review on certiorari of a decision of the Court of Appeals.
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari of the Court of Appeals Decision1 dated
March 27, 2014, which reversed and set aside the Decision2 dated December 27, 2012
issued by the National Labor Relations Commission in NLRC LAC Case No. 08-
002451-12 and, accordingly, entered a new judgment finding that petitioners Ricardo
Sy and Henry Alix were terminated from employment for just causes, but ordered
respondents Neat, Inc., Banana Peel and Paul Vincent Ng to pay petitioners
₱30,000.00 each as nominal damages for the denial of their right to procedural due
process.
Respondent Neat, Inc. is a corporation existing by virtue of Philippine laws, and the
owner/distributor of rubber slippers known as "Banana Peel," while respondent Paul
Vincent Ng is its President and Chief Executive Officer. Petitioner Ricardo Sy was hired
on May 5, 2008 as company driver and was dismissed from work on August 4, 2011.
Petitioner Henry Alix was hired on November 30, 2005 as a delivery helper/utility and
was dismissed from work on May 31, 2011.
Recounting how he was dismissed from work, petitioner Sy alleged that on July 28,
2011, his co-worker Jeffrey Enconado blocked his way to the daily time record of the
company, which annoyed him as he was going to be late for work. When he learned
from the delivery schedule that Enconado would be his partner, Sy requested the
company assistant operations manager, Cesca Abuan, to assign him
another ''pahinante" or delivery utility, but the request was not acted upon. In order to
avoid confrontation with Enconado, Sy assigned to himself a new delivery utility. Abuan
reported the incident to the human resources department, for which Sy was required to
submit a written explanation. The next day, Sy was informed that he would be
suspended due to insubordination for three (3) days starting July 29, 2011 until August
2, 2011. Meantime, Sy was supposedly issued 3 other memoranda, covering violations
of company rules and regulations on wearing of improper office uniform, which were
committed in 2009. On August 3, 2011, Sy reported for work but was not allowed to log
in/time in. Human Resource (HR)Manager Anabel Tetan informed Sy that his services
will be terminated effective August 4, 2011 due to poor performance. Sy disagreed,
claiming that for the 3 years that he worked with the company, he received bonuses for
excellent performance.
For his part, petitioner Alix averred that sometime in February 2011, he was ordered to
assist a newly-hired clerk. After helping his co-worker, Alix sat down for a while.
Respondent Ng saw Alix, and thought that he was doing nothing during working hours.
On May 19, 2011, Alix was assigned to clean at the company warehouse. After working,
Ng saw Alix resting again. Alix was suspended for 3 days, and was thereafter
dismissed. A month after his dismissal, Alix went back to the company to ask for his
salary. Before being allowed to receive his salary, Alix was asked to sign a document.
In dire need of money, he was left with no option but to sign the document, which he
later discovered to be a waiver.
On August 10, 2011, petitioners Sy and Alix filed a Complaint3 for illegal dismissal and 5th warning (issued on Wasting time during working hours
payment of money claims. May 19, 2011) -
Respondents Neat, Inc. and Ng countered that during the period that petitioners were 6th warning (issued on Tardiness for the month of January, February,
employed, they were both problem employees. They alleged May 20, 2011) - March, April 2011
that Sy was the recipient of numerous disciplinary actions, namely: 7th warning (issued on Poor performance evaluation from operation[s]
Date of Memorandum Nature of Offense Penalty Imposed May 30, 2011) - head.
Respondents contended that because of petitioners' continued and repeated
30 January 2009 Improper uniform (wearing Warning
commission of various offenses and violations of company rules and regulations, they
earrings)
were terminated for a just cause. They added that petitioners were paid wages,
29 May 20009 Improper uniform Warning overtime pay, 13th month pay and other benefits in accordance with the Labor Code
01June2009 Improper uniform 3-day suspension and other laws, as shown in the payslips attached as Annexes "1" to "354" of their
position paper.
28 July 2011 Insubordination 3-day suspension As the parties failed to reach a settlement, the Labor Arbiter6 (LA) directed them to
05 August 2011 Poor Performance Evaluation Warning submit their respective position papers. Both parties submitted their Position Papers on
October 13, 2011, their Replies on November 15, 2011, and their Rejoinders on
In a notice dated August 4, 2011, respondent Neat, Inc., through HR Manager Tetan, November 28, 2011.
terminated Sy's services effective on even date, thus:
On July 25, 2012, the LA rendered a Decision, the dispositive portion of which states:
We regret to inform you that Neat, Inc. has terminated your employment effective
August 04, 2011. Your dismissal is due to the offenses made; according to our record WHEREFORE, premises considered, the complaint for illegal dismissal is
you have been issued 5 written warnings that are subjected to your dismissal. dismissed for lack of merit. But, the respondents are hereby ordered to pay
complainants Alix and Sy the amount of ₱15,000.00 each, or a total of ₱30,000.00
Neat, Inc. would like to take this opportunity to thank you for your service that you for both, as financial assistance. ·
rendered in our company. Please report to the head office HR Department for your
clearance and return any company properties that are in your possession.4 All other claims of complainants are dismissed for lack of merit.
Alix was also a recipient of many disciplinary actions: SO ORDERED.7
Date of Memorandum Nature of Offense Penalty Imposed The LA found that petitioners Sy and Alix were dismissed due to serious misconduct,
gross neglect of duty and insubordination. It held that these offenses were duly proven
21July2007 Negligence in work Warning by the respondents, as can be gleaned from the case records, and noted that Alix even
29 May 2009 Improper Uniform Warning signed a Waiver and Release on June 10, 2011, releasing respondents from any
01 February 2011 Wasting Time Warning liabilities whatsoever in connection with his employment. The LA ruled that the evidence
01 February 2011 Poor Performance Evaluation Warning on record shows that respondents gave petitioners opportunity to defend themselves,
and have thus complied with the procedural due process required by the Labor Code.
19 May 2011 Wasting Time 3-day suspension
Nonetheless, for compassionate reasons and considering that petitioners have
20 May 2011 Frequent Tardiness Warning rendered services which somehow contributed to the growth of the company, the LA
30 May2011 Poor Performance Warning deemed it proper to award them financial assistance in the amount of ₱l5,000.00 each.
In a Memorandum5 dated May 31, 2011, Neat, Inc., through HR Manager Tetan, Dissatisfied with the Labor Arbiter decision, petitioners filed an appeal before the
terminated Alix's services on even date, thus: National Labor Relations Commission (NLRC).
We regret to inform you that your employment with Neat, Inc. has terminated effective On December 27, 2012, the NLRC rendered a Decision, the dispositive portion of which
as of May 31, 2011. Your dismissal is due to the offense made; according to our reads:
record you have been issued 6 written warnings that are subjected to your dismissal. WHEREFORE, complainants' APPEAL is hereby GRANTED. Respondents are
Reason for your termination are as follows: hereby ordered to pay complainants full backwages and separation pay equivalent
1st warning (issued on negligence in performing his work to one (1) month salary for every year of service. The award of financial assistance
July 21, 2008) - is deleted.
2nd warning (issued on Not wearing complete uniform The attached computation shall form part of the decision.
May 29, 2009) - SO ORDERED.8
3rd warning (issued on Wasting time during working hours The NLRC reversed the LA's Decision, finding that the records failed to support the
February 1, 2011) - grounds of serious misconduct, gross neglect of duty and insubordination cited by
4th warning (issued on Poor performance evaluation from Production respondents as bases in terminating petitioners' employment. It held that records show
February 1, 2011) - Supervisor, Noel Jabagat that petitioners were suspended after a single incident and thereafter, they were served
notices of termination which denied them their rights to defend themselves. The NLRC
noted that Sy was suspended after changing his ''pahinante" despite not being allowed
to do so, and was then issued 3 memos for infractions committed in 2009, while Alix
was suspended after being caught resting and not working, and was thereafter served
with a notice of termination.
The NLRC stressed that past infractions cannot be collectively taken as justification for
dismissal of an employee from service. The NLRC pointed out that in the matrix
.submitted by respondents, corresponding penalties for past infractions were already
imposed, and petitioners were further suspended for their latest infractions; thus, there
is no valid justification on the part of respondents to consider the past infractions in
terminating petitioners. Anent the waiver and release signed by Alix, the NLRC rejected
it, stating that his wage is his only source of income to sustain his family, and that any
person in a similar situation would sign any document to get the withheld salary. Since
petitioners were illegally dismissed, the NLRC held that they are entitled to payment of
backwages and payment of separation pay in lieu of reinstatement on account of the
strained relations between the parties, but the award of financial assistance is
considered moot and academic.
Respondents filed a motion for reconsideration, which the NLRC denied for lack of merit
in the Resolution dated June 20, 2013.
Aggrieved by the NLRC Decision, respondents filed before the Court of Appeals (CA) a
petition for certiorari under Rule 65 of the Rules of Court.
On March 2 7, 2014, the CA rendered the assailed Decision, finding that the NLRC
gravely abused its discretion in reversing the decision of the LA, and disposing as
follows:
WHEREFORE, in view of the foregoing premises, the petition is hereby partially
GRANTED. The Resolution dated June 20, 2013 and the Decision dated December
27, 2012 issued by the National Labor Relations Commission (Fourth Division) in
NLRC LAC Case No. 08-002451-12 are REVERSED AND SET ASIDE.
Accordingly, a NEW JUDGMENT is entered finding that private respondents were
terminated from employment for just cause. However, the petitioners are ordered to
pay private respondents ₱30,000.00 each as nominal damages for the farmer's denial
of their right to procedural due process.
SO ORDERED.9
The CA held that the dismissal of petitioners was justified under Article 282 (a) and (b)
of the Labor Code, as amended, on the grounds of serious misconduct or willful
disobedience of the lawful order of the employer or representative in connection with
the employee's work, and gross and habitual neglect of the employee's duties.
With respect to petitioner Sy, the CA stressed that his repeated violations of the
company's rules and regulation, as reflected in the several warnings found on record,
amounted to just cause for termination, and that his act of insubordination alone when
he changed his "pahinante" in direct contravention of the orders of his superior,
amounts to serious misconduct or willful disobedience. As for petitioner Alix, the CA
said that aside from his frequent tardiness, the six (6) warnings issued to him provide
a just cause for his dismissal. While there are just causes for the termination of
petitioners' employment, the CA ruled that failure to comply with the procedural
requirements of notice [specifying the ground/s for termination, and giving to the
employee reasonable opportunity to be heard] and hearing, constitutes denial of due
process, which entitles them to an award of nominal damages in the amount of
₱30,000.00 each. As regards the Waiver and Release signed by Alix, the CA said that
it cannot bar him from demanding what is legally due, because an employee does not
stand on equal footing with the employer, and in desperate situations may even be
willing to bargain away his rights. Finally, there being no basis for the grant of
backwages and separation pay, the CA no longer discussed the monetary award
computed by the NLRC.
Unconvinced with the CA Decision, petitioners filed this petition for review
on certiorari under Rule 45, arguing in the affirmative of the following issues:
I.
WHETHER THE PETITIONERS' ALLEGED PAST INFRACTIONS IS
DETERMINATIVE IN IMPOSING THE PENALITY FOR THEIR SUPPOSED RECENT
INFRACTION.
II.
WHETHER RESPONDENTS ILLEGALLY DISMISSED PETITIONERS.
III.
WHETHER PETITIONERS ARE ENTITLED TO MORAL AND EXEMPLARY
DAMAGES AND ATTORNEY'S FEES.10
The petition is partly impressed with merit.
In resolving the issue of whether or not respondents were able to establish that
petitioners were validly terminated on the ground of serious misconduct and willful
disobedience of the lawful orders of the employer, and gross and habitual neglect of
duties, the Court is called upon to re-examine the facts and evidence on record. Given
that the Court is not a trier of facts, and the scope of its authority under Rule 45 of the
Rules of Court is confined only to errors of law and does not extend to questions of fact,
which are for labor tribunals to resolve,11 one of the recognized exceptions to the rule
is when the factual findings and conclusion of the labor tribunals are contradictory or
inconsistent with those of the CA.12 Departure from the settled rule is warranted and a
review of the records and the evidence presented by the opposing parties shall be
made in order to determine which findings should be preferred as more conformable
with evidentiary facts.
After a circumspect study of the records, the Court rules that the CA erred in finding
that respondents were able to prove that the totality of Sy's violations of company rules
and regulations constitute a just cause for termination of employment.
It is well settled that in illegal dismissal cases, "the burden of proof is upon the employer
to show that the employee's termination from service is for a j.ust and valid cause. The
employer's case succeeds or fails on the strength of its evidence and not on the
weakness of that adduced by the employee, in keeping with the principle that the scales
of justice should be tilted in favor of the latter in case of doubt in the evidence presented
by them. Often described as more than a mere scintilla, the quantum of proof is
substantial evidence which is understood as such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other equally
reasonable minds might conceivably opine otherwise. Failure of the employer to
discharge the foregoing onus would mean that the dismissal is not justified and
therefore illegal."13
In determining the sanction imposable on an employee, the employer may consider the
former's past misconduct and previous infractions. Also known as the principle of
totality of infractions, the Court explained such concept in Merin v. National Labor
Relations Commission, et al.,14 thus:
The totality of infractions or the number of violations committed during the period of
employment shall be considered in determining the penalty to be imposed upon an
erring employee. The offenses committed by petitioner should not be taken singly and
separately. Fitness for continued employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct and ability separate and independent of
each other. While it may be true that petitioner was penalized for his previous
infractions, this does not and should not mean that his employment record would be
wiped clean of his infractions. After all, the record of an employee is a relevant
consideration in determining the penalty that should be meted out since an employee's
past misconduct and present behavior must be taken together in determining the proper
imposable penalty. Despite the sanctions imposed upon petitioner, he continued to
commit misconduct and exhibit undesirable behavior on board. Indeed, the employer
cannot be compelled to retain a misbehaving employee, or one who is guilty of acts
inimical to its interests. It has the right to dismiss such an employee if only as a measure
of self-protection.
A closer look into the entirety of the violations imputed against Sy shows that
respondents failed to prove with substantial evidence that the totality of infractions
committed by him constitutes as a just cause for his dismissal under the Labor Code.
In fact, even by its own standards, respondents' dismissal of Sy fails to measure up to
Neat, Inc.'s Guide to the Administration of Code of Conduct,15 which states that the
"termination of employment of the employee by the Company is usually imposed when
the employee's record over the period of time shows clearly that the amount of warnings
and other disciplinary actions has not made the employee understand the error of his
ways and/or for the first offense which is such a serious error that cannot be ignored."16
There is no dispute that Sy was properly warned twice and aptly sanctioned with a 3-
day suspension for violation of the company dress code which he committed on
January 29, 2009, May 28, 2009 and May 30, 2009.17 There is also no question that Sy
is guilty of insubordination for not following the instruction of Operation Assistant Cesca
Abuan on July 28, 2011 as to the swapping of his assigned delivery utility, and for
insisting on his preferred delivery utility. Because of such incident, a
Memorandum18 dated July 29, 2011 was issued to Sy (1) suspending him for 3 days
starting on even date until August 2, 2011; (2) requiring him to report to the head office
on August 3, 2011 to discuss the grounds and degree of violation, and (3) warning him
that further violation of policies will result in disciplinary action up to and including
immediate termination of employment. Unfortunately, Sy was terminated the following
day, August 4, 2011, due to the 5 written warnings previously issued to him - 3 of which
were due to wearing of improper uniform in 2009, 1 for insubordination on July 28,
2011, and the last for supposed poor performance evaluation on August 3, 2011.
Based on a Memorandum19 dated August 5, 2011, HR Manager Tetan met with Sy on
August 3, 2011 to discuss his work performance, particularly his attitude problem. On
said date, Tetan discussed Sy's performance evaluation by his Operation Manager,
Ricky Jamlid, who said that on several instances Sy was not following instruction,
despite being given verbal warning. Tetan also pointed out that such concern has
already been raised by the previous Operations Manager, Marianne De Leon, and
aside from not following instruction, complaints were also received that Sy keeps on
arguing and did not show respect to his superior. Tetan added that based on Sy's
written explanation with regard to his performance evaluation, he did not take the
criticism positively and blamed someone else for his mistake. Tetan stated that Sy just
realized and acknowledged his mistake after having a closed door meeting together
with his operation manager last August 3, 2011, and promised to take the necessary
steps to improve his performance. In closing, Tetan informed Sy that the meeting was
held to give appropriate action for the complaints of his operations manager on his poor
performance.
Contrary to respondents' contention, however, the past 3 infractions in 2009 for wearing
of improper uniform can no longer be taken against Sy, because he was already warned
and penalized for them, and he has, in fact, reformed his errors in that regard. Notably,
in the Performance Appraisal dated August 3, 2011 for the criteria of "Personal
Appearance - personal impression of an individual makes on others. (Consider
cleanliness, grooming, neatness and appropriateness of dress on the
job,"20 Operations Manager Jamlid gave Sy a grade of 80 points for "Good - Competent
and dependable level of performance. Meets standards at the job",21 and commented
that Sy report[s] to work in complete uniform. Where an employee had already suffered
the corresponding penalties for his infraction, to consider the same offenses as
justification for his dismissal would be penalizing the employee twice for the same
offense.22
Significantly, the infractions of Sy for wearing of improper uniform are not related to his
latest infractions of insubordination and purported poor performance evaluation.
Previous offenses may be used as valid justification for dismissal only if they are related
to the subsequent offense upon which the basis of termination is decreed,23 or if they
have a bearing on the proximate offense warranting dismissal.24
Neither can respondents fault Sy's sole act of insubordination as amounting to serious
misconduct, willful disregard of the lawful orders of the employer, or gross and habitual
negligence.
Misconduct is defined as 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 in judgment."25 In order for serious misconduct to justify
dismissal, these requisites must be present: (a) it must be serious; (b) it must relate to
the performance of the employee's duties, showing that the employee has become unfit
to continue working for the employer, and (c) it must have been performed with wrongful
intent.26 On the other hand, to be considered as a just cause for terminating an
employee's services, "insubordination" requires that the orders, regulations or
instructions of the employer or representative must be (a) reasonable and lawful; (b)
sufficiently known to the employee; (c) in connection with the duties which the employee
has been engaged to discharge; and (d) the employee's assailed conduct must have
been willful or intentional, the willfulness being characterized by a wrongful and
perverse attitude.27
Sy's insubordination of changing his delivery utility without permission from the
operations manager is no doubt a misconduct, but not a serious and willful one as to
cost him his livelihood. Concededly, Sy's act of unilaterally assigning to himself another
delivery utility in lieu of the one designated to him, reflects his attitude problem and
disregard of a lawful order of a representative of the employer. Be that as it may, such
willful disobedience cannot be deemed to depict a wrongful attitude, because it was
prompted by his desire to carry out his duty without distractions. It is not farfetched that
Sy's annoyance with the delivery utility assigned to him, who annoyed him earlier in the
day by blocking his way to the daily time record, could have prevented him from
performing his task, or worst, could have resulted in fisticuffs with the said co-worker.
As a just cause for termination of employment, on the other hand, the neglect of duties
must not only be gross but habitual as well. Gross negligence means an absence of
that diligence that a reasonably prudent man would use in his own affairs, and connotes
want of care in the performance of one's duties.28 Habitual neglect implies repeated
failure to perform one's duties for a period of time, depending upon the
circumstances.29 A single or isolated act of negligence does not constitute a just cause
for the dismissal of the employee. Suffice it to state that by no stretch of reasoning can
the 5 infractions - wearing of improper uniform, insubordination and poor performance
evaluation - imputed against Sy be collectively deemed as gross and habitual
negligence.
A careful perusal of the Memorandum dated August 5, 2011 regarding Sy's poor
performance evaluation further reveals that such unfavorable conclusion is not
consistent with the Performance Appraisal dated August 3, 2011. Instead of being given
an "Unsatisfactory" rating, Operations Manager Jamlid merely stated that Sy "needed
improvement" in terms of "People Interaction," "Cooperativeness" and "Judgment"
mainly because he is very emotional when dealing with his superior and co-workers. In
citing poor performance as a ground for termination, respondents cannot also ignore
the other factors where Sy was rated "Good," namely: "Quality," "Productivity," "Job
Knowledge," "Availability," "Independence," "Personal Appearance," and "Attendance."
Granted that the employer enjoys a wide latitude of discretion in the promulgation of
policies, rules and regulations on work-related activities of the employees, those
directives must always be fair and reasonable, and the corresponding penalties, when
prescribed, must be commensurate to the offense involved and to the degree of the
infraction.30 To be lawful, the cause for termination must be a serious and grave
malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping
with the spirit of our Constitution and laws which lean over backwards in favor of the
working class, and mandate that every doubt must be resolved in their favor.31 After all,
an employment is not merely a contractual relationship, since in the life of most workers
it may spell the difference of whether or not a family will have food on their table, roof
over their heads and education for their children.
With respect to Sy's attitude problem, the Court finds no evidence to substantiate such
allegation. Aside from the allegations in the August 5, 2012 memorandum to the effect
that the Operations Managers have complained about his attitude problem, nothing in
the records show that Sy was previously warned for not following instructions, and for
arguing with or disrespecting his superiors. Bare allegations, unsubstantiated by
evidence, are not equivalent to proof under our Rules. To be sure, unsubstantiated
suspicions, accusations and conclusions of employers do not provide for legal
justification for dismissing an employee. Respondents failed to present reports or sworn
statements of the Operations Managers, narrating the instances when he displayed
attitude problems at work, as well as his previous Performance Appraisal indicating
unsatisfactory evaluation of his work.
On the other hand, in light of the totality of petitioner Alix's infractions against the
company rules and regulations, the Court cannot extend the same magnanimity it has
accorded to Sy. Respondents have proven with substantial evidence said infractions
through 7 written warnings, viz. :
1. July 21, 2007 - Negligence of work due to lost or receipt of Handy Man32
2. May 29, 2009 - Wearing of improper uniform33
3. February 1, 2011 - Wasting time during working hours34
4. February 1, 2011 - Poor Performance Evaluation35
5. May 19, 2011 - Wasting time during working hours36
6. May 20, 2011 - Tardiness for the months of January, February, March and April of
201137
7. May 30, 2011 - Poor Performance evaluation from operations head38
It does not escape the attention of the Court that the third (3rd) to sixth (6th) warnings
were all received by petitioner Alix only on May 20, 2011, and that the seventh (7th)
warning was received on the very day of his termination, May 31, 2011, prompting him
to make separate handwritten explanations on the same date of receipt of said
warnings. Respondents' perfunctory observance of Alix's right to notice and hearing,
however, does not detract from the veracity of the violations of company rules and
regulation imputed against him.
Habitual tardiness alone, as aptly noted by the CA, is a just cause for termination of
Alix's employment. Punctuality is a reasonable standard imposed on every employee,
whether in government or private sector, whereas habitual tardiness is a serious
offense that may very well constitute gross or habitual neglect of duty, a just cause to
dismiss a regular employee.39 Habitual tardiness manifests lack of initiative, diligence
and discipline that are inimical to the employer's general productivity and business
interest.40 Respondents have substantiated habitual tardiness by presenting Alix's daily
time card, showing that in 2011 alone prior to his dismissal, he was late fourteen (14)
times in January, seven (7) times in February, eight (8) times in March, and five (5)
times in April.41
Having in mind the work productivity-related infractions he incurred in a span of 5
months from January to May 2011 - consisting of habitual tardiness, 2 warnings for
wasting time during working hours and 2 more warnings for poor performance
evaluation - the Court must agree with the CA that respondents have a just cause to
terminate Alix's employment. As held in Piedad v. Lanao del Norte Electric Coop, Inc
.,42 "fitness for continued employment cannot be compartmentalized into tight little
cubicles of aspects of character, conduct and ability separate and independent of each
other. A series of irregularities when put together may constitute serious misconduct,
which under Article 283 [now Art. 297] of the Labor Code, is a just cause for dismissal."
More than the fact that an employee's right to security of tenure does not give him a
vested right to his position,43Alix would also do well to bear in mind the prerogative of
the employer to prescribe reasonable rules and regulations necessary or proper for the
conduct of its business and to provide certain disciplinary measures in order to
implement said rules and to assure that the same would be complied with.44 Although
the State affords the constitutional blanket of affording protection to labor, the rule is
settled that it must also protect the right of employers to exercise what are clearly
management prerogatives, so long as the exercise is without abuse of discretion.45
Having discussed the just causes for termination of employment, the Court may now
dwell on the procedural requirements of due process as laid down in King of Kings
Transport, Inc. v. Mamac:46
To clarify, the following should be considered in terminating the services of employees:
(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 conferencewherein 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.
Respondents failed to afford petitioners the first written notice, containing the specific
causes or grounds for termination against them, as well as the requisite hearing or
conference wherein they should have been given reasonable opportunity to be heard
and defend themselves. Save for the notices of termination dated August 4, 2011 and
May 31, 201147 issued to petitioners Sy and Alix, respectively, all the other notices
given to petitioners consist of warnings, suspension, and orders to submit written
explanations for specific violations of company rules and regulations. It bears stressing
that prior to his termination on August 4, 2011, the last warning given to Sy on August
3, 2011 was on account of poor performance evaluation only, without mentioning his
past infractions of wearing improper uniform and insubordination. As for Alix, the last
warning given to him was received on the very day of his termination, May 31, 2011,
for poor performance evaluation sans any reference to his past infractions of
negligence in performing work, wearing of improper uniform, wasting time during-
working hours, tardiness, and poor performance evaluation. While they were given
several warnings for separate offenses committed, petitioners were not given
opportunity to be heard why they should not be terminated on account of the totality of
their respective infractions against company rules and regulations. It bears emphasis
that notice to the employee should embody the particular acts or omissions constituting
the grounds for which the dismissal is sought, and that an employee may be dismissed
only if the grounds cited in the pre-dismissal notice were the ones cited for the
termination of employment.48
An employee who is dismissed without just cause and due process is entitled to either
reinstatement if viable or separation pay if reinstatement is no longer viable, and
payment of full backwages and other benefits. Specifically prayed for by petitioner
Sy,49 the NLRC correctly awarded separation pay, which is proper when reinstatement
is no longer viable due to the antagonism and strained relationship between the
employer and the employee as a consequence of the litigation, not to mention the
considerable length of time that the latter has been out of the former's employ.
Nevertheless, the Court limits the award of separation pay, backwages and other
benefits, because Sy is not entirely faultless.50 Since the latest infraction of Sy relating
to attitude problem at work does not constitute serious misconduct, willful disobedience
to lawful orders of the employer or gross and habitual negligence in the performance of
duties, as to merit the harsh penalty of dismissal, the Court holds that Sy is entitled to
the award of (1) separation pay equivalent to 1 month salary for every year of service
computed from May 5, 2008 when he was hired up to December 27, 2012 when the
NLRC ruled that he was illegally dismissed; and (2) backwages and other benefits,
computed from the time of his termination on August 4, 2012 until December 27, 2012.
Anent the Waiver and Release dated June 10, 2011 where Alix stated that he has no
claim of whatever kind and nature against Neat, Inc., the Court sustains the CA that
such quitclaim does not bar an employee from demanding what is legally due him,
especially when it is made under circumstances where the voluntariness of such
agreement is questionable. While quitclaims are, at times, considered as valid and
binding compromise agreements,51 the rule is settled that the burden rests on the
employer to prove that the quitclaim constitutes a credible and reasonable settlement
of what an employee is entitled to recover, and that the one accomplishing it has done
so voluntarily and with a full understanding of its import.52 Respondents failed to
discharge such burden. Recognizing that the subordinate position of individual rank-
and-file employees vis-a-vis management renders the former vulnerable to the latter's
blandishments, importunings and even intimidation that may well result in the
improvident if reluctant signing over of benefits to which the employees are entitled, the
Court has consistently held that quitclaims of workers' benefits will not bar them from
asserting these benefits on the ground that public policy prohibits such waivers.53
The Court likewise upholds the award of nominal damages awarded in favor of
petitioners Sy and Alix.1âwphi1 Nominal damages are "adjudicated in order that a right
of the plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him."54Jurisprudence holds that such indemnity to be imposed should be stiffer to
discourage the abhorrent practice of "dismiss now, pay later."55 The sanction should be
in the nature of indemnification or penalty and should depend on the facts of each case,
taking into special consideration the gravity of the due process violation of the
employer."56Considering that petitioners were deprived of their right to notice and
hearing prior to their termination, the Court affirms the CA's award of ₱30,000.00 as
nominal damages.
To be entitled to an award of moral damages, it is not enough for an employee to prove
that he was dismissed without just cause or due process. Moral damages are
recoverable only where the dismissal or suspension of the employee was attended by
bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy.57 "The person claiming moral
damages must prove the existence of bad faith by clear and convincing evidence for
the law always presumes good faith."58 Awarded in accordance with the sound
discretion of the court, on the other hand, exemplary damages are imposed as a
corrective measure when the guilty party has acted in a wanton, fraudulent, reckless
and oppressive manner. In this case, apart from petitioners' bare allegation of
entitlement thereto, no proof was presented to justify an award of moral and exemplary
damages. At any rate, all the damages awarded to petitioners shall incur interest at the
rate of six percent (6%) per annum from finality of this Decision until fully paid, in line
with Nacar v. Gallery Frames, lnc.59
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 monetary award by way of
attorney's fees is justifiable under Article III of the Labor Code, Section 8, Rule VIII,
Book III of its Implementing Rules; and paragraph 7, Article 2208 of the New Civil Code.
Considering that petitioners were compelled to engage the services of the Public
Attorney's Office to protect their rights and interests, the attorney's fees equivalent to
10% of the monetary award to which they are entitled should be deposited to the
National Treasury in accordance with Republic Act No. 9406.60
Finally, as to the liability of respondent Paul Vincent Ng as President and Chief
Executive Officer of Neat, Inc., for the illegal dismissal of petitioner Sy and the dismissal
of Alix without due process, it has been held that a corporation, being a juridical entity,
may act only through its directors, officers and employees, and that obligations incurred
by these officers, acting as such corporate agents, are not theirs but the direct
accountability of the corporation they represent.61 Solidary liability may at times be
incurred, but only under exceptional circumstances.62In labor cases, corporate directors

and officers are solidarily liable with the corporation for the termination of employment
of employees only if such is done with malice or in bad faith.63 There being no proof
that he was guilty of malice and bad faith in Sy's illegal dismissal, respondent Ng, as
its President and CEO, cannot be held solidarily liable with Neat, Inc.
WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The
Dedsion of the Court of Appeals dated March 27, 2014 in CA-G.R. SP No. 131410
is AFFIRMED WITH MODIFICATION declaring that petitioner Ricardo Sy was
dismissed without just cause and due process. Accordingly, respondent Neat, Inc.
is ORDERED to PAY him:
(1) Separation pay equivalent to one (1) month salary for every year of service,
computed from May 5, 2008 when he was hired up to December 27, 2012 when the
National Labor Relations Commission ruled that he was illegally dismissed;
(2) Backwages and other benefits, computed from August 4, 2011 when he was illegally
dismissed up to December 27, 2012; and
(3) Ten percent (10%) attorney's fees based on the total amount of the awards, which
shall be deposited to the National Treasury in accordance with Republic Act No. 9406.
Legal interest is further imposed on the monetary awards at the rate of six percent
(6%) per annum from finality of this Decision until fully paid. The records of this case
is REMANDED to the Labor Arbiter, who is ORDERED to make a re-computation of
the total monetary benefits awarded.
SO ORDERED.
Footnotes
*On leave.
1 Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Michael P.
Elbinias and Victoria Isabel A. Paredes, concurring; rollo, pp. 488-504.
2 Penned by Commissfoner Numeriano D. Villena with Commissioner Herminio V. Sue
lo concurring, and Commissioner Angelo Ang Palaña dissenting; id. at 65-73.
3 Rollo, pp. 85-86.
4 Id. at 354; Marked as Annex "377."
5 Id. at 379.
6 Penned by Labor Arbiter Arden S. Anni.
7 Rollo, p. 83.
8 Id. at 73.
9 Id. at 503. (Emphasis is the original)
10 Id. at 19.
11 Raza v. Daikoku Electronic Phils., Inc., et al., 765 Phil. 61, 75 (2015).
12 Philippine Long Distance Telephone Company, et al., v. Estrañero, 745 Phil. 543,
550 (2014).
13 Blue Sky Trading Co., Inc. v. Blas, et al., 683 Phil. 689, 706 (2007), citing Functional,
Inc. v. Granfil, 676 Phil. 279, 287 (2011).
14 590 Phil. 596, 602-603 (2008).
15 Id. at 309-312.
16 Id. at 310.
17 Rollo, pp. 313, 315, and 317; Marked as Annexes "356," "358" and "360,"
respectively.
18 Id. at 318, Marked as Annex "361."
19 Id. at 321, Marked as Annex "363."
20 Id. at323.
21 Id.
22 Salas v. Aboitiz One, Inc. 578 Phil. 915, 929 (2008).
23
Id.
24 McDonalds (Katipunan Branch), etc. v. Alba, 595 Phil. 44, 54 (2008).
25 Imasen Philippine Manufacturing Corporation v. Alcon, et al., 746 Phil. 172, 181
(20174).
26 Id.
27 Nissan Motors Phils., Inc. v. Angelo, 673 Phil. 150, 160 (2011).
28 Nissan Motors Philippines, Inc. v. Angelo, supra note 27, at 162.
29 AFI International Trading Corp. (Zamboanga Buying Station) v. Lorenzo, 561 Phil.
451, 457 (2007).
30 VH Manufacturing Inc. v. NLRC, 379 Phil. 444, 451, 457 (2000).
31 The Hongkong and Shanghai Banking Corporation v. NLRC, 328 Phil. 1156, 1166
(1996).
39 Carvajal v. Luzon Development Bank, et al., 692 Phil. 273, 285 (2012).
40 Realda v. New Age Graphics, Inc., et al., 686 Phil. 1110, 1121 (2012).
41 Rollo, pp. 347-350.
42 237 Phil. 481, 488 (1987).
43 Exocet Security and Allied Services Corp, et al. v. Serrano, 744 Phil. 403, 420 (2014).
44 Arena, Jr. v. Skycable PCC-Baguio, 625 Phil. 561, 576-577 (2010).
45 Pantranco North Express, Inc. v. NLRC, 373 Phil. 520, 529 (1999).
46 553 Phil. 108, 115-116 (2007). (Emphasis in the original)
47 Rollo, pp. 354 and 379; Marked as Annexes "377" and "379."
48 Glaxo Wellcome Phils. Inc., v. Nagkakaisang Empleyado ng Wellcome-DFA, 493
Phil. 410, 427 (2005).
49 Rollo, p. 25, Petition for Review on Certiorari; p. 85, Complaint; p. 418, Notice of
Appeal with Manifestation and Memorandum of Appeal.
50 Salas v. Aboitiz One, Inc., 578 Phil. 915, 930 (2008); PLDT v. National Labor
Relations Commission, 362 Phil. 352, 361 (1999).
51 Samaniego v. National Labor Relations Commission, 275 Phil. 126, 135 (1991).
52 Plastimer Industrial Corp. v. Gopo, et al., 658 Phil. 627, 635 (2011).
53 Carmelcraft Corporation v. NLRC, 264 Phil. 763, 769 (1990).
54 An Act to Ordain and Institute the Civil Code of the Philippines, Republic Act No. 386
(1950), Art. 2221.
55 Concepcion v. Minex Import Corporation, et al., 679 Phil. 491, 507 (2012),
citing Agabon v. NLRC, 485 Phil. 248, 287 (2004).
56 Id.
57 Montinola v. Philippine Airlines, 742 Phil. 487, 505 (2014).
58 Id.
59 716 Phil. 267, 282-283 (2013).
60 An Act Reorganizing and Strengthening the Public Attorney's Office (PAO), Republic
Act No. 9406, §6 (2007):
"The costs of the suit, attorney's fees and contingent fees imposed upon the
adversary of the PAO clients after a successful litigation shall be deposited in
the National Treasury as trust fund and shall be disbursed for special
allowances of authorized officials and lawyers of the PAO."
61 Alba v. Yupangco, 636 Phil. 514, 519 (2010), quoting MAM Realty Devt. Corp. v.
NLRC, 314 Phil. 838, 844 (1995).
62 Id.
63 David v. National Federation of Labor Unions, et al., 604 Phil. 31, 41 (2009).
FIRST DIVISION the vehicle was stalled when its battery broke down.5 Unsatisfied with Hermosa’s
G.R. No. 155279 October 11, 2005 explanation, the company dismissed him on January 9, 1999.
MICRO SALES OPERATION NETWORK and WILLY BENDOL, Petitioners, vs. De Castro was suspected of firing a gun during the blessing of the company’s
THE NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), LARRY warehouse on December 10, 1998. The next day, he was placed under preventive
HERMOSA, LEONARDO G. DE CASTRO and RAMIL BASINILLO, Respondents. suspension and temporarily banned from entering the company’s premises. He was
also asked to explain within 24 hours why he should not be terminated. He explained
Civil Procedure; Pleadings and Practice; Forum Shopping; The requirement
that he had no knowledge of the said incident.6 As his suspension was indefinite and
regarding verification of a pleading is not jurisdictional—such requirement is simply a
he received no recall order from petitioners, he no longer reported for work.
condition affecting the form of the pleading, non-compliance with which does not
necessarily render the pleading fatally defective.—The requirement regarding Basinillo alleged that sometime in September 1998, the company’s security guard
verification of a pleading is not jurisdictional. Such requirement is simply a condition scolded him for not wearing the employee ID. On October 17, 1998, he was dismissed.
affecting the form of the pleading, non-compliance with which does not necessarily Thus, on February 10, 1999, Hermosa, de Castro, and Basinillo collectively filed a
render the pleading fatally defective. The Court of Appeals relied on Loquias v. Office Complaint7 for illegal dismissal before the Regional Arbitration Branch No. IV, docketed
of the Ombudsman, which held that a certification on non-forum shopping signed by as NLRC Case No. RAB-IV-2-10765-99-C.
only one of two or more petitioners is defective, unless he was duly authorized by his In his Decision8 dated February 21, 2000, Labor Arbiter Antonio R. Macam found that
co-petitioner. However, the said ruling applies when the co-parties are being sued in private respondents were illegally dismissed. The fallo of the decision reads:
their individual capacities. Note that the petitioners in Loquias are the mayor, vice-
WHEREFORE, premises considered, judgment is hereby rendered declaring the
mayor, and three members of the municipal board of San Miguel, Zamboanga del Sur.
dismissal of all complainants herein illegal and ordering respondents to reinstate them
The said co-parties were charged with violation of Republic Act No. 3019 in their various
to their former or equivalent positions and to pay them full backwages, plus ten percent
capacities.
(10%) attorney’s fees, computed as follows:
Labor Law; Labor Relations; Dismissals; Disobedience; For willful disobedience
LARRY HERMOSA
to be a valid cause for dismissal, the following twin elements must concur: (1) the
From January 9, 1999 to Feb. 21, 2000
employee’s assailed conduct must have been willful, that is, characterized by a
= 1 yr. 1 mo. & 12 days or 13.36 mos.
wrongful and perverse attitude; and (2) the order violated must have been reasonable,
₱220.00 x 26 x 13.36 = ₱76,419.20
lawful, made known to the employee and must pertain to the duties which he had been
₱76,419.20/12 = 6,368.27
engaged to discharge.—For willful disobedience to be a valid cause for dismissal, the
₱220.00 x 5 = 1,100.00 ₱83,887.47
following twin elements must concur: (1) the employee’s assailed conduct must have
----------------
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
LEONARDO DE CASTRO
violated must have been reasonable, lawful, made known to the employee and must
From Dec. 12, 1998 to Feb. 21, 2000
pertain to the duties which he had been engaged to discharge.
= 1 yr. 2 mos. & 9 days or 14.30 mos.
PETITION for review on certiorari of the resolutions of the Court of Appeals. ₱7,280.00 x 14.30 = ₱104,104.00
DECISION ₱104,104.00/12 = 8,675.33
QUISUMBING, J.: ₱7,280.00/26 x 5 = 1,400.00 ₱114,179.33
----------------
For review on certiorari are the Resolutions1 dated November 28, 2001 and
RAMIL BASINILLO
September 3, 2002, respectively, of the Court of Appeals, in CA-G.R. SP No. 67755.
From Oct. 17, 1998 to Feb. 21, 2000
The said Resolutions dismissed petitioners’ special civil action for certiorari against the
= 1 yr., 4 mos. & 4 days or 16.13 mos.
National Labor Relations Commission (NLRC) Resolution,2 which affirmed the Labor
₱200.00 x 26 x 16.13 = ₱83,876.00
Arbiter’s Decision3 finding petitioners herein liable for illegal dismissal.
₱83,876.00/12 = 6,989.67
The antecedent facts are as follows: ₱200.00 x 5 = 1,000.00 ₱ 91,865.67
Petitioner Micro Sales Operation Network ("company" for brevity) is a domestic ---------------- ---------------
corporation engaged in local transportation of goods by land. Petitioner Willy4 Bendol Total Full Backwages = ₱289,932.47
was the company’s operations manager at the time of the controversy. Plus 10% Attorney’s Fees = 28,993.25
Private respondents Larry Hermosa, Leonardo de Castro, and Ramil Basinillo were ---------------
employed by the company as driver, warehouseman, and helper, respectively. GRAND TOTAL = ₱318,925.72
Hermosa was hired on November 17, 1997, de Castro on February 1, 1996, and SO ORDERED.9
Basinillo on February 4, 1998. On appeal, the NLRC affirmed the Labor Arbiter’s decision. It also denied petitioners’
Hermosa failed to promptly surrender the ignition key of the company’s vehicle after motion for reconsideration.
discharging his duties. Such failure was allegedly contrary to the company’s standard Undaunted, petitioners filed with the Court of Appeals a special civil action for certiorari.
operating procedure. Thus, he was asked to explain within 24 hours why disciplinary However, the appellate court dismissed the petition for being defective in form. It found
action should not be meted on him. He explained that he kept the ignition key because
that only the company signed the verification and certification on non-forum shopping.
Petitioner Willy Bendol did not sign the same.
Petitioners’ motion for reconsideration was denied. The appellate court reasoned that
even if petitioner Willy Bendol was not impleaded as a real party in interest, records
showed that he was impleaded as a co-respondent before the Labor Arbiter. Thus, the
appellate court ruled, his failure to sign the verification and certification on non-forum
shopping is a ground for the dismissal of the petition.
Hence, the instant petition anchored on the following grounds:
A. THE HONORABLE COURT OF APPEALS PLAINLY ERRED AND ACTED
CONTRARY TO EXISTING LAW AND JURISPRUDENCE IN DISMISSING THE
PETITION FOR CERTIORARI ON A MERE TECHNICALITY CONSIDERING THAT
WILLY BENDOL WAS JOINED MERELY AS A NOMINAL PARTY TO THE PETITION.
B. MORE IMPORTANTLY, JUSTICE WOULD BE BEST SERVED IF THE PETITION
WAS GIVEN DUE COURSE CONSIDERING THAT THE PUBLIC RESPONDENT
COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DECISION OF
LABOR ARBITER MACAM CONSIDERING THAT:
1. THERE IS NO FACTUAL OR EVIDENTIARY BASIS TO SUPPORT THE FINDING
OF ILLEGAL DISMISSAL. DUE PROCESS AND FAIR PLAY DICTATE THAT THE
PUBLIC RESPONDENT COMMISSION POINT OUT THE PARTICULAR FACTUAL
FINDING OF THE LABOR ARBITER WHICH JUSTIFIED THE FINDING OF ILLEGAL
DISMISSAL.
2. THE PUBLIC RESPONDENT COMMISSION IGNORED THE FACT THAT THE
LABOR ARBITER’S FINDING OF ILLEGAL DISMISSAL RESTS ON PURE
SPECULATION, CONJECTURE AND SURMISES.
3. PRIVATE RESPONDENT BASINILLO HIMSELF DENIED THAT HE WAS
DISMISSED BY PETITIONERS.
4. THE ACTS OF HERMOSA CONSTITUTE WILLFUL DISOBEDIENCE JUSTIFYING
HIS DISMISSAL.
5. THE HONORABLE COMMISSION COMPLETELY IGNORED THE FACT THAT
PRIVATE RESPONDENTS’ SINGULAR CAUSE OF ACTION IS THAT FOR ILLEGAL
DISMISSAL. THUS, THE LABOR ARBITER’S AWARD OF SEPARATION PAY AND
ATTORNEY’S FEES WAS UTTERLY WITHOUT BASIS.10
Petitioners insist Willy Bendol was impleaded merely because he was the immediate
supervisor of private respondents. They argue that the real party in interest in this case
is the company. In any case, petitioners point out that Bendol was no longer connected
with the company when the special civil action for certiorari was filed.
Private respondents, however, maintain that formal requirements must be strictly
complied with. Thus, they posit, the Court of Appeals correctly dismissed the petition
for failure of one of the petitioners to sign the verification and certification on non-forum
shopping.
Further, petitioners contend that Hermosa’s omission constituted willful disobedience
justifying his dismissal. With respect to de Castro, petitioners claim that he was merely
suspended. As for Basinillo, petitioners point to an unsworn statement,11 where he
denied filing any complaint for illegal dismissal against the company.
Private respondents, however, counter that petitioners failed to prove willful
disobedience as a just cause for Hermosa’s termination. Moreover, they posit that de
Castro’s preventive suspension constituted constructive dismissal because it was for
an indefinite period and no recall order was issued by the company. Private
respondents also argue that Basinillo’s purported unsworn statement has no probative
value.
Lastly, petitioners contend the Labor Arbiter erroneously awarded separation pay and
attorney’s fees not prayed for. On this point, private respondents quickly point out that,
contrary to petitioners’ claim, separation pay was not awarded at all. They also claim
that the award of attorney’s fees was in accordance with law.
We resolve to give due course to the petition.
The requirement regarding verification of a pleading is not jurisdictional. Such
requirement is simply a condition affecting the form of the pleading, non-compliance
with which does not necessarily render the pleading fatally defective.12
The Court of Appeals relied on Loquias v. Office of the Ombudsman,13 which held that
a certification on non-forum shopping signed by only one of two or more petitioners is
defective, unless he was duly authorized by his co-petitioner. However, the said ruling
applies when the co-parties are being sued in their individual capacities. Note that the
petitioners in Loquias14 are the mayor, vice-mayor, and three members of the municipal
board of San Miguel, Zamboanga del Sur. The said co-parties were charged with
violation of Republic Act No. 301915 in their various capacities.
In the instant case, the petitioners are the company and its operations manager, Willy
Bendol. The latter was impleaded simply because he was a co-respondent in the illegal
dismissal complaint. He has no interest in this case separate and distinct from the
company, which was the direct employer of private respondents. Any award of
reinstatement, backwages, and attorney’s fees in favor of private respondents will be
enforced against the company as the real party in interest in an illegal dismissal case.
Petitioner Bendol is clearly a mere nominal party in the case. His failure to sign the
verification and certification on non-forum shopping is not a ground for the dismissal of
the petition. The appellate court erred in dismissing outright petitioners’ special civil
action for certiorari solely on that ground.
The logical course of action now is to direct the Court of Appeals to give due course to
the special civil action for certiorari. However, to obviate further delay in the resolution
of this case, we shall bring the present controversy to rest.
After weighing the parties’ arguments and carefully reviewing the records of this case,
we agree with the findings and conclusions of the Labor Arbiter as affirmed by the
NLRC.
Hermosa was unjustly dismissed. For willful disobedience to be a valid cause for
dismissal, the following twin elements must concur: (1) the employee's assailed
conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he had been engaged to
discharge.16
Both elements are lacking. We find no hint of perverse attitude in Hermosa’s written
explanation.17 On the contrary, it appears that the alleged company procedure for
leaving the ignition key of the company’s vehicles within office premises was not even
made known to him.18 Petitioners failed to prove Hermosa willfully disobeyed the said
company procedure. At any rate, dismissal was too harsh a penalty for the omission
imputed to him.
De Castro was likewise unlawfully terminated. Contrary to petitioner’s claim, records
show that de Castro was not merely suspended. He was dismissed for alleged
abandonment of work.19 To constitute abandonment as a just cause for dismissal, there
 16
must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested Bascon v. Court of Appeals, G.R. No. 144899, 5 February 2004, 422 SCRA 122,
by some overt act, to sever the employer-employee relationship.20 131.
Petitioners failed to prove that de Castro abandoned his job. A clear intention to end 17 Records, p. 80.

the employer-employee relationship is missing. He did not report for work simply 18 Id. at 81.
because he was indefinitely suspended. Moreover, the fact that de Castro filed a case 19 Id. at 254.
for illegal dismissal against petitioners belies abandonment.21 20 Globe Telecom, Inc. v. Florendo-Flores, G.R. No. 150092, 27 September 2002, 390
In the case of Basinillo, petitioners rely solely on his purported unsworn statement
SCRA 201, 212.
alleging he was never dismissed. However, not having been sworn to, the said 21 Hyatt Taxi Services, Inc. v. Catinoy, G.R. No. 143204, 26 June 2001, 359 SCRA 686,
document has no probative value. While the Court is liberal in the conduct of
proceedings for labor cases, proof of authenticity as a condition for the admission of 695.
22 Asuncion v. National Labor Relations Commission, G.R. No. 129329, 31 July 2001,
documents is nonetheless required.22
Petitioners failed to present evidence of Basinillo’s continuous contribution to SSS or 362 SCRA 56, 63-64.
23 Records, pp. 1-2.
uninterrupted pay slips to prove he remained under the company’s employ. Hence, the
complaint23 for illegal dismissal filed by Basinillo stands and speaks for itself. Once a 24 Sy v. Court of Appeals, G.R. No. 142293, 27 February 2003, 398 SCRA 301, 310.
case for illegal dismissal is filed, the burden is on the employer to prove that the 25 Civil Code, Art. 2208. In the absence of stipulation, attorney’s fees and expenses of
termination was for valid cause.24 Petitioners failed to discharge this burden litigation, other than judicial costs, cannot be recovered, except:
persuasively.
...
Finally, petitioners lament that the Labor Arbiter erred in granting respondents
separation pay and attorney’s fees. We note, however, that separation pay was not (7) In actions for the recovery of wages of … laborers and skilled workers;
awarded at all; thus, any discussion on this matter would be futile. On the other hand, ...
the award of attorneys’ fees, though not prayed for, is sanctioned by law25 and must be
upheld.
WHEREFORE, the assailed Resolutions dated November 28, 2001 and September 3,
2002, respectively, of the Court of Appeals, in CA-G.R. SP No. 67755, are SET ASIDE.
The NLRC Resolution affirming the Labor Arbiter’s Decision, finding petitioners liable
for illegal dismissal, is AFFIRMED. Costs against petitioners.
SO ORDERED.
Footnotes
1 Rollo, pp. 44-45 and 47-48. Penned by Associate Justice Conrado M. Vasquez, Jr.,

with Associate Justices Andres B. Reyes, Jr., and Amelita G. Tolentino concurring.
2 Id. at 132-139.

3 Id. at 99-106.

4 Sometimes "Wilfredo" in some parts of the records.

5 Records, p. 80.

6 Id. at 253.

7 Id. at 1-2.

8 Rollo, pp. 99-106.

9 Id. at 105-106.

10 Id. at 22-23.

11 Id. at 63.

12 Shipside Incorporated v. Court of Appeals, G.R. No. 143377, 20 February 2001, 352

SCRA 334, 345-346.

13 G.R. No. 139396, 15 August 2000, 338 SCRA 62, 68.

14 Ibid.

15 Otherwise known as the "Anti-Graft and Corrupt Practices Act."

FIRST DIVISION
G.R. No. 165268 November 8, 2005
Challenge socks corporation, Petitioner, vs. COURT OF APPEALS (Former First
Division), NATIONAL LABOR RELATIONS COMMISSION (First Division), HON.
ANTONIO R. MACAM, in his capacity as Labor Arbiter and ELVIE
BUGUAT, Respondents.
Labor Law; Dismissals; Habitual Neglect; Gross and habitual neglect by an
employee of her duties includes gross inefficiency, negligence and carelessness.—One
of the just causes for terminating an employment under Article 282 of the Labor Code
is gross and habitual neglect by the employee of her duties. This cause includes gross
inefficiency, negligence and carelessness. Such just causes is derived from the right of
the employer to select and engage his employees. In the instant case, there is no doubt
that Buguat was habitually absent, tardy and neglectful of her duties.
Same; Same; Same; Gross Misconduct; Absenteeism; Habitual neglect implies
repeated failure to perform one’s duties for a period of time—repeated and habitual
infractions, committed despite several warnings, constitute gross misconduct; Habitual
absenteeism without leave constitutes gross negligence and is sufficient to justify
termination of an employee.—Habitual neglect implies repeated failure to perform one’s
duties for a period of time. Buguat’s repeated acts of absences without leave and her
frequent tardiness reflect her indifferent attitude to and lack of motivation in her work.
Her repeated and habitual infractions, committed despite several warnings, constitute
gross misconduct. Habitual absenteeism without leave constitute gross negligence and
is sufficient to justify termination of an employee.
Same; Same; Same; The totality of infractions or the number of violations
committed during the period of employment shall be considered in determining the
penalty to be imposed on the erring employee—fitness for continued employment
cannot be compartmentalized into tight little cubicles of aspects, character, conduct and
ability separate and independent of each other.—We find the penalty of dismissal from
the service reasonable and appropriate to Buguat’s infraction. Her repeated negligence
is not tolerable; neither should it merit the penalty of suspension only. The record of an
employee is a relevant consideration in determining the penalty that should be meted
out. Buguat committed several infractions in the past and despite the warnings and
suspension, she continued to display a neglectful attitude towards her work. An
employee’s past misconduct and present behavior must be taken together in
determining the proper imposable penalty. The totality of infractions or the number of
violations committed during the period of employment shall be considered in
determining the penalty to be imposed upon an erring employee. The offenses
committed by him should not be taken singly and separately but in their totality. Fitness
for continued employment cannot be compartmentalized into tight little cubicles of
aspects of character, conduct, and ability separate and independent of each other. It is
the totality, not the compartmentalization, of such company infractions that Buguat had
consistently committed which justified her dismissal.
Same; Same; Management Prerogatives; Management has the prerogative to
discipline its employees and to impose appropriate penalties on erring workers
pursuant to company rules and regulations.—Terminating an employment is one of
petitioner’s prerogatives. As the employer, petitioner has the right to regulate, according
to its discretion and best judgment, all aspects of employment, including work
assignment, working methods, processes to be followed, working regulations, transfer
of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of workers. Management has the prerogative to discipline its employees and to
impose appropriate penalties on erring workers pursuant to company rules and
regulations.
Same; Same; Same; The employer may not be compelled to continue to employ
such persons whose continuance in the service will patently be inimical to its interest.—
The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice and
hearing in the termination of employment. On the other hand, the law also recognizes
the right of the employer to expect from its workers not only good performance,
adequate work and diligence, but also good conduct and loyalty. The employer may
not be compelled to continue to employ such persons whose continuance in the service
will patently be inimical to his interests.
Same; Same; Same; Due Process; The violation of the employee’s right to
statutory due process by the employer warrants payment of indemnity in form of
nominal damages.—In Agabon v. National Labor Relations Commission, we upheld as
valid the dismissal for just cause although it did not comply with the requirements of
procedural due process. We ruled that while the procedural infirmity cannot be cured,
it should not invalidate the dismissal. However, the employer should be held liable for
non-compliance with the procedural requirements of due process. The violation of
Buguat’s right to statutory due process by the petitioner warrants the payment of
indemnity in the form of nominal damages in the amount of P30,000, which is
appropriate under the circumstances.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court assails the May
11, 2004 Decision1 of the Court of Appeals in CA-G.R. SP No. 75761, and its
September 13, 2004 Resolution2 denying the motion for reconsideration.
The antecedent facts show that respondent Elvie Buguat was hired on January 17,
1997 by petitioner Challenge Socks Corporation as knitting operator.3 In the course of
her employment, she incurred absences and tardiness without prior approval and had
been neglectful of her duties.4 On May 25, 1998, she failed to check the socks she was
working on causing excess use of yarn and damage to the socks’ design. She was
suspended for five days and warned that a repetition of the same act would mean
dismissal from the service.5 On February 2, 1999, she committed the same infraction
and was given a warning.6 Despite the previous warnings, Buguat continued to be
habitually absent and inattentive to her task. On March 1, 1999, she again failed to
properly count the bundle of socks assigned to her. Thus, on March 2, 1999, petitioner
terminated her services on grounds of habitual absenteeism without prior leave,
tardiness and neglect of work.7
Thereafter, Buguat filed a complaint for illegal dismissal.8
On February 11, 2000, the labor arbiter9 rendered a Decision10 holding that Buguat was
illegally dismissed. The dispositive portion of the decision reads:
WHEREFORE, following the pronouncement in the case of ALU-TUCP v. NLRC (G.R.
No. 120450, February 10, 1999), judgment is hereby rendered ordering respondents to
reinstate complainants without loss of seniority rights and benefits, but without
backwages.
SO ORDERED.11
The labor arbiter found Buguat’s dismissal too harsh and disproportionate to the
infraction committed. It was observed that counting volumes of socks is tedious and the
worker is prone to commit mistakes especially if the counting is done on a regular basis.
The labor arbiter ruled that mistake in counting bundles of socks is tolerable and should
be punished by suspension only.12
The National Labor Relations Commission (NLRC) adopted the findings of the labor
arbiter. It denied13 petitioner’s appeal and motion for reconsideration.
Petitioner filed a petition for certiorari before the Court of Appeals which rendered a
Decision on May 11, 2004 reversing and setting aside that of the labor arbiter and the
NLRC, the dispositive portion of which provides:
WHEREFORE, the Decision dated October 30, 2001 and the Order of December 19,
2002 of the National Labor Relations Commission are hereby REVERSED and SET
ASIDE and a new one entered herein.
CHALLENGE SOCKS CORPORATION, having terminated private respondent with just
and valid cause but without observing the proper procedure in terminating private
respondent’s services, is ordered to pay ELVIE BUGUAT full backwages from the time
her employment was terminated on March 2, 1999 up to the time the herein decision
becomes final. For this purpose, this case is REMANDED to the Regional Labor Arbiter
for the computation of the backwages due private respondent.
SO ORDERED.14
The appellate court found that there was just cause for terminating the services of
Buguat considering the series of infractions she committed.15 However, it was noted
that petitioner failed to comply with the twin-notice requirement in terminating an
employee hence, the dismissal was considered ineffectual.16 Petitioner was ordered to
pay Buguat her back wages computed from the time of her dismissal up to the finality
of the decision.17
Petitioner sought reconsideration of the appellate court’s decision but the same was
denied on September 13, 2004.
Hence, this petition.
The issue for resolution is the validity of Buguat’s termination.
One of the just causes for terminating an employment under Article 282 of the Labor
Code is gross and habitual neglect by the employee of her duties. This cause includes
gross inefficiency, negligence and carelessness. Such just causes is derived from the
right of the employer to select and engage his employees.18
In the instant case, there is no doubt that Buguat was habitually absent, tardy and
neglectful of her duties. We agree with the Court of Appeals that:
Elvie’s commission of three (3) violations of the company’s rules and regulations,
including her unauthorized absences and tardiness, all committed in the span of two
years, shows that she did not only fail to observe due diligence in performing her job,
but she has little regard for the consequences of her acts and inactions. She repeatedly
committed error in counting the socks to be given to the Looping Section. As a knitting
operator, Elvie was required to check the socks she was working on and to count the
bundles of socks she had to pack to be forwarded to the Looping Section. Elvie did not
question the authenticity of the May 25, 1998 suspension letter and the February 2,
1999 memorandum….
While a first violation could be considered excusable, repeated commission of the same
offense could be considered willful disobedience. Elvie, despite the suspension and
warning, continued to disregard the company rules and regulations….19
Habitual neglect implies repeated failure to perform one’s duties for a period of time.
Buguat’s repeated acts of absences without leave and her frequent tardiness reflect
her indifferent attitude to and lack of motivation in her work. Her repeated and habitual
infractions, committed despite several warnings, constitute gross misconduct. Habitual
absenteeism without leave constitute gross negligence and is sufficient to justify
termination of an employee.20
We find the penalty of dismissal from the service reasonable and appropriate to
Buguat’s infraction. Her repeated negligence is not tolerable; neither should it merit the
penalty of suspension only. The record of an employee is a relevant consideration in
determining the penalty that should be meted out.21 Buguat committed several
infractions in the past and despite the warnings and suspension, she continued to
display a neglectful attitude towards her work. An employee’s past misconduct and
present behavior must be taken together in determining the proper imposable
penalty.22 The totality of infractions or the number of violations committed during the
period of employment shall be considered in determining the penalty to be imposed
upon an erring employee. The offenses committed by him should not be taken singly
and separately but in their totality. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character, conduct, and ability
separate and independent of each other.23 It is the totality, not the
compartmentalization, of such company infractions that Buguat had consistently
committed which justified her dismissal.24
Besides, terminating an employment is one of petitioner’s prerogatives. As the
employer, petitioner has the right to regulate, according to its discretion and best
judgment, all aspects of employment, including work assignment, working methods,
processes to be followed, working regulations, transfer of employees, work supervision,
lay-off of workers and the discipline, dismissal and recall of workers. Management has
the prerogative to discipline its employees and to impose appropriate penalties on
erring workers pursuant to company rules and regulations.25
This Court has upheld a company’s management prerogatives so long as they are
exercised in good faith for the advancement of the employer’s interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws
or under valid agreements.26
In the case at bar, petitioner exercised in good faith its management prerogative as
there is no dispute that Buguat had been habitually absent, tardy and neglectful of her
work, to the damage and prejudice of the company. Her dismissal was therefore
proper.
The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice and
hearing in the termination of employment. On the other hand, the law also recognizes
the right of the employer to expect from its workers not only good performance,
adequate work and diligence, but also good conduct and loyalty. The employer may
not be compelled to continue to employ such persons whose continuance in the service
will patently be inimical to his interests.27
The employer has the burden of proving that the dismissed worker has been served
two notices: (1) one to apprise him of the particular acts or omissions for which his
dismissal is sought, and (2) the other to inform him of his employer’s decision to dismiss
him.28
As found by the Court of Appeals, petitioner failed to comply with this requirement, thus:
A review of the records shows that private respondent was served a written termination
notice on the very day she was actually dismissed from the service. The case records
are bereft of any showing that Challenge Socks Corporation notified Elvie in advance
of the charge or charges against her. Likewise, she was not given an opportunity to
 27
refute the charges made against her, thus, depriving her of the right to defend herself. Agabon v. National Labor Relations Commission, G.R. No. 158693, November 17,
In other words, petitioner fell short in observing the two-notice rule required by law.29 2004, 442 SCRA 573, 606-607.
In Agabon v. National Labor Relations Commission,30 we upheld as valid the dismissal 28 Electro System Industries Corporation v. National Labor Relations Commission, et

for just cause although it did not comply with the requirements of procedural due al., G.R. No. 165282, October 5, 2005.
process. We ruled that while the procedural infirmity cannot be cured, it should not 29 Rollo, p. 37.
invalidate the dismissal. However, the employer should be held liable for non- 30 Supra.
compliance with the procedural requirements of due process.31 The violation of 31 Id. at 609.
Buguat’s right to statutory due process by the petitioner warrants the payment of
32 Id. at 617; Electro System Industries Corporation v. National Labor Relations
indemnity in the form of nominal damages in the amount of P30,000, which is
appropriate under the circumstances.32 Commission, et al., supra.
33 Electro System Industries Corporation v. National Labor Relations Commission, et
Conformably, the award of backwages in the present case should be deleted. Instead,
private respondent should be indemnified in the amount of P30,000.00 as nominal al., supra.
damages.33
WHEREFORE, the May 11, 2004 Decision and the September 13, 2004 Resolution of
the Court of Appeals in CA-G.R. SP No. 75761, which declared that petitioner
Challenge Socks Corporation did not comply with the statutory due process
requirements in terminating the employment of private respondent Elvie Buguat,
are AFFIRMED with the MODIFICATION that the award of backwages is DELETED.
Petitioner is ordered to pay private respondent Elvie Buguat nominal damages in the
amount of P30,000.00. No costs.
SO ORDERED.
Footnotes
* On official leave.
** Acting Chairman.
1 Rollo, pp. 29-41. Penned by Associate Justice Regalado E. Maambong and concurred

in by Associate Justices Cancio C. Garcia (now Associate Justice of the Supreme

Court) and Renato C. Dacudao.
9 Antonio R. Macam.

10 Rollo, pp. 45-50.

11 Id. at 50.

12 Id. at 49.

13 Id. at 51-57 & 58-60. Penned by Commissioner Vicente S. E. Veloso and concurred

in by Commissioners Roy V. Señeres and Alberto R. Quimpo.

14 Id. at 40.

15 Id. at 36.

16 Id. at 37.

17 Id. at 40.

18 Meralco v. NLRC, 331 Phil. 838, 847 [1996].

19 Rollo, pp. 36-37.

20 Valiao v. Court of Appeals, G.R. No. 146621, July 30, 2004, 435 SCRA 543, 551.

21 Cosmos Bottling Corp. v. NLRC, 346 Phil. 127, 134-135 [1997].

22 Id. at 135.

23 Valiao v. Court of Appeals, supra at 552-553.

24 Meralco v. NLRC, supra at 848.

25 Deles, Jr. v. NLRC, 384 Phil. 271, 281-282 [2000].

26 Meralco v. NLRC, supra at 847.

FIRST DIVISION
G.R. No. 146621 July 30, 2004
RENE P. VALIAO, petitioner, vs. HON. COURT OF APPEALS, NATIONAL LABOR
RELATIONS COMMISSION-FOURTH DIVISION (Cebu City), WEST NEGROS
COLLEGE, respondents.
Labor Law; Dismissal; Absenteeism; Serious Misconduct; Habitual Neglect of
Duties; Words and Phrases; Gross negligence connotes want of care in the
performance of one’s duties while habitual neglect implies repeated failure to perform
one’s duties for a period of time, depending upon the circumstances; Habitual
absenteeism without leave constitutes gross negligence and is sufficient to justify
termination of an employee.—For an employee’s dismissal to be valid, (a) the dismissal
must be for a valid cause, and (b) the employee must be afforded due process. Serious
misconduct and habitual neglect of duties are among the just causes for terminating an
employee under the Labor Code of the Philippines. 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. The Labor
Arbiter’s findings that petitioner’s habitual absenteeism and tardiness constitute gross
and habitual neglect of duties that justified his termination of employment are
sufficiently supported by evidence on record. Petitioner’s repeated acts of absences
without leave and his frequent tardiness reflect his indifferent attitude to and lack of
motivation in his work. More importantly, his repeated and habitual infractions,
committed despite several warnings, constitute gross misconduct unexpected from an
employee of petitioner’s stature. This Court has held that habitual absenteeism without
leave constitute gross negligence and is sufficient to justify termination of an employee.
Same; Same; Same; Same; Same; The totality of infractions or the number of
violations committed during the period of employment shall be considered in
determining the penalty to be imposed upon an erring employee; Fitness for continued
employment cannot be compartmentalized into tight little cubicles of aspects of
character, conduct, and ability separate and independent of each other.—Even without
the arrest incident, WNC had more than enough basis for terminating petitioner from
employment. It bears stressing that petitioner’s absences and tardiness were not
isolated incidents but manifested a pattern of habituality. In one case, we held that
where the records clearly show that the employee has not only been charged with the
offense of highgrading but also has been warned 21 times for absences without official
leave, these repeated acts of misconduct and willful breach of trust by an employee
justify his dismissal and forfeiture of his right to security of tenure. The totality of
infractions or the number of violations committed during the period of employment shall
be considered in determining the penalty to be imposed upon an erring employee. The
offenses committed by him should not be taken singly and separately but in their totality.
Fitness for continued employment cannot be compartmentalized into tight little cubicles
of aspects of character, conduct, and ability separate and independent of each other.
Same; Same; Management Prerogatives; As long as the company’s exercise of
its management rights and prerogatives is in good faith to advance its interest and not
for the purpose of defeating or circumventing the rights of employees under the laws or
valid agreements, such exercise will be upheld.—So irresponsible an employee like
petitioner does not deserve a place in the workplace, and it is within the management’s
prerogative of WNC to terminate his employment. Even as the law is solicitous of the
welfare of employees, it must also protect the rights of an employer to exercise what
are clearly management prerogatives. As long as the company’s exercise of those
rights and prerogatives is in good faith to advance its interest and not for the purpose
of defeating or circumventing the rights of employees under the laws or valid
agreements, such exercise will be upheld.
Same; Administrative Law; Appeals; Judicial review of labor cases does not go
as far to evaluate the sufficiency of evidence upon which the Labor Arbiter and the
National Labor Relations Commission based their determinations.—Petitioner claims
that he was not afforded due process so that his dismissal from employment should be
declared invalid. This contention deserves scant consideration. The Court of Appeals
held that “the records reveal that petitioner was afforded the twin requirements of notice
and hearing and was likewise given the opportunity to defend himself before the
investigating committee.” We find no reason to set aside these factual findings of the
Court of Appeals as they are supported by evidence on record. Besides, we may not
review the appellate court’s findings of fact in an appeal viacertiorari, since as a rule,
the Supreme Court’s review is limited to errors of law allegedly committed by the
appellate court. Judicial review of labor cases does not go as far as to evaluate the
sufficiency of evidence upon which the Labor Arbiter and National Labor Relations
Commission based their determinations.
Same; Same; Due Process; The essence of due process is simply an opportunity
to be heard, or as applied to administrative proceedings, an opportunity to explain one’s
side or an opportunity to seek a reconsideration of the action or ruling complained of.—
At any rate, petitioner was given enough opportunity to be heard, and his dismissal was
based on valid grounds. The essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an opportunity to explain one’s side
or an opportunity to seek a reconsideration of the action or ruling complained of. A
formal or trial-type hearing is not at all times and in all instances essential, as the due
process requirements are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand. What is frowned upon is the
absolute lack of notice and hearing.
Same; Preventive Suspension; Where there is no indication that an employee
posed a serious threat to the life and property of the employer or his co-employees, nor
was it shown that he was in such a position to unduly influence the outcome of the
investigation, his preventive suspension could not be justified, and the payment of his
salary differentials is in order.—The Labor Arbiter found that petitioner is entitled to
salary differentials for the period of his preventive suspension, as there is no sufficient
basis shown to justify his preventive suspension. During the pendency of the
investigation, the employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to life or
property of the employer or of his co-workers. But in this case, there is no indication
that petitioner posed a serious threat to the life and property of the employer or his co-
employees. Neither was it shown that he was in such a position to unduly influence the
outcome of the investigation. Hence, his preventive suspension could not be justified,
and the payment of his salary differentials is in order.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
DECISION
QUISUMBING, J.:
For review on certiorari is the Decision1 dated August 22, 2000 of the Court of Appeals
in CA-G.R. SP No. 55133, and its Resolution2 dated November 22, 2000 denying the
motion for reconsideration. The Court of Appeals dismissed the petition for certiorari
filed by petitioner and affirmed the Resolution dated July 7, 1999 of the National Labor
Relations Commission (NLRC)-Fourth Division in NLRC Case No. V-000134-98 (RAB
Case No. 06-01-10026-95), which sustained the Decision of Labor Arbiter Benjamin E.
Pelaez, directing private respondent West Negros College (WNC) to pay petitioner
Rene P. Valiao’s salary during the period of his preventive suspension and attorney’s
fees, while dismissing all other claims.
The facts, as culled from records, are as follows:
On February 5, 1990, petitioner Rene Valiao was appointed by private respondent West
Negros College (WNC) as Student Affairs Office (SAO) Director, with a starting salary
of P2,800 per month. On May 14, 1990, he was assigned as Acting Director, Alumni
Affairs Office.
On July 29, 1990, petitioner was transferred to a staff position and designated as
Records Chief at the Registrar’s Office but was again re-assigned as a typist on June
24, 1991.
The latest re-assignment was due to his tardiness and absences, as reflected in the
summary of tardiness and absences report, which showed him to have been absent or
late for work from a minimum of seven (7) to a maximum of seventy-five (75) minutes
for the period March to October 31, 1991, and to have reported late almost every day
for the period November to December 1991.
Copies of his tardiness/absences reports were furnished petitioner, along with
memoranda requiring him to explain but his explanations were either unacceptable or
unsatisfactory. Subsequent reports also showed that he did not change his habits
resulting in tardiness and absences. He was even caught one time manipulating the
bundy clock, thus necessitating another memorandum to him asking him to explain his
dishonest actuations in accomplishing the daily attendance logbook and in using the
bundy clock.
On December 10, 1991, petitioner received a suspension order without pay for fifteen
(15) days effective January 1, 1992, because of dishonesty in reporting his actual
attendance. After serving the suspension, the petitioner reported back to office on
January 16, 1992.
On June 15, 1992, another adverse report on tardiness and absences from the
Registrar was made against the petitioner prompting WNC to send him another
memorandum with an attached tardiness and absences report, calling his attention on
his tardiness and absences for the period February to April 1992.
On June 20, 1992, petitioner sent a letter of appeal and explained his side to the new
college president, Suzette Arbolario-Agustin, who gave petitioner another chance. The
petitioner was then appointed as Information Assistant effective immediately. However,
the petitioner did not immediately assume the post of Information Assistant prompting
the President of private respondent WNC to call his attention. When the petitioner finally
assumed his post, he was allowed a part-time teaching job in the same school to
augment his income.
Sometime in December 1992, WNC won a case against the officials of the union before
the NLRC. Petitioner was ordered to prepare a media blitz of this victory but the
petitioner did not comply with the order on the ground that such a press release would
only worsen the already aggravated situation and strained relations between WNC
management and the union officials.
When petitioner reported for work on the first day of January 1993, he was relieved
from his post and transferred to the College of Liberal Arts as Records Evaluator. Not
for long, the Dean of the Liberal Arts sent a letter to the Human Resources Manager
complaining about the petitioner’s poor performance and habitual absenteeism, as
shown in the daily absence reports.
On January 18, 1993, petitioner was again absent from work without permission or
notice to his immediate superior. It turned out that he went to Bacolod City and on
January 28, 1993, the petitioner was one of those arrested during a raid in the house
of one "Toto Ruiz," a suspected drug pusher and was brought to the Bacolod Police
Station along with four (4) other suspects. Upon further search and investigation by the
Narcotics Control Division, the petitioner was found possessing two (2) suspected
marijuana roaches (butts) which were placed inside his left shoe. The event was widely
publicized, focusing on petitioner’s position as an Economics teacher of WNC, and
considering further that one of his fellow suspects was a member of the Philippine
Army, who was caught with an unlicensed firearm, a tooter and other "shabu"
paraphernalia. The petitioner and other suspects were then charged with violation of
the Dangerous Drugs Act of 1972 (Republic Act No. 6425, as amended).
Petitioner was asked to explain within 24 hours why he should not be terminated as a
result of the raid and the charges against him for violation of Rep. Act No. 6425 as
amended. Petitioner allegedly was not able to answer immediately since he was in jail
and received said memorandum only on January 30, 1993, although his wife had earlier
received the memorandum on January 28, 1993.
On January 29, 1993, the petitioner was dismissed for failure to answer said
memorandum.
On February 1, 1993, the petitioner wrote to the President of WNC explaining his side
and asking for due process. WNC cancelled its Notice of Termination dated January
29, 1993, and granted the petitioner’s request. The petitioner was notified through a
memorandum about the grant of his request and that a hearing would be conducted.
He was then placed under preventive suspension and an investigation committee was
organized to conduct the probe. On March 6, 1993, a notice of hearing/investigation
was sent to the petitioner.
After the investigation attended by the petitioner and his counsel, with proceedings duly
recorded, the investigation committee recommended the dismissal of petitioner. A
notice of termination was then sent to petitioner informing him of his termination from
the service for serious misconduct and gross and habitual neglect of duty. The
petitioner received the notice on March 25, 1993, but did not file a grievance concerning
the notice of termination.
On January 19, 1995, petitioner filed a Complaint against WNC for illegal suspension,
illegal dismissal, backwages, salary differential for salary increases and other benefits
granted after his dismissal as well as for moral and exemplary damages and attorney’s
fees.
In its Answer, WNC alleged that petitioner was dismissed on charges of serious
misconduct, and gross and willful neglect of duty. WNC said his dismissal was effected
after due notice and prior hearing. It claimed also that since petitioner was terminated
for a valid cause after a due hearing, the latter’s claim for moral and exemplary
damages, and attorney’s fees had no basis in fact and in law.
After due proceedings, the Labor Arbiter rendered a decision, the decretal portion of
which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered DIRECTING
respondent West Negros College to pay complainant Rene P. Valiao – (a)
P3,300.00 as salary for the period of his preventive suspension, and (b) P330.00
as attorney’s fees, or the total amount of THREE THOUSAND SIX HUNDRED
THIRTY PESOS (P3,630.00).
Further, all other claims are DISMISSED for lack of merit.
 SO ORDERED.3
The Labor Arbiter found no justifiable reason to place the petitioner under preventive
suspension as there was no serious or imminent threat to the life or property of his
employer or co-workers.
However, the Labor Arbiter found the dismissal of the petitioner from WNC to be valid
due to absenteeism and tardiness and after he was accorded the procedural due
process aspect of the law as reflected in the records showing that the petitioner was
formally investigated and given the opportunity to refute the alleged findings by the
management of WNC. The Labor Arbiter held that frequent absenteeism and tardiness
of the petitioner constituted not only willful disobedience but also gross and habitual
neglect of duties, which are valid grounds for termination of employment. He stressed
that the petitioner’s frequent absences without proper leave of absence was not only
unfair to WNC and the petitioner’s co-employees but also set an undesirable example
to the employees under his supervision, considering that the petitioner was not a mere
rank-and-file employee but one who owed more than the usual fealty to the
organization.
On appeal to the NLRC, the latter affirmed the decision of the Labor Arbiter, sustained
the latter’s findings of facts, and made its own findings on the apprehension of the
petitioner for possession of prohibited drugs. The decretal portion of the decision reads
as follows:
WHEREFORE, premises considered, the appeal is DISMISSED and the decision
of the Executive Labor Arbiter is AFFIRMED in its entirety.
SO ORDERED.4
Petitioner then filed a Petition for Certiorari under Rule 65 before the Court of Appeals
but this was dismissed for lack of merit. The decretal portion of the decision reads as
follows:
WHEREFORE, the questioned Decision and Resolution dated December 11, 1998
and July 7, 1999, respectively, of public respondent National Labor Relations
Commission are hereby AFFIRMED.
SO ORDERED.5
The Court of Appeals held that the petitioner was validly dismissed for serious
misconduct and gross habitual neglect of duties, which was aggravated by his arrest
for violation of Rep. Act No. 6425, as amended [the January 28, 1993 incident] and that
he was afforded the twin requirements of notice and hearing and the opportunity to
defend himself by the investigating committee. The appellate court noted that WNC had
presented sufficient evidence to support petitioner’s termination from employment after
taking into consideration the totality of the infractions or the number of violations
committed by petitioner during the period of employment and stressed that it properly
exercised its management prerogative by observing due process. Finally, the Court of
Appeals ruled that the NLRC correctly denied the claim for damages and attorney’s
fees for lack of evidentiary support.
Petitioner duly filed a Motion of Reconsideration, which was denied by the Court of
Appeals.
Hence, this petition alleging that:
A. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN
HOLDING THAT THE DISMISSAL OF PETITIONER WAS VALID, DESPITE THE
FACT THAT THERE IS CLEAR AND BLATANT VIOLATION OF THE BASIC
CONSTITUTIONAL RIGHTS OF THE HEREIN PETITIONER BOTH
SUBSTANTIVE AND PROCEDURAL DUE PROCESS.
B. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS IN (SIC)
DISMISSING THE RELIEFS FOR MORAL AND EXEMPLARY DAMAGES AND
ATTORNEY’S FEES.6
In our view, the only relevant issue for our resolution is whether or not the petitioner
was validly dismissed from employment on the ground of serious misconduct and gross
habitual neglect of duties, including habitual tardiness and absenteeism.
Petitioner claims that his outright dismissal from employment was not valid and too
harsh and that he was not dismissed from employment because of tardiness or
absences but because he was among those apprehended in a raid. Also, he was not
accorded due process because although his wife received the show cause notice, he
did not have the proper mind to reply as he was in jail and was psychologically
disturbed.
Considering the submissions of the parties as well as the records before us, we find
the petition without merit. Petitioner’s dismissal from employment is valid and justified.
For an employee’s dismissal to be valid, (a) the dismissal must be for a valid cause and
(b) the employee must be afforded due process.7
Serious misconduct and habitual neglect of duties are among the just causes for
terminating an employee under the Labor Code of the Philippines. 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.8 The Labor Arbiter’s findings that petitioner’s habitual absenteeism and
tardiness constitute gross and habitual neglect of duties that justified his termination of
employment are sufficiently supported by evidence on record. Petitioner’s repeated
acts of absences without leave and his frequent tardiness reflect his indifferent attitude
to and lack of motivation in his work. More importantly, his repeated and habitual
infractions, committed despite several warnings, constitute gross misconduct
unexpected from an employee of petitioner’s stature. This Court has held that habitual
absenteeism without leave constitute gross negligence and is sufficient to justify
termination of an employee.9
However, petitioner claims that he was dismissed not for his tardiness or absences but
for his arrest as a suspected drug user. His claim, however, is merely speculative. We
find such contention devoid of basis. First, the decisions of the Labor Arbiter, the NLRC,
and the Court of Appeals are indubitable. They show that indeed petitioner had incurred
numerous and repeated absences without any leave. Moreover, he was not punctual
in reporting for work. These unexplained absences and tardiness were reflected on the
summary reports submitted by WNC before the labor arbiter, but petitioner failed to
controvert said reports. Second, contrary to petitioner’s assertion, the NLRC did not
base its conclusions on the fact of the arrest of petitioner for violation of Rep. Act No.
6425 but on the totality of the number of infractions incurred by the petitioner during the
period of his employment in different positions he occupied at WNC. Thus:
In the case of petitioner Valiao, his services were terminated by private respondent
after having been found guilty of serious misconduct and gross habitual neglect
of duty which was aggravated by the January 28, 1993 incident. In exercising such
management prerogative, due process was properly observed. Private respondent
presented sufficient evidence to support its act in terminating the services of
petitioner. Private respondent took into consideration the totality of the
infractions or the number of violations committed by petitioner during the
period of employment. Furthermore, it hardly needs reminding that, in view of
petitioner’s position and responsibilities, he must demonstrate a scrupulous regard
 for rules and policies befitting those who would be role models for their young
charges.10 (Emphasis and italics supplied)
Indeed, even without the arrest incident, WNC had more than enough basis for
terminating petitioner from employment. It bears stressing that petitioner’s absences
and tardiness were not isolated incidents but manifested a pattern of habituality. In one
case, we held that where the records clearly show that the employee has not only been
charged with the offense of highgrading but also has been warned 21 times for
absences without official leave, these repeated acts of misconduct and willful breach of
trust by an employee justify his dismissal and forfeiture of his right to security of
tenure.11 The totality of infractions or the number of violations committed during the
period of employment shall be considered in determining the penalty to be imposed
upon an erring employee. The offenses committed by him should not be taken singly
and separately but in their totality. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character, conduct, and ability
separate and independent of each other.12
Needless to say, so irresponsible an employee like petitioner does not deserve a place
in the workplace, and it is within the management’s prerogative of WNC to terminate
his employment. Even as the law is solicitous of the welfare of employees, it must also
protect the rights of an employer to exercise what are clearly management
prerogatives. As long as the company’s exercise of those rights and prerogative is in
good faith to advance its interest and not for the purpose of defeating or circumventing
the rights of employees under the laws or valid agreements, such exercise will be
upheld.13
Still, petitioner claims that he was not afforded due process so that his dismissal from
employment should be declared invalid. This contention deserves scant consideration.
The Court of Appeals held that "the records reveal that petitioner was afforded the twin
requirements of notice and hearing and was likewise given the opportunity to defend
himself before the investigating committee." We find no reason to set aside these
factual findings of the Court of Appeals as they are supported by evidence on record.
Besides, we may not review the appellate court’s findings of fact in an appeal
via certiorari,14 since as a rule, the Supreme Court’s review is limited to errors of law
allegedly committed by the appellate court.15 Judicial review of labor cases does not go
as far as to evaluate the sufficiency of evidence upon which the Labor Arbiter and
National Labor Relations Commission based their determinations.16
In this case, petitioner was asked to explain his several absences and tardiness on
many occasions. A notice to explain was sent to him regarding the arrest incident
wherein he was able to reply. An investigation committee was formed by WNC to
investigate the arrest incident and the absences and tardiness of petitioner. It must be
emphasized that proceedings of the committee were duly recorded, and petitioner
actively participated therein by answering the various questions interposed by the panel
members. Finally, a notice of his termination was sent to petitioner, although he claims
to have received it late as he was in jail. It is an undeniable fact, however, that his wife
had actually received the notice in his house earlier, even before petitioner’s termination
and this matter was later communicated to him.
At any rate, petitioner was given enough opportunity to be heard, and his dismissal was
based on valid grounds. The essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an opportunity to explain one’s side
or an opportunity to seek a reconsideration of the action or ruling complained of. A
formal or trial-type hearing is not at all times and in all instances essential, as the due
process requirements are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand. What is frowned upon is the
absolute lack of notice and hearing.17
Finally, the Labor Arbiter found that petitioner is entitled to salary differentials for the
period of his preventive suspension, as there is no sufficient basis shown to justify his
preventive suspension. During the pendency of the investigation, the employer may
place the worker concerned under preventive suspension if his continued employment
poses a serious and imminent threat to life or property of the employer or of his co-
workers.18 But in this case, there is no indication that petitioner posed a serious threat
to the life and property of the employer or his co-employees. Neither was it shown that
he was in such a position to unduly influence the outcome of the investigation. Hence,
his preventive suspension could not be justified, and the payment of his salary
differentials is in order.
However, the award of attorney’s fees to him cannot be sustained, in view of our
findings that petitioner was validly dismissed from employment. Said award lacks legal
basis and could not be granted properly in this case.
WHEREFORE, the assailed Decision dated August 22, 2000 and Resolution dated
November 22, 2000 of the Court of Appeals in CA-G.R. SP No. 55133 are AFFIRMED
with MODIFICATION in that the award of attorney’s fees is deleted. No pronouncement
as to costs. SO ORDERED.
Footnotes
1 Rollo, pp. 23-31. Penned by Associate Justice Remedios A. Salazar Fernando, with
Associate Justices Fermin A. Martin, Jr., and Salvador J. Valdez, Jr. concurring.
2 Id. at 45-46.
3 Id. at 26.
4 Id. at 64.
5 Id. at 31.
6 Id. at 14.
7 Sy v. Court of Appeals, G.R. No. 142293, 27 February 2003, 398 SCRA 301, 310.
8 JGB and Associates, Inc. v. NLRC, G.R. No. 109390, 7 March 1996, 254 SCRA 457,
463.
9 Club Filipino, Inc. v. Sebastian, G.R. No. 85490, 23 July 1992, 211 SCRA 717, 721.
10 Rollo, pp. 30-31.
11 Palagpag v. NLRC, G.R. No. 96646, 8 February 1993, 218 SCRA 510, 515.
12 National Service Corporation v. Leogardo, Jr., No. L-64296, 20 July 1984, 130 SCRA
502, 509.
13 Maya Farms Employees Organization v. NLRC, G.R. No. 106256, 28 December
1994, 239 SCRA 508, 515.
14 Arriola v. Mahilum, G.R. No. 123490, 9 August 2000, 337 SCRA 464, 469.
15 Industrial Insurance Company, Inc. v. Bondad, G.R. No. 136722, 12 April 2000, 330
SCRA 706, 713.
16 Damasco v. NLRC, G.R. Nos. 115755 & 116101, 4 December 2000, 346 SCRA 714,
722.
17 See Stayfast Philippines Corp. v. NLRC, G.R. No. 81480, 9 February 1993, 218
SCRA 596, 601.
18 Section 8, Rule XXIII, Book V, Rules and Regulations Implementing the Labor Code,
as amended by Dept. Order No. 9, Series of 1997.
THIRD DIVISION
G.R. No. 145800 January 22, 2003
CENTRAL PANGASINAN ELECTRIC COOPERATIVE, INC., petitioner, vs.
GERONIMA MACARAEG and MARIBETH DE VERA, respondents.
Labor Law; Voluntary Arbitration; The parties’ active participation in the voluntary
arbitration proceedings, and their failure to insist that the case be remanded to the
grievance machinery, shows a clear intention on their part to have the issue of illegal
dismissal directly resolved by the voluntary arbitrator.—At the outset, we hold that the
first issue raised in the petition pertaining to the alleged violation of the CBA grievance
procedure is moot and academic. The parties’ active participation in the voluntary
arbitration proceedings, and their failure to insist that the case be remanded to the
grievance machinery, shows a clear intention on their part to have the issue of
respondents’ illegal dismissal directly resolved by the voluntary arbitrator. We therefore
find it unnecessary to rule on the matter in light of their preference to bring the illegal
dismissal dispute to voluntary arbitration without passing through the grievance
machinery. Same; Dismissal; Requisites for Valid Dismissals.—This leads us to the
next issue of whether respondents were validly dismissed. To constitute a valid
dismissal from employment, two requisites must be met, namely: (1) it must be for a
just or authorized cause, and (2) the employee must be afforded due process.
Same; Same; Loss of Trust and Confidence; Proof beyond reasonable doubt of
the employees’ misconduct is not required, it being sufficient that there is some basis
for the same or that the employer has reasonable ground to believe that they are
responsible for the misconduct and their participation therein rendered them unworthy
of the trust and confidence demanded of their position.—We hold that there exists a
valid reason to dismiss both employees. Article 282(c) of the Labor Code allows an
employer to dismiss employees for willful breach of trust or loss of confidence. Proof
beyond reasonable doubt of their misconduct is not required, it being sufficient that
there is some basis for the same or that the employer has reasonable ground to believe
that they are responsible for the misconduct and their participation therein rendered
them unworthy of the trust and confidence demanded of their position.
Same; Same; Same; Tellers; Cashiers; The basic premise for dismissal on the
ground of loss of confidence is that the employees concerned hold positions of trust,
and the betrayal of this trust is the essence of the offense for which an employee is
penalized.—It is not material that they did not “misappropriate any amount of money,
nor incur any shortage relative to the funds in their possession.” The basic premise for
dismissal on the ground of loss of confidence is that the employees concerned hold
positions of trust. The betrayal of this trust is the essence of the offense for which an
employee is penalized. In the case at bar, the respondents held positions of utmost
trust and confidence. As teller and cashier, respectively, they are expected to possess
a high degree of fidelity. They are entrusted with a considerable amount of cash.
Respondent de Vera accepted payments from petitioner’s consumers while respondent
Macaraeg received remittances for deposit at petitioner’s bank. They did not live up to
their duties and obligations.
Same; Same; Due Process; Due process is simply an opportunity to be heard.—
Nor is there any doubt that petitioner observed procedural due process in dismissing
the respondents. In separate memoranda dated February 4, 1999 and signed by the
General Manager (de Guzman), the respondents were both appraised of the particular
acts or omissions constituting the charges against them. They gave their own
“answer/explanation” to the charges. They participated in the investigation conducted
at petitioner’s board room on February 13, 1999 at 11:30 a.m. They were represented
by counsel during the investigation. Finally, notices were sent to them on March 19,
1999, informing them of the basis of their termination. In fine, private respondents were
given due process before they were dismissed. Time and again, we have stressed that
due process is simply an opportunity to be heard.
Same; Same; The longer an employee stays in the service of the company, the
greater is his responsibility for knowledge and compliance with the norms of conduct
and the code of discipline in the company.—We are aware that the respondents
Macaraeg and de Vera have been employed with the petitioner for 22 and 19 years of
continuous service, respectively, and this is the first time that either of them has been
administratively charged. Nonetheless, it is our considered view that their dismissal is
justified considering the breach of trust they have committed. Well to emphasize, the
longer an employee stays in the service of the company, the greater is his responsibility
for knowledge and compliance with the norms of conduct and the code of discipline in
the company. Considering that they have mishandled the funds of the cooperative and
the danger they have posed to its members, their reinstatement is neither sound in
reason nor just in principle. It is irreconcilable with trust and confidence that has been
irretrievably lost.
PETITION for review on certiorari of a decision of the Court of Appeals.
PUNO, J.:
In this petition for review on certiorari, petitioner Central Pangasinan Electric
Cooperative, Inc. challenges the decision of the Court of Appeals in CA-G.R. SP No.
55128 affirming the decision of the voluntary arbitrator in NCMB-RBI-PM-VA-5-03-99
ordering the reinstatement of respondents to petitioner’s employ and payment of their
backwages.
Petitioner is an electric cooperative duly organized and existing under Philippine laws.
Respondent Geronima Macaraeg and Maribeth de Vera are employees of petitioner at
its office in Area V, Bayambang, Pangasinan. Respondent de Vera was employed as
teller whose primary duty was to accept payments from petitioner’s consumers in
Bayambang and remit her collections to the cashier, herein co-respondent Geronima
Macaraeg. Respondent Macaraeg’s duty was to deposit the daily collections of the
office to petitioner’s account at the Rural Bank of Central Pangasinan in Bayambang.
From January 1998 to January 1999, respondent de Vera accommodated and
encashed the crossed checks of her sister, Evelyn Joy Estrada. Evelyn issued two
hundred eleven (211) crossed checks amounting to P6,945,128.95 payable to
petitioner cooperative despite the absence of any transaction or any outstanding
obligation with petitioner. In turn, respondent de Vera, with the knowledge and consent
of respondent Macaraeg, paid the full value of these checks from the cash collections
of petitioner. At the end of the day, respondents credited the checks as part of their
collection and deposited the same together with their cash collection to the account of
petitioner at the Rural Bank of Central Pangasinan.
Sometime in January 1999, petitioner, through its Finance Department, noticed that
several checks payable to petitioner from the collections in the Area V office were
returned due to insufficiency of funds.
On January 19, 1999, Josefina Mandapat, Sandra Frias and Marites Radac, petitioner’s
Finance Manager, Chief Accountant and Legal Assistant, respectively, confronted
respondents with their discovery. Respondent de Vera admitted that the checks were
issued by her sister and that she encashed them from the money collected from
petitioner’s customers.
On January 21, 1999, Mrs. Josefina Mandapat submitted a memorandum to petitioner’s
General Manager, Salvador M. de Guzman, detailing their findings about the bounced
checks. On February 2, 1999, she submitted an addendum to her memorandum.
On February 4, 1999, petitioner, through de Guzman, issued a memorandum to
respondents placing them under preventive suspension and requiring them to explain
in writing within forty-eight (48) hours why they misappropriated cooperative funds. In
the same communication, a hearing was set on February 13, 1999 at 9:30 a.m. at the
Board Room of petitioner before Atty. Teodoro Fernandez.
In their respective Answers/Explanations, respondents denied having misappropriated
the funds of petitioner cooperative. They alleged that: (1) the checks that bounced were
redeposited with the Rural Bank of Central Pangasinan; (2) the amount representing
the face value of the checks had been used by petitioner as of December 15, 1998; (3)
there was never any shortage in the cooperative money or funds in their possession;
and (4) they never violated any policy of the cooperative and on the contrary, they have
been very religious in remitting the funds and money of petitioner.1
At the scheduled hearing on February 13, 1999, respondents, with assistance of
counsel, appeared before Atty. Teodoro Fernandez. Respondent de Vera testified and
admitted that she encashed the checks of Evelyn Joy Estrada because the latter is her
older sister and that she has a soft spot for her; that Mrs. Estrada owns a sash factory
and that she merely wanted to help her sister meet her business obligations; that
sometime in November 1998, Mrs. Marites Radoc, Chief Accountant of petitioner,
called her attention to one check which bounced thrice; that this check was eventually
replaced by her sister with cash; that despite the bouncing of some other checks, all
checks were eventually funded and paid to petitioner, hence, petitioner incurred no
losses in its collections; that she has worked for petitioner for nineteen (19) years and
this is the first time she has been charged administratively by petitioner.
Respondent Macaraeg admitted that she knew of the accommodations given by
respondent de Vera to her sister; that she allowed her subordinate to do it because
respondent de Vera is her kumare, and that she knew that Mrs. Estrada’s checks were
sufficiently funded. She worked for petitioner for twenty-two (22) years and has never
had an administrative charge.
Mrs. Josefina Mandapat, Finance Manager of petitioner, testified as petitioner’s
witness. She stated that she prepared a report on the findings of their accountant
regarding the encashment of Evelyn Joy Estrada’s checks, and that the encashment of
said checks is prohibited under an office memorandum.
On March 10, 1999, Atty. Fernandez submitted his findings to the General Manager of
petitioner. On March 19, 1999, on the basis of said findings and recommendation, the
General Manager issued to respondents separate notices of termination, effective April
9, 1999, for "serious misconduct, and breach of trust and confidence reposed on them
by management."2
Respondents, with the help of the President and representative of the Union, Central
Pangasinan Electric Cooperative (CENPELCO) Employees’ Association-Tupas Local
Chapter No. R01-0012, questioned their dismissal before the National Conciliation and
Mediation Board (NCMB). They claimed that their dismissal was without just cause and
in violation of the Collective Bargaining Agreement (CBA), which requires that the case
should first be brought before a grievance committee. Eventually, the parties agreed to
submit the case to a voluntary arbitrator for arbitration.
On August 12, 1999, the voluntary arbitrator rendered a decision in favor of
respondents, viz.:
"WHEREFORE, in view of the foregoing, the undersigned arbitrator finds and so
holds:
(1) That the parties failed to comply with the provisions of the GRIEVANCE
PROCEDURE of the Collective Bargaining Agreement;
(2) Reinstate immediately upon receipt of the Decision complainants
GERONIMA MACARAEG and MARIBETH DE VERA to their former positions
without loss of seniority rights;
(3) Pay complainants their backwages to be reckoned from the time their
employment has been [sic] illegally terminated up to their actual reinstatement
based on their last salary.
Parties are hereby enjoined to be faithful with their commitment to abide by this
Decision which under their Collective Bargaining Agreement is final, executory and
not subject to appeal.
SO ORDERED."3
Petitioner appealed to the Court of Appeals via a petition for review. On August 17,
2000, the Court of Appeals rendered a decision dismissing the petition and affirming
the decision of the voluntary arbitrator. Hence, the present course of action.
Petitioner claims that:
"(1) The Honorable Court of Appeals gravely abused its discretion in finding that the
procedure leading to the termination of respondents Maribeth de Vera and
Geronima Macaraeg was in violation of the provisions of the Collective Bargaining
Agreement (CBA) particularly Steps 1-4, Article XIII of the said Agreement.
(2) The Honorable Court of Appeals gravely abused its discretion in holding that
petitioner illegally terminated the services of herein private respondents."4
The petition is impressed with merit.
At the outset, we hold that the first issue raised in the petition pertaining to the alleged
violation of the CBA grievance procedure is moot and academic. The parties’ active
participation in the voluntary arbitration proceedings, and their failure to insist that the
case be remanded to the grievance machinery, shows a clear intention on their part to
have the issue of respondents’ illegal dismissal directly resolved by the voluntary
arbitrator. We therefore find it unnecessary to rule on the matter in light of their
preference to bring the illegal dismissal dispute to voluntary arbitration without passing
through the grievance machinery.
This leads us to the next issue of whether respondents were validly dismissed. To
constitute a valid dismissal from employment, two requisites must be met, namely: (1)
it must be for a just or authorized cause, and (2) the employee must be afforded due
process.5
We hold that there exist a valid reason to dismiss both employees. Article 282(c) of the
Labor Code allows an employer to dismiss employees for willful breach of trust or loss
of confidence.6 Proof beyond reasonable doubt of their misconduct is not required, it
being sufficient that there is some basis for the same or that the employer has
reasonable ground to believe that they are responsible for the misconduct and their
participation therein rendered them unworthy of the trust and confidence demanded of
their position.7
To be sure, the acts of the respondents were clearly inimical to the financial interest of
the petitioner. During the investigation, they admitted accommodating Evelyn Joy
Estrada by encashing her checks from its funds. They did so without petitioner’s
knowledge, much less its permission. These inimical acts lasted for more than a year,
and probably would have continued had it not been discovered in time. All along, they
were aware that these acts were prohibited by the Coop Checks Policy.8 Clearly, there Footnotes
was willful breach of trust on the respondents’ part, as they took advantage of their 1 Rollo, pp. 69-70.
highly sensitive positions to violate their duties. 2 Rollo, pp. 85-86.
Moreover, the acts of the respondents caused damage to the petitioner. During those 3 Decision, p. 11; Rollo, p. 133.
times the checks were illegally encashed, petitioner was not able to fully utilize the 4 Petition, p. 9; Rollo, p. 16.
collections, primarily in servicing its debts. In her memorandum9dated January 21,
5 Lagatic v. NLRC, 285 SCRA 251 (1998).
1999, Finance Manager Josefina Mandapat reported how petitioner is prejudiced, thus:
6 "Art. 282. Termination by the Employer.—An employer may terminate an employee
"Though the checks were funded, it constitutes a violation of Coop Policy. Checks
that are covered even by local clearing only take three days to be converted to cash for any of the following causes:
and when returned another three (3) days to retry clearing. The cooperative is xxx
deprived of the privilege to maximize use of its collections primarily in servicing its (c) Fraud or willful breach by the employee of the trust reposed in him by his
debts considering the state of calamity and even at the moment wherein we worry employer or duly authorized representative;
every time if we can payoff (sic) our NAPOCOR power bill."10
x x x."
It is not material that they did not "misappropriate any amount of money, nor incur any 7 Auxilio, Jr. v. NLRC, 188 SCRA 263 (1990).
shortage relative to the funds in their possession."11 The basic premise for dismissal on
8 Decision, p. 5; Rollo, p. 127.
the ground of loss of confidence is that the employees concerned hold positions of trust.
The betrayal of this trust is the essence of the offence for which an employee is 9 Detailing the result of the reconciliation of bank account under the custodianship of

penalized.12 In the case at bar, the respondents held positions of utmost trust and
confidence. As teller13 and cashier,14 respectively, they are expected to possess a high
degree of fidelity. They are entrusted with a considerable amount of cash. Respondent
de Vera accepted payments from petitioner’s consumers while respondent Macaraeg
received remittances for deposit at petitioner’s bank. They did not live up to their duties
and obligations.
Nor is there any doubt that petitioner observed procedural due process in dismissing
the respondents. In separate memoranda dated February 4, 1999 and signed by the
General Manager ( de Guzman), the respondents were both appraised of the particular
acts or omissions constituting the charges against them. They gave their own
petitioner Cashier Geronima Macaraeg.
10 Memorandum, p. 2; Rollo, p. 51.
11 See Answer/Explanation of Geronima Macaraeg, Rollo, p. 35; See also
Answer/Explanation of Maribeth de Vera, Rollo, p. 38.
12 See Quezon Electric Cooperative v. NLRC, 172 SCRA 88 (1989).
13 See Allied Banking Corporation v. Castro, et al., 156 SCRA 789 (1987), and Galsim
v. Philippine National Bank, 29 SCRA 293 (1969), where we held that the position of a
teller is one of utmost confidence.
14 See Metro Drug Corporation v. National Labor Relations, 143 SCRA 132 (1986),

"answer/explanation" to the charges. They participated in the investigation conducted where we held that the position of a cashier is one of utmost trust.
at petitioner’s board room on February 13, 1999 at 11:30 a.m. They were represented 15 Maranaw Hotel & Resort Corporation (Century Park Sheraton Manila) v. NLRC, 244
by counsel during the investigation. Finally, notices were sent to them on March 19, SCRA 375 (1995).
1999, informing them of the basis of their termination. In fine, private respondents were 16 Citibank, N.A. v. Gatchalian, 240 SCRA 212 (1995).
given due process before they were dismissed. Time and again, we have stressed that 17 Galsim v. Philippine national Bank, supra at 13.
due process is simply an opportunity to be heard.15
We are aware that the respondents Macaraeg and de Vera have been employed with
the petitioner for 22 and 19 years of continuous service, respectively, and this is the
first time that either of them has been administratively charged. Nonetheless, it is our
considered view that their dismissal is justified considering the breach of trust they have
committed. Well to emphasize, the longer an employee stays in the service of the
company, the greater is his responsibility for knowledge and compliance with the norms
of conduct and the code of discipline in the company. 16Considering that they have
mishandled the funds of the cooperative and the danger they have posed to its
members, their reinstatement is neither sound in reason nor just in principle. It is
irreconcilable with trust and confidence that has been irretrievably lost.17
IN VIEW WHEREOF, the petition is GRANTED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 55128 (affirming the decision of the voluntary
arbitrator in NCMB-RBI-PM-VA-5-03-99) are reversed and set aside.
SO ORDERED
Panganiban, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
G.R. No. 165586 June 15, 2005
CORNELIO C. CRUZ, petitioner, vs. COCA-COLA BOTTLERS PHILS., INC.,
MANUEL A. REMULLA, JR., ROMEO A. LARA and/or RENE P.
HORRILLENO, respondents.
Labor Law; National Labor Relations Commission (NLRC);Factual
Findings; Appeals; Time and again we have held that the findings of fact of quasi-
judicial bodies like the NLRC and of the Labor Arbiter are accorded with respect, even
finality, if supported by substantial evidence.—Time and again we have held that the
findings of fact of quasi-judicial bodies like the NLRC and of the Labor Arbiter are
accorded with respect, even finality, if supported by substantial evidence. Particularly
when passed upon and upheld by the Court of Appeals, these are binding and
conclusive upon the Court and will not normally be disturbed. The rationale behind this
doctrine is that review of the findings of fact by the Court of Appeals is not a function
that the Supreme Court normally undertakes. Only when there is a clear showing of
grave abuse of discretion, fraud or error of law will such findings of fact be set aside.
Same; Same; Same; Same; The interests of both the employers and employees
are intended to be protected and not one of them is given undue preference.—The
invocation of the protective mantle of the law in favor of labor cannot be upheld in this
case. This principle cannot be adopted where there is clear and convincing evidence
of the truth. While this court endeavors to live up to its mandate that the workingman’s
welfare should be the primordial and paramount consideration, it cannot do so if it will
be at the expense of justice and will result in the oppression or self-destruction of the
employer. The interests of both the employers and employees are intended to be
protected and not one of them is given undue preference.
Same; Employment; Termination; Just Causes; Loss of Confidence; 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.—
Termination of employment by reason of loss of confidence is governed by Article
282(c) of the Labor Code, which provides that an employer can terminate the
employment of the employee concerned for “fraud or willful breach by an employee of
the trust reposed in him by his employer or duly authorized representative.” 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. He
must be invested with confidence on delicate matters such as the custody, handling,
care and protection of the employer’s property and/or funds.
Same; Same; Same; Same; Same; Twin Notice Requirement; We have long
established that the twin requirements of notice and hearing constitute the essential
elements of due process, and neither of those elements can be eliminated without
running afoul of the constitutional guaranty.—We have long established that the twin
requirements of notice and hearing constitute the essential elements of due process,
and neither of those elements can be eliminated without running afoul of the
constitutional guaranty. These requisites cannot be replaced as they are not mere
technicalities, but requirements of due process to which every employee is entitled to
ensure that the employer’s prerogative to dismiss is not exercised arbitrarily. Pursuant
to the case of Agabon v. NLRC, the prevailing doctrine is that where the dismissal is
for just cause, the lack of statutory due process does not nullify the dismissal or render
it illegal. The employer, however, should indemnify the employee in the form of nominal
damages to vindicate or recognize the employee’s right that was violated. The amount
of such damages is addressed to the sound discretion of the court, taking into account
the relevant circumstances.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
DECISION
YNARES-SANTIAGO, J.:
This petition assails the decision1 of the Court of Appeals dated June 3, 2004 in CA-
G.R. SP No. 66970 which modified the decision and resolution of the National Labor
Relations Commission (NLRC) dated May 29, 2001 and July 11, 2001 respectively, and
its resolution2 dated October 5, 2004 denying reconsideration thereof. The appellate
court deleted the order of reinstatement but awarded backwages to petitioner Cornelio
C. Cruz computed from the time he was dismissed from the service on August 19, 1998
until the date of the finality of the said decision. Coca-Cola Bottlers Phils., Inc. (CCBPI)
and its officers Manuel A. Remulla, Jr., Romeo A. Lara and Rene P. Horilleno are
named respondents.
Petitioner Cruz has been working for respondent company’s plant in Calamba, Laguna,
as a driver/helper since June 1983. At times, however, petitioner gets designated as
Acting Salesman for respondent’s soft drinks and other beverages. On July 25, 1998,
petitioner was assigned as acting salesman of Route DA1, covering the small
barangays within the Calamba Area. Together with his helper, Mr. Pablito Aguila,
petitioner loaded their truck with CCBPI products. After the required verification and
confirmation of the products loaded on the truck by the Checker and the guard at the
gate, petitioner proceeded to leave the plant vicinity.
After gate inspection, however, petitioner drove back inside the plant on the pretext of
refueling. While waiting in line to refuel, petitioner allegedly asked Aguila to load an
additional thirty (30) cases of assorted canned soft drinks as "plus load". As there was
no Temporary Gate Pass (TGP) and Load Order Gate Pass (LOGP) prepared for the
additional products, Aguila reminded petitioner about the required documents but he
merely stated "Ayos na" and continued with the refueling of the truck.
On his second exit from the plant premises, petitioner did not slow down for the
mandatory inspection even as the security guards at the gate flagged him down.
Instead, petitioner shouted, "Ayos na". Miguel Legaspi, one of the security guards,
noticed several cases of canned soft drinks loaded at the back of the truck which he
verified to be unlisted in the truck’s LOGP.
He thus pursued the truck and when he caught up with petitioner at the Walter Mart
Shopping Mall in Barangay Real, Calamba, the latter could not produce the proper
documents for the extra thirty (30) cases loaded on his truck. He was then directed to
return to the plant and unload the products. At this point, it was confirmed that petitioner
did not actually secure any paper for the added products nor did he follow the
established procedure before taking out the extra cases.
The Shift-in-Charge made a written report regarding the incident. In an Inter-Office
Memorandum3 dated July 27, 1998, petitioner was directed to explain why no
disciplinary action should be taken against him for violating Section 16, Rule 003-
854 and Section 12, Rule 005-855 of the Coca-Cola Bottlers Phils., Inc. Employees
Code of Disciplinary Rules and Regulations. In his written explanation,6 petitioner
admitted the incident but alleged that he forgot to secure the requisite documents for
the products. On August 5, 1998, an investigation was conducted on the alleged
violations committed by petitioner. On August 19, 1998, respondent company
terminated the services of petitioner effective upon receipt of the memorandum.7
On August 24, 1998, petitioner filed a Complaint8 before the Labor Arbiter for illegal
dismissal, unfair labor practice and damages against respondents. The Labor
Arbiter9 dismissed the Complaint for lack of merit, ruling that the petitioner’s termination
was valid and lawful because it was based on a just cause. On appeal,10 the NLRC
found the penalty of dismissal too excessive and not proportionate to the alleged
infractions committed.11 Thus, it modified the decision of the Labor Arbiter, stating:
WHEREFORE, premises considered, the assailed decision, dated September 30, 1999
of Labor Arbiter Antonio R. Macam is hereby MODIFIED in such a way that respondents
are hereby ordered to reinstate complainant to his former position without loss of
seniority rights, and to pay full backwages computed from the time of illegal dismissal
to the time of actual reinstatement, less the period of suspension of six (6) days for
violation of Rule 005-85, Section 12 and another fifteen (15) days for violation of Rule
003-85, Section 16 of the CCBPI Employees’ Code of Disciplinary Rules and
Regulations.
However, the dismissal of the charge of unfair labor practice and claim for payment of
moral and exemplary damages, as well as, attorney’s fees or cost of litigation are
AFFIRMED.
SO ORDERED.12
Their motion for reconsideration having been denied,13 respondents filed a petition with
the Court of Appeals which ruled that while there was valid cause for petitioner’s
termination, respondent company failed to satisfy the procedural requirements because
the notices it sent to petitioner were "legally deficient in failing to notify [petitioner] with
particularity the specific acts of violation he was being charged of". Thus, it ruled:
WHEREFORE, the assailed Decision dated May 29, 2001 and the Resolution dated
July 11, 2001 of the National Labor Relations Commission, Second Division in NLRC
Case No. CA 021908-00 are hereby MODIFIED in that the order for reinstatement is
DELETED and that the Backwages be computed from the time Private Respondent
was dismissed or from August 19, 1998 up to the date of the finality of this Decision.
SO ORDERED.14
Petitioner’s motion for reconsideration15 was denied.16 Hence, the instant petition
based on the following assignment of errors:
A.
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND
GRAVELY ABUSED ITS DISCRETION IN MODIFYING THE DECISION OF THE
NLRC BY DELETING ITS REINSTATEMENT ASPECT AND FINDING THE
DISMISSAL OF THE PETITIONER VALID ALBEIT WITHOUT OBSERVANCE OF
PROCEDURAL DUE PROCESS.
B.
THE HONORABLE COURT OF APPEALS DID NOT HEED THE INJUNCTION OF
THIS HONORABLE COURT THAT: "AS IS WELL-SETTLED, IF DOUBTS EXIST
BETWEEN THE EVIDENCE PRESENTED BY THE EMPLOYER AND THE
EMPLOYEE, THE SCALES OF JUSTICE MUST BE TILTED IN FAVOR OF THE
EMPLOYEE. SINCE IT IS A TIME-HONORED RULE THAT IN CONTROVERSIES
BETWEEN A LABORER AND HIS MASTER, DOUBTS REASONABLY ARISING
FROM THE EVIDENCE, OR IN THE INTERPRETATION OF AGREEMENTS AND
WRITINGS SHOULD BE RESOLVED IN THE FORMER’S FAVOR" IN RENDERING
THE DISPUTED DECISION AND RESOLUTION.17
Petitioner maintains that there is no basis for the appellate court’s conclusion that he is
guilty of serious misconduct and fraudulent acts to warrant his termination. He argues
that the charge was not proven by substantive evidence; and even assuming that he
violated company rules and regulations, the penalty of dismissal is too harsh for the
infractions he allegedly committed.
Petition lacks merit.
The Labor Arbiter, the NLRC and the Court of Appeals were unanimous in their findings
that petitioner was guilty of dishonest acts but differed only on the propriety of the
penalty imposed upon petitioner.
Time and again we have held that the findings of fact of quasi-judicial bodies like the
NLRC and of the Labor Arbiter are accorded with respect, even finality, if supported by
substantial evidence. Particularly when passed upon and upheld by the Court of
Appeals, these are binding and conclusive upon the Court and will not normally be
disturbed.18 The rationale behind this doctrine is that review of the findings of fact by
the Court of Appeals is not a function that the Supreme Court normally
undertakes.19 Only when there is a clear showing of grave abuse of discretion, fraud or
error of law will such findings of fact be set aside.20
After a careful evaluation of the evidence on record of this case, we found no compelling
reason to disturb the unanimous findings of the Court of Appeals, the NLRC and the
Labor Arbiter. The incident that transpired on July 25, 1998 was witnessed by a number
of people who have all executed affidavits attesting to petitioner’s actuations. Petitioner
even admitted that indeed, he had the thirty (30) cases of canned soft drinks loaded on
his truck without the required documentation.
Several factors militate against petitioner’s claim of good faith. Petitioner’s length of
service, which spans almost fifteen (15) years, works against his favor in this case. We
have held that the longer an employee stays in the service of the company, the greater
is his responsibility for knowledge and compliance with the norms of conduct and the
code of discipline in the company.21 Considering that petitioner has worked at
respondent company for a long period of time, one expects that securing the LOGP or
TGP would be automatic for him.
Moreover, in his sworn statement,22 Aguilar attested that he reminded petitioner of
whether he had secured the gate pass for the products, and petitioner merely replied,
"Ayos na". The Labor Arbiter and the NLRC found no reason to disregard Aguilar’s
statement which was candid, straightforward and in harmony with the statements of the
other witnesses. More importantly, the statement is consistent with how petitioner acted
on that fateful day. Petitioner was described to have left the plant premises without
stopping at the gates for the mandatory inspection. His suspicious actions, thus,
prompted the dispatch of security to pursue his truck.23
As the Labor Arbiter observed, faced with the overwhelming evidence presented by
respondents on one hand and the mere general denial of petitioner on the other, the
invocation of the protective mantle of the law in favor of labor cannot be upheld in this
case. This principle cannot be adopted where there is clear and convincing evidence
of the truth. While this court endeavors to live up to its mandate that the workingman’s
welfare should be the primordial and paramount consideration,24 it cannot do so if it will
be at the expense of justice and will result in the oppression or self-destruction of the
employer.25 The interests of both the employers and employees are intended to be
protected and not one of them is given undue preference.26
It appears that the points of contention in this case are limited to the propriety of the
penalty imposed on petitioner and the respondent company’s compliance with the
procedural requirements for termination. Both the Labor Arbiter and the Court of
Appeals upheld respondent company insofar as it terminated petitioner’s services, but
the Court of Appeals found that the notices sent to petitioner were deficient. The NLRC,
for its part, believed that the dismissal was too severe a penalty considering that
respondent company’s own rules provided for the penalty of suspension alone.
Termination of employment by reason of loss of confidence is governed by Article
282(c) of the Labor Code, which provides that an employer can terminate the
employment of the employee concerned for "fraud or willful breach by an employee of
the trust reposed in him by his employer or duly authorized representative."27 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. He
must be invested with confidence on delicate matters such as the custody, handling,
care and protection of the employer’s property and/or funds.28
Admittedly, the company rules violated by petitioner are punishable, for the first offense,
with the penalty of suspension. However, respondent company has presented evidence
showing that petitioner has a record of other violations from as far back as 1986. In
1991, petitioner was found to have deliberately misrepresented on two occasions the
total number of empties and was consequently suspended for six (6) days.29 In 1990
and 1991, petitioner was also suspended for his involvement in vehicular accidents,
which caused damage to another car and an outlet store.30 On several occasions,
petitioner has been investigated for shortages in remittances of collections from
customers.31 These misdemeanors are aggravated by several AWOLS which petitioner
had taken in the course of his employment.
To be sure, the nature of petitioner’s offenses is downright inimical to the interests of
respondent company. By virtue of his job, petitioner is entrusted with the property and
funds, which belong to respondent company. His actions on that fateful day of July 25,
1998 highlight, not only petitioner’s consistent and deliberate defiance of company rules
and regulation, but also his duplicity in handling respondent company’s properties. It
would appear that respondent company had tolerated petitioner’s work ethic far too
long. We therefore find that it was justified in terminating petitioner after the flagrant
dishonesty he committed.
Anent the issue of compliance with the procedural requirements for termination, we
agree with the Court of Appeals that the notices given to petitioner were legally
deficient. As observed by the appellate court, the first notice dated July 27, 1998,32 did
not contain the particulars of the charges nor the circumstances in which the violation
happened. The notice was also couched in general terms that it only mentions the
specific sections and rule numbers of the Red Book that was violated without defining
what such violation was. A cursory reading of this notice likewise shows that it does not
state that petitioner was in fact facing a possible dismissal from the company.
Consequently, petitioner was not sufficiently apprised of the gravity of the situation he
was in.
We have long established that the twin requirements of notice and hearing constitute
the essential elements of due process, and neither of those elements can be eliminated
without running afoul of the constitutional guaranty.33These requisites cannot be
replaced as they are not mere technicalities, but requirements of due process to which
every employee is entitled to ensure that the employer’s prerogative to dismiss is not
exercised arbitrarily.34Pursuant to the case of Agabon v. NLRC, the prevailing doctrine
is that where the dismissal is for just cause, the lack of statutory due process does not
nullify the dismissal or render it illegal. The employer, however, should indemnify the
employee in the form of nominal damages to vindicate or recognize the employee’s
right that was violated. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant circumstances.35 In this case,
the amount of P20,000.00 is sufficient for the purpose.
WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals
dated June 3, 2004 in CA-G.R. SP No. 66970 and its resolution dated October 5, 2004,
are hereby AFFIRMED with MODIFICATION. As modified, the dismissal of petitioner
is declared valid but respondent company is ORDERED to pay petitioner the amount
of P20,000.00 as nominal damages for non-compliance with statutory due process.
SO ORDERED.
Footnotes
1 Penned by Court of Appeals Associate Justice Noel G. Tijam as concurred in by
Associate Justices Godardo A. Jacinto and Jose L. Sabio, Jr., Rollo, pp. 46-55.
2 Rollo, pp. 57-58.
3 Id. at 227.
4 Removal of Company property without proper authorization or theft/pilferage of
Company Property or personal property of co-employees, or third persons in Company
premises.
5 Negligence or inefficiency in the performance of Duties or blatant disregard of or
deviation from Established control and other policies and procedures.
9 Antonio R. Macam.
10 Rollo, pp. 83-111.
11 Penned by Commissioner Victoriano R. Calaycay as concurred in by Commissioners
Raul T. Aquino and Angelita A. Gacutan, Rollo, pp. 112-124.
18 San Juan de Dios Educational Foundation Employees Union-Alliance of Filipino
Workers v. San Juan de Dios Educational Foundation, Inc., G.R. No. 143341, 28 May
2004, 430 SCRA 193, 205-206; see also Procter and Gamble Philippines v. Bondesto,
G.R. No. 139847, 5 March 2004, 425 SCRA 1, 8; Mitsubishi Motors Philippines
Corporation v. Chrysler Philippines Labor Union, G.R. No. 148738, 29 June 2004, 433
SCRA 206, 217; Felix v. National Labor Relations Commission, G.R. No. 148256, 17
November 2004; Urbanes, Jr. v. Court of Appeals, et al., G.R. No. 138379, 25
November 2004; German Machineries Corporation v. Andaya, G.R. No. 156810, 25
November 2004.
19 Philippine Journalists, Inc. v. Mosqueda, G.R. No. 141430, 7 May 2004, 428 SCRA
369, 376.
20 Rosario v. Victory Ricemill, 445 Phil. 830, 838 (2003).
21 Central Pangasinan Electric Cooperative, Inc. v. Macaraeg and De Vera, 443 Phil.
866, 877 (2003).
22 Rollo, p. 220.
23 Affidavit of Security Personnel Miguel Legaspi, Rollo, pp. 221-222; Written Report by
Shift-in-Charge Jorge D. Vergara, Rollo, pp. 225-226.
24 Santos v. Velarde, 450 Phil. 381, 390-391 (2003).
25 Cama v. Joni’s Food Services, Inc., G.R. No. 153021, 10 March 2004, 425 SCRA
259, 269; see also Rosario v. Victory Ricemill, supra; Philippine Airlines, Inc. v. NLRC,
G.R. No. 117038, 25 September 1997, 345 SCRA 57, 66.
26 Philtread Workers Union (PTWU) v. Secretary, 336 Phil. 375, 381 (1997).
27 Del Val v. NLRC, 357 Phil. 286, 292 (1998); see also Quezon Electric Cooperative
v. NLRC, G.R. Nos. 79718-22, 12 April 1989, 172 SCRA 88, 94; Kwikway Engineering
Works v. NLRC, G.R. No. 84914, 22 March 1991, 195 SCRA 526, 529; National Sugar
Refineries Corporation (NASUREFCO) v. NLRC, 350 Phil. 119, 127 (1998).
28 Gonzales v. NLRC, G.R. No. 131653, 26 March 2001, 355 SCRA 195, 207.
29 Rollo, pp. 207-208.
30 Id. at 205.
31 Id. at 210, 212 and 217.
32 Id. at 227.
33 Condo Suite Club Travel, Inc. v. NLRC, 380 Phil. 660, 670 (2000); see also Vinta
Maritime Co., Inc. v. NLRC, 348 Phil. 714, 731-732 (1998).
34 Malaya Shipping Services, Inc. v. NLRC, 351 Phil. 421, 428 (1998).
35 G.R. No. 158693, 17 November 2004.
SECOND DIVISION
G.R. No. 166111 August 25, 2005
STANDARD ELECTRIC MANUFACTURING CORPORATION, Petitioners, vs.
STANDARD ELECTRIC EMPLOYEES UNION-NAFLU- KMU and ROGELIO
JAVIER,
Respondents.LaborLaw; IllegalDismissal; Abandonment; Requisites; Abandon
ment is a matter of intention and cannot be lightly inferred or legally presumed from
certain equivocal acts.—Respondent Javier’s absence from August 9, 1995 cannot be
deemed as an abandonment of his work. Abandonment is a matter of intention and
cannot lightly be inferred or legally presumed from certain equivocal acts. To constitute
as such, two requisites must concur: first, the employee must have failed to report for
work or must have been absent without valid or justifiable reason; and second, there
must have been a clear intention on the part of the employee to sever the employer-
employee relationship as manifested by some overt acts, with the second element
being the more determinative factor. Abandonment as a just ground for dismissal
requires clear, willful, deliberate, and unjustified refusal of the employee to resume his
employment. Mere absence or failure to report for work, even after notice to return, is
not tantamount to abandonment.
Same; Same; Criminal Law; Rape; Where the dismissal of the case of rape
against the employee was due to insufficiency of evidence, such proves that his arrest
and detention was without factual or legal basis in the first place, and his employer
petitioner acted with precipitate haste in terminating his employment on the ground that
he had raped the complainant therein; While it may be true that after the preliminary
investigation of the complaint, probable cause was found and the employee was
detained, these cannot be made as legal bases for immediate termination of his
employment.—Respondent Javier’s acquittal for rape makes it more compelling to view
the illegality of his dismissal. The trial court dismissed the case for “insufficiency of
evidence,” and such ruling is tantamount to an acquittal of the crime charged, and proof
that respondent Javier’s arrest and detention were without factual and legal basis in the
first place. The petitioner acted with precipitate haste in terminating respondent Javier’s
employment on January 30, 1996, on the ground that he had raped the complainant
therein. Respondent Javier had yet to be tried for the said charge. In fine, the petitioner
prejudged him, and preempted the ruling of the RTC. The petitioner had, in effect,
adjudged respondent Javier guilty without due process of law. While it may be true that
after the preliminary investigation of the complaint, probable cause for rape was found
and respondent Javier had to be detained, these cannot be made as legal bases for
the immediate termination of his employment.
Same; Same; Grievance Machinery; Due Process; Meetings held pursuant to
the grievance machinery of the collective bargaining agreement done only after the
dismissal of the employee cannot cure an otherwise unlawful termination; The essence
of due process lies in the opportunity to be heard and not always and indispensably in
actual hearing.—We cannot subscribe to the petitioner’s contention that the due
process requirement relative to the dismissal of respondent Javier was duly complied
with when he was allowed to explain his side during the grievance machinery
conferences. Indeed, in the case at bar, the petitioner did not conduct any investigation
whatsoever priorto his termination, despite being informed of respondent Javier’s
predicament by the latter’s siblings, his Union and his counsel. The meetings held
pursuant to the grievance machinery provisions of the collective bargaining agreement
were only done afterhis dismissal had already taken effect on February 5, 1996.
Clearly, well-meaning these conferences might be, they can not cure an otherwise
unlawful termination. It bears stressing that for a dismissal to be validly effected, the
twin requirements of due process—notice and hearing—must be observed. In
dismissing an employee, an employer has the burden of proving that the former worker
has been served two notices: (1) one to apprise him of the particular acts or omissions
for which his dismissal is sought; and (2) the other to inform him of his employer’s
decision to dismiss him. As to the requirement of a hearing, the essence of due process
lies in an opportunity to be heard, and not always and indispensably in an actual
hearing.
Same; Same; Backwages; While an employee who was imprisoned is not
entitled to any salary during the period of his detention, he is however entitled to full
backwages from the time his employer refused his reinstatement.—In line with the
rulings of this Court in Magtoto and Pedroso on the matter of backwages, respondent
Javier is not entitled to any salary during the period of his detention. His entitlement to
full backwages commenced from the time the petitioner refused his reinstatement. In
the instant case, when respondent Javier was freed on May 24, 1996 by virtue of the
judgment of acquittal dated May 17, 1996, he immediately proceeded to the petitioner
but was not accepted back to work; hence, the reckoning point for the grant of
backwages started therefrom.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari seeking to review the Decision1 and
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 76657, which annulled and
set aside the Resolution of the National Labor Relations Commission (NLRC) affirming
the Labor Arbiter’s Decision3 in NLRC NCR Case No. 00-08-04760-96.
Rogelio Javier was employed by the Standard Electric Manufacturing Corporation
(SEMC) on January 15, 1973 as radial spot machine operator in its Production
Department. Javier was a member of the Standard Electric Employees Union-NAFLU
(Union).4
On July 31, 1995, Javier failed to report for work. He failed to notify the SEMC of the
reason for his absences. On August 9, 1995, he was arrested and detained for the
charge of rape upon complaint of his neighbor, Genalyn Barotilla. After the requisite
preliminary investigation, an Information for rape was filed in the Regional Trial Court
(RTC) of Pasig, docketed as Criminal Case No. 108593.5
On January 13, 1996, the SEMC received a letter6 from Javier, through counsel,
informing the SEMC that Javier was detained for the charge of rape and for that reason
failed to report for work. He requested the SEMC to defer the implementation of its
intention to dismiss him, citing the ruling of this Court in Magtoto v. NLRC.7 The SEMC
denied Javier’s request and issued a Memorandum terminating his employment for (a)
having been absent without leave (AWOL) for more than fifteen days from July 31,
1995; and (b) for committing rape.8
On May 17, 1996, the RTC issued an Order9 granting Javier’s demurrer to evidence
and ordered his release from jail. Shortly thereafter, Javier reported for work, but the
SEMC refused to accept him back.
A grievance meeting between the Union, Javier and the SEMC was held, but SEMC
refused to re-admit Javier. On August 2, 1996, the Union and Javier filed a
Complaint10 for illegal dismissal against the SEMC before the NLRC. He averred that
since the reason for his detention for rape was non-existent, the termination of his
employment was illegal. Javier cited the ruling of this Court in Magtoto v. NLRC.11
For its part, the SEMC averred that Javier’s prolonged absences caused irreparable
damages to its orderly operation; he had to be replaced so that the continuity and flow
of production would not be jeopardized. It could not afford to wait for Javier’s indefinite
return from detention, if at all. The SEMC insisted that conformably with its Rules and
Regulations, it was justified in dismissing Javier for being absent without leave for
fifteen days or so.
On January 14, 1997, the Labor Arbiter rendered judgment ordering the dismissal of
the complaint.12 The Labor Arbiter ruled that the complaint was within the exclusive
jurisdiction of the Voluntary Arbitrators or Panel of Arbitrators. On appeal, the NLRC
reversed the Labor Arbiter’s decision and ruled that the latter had jurisdiction over the
complaint; it thus ordered the remand of the case to the Labor Arbiter for resolution on
the merits.13
On August 16, 1999, the Labor Arbiter rendered judgment ordering the dismissal of the
complaint.14 However, the SEMC was ordered to pay separation pay to the
complainant. The dispositive portion reads:
WHEREFORE, in view of the foregoing, the complaint for illegal dismissal is hereby
ordered DISMISSED for lack of merit.
The respondents Standard Electric Manufacturing Corporation and Mr. Jose Uy are,
however, ordered to pay complainant Rogelio Javier the amount of SEVENTY-ONE
THOUSAND SEVEN HUNDRED SIXTY PESOS (₱71,760.00) representing his
financial assistance/separation pay.
SO ORDERED.15
On appeal, the NLRC affirmed the Labor Arbiter’s ruling in its Resolution of September
24, 2002. The NLRC declared that:
Appellants’ contention is baseless. A perusal of the evidence on record clearly shows
that prior to his dismissal from his job by respondents-appellees, he was made to
explain his side (Exhibit "5," respondents’ Formal Offer of Evidence). Evidence on
record further shows that a grievance machinery as provided for in the CBA was
activated by respondents-appellees for the purpose of affording complainant a chance
to present his side prior to his dismissal. (Exhibits "4" to "4-b," respondents’ Formal
Offer of Evidence).
Considering the adequate evidence presented by respondents-appellants on which the
findings of the Labor Arbiter were based, this Commission finds no merit on
complainants-appellants’ contention that the Labor Arbiter had committed serious
errors in his findings of facts and the law in this instant case.
Hence, the assailed decision must stand for "the matter of evaluating the merits and
demerits of the case, as long as the Decision is supported by the facts and the
evidence, is left to the sound discretion of the Labor Arbiter." (Metropolitan Bank and
Trust Company vs. NLRC, et al., 235 SCRA 400, 403).
WHEREFORE, in the light of the foregoing premises, [the] Decision of the Labor
Arbiter dated August 16, 1999 is hereby AFFIRMED.
SO ORDERED.16
When the NLRC denied the motion for reconsideration of the said decision, Javier and
the Union filed a petition for certiorari with the CA, questioning such ruling, as follows:
I
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN NOT
HOLDING THAT RESPONDENT COMPANY VIOLATED PETITIONER ROGELIO
JAVIER’S RIGHT TO PRIOR NOTICE RELATIVE TO THE LATTER’S DISMISSAL.
II
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN
HOLDING THAT PETITIONER ROGELIO JAVIER WENT AWOL (ABSENCE
WITHOUT LEAVE) FROM HIS JOB.
III
PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN NOT APPLYING
THE RULING IN MAGTOTO VS. NLRC TO THE INSTANT CASE.17
In the Decision18 dated August 19, 2004, the CA reversed the findings of the Labor
Arbiter and the NLRC. The fallo of the decision reads:
WHEREFORE, the NLRC’s Resolution dated September 24, 2002
is ANNULLED and SET ASIDE. Private respondent Standard Electric Manufacturing
Corporation is hereby ORDERED to REINSTATE Rogelio Javier to his former position,
without loss of seniority rights and other privileges appurtenant thereto, with full
backwages from the time of his dismissal until he is actually reinstated, or to pay him
separation pay, if reinstatement is no longer feasible.
SO ORDERED.
The appellate court cited the rulings of this Court in Magtoto v. NLRC19 and City
Government of Makati City v. Civil Service Commission20 as precedents. It declared
that it was not Javier’s intention to abandon his job; his incarceration reasonably
justified his failure to report for work and negated the theory that he was on AWOL.
Likewise, the CA held that Javier could not be terminated on the ground of commission
of a crime, as when he was acquitted of the rape charges, the second ground relied
upon by the
SEMC ceased to have factual basis. Hence, despite the fact that Javier was allegedly
afforded the opportunity to explain his side, the same was unnecessary since, in the
first place, there was no just or authorized cause for the dismissal.
The motion for reconsideration seasonably filed by the SEMC on August 19, 2004 was
denied by the CA in its November 23, 2004 Resolution.21 Hence, this recourse.
The issues posed by the petitioner are the following:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
PATENT AND REVERSIBLE ERROR IN APPLYING THE CASE OF MAGTOTO VS.
NLRC IN THIS CASE.
II
WHETHER OF NOT THE HONORABLE COURT OF APPEALS COMMITTED
PATENT AND REVERSIBLE ERROR IN APPLYING THE CASE OF CITY
GOVERNMENT OF MAKATI CITY IN THIS CASE.
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
PATENT AND REVERSIBLE ERROR IN REINSTATING [RESPONDENT] ROGELIO
JAVIER AND GRANTING HIM FULL BACKWAGES.
IV
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
PATENT AND REVERSIBLE ERROR IN TOTALLY DISREGARDING THE FINDINGS
OF THE NATIONAL LABOR RELATIONS COMMISSION AND THE LABOR
ARBITER A QUO.22
The Court finds that the petition is bereft of merit.
The petitioner asserts that the ruling of the Court in Magtoto finds no application in the
present case. It argues that in Magtoto, no criminal information was filed in the regular
court against the employee, as the city prosecutor found no probable cause to hold the
respondent therein for trial. The petitioner argues that respondent Javier was indicted
for the crime of rape in the RTC. Another difference, the petitioner points out, is that the
employee in the cited case was dismissed solely on account of his absences during his
imprisonment; respondent Javier was terminated due to truancy prior to his detention
from July 31, 1995, to his detention for rape on August 9, 1995, until his release on May
24, 1996. Respondent Javier never informed the petitioner why he was absent on the
said dates, and subsequent thereto. It was only on January 13, 1996 that respondent
Javier, through his counsel, informed the petitioner of his detention for rape for the first
time.
The petitioner avers that the ruling of this Court in City Government of Makati City is
not applicable because respondent Javier was dismissed on a demurrer to evidence,
and not because he did not commit the offense alleged. The case was dismissed
because of the prosecution’s failure to prove his guilt beyond reasonable doubt. In
marked contrast, the petitioner notes, the employee in City Government of Makati
City was acquitted by reason of the prosecution’s failure to prove her complicity in the
crime.
The petitioner maintains that the mere filing of the Information for the crime of rape
against respondent Javier rendered its Rules and Regulations operational, particularly
Serious Offense No. 7. It avers that substantial proof, not clear and convincing evidence
or proof beyond reasonable doubt, is sufficient basis for the imposition of any
disciplinary action over an erring employee.
The petitioner’s contentions are wrong.
Respondent Javier was dismissed by the petitioner effective February 5, 1996 for (a)
being AWOL from July 31, 1995 up to January 30, 1996; and (b) committing rape.
However, on demurrer to evidence, respondent Javier was acquitted of the charge.
With respondent Javier’s acquittal, the cause of his dismissal from his employment
turned out to be non-existent.
In the Magtoto case, Alejandro Jonas Magtoto was arrested by virtue of an Arrest,
Search and Seizure Order dated September 1, 1980. He was
charged with violation of Article 136 (Conspiracy and Proposal to Commit Rebellion)
and Article 138 (Inciting to Rebellion or Insurrection) of the Revised Penal Code (RPC).
Although Magtoto informed his employer and pleaded that he be considered as "on
leave" until released, his employer denied the request. On April 10, 1981, or about
seven (7) months after his arrest, Magtoto was released after the City Fiscal dismissed
the criminal charges for lack of evidence. On the same date, he informed his employer
of his intent to start working again, but the employer rejected the offer. In ruling that his
termination was illegal, the Supreme Court ruled as follows:
The employer tries to distance itself from the detention by stressing that the petitioner
was dismissed due to prolonged absence. However, Mr. Magtoto could not report for
work because he was in a prison cell. The detention cannot be divorced from prolonged
absence. One caused the other. Since the causes for the detention, which in turn gave
the employer a ground to dismiss the petitioner, proved to be non-existent, we rule that
the termination was illegal and reinstatement is warranted. A non-existent cause for
dismissal was explained in Pepito v. Secretary of Labor (96 SCRA 454).
…
"... A distinction, however, should be made between a dismissal without cause and a
dismissal for a false or non-existent cause. In the former, it is the intention of the
employer to dismiss his employee for no cause whatsoever, in which case the
Termination Pay Law would apply. In the latter case, the employer does not intend to
dismiss the employee but for a specific cause which turns out to be false or non-
existent. Hence, absent the reason which gave rise to his separation from employment,
there is no intention on the part of the employer to dismiss the employee concerned.
Consequently, reinstatement is in order. And this is the situation here. Petitioner was
separated because of his alleged involvement in the pilferage in question. However, he
was absolved from any responsibility therefor by the court. The cause for his dismissal
having been proved non-existent or false, his reinstatement is warranted. It would be
unjust and unreasonable for the Company to dismiss petitioner after the latter had
proven himself innocent of the cause for which he was dismissed."23
The facts in Pedroso v. Castro24 are similar to the set of facts in the present case. The
petitioners therein were arrested and detained by the military authorities by virtue of a
Presidential Commitment Order allegedly for the commission of Conspiracy to Commit
Rebellion under Article 136 of the RPC. As a result, their employer hired substitute
workers to avoid disruption of work and business operations. They were released when
the charges against them were not proven. After incarceration, they reported back to
work, but were refused admission by their employer. The Labor Arbiter and the NLRC
sustained the validity of their dismissal. Nevertheless, this Court again held that the
dismissed employees should be reinstated to their former positions, since their
separation from employment was founded on a false or non-existent cause; hence,
illegal.
Respondent Javier’s absence from August 9, 1995 cannot be deemed as an
abandonment of his work. Abandonment is a matter of intention and cannot lightly be
inferred or legally presumed from certain equivocal acts. To constitute as such, two
requisites must concur: first, the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and second, there must have been
a clear intention on the part of the employee to sever the employer-employee
relationship as manifested by some overt acts, with the second element being the more
determinative factor. Abandonment as a just ground for dismissal requires clear, willful,
deliberate, and unjustified refusal of the employee to resume his employment. Mere
absence or failure to report for work, even after notice to return, is not tantamount to
abandonment.25
Moreover, respondent Javier’s acquittal for rape makes it more compelling to view the
illegality of his dismissal. The trial court dismissed the case for "insufficiency of
evidence," and such ruling is tantamount to an acquittal of the crime charged, and proof
that respondent Javier’s arrest and detention were without factual and legal basis in the
first place.
The petitioner acted with precipitate haste in terminating respondent Javier’s
employment on January 30, 1996, on the ground that he had raped the complainant
therein. Respondent Javier had yet to be tried for the said charge. In fine, the petitioner
prejudged him, and preempted the ruling of the RTC. The petitioner had, in effect,
adjudged respondent Javier guilty without due process of law. While it may be true that
after the preliminary investigation of the complaint, probable cause for rape was found
and respondent Javier had to be detained, these cannot be made as legal bases for
the immediate termination of his employment.
Moreover, the petitioner did not accord respondent Javier an opportunity to explain his
absences from July 31, 1995. The petitioner’s reliance on the alleged Letter dated
August 17, 1995 is misplaced. There is no evidence on record that respondent Javier
received such letter, and its sudden presence is highly suspect. The Court agrees with
respondent Javier’s observation that the letter was not mentioned nor annexed in the
petitioner’s Position Paper, Rejoinder and even in its Opposition to the Appeal. The
letter surfaced only on a much later date, in 1999, when it was formally offered in
evidence26 and referred to in the petitioner’s Memorandum27 before the Labor Arbiter –
a clear inference that the said letter was but an afterthought to justify petitioner’s
termination of respondent Javier’s employment.
 13 CA
Further, we cannot subscribe to the petitioner’s contention that the due process Rollo, pp. 93-98.
requirement relative to the dismissal of respondent Javier was duly complied with when 14 Id. at 109-114.
he was allowed to explain his side during the grievance machinery conferences. 15 Id. at 114.
Indeed, in the case at bar, the petitioner did not conduct any investigation 16 CA Rollo, pp. 27-28.
whatsoever prior to his termination, despite being informed of respondent Javier’s
17 Id. at 12.
predicament by the latter’s siblings, his Union and his counsel.28 The meetings held
pursuant to the grievance machinery provisions of the collective bargaining agreement 18 Rollo, pp. 39-46.
were only done after his dismissal had already taken effect on February 5, 1996. 19 Supra, see note 7.
Clearly, well-meaning these conferences might be, they can not cure an otherwise 20 G.R. No. 131392, 6 February 2002, 376 SCRA 248.
unlawful termination.
21 Rollo, pp. 47-48.
It bears stressing that for a dismissal to be validly effected, the twin requirements of
22 Rollo, p. 20.
due process – notice and hearing – must be observed. In dismissing an employee, an
employer has the burden of proving that the 23 Magtoto v. NLRC, supra, pp. 64-65.

former worker has been served two notices: (1) one to apprise him of the particular acts 24 No. L-70361, 30 January 1986, 141 SCRA 252.
or omissions for which his dismissal is sought; and (2) the other to inform him of his 25 R.P. Dinglasan Construction, Inc. v. Atienza, G.R. No. 156104, 29 June 2004, 433
employer’s decision to dismiss him. As to the requirement of a hearing, the essence of
SCRA 263; Hantex Trading Co., Inc. v. Court of Appeals, G.R. No. 148241, 27
due process lies in an opportunity to be heard, and not always and indispensably in an
September 2002, 390 SCRA 181; Del Monte Philippines v. NLRC, G.R. No. 126688, 5
actual hearing.29
March 1998, 287 SCRA 71; and Labor v. NLRC, G.R. No. 110388, 14 September 1995,
Finally, in line with the rulings of this Court in Magtoto and Pedroso on the matter of 248 SCRA 183.
backwages, respondent Javier is not entitled to any salary during the period of his 26 Rollo, pp. 200-203.
detention. His entitlement to full backwages commenced from the time the petitioner
27 Id. at 190-199.
refused his reinstatement. In the instant case, when respondent Javier was freed on
May 24, 1996 by virtue of the judgment of acquittal dated May 17, 1996, he immediately 28 CA Rollo, p. 53.

proceeded to the petitioner but was not accepted back to work; hence, the reckoning 29 Tan v. NLRC, G.R. No. 128290, 24 November 1998, 299 SCRA 169.
point for the grant of backwages started therefrom.
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DISMISSED for
lack of merit. The assailed Decision of the Court of Appeals is AFFIRMED WITH
MODIFICATION. Petitioner is hereby ORDERED to reinstaterespondent Rogelio
Javier to his former position or, if no longer possible, a substantially equivalent position
without loss of seniority rights and other privileges appurtenant thereto, with full
backwages from the time it refused to allow his reinstatement on May 24, 1996 until
actually reinstated; or, if reinstatement is no longer feasible, to pay him separation pay
equivalent to one (1) month salary for every year of service.
Costs against the petitioner.
Footnotes
1 Penned by Associate Justice Magdangal M. De Leon, with Associate Justices

Edgardo P. Cruz and Mariano C. Del Castillo, concurring; Rollo, pp. 39-40.
2 Rollo, pp. 47-48.

3 Penned by Labor Arbiter Fatima Jambaro-Franco.

4 CA Rollo, p. 80.

5 Id. at 52, 102.

6 Id. at 53.

7 No. L-63370, 18 November 1985, 140 SCRA 58.

8 CA Rollo, p. 55.

9 CA Rollo, pp. 102-104.

10 Rollo, p. 318.

11 Supra.

12 CA Rollo, pp. 79-87.

G.R. No. 155264 May 6, 2005
FLOREN HOTEL and/or LIGAYA CHU, DELY LIM and JOSE CHUA
LIM, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, RODERICK A.
CALIMLIM, RONALD T. RICO, JUN A. ABALOS, LITO F. BAUTISTA and GLORIA
B. LOPEZ, respondents.
Actions; Certiorari; Acceptance of a petition for certiorari as well as the grant of
due course thereto is addressed to the sound discretion of the court.—We find no merit
in private respondents’ insistence on procedural flaws. Acceptance of a petition
for certiorari as well as the grant of due course thereto is addressed to the sound
discretion of the court. Section 1, Rule 65 of the Rules of Court in relation to Section 3,
Rule 46 of the same rules does not specify the precise documents, pleadings or parts
of the records that should be appended to the petition other than the judgment, final
order, or resolution being assailed. The Rules only state that such documents,
pleadings or records should be relevant or pertinent to the assailed resolution, judgment
or orders. Here the pieces of evidence, which petitioners alleged had been arbitrarily
disregarded, were duly annexed to the petition. Also, the material allegations of the
position papers were summarized and discussed extensively in the decision of the
Labor Arbiter, a copy of which was also made part of the petition. It does not appear in
this case that in deciding to give due course to the petition for certiorari, the Court of
Appeals committed any error that prejudiced the substantial rights of the parties. There
is, therefore, no reason for this Court to disturb the appellate court’s determination that
the copies of the pleadings and documents attached to the petition were sufficient to
make out a prima facie case.
Labor Law; Abandonment; An employer has the burden of showing the existence
of the two requirements for a valid dismissal on the ground of abandonment, namely,
evidence not only of the failure to report for work or that absence was without valid or
justifiable reasons, but also of some overt act showing the employee’s loss of interest
to continue working in his or her job; Mere absence from work does not constitute
abandonment.—On the second issue, we find that the Court of Appeals erred in
reversing the NLRC decision and in holding that Bautista, Abalos and Lopez were not
illegally dismissed, but had abandoned their jobs. Petitioners claimed that all five private
respondents were guilty of abandoning their jobs. Thus, it was incumbent upon
petitioners to show that the two requirements for a valid dismissal on the ground of
abandonment existed in this case. Specifically, petitioners needed to present, for each
private respondent, evidence not only of the failure to report for work or that absence
was without valid or justifiable reasons, but also of some overt act showing the private
respondent’s loss of interest to continue working in his or her job. In our view, petitioners
failed to adduce sufficient evidence to prove the charge of abandonment. Petitioners
merely presented joint affidavits from hotel supervisors Agustin Aninag and Lourdes
Cantago and other hotel employees showing that Calimlim, Rico, and Bautista simply
went on absence without leave after they were confronted with certain irregularities,
and that Abalos and Lopez likewise just left their employment, also without filing leaves
of absence. Those joint affidavits, however, are insufficient as they do not show that
the absence of Calimlim, Rico, Bautista, Abalos and Lopez were unjustified. More
important, they do not show any overt act that proves that private respondents
unequivocally intended to sever their working relationship with the petitioners. We have
held that mere absence from work does not constitute abandonment. If it was true that
private respondents abandoned their jobs, then petitioners should have served them
with a notice of termination on the ground of abandonment as required under Sec. 2,
Rule XIV, Book V, Rules and Regulation Implementing the Labor Code, in effect at that
time.
Same; Same; The well-established rule is that an employee who takes steps to
protest his layoff cannot be said to have abandoned his work.—We find that none of
the private respondents in this case had any intention to sever their working
relationship. Just days after they were dismissed, private respondents Calimlim, Rico,
Bautista, Abalos and Lopez filed complaints to protest their dismissals. The well-
established rule is that an employee who takes steps to protest his layoff cannot be
said to have abandoned his work.
Same; Due Process; Transfers or Reassignments; Demotions; For the transfer
of an employee to be considered a valid exercise of management prerogatives, the
employer must show that the transfer is not unreasonable, inconvenient or prejudicial
to the employee, and neither would it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits; Even the employer’s right to demote an
employee requires the observance of the twin-notice requirement.—For the transfer of
the employee to be considered a valid exercise of management prerogatives, the
employer must show that the transfer is not unreasonable, inconvenient or prejudicial
to the employee; neither would it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits. Should the employer fail to discharge this burden
of proof, the employee’s transfer shall be tantamount to constructive dismissal, which
has been defined as a quitting because continued employment is rendered impossible,
unreasonable or unlikely, as in an offer involving a demotion in rank and diminution in
pay. In this case, Calimlim and Rico were being forced to accept alternate work periods
in their new jobs as janitors, otherwise they would be unemployed. Not only did their
new schedule entail a diminution of wages, because they would only be allowed to work
every other week, the new schedule was also clearly for an undefined period. The June
13, 1998, memorandum did not state how long the schedule was to be effective.
Indeed, it appears that the period could continue for as long as management desired
it. These unreasonable new terms of employment were imposed in the memorandum
of June 13, 1998, which was issued two days before Calimlim and Rico returned from
their week-long suspension. They were imposed for alleged past infractions for which
neither Calimlim nor Rico was given the chance to be heard. Under the circumstances,
we fail to see how the temporary transfer of Calimlim and Rico could be a valid exercise
of management prerogatives. Even the employer’s right to demote an employee
requires the observance of the twin-notice requirement.
Same; Same; Indemnity; The award of indemnity is a penalty awarded only when
the dismissal was for just or authorized cause but where the twin-notice requirement
was not observed.—As to the third issue, Article 279 of the Labor Code gives to
Calimlim and Rico the right to reinstatement without loss of seniority rights and other
privileges or separation pay in case reinstatement is no longer possible, and to his full
backwages, inclusive of allowances and other benefits. It was thus error for the Court
of Appeals to affirm the NLRC decision to award Calimlim and Rico indemnity in
addition to the measure of damages provided in Article 279. The award of indemnity is
a penalty awarded only when the dismissal was for just or authorized cause but where
the twin-notice requirement was not observed.
Same; Appeals; The office of a petition for review under Rule 45 is to review the
decision of the Court of Appeals, not the National Labor Relations Commission.—With
respect to the fourth issue, petitioners fault the appellate court for failing to state why
petitioners should pay respondents their proportionate 13th month pay and service
incentive leave pay. On this matter, we find that the appellate court committed no error.
Petitioners did not question the propriety of the award of proportionate 13th month pay
and service incentive leave in the Court of Appeals. They assailed the NLRC decision
on only one ground: “Respondent NLRC committed grave abuse of discretion in
reversing the Labor Arbiter’s decision insofar as it relates to the issues of illegal
dismissal.” Hence, the correctness of the cited award in the NLRC ruling was never
brought before the appellate court and is deemed to have been admitted by petitioners.
It cannot therefore be raised anymore in this petition. The office of a petition for review
under Rule 45 is to review the decision of the Court of Appeals, not the NLRC. The
decision of the NLRC as regards the award of 13th month pay and service incentive
leave pay became binding on petitioners because the failure to question it before the
Court of Appeals amounts to an acceptance of the ruling. In any event, the award
appears to us amply supported by evidence and in accord with law.
PETITION for review on certiorari of a decision of the Court of Appeals.
DECISION
QUISUMBING, J.:
Petitioners Floren Hotel, Ligaya Chu, Dely Lim and Jose Chua Lim seek to annul the
Decision,1 dated September 10, 2002, of the Court of Appeals in CA-G.R. SP No.
60685 insofar as it ruled that petitioners had constructively dismissed private
respondents Roderick A. Calimlim and Ronald T. Rico, hence the petitioners are liable
to the private respondents for their proportionate 13th month pay, service incentive
leave pay, and indemnity.
At the time of their termination, private respondents Roderick A. Calimlim, Ronald T.
Rico and Jun A. Abalos were working in the hotel as room boys, private respondent
Lito F. Bautista as front desk man, and private respondent Gloria B. Lopez as waitress.
They all started working for the hotel in 1993, except for Jun A. Abalos who started only
in 1995.
In the afternoon of June 6, 1998, petitioner Dely Lim randomly inspected the hotel
rooms to check if they had been properly cleaned. When she entered Room 301, she
found private respondent Lito F. Bautista sleeping half-naked with the air-conditioning
on. Lim immediately called the attention of the hotel’s acting supervisor, Diosdado
Aquino, who had supervision over Bautista. Lim admonished Aquino for not supervising
Bautista more closely, considering that it was Bautista’s third offense of the same
nature.
When she entered Room 303, she saw private respondents Calimlim and Rico drinking
beer, with four bottles in front of them. They had taken these bottles of beer from the
hotel’s coffee shop. Like Bautista, they had switched on the air conditioning in Room
303.
That same afternoon, Dely Lim prepared a memorandum for Bautista, citing the latter
for the following incidents: (1) sleeping in the hotel rooms; (2) entertaining a brother-in-
law for extended hours during duty hours; (3) use of hotel funds for payment of SSS
loan without management consent; (4) unauthorized use of hotel’s air-con; and (5)
failure to pay cash advance in the amount of P4,000.2
In the presence of Acting Supervisor Aquino as well as workers Jennifer Rico, Romel
Macaraeg, Mario Resquino and Charie Chua, Dely Lim tried to give Bautista a copy of
the memorandum but Bautista refused to receive it. Bautista then went on absence
without leave. Calimlim and Rico, embarrassed by the incident, went home. When they
returned to work the next day, they were served with a notice3 of suspension for one
week.
Like Bautista, they refused to receive the notice of suspension, but opted to serve the
penalty. Upon their return on June 15, 1998, they saw a memorandum4 dated June 13,
1998 on the bulletin board announcing (a) the suspension as room boys of Calimlim
and Rico, or alternately, (b) returning to work on probation as janitors for the following
reasons: unsatisfactory work, having a drinking spree inside the hotel’s rooms, cheating
on the Daily Time Record, being absent without valid reason, leaving work during duty
time, tardiness, and sleeping on the job. The memorandum also included Calimlim and
Rico’s new work schedule.
Calimlim and Rico submitted handwritten apologies5 and pleaded for another chance,
before they went AWOL (absent without leave).
On June 25, 1998,6 Calimlim, Rico and Bautista filed separate complaints, for illegal
dismissal and money claims, before the Labor Arbiter in Dagupan City. Calimlim and
Rico claimed they were constructively dismissed, while Bautista claimed that Dely Lim
orally told him not to go back to work because he was already dismissed. Abalos and
Lopez later also filed separate complaints for underpayment of wages, non-payment of
their 13th month pay, and service incentive leave pay. On July 7, 1998, after they
stopped working, Abalos and Lopez amended their complaints. They claimed that
petitioners orally dismissed them when they refused to withdraw their complaints.
Petitioners for their part, alleged that they did not dismiss private respondents but that
private respondents had abandoned their jobs.7
Private respondents filed a manifestation and motion8 dated November 24, 1998,
praying that petitioners be ordered to reinstate them to their former positions since after
all, according to petitioners, they were not dismissed.
Petitioners opposed the motion and argued that private respondents cannot be
reinstated since they were not illegally dismissed but they had abandoned their jobs
and management simply considered them dismissed for abandonment.9 There is no
record, however, that the Labor Arbiter resolved said motion.
On March 19, 1999, the Labor Arbiter dismissed the complaints but ordered petitioners
to pay private respondents their proportionate 13th month pay, and service incentive
leave pay. He likewise ordered petitioners to pay Calimlim and Rico indemnity. He
decreed:
IN VIEW OF THE FOREGOING PREMISES, judgment is hereby rendered as
follows:
1. Declaring that the five complainants in these consolidated cases were not
dismissed illegally from their work but they abandoned their work.
2. Ordering respondents Floren Hotel and/or Ligaya [Chu] and Dely Joson Lim to
pay the complainants proportionate 13th month pay for 1998 and incentive leave
pay equivalent to two and one half days salary (January to June 1998), computed
as follows:
Proportionate 13th month pay:
a) Roderick Calimlim (daily wage as of June 4, 1998 =
P148.00 x 30 days [=] P4,440 x 6 months (Jan. to June
1998) = P26,640 divided by 12 (one year) = P2,220.00;
b) Ronald Rico = P2,220.00
c) Jun Abalos = P2,220.00
d) Lito Bautista = P2,220.00
e) Gloria Lopez = P2,220.00
Service Incentive Leave:
R. Calimlim (2 ½ days salary) = P 369.00
R. Rico = 369.00
J. Abalos = 369.00
 L. Bautista = 369.00 Later, the NLRC also denied petitioners’ motion for reconsideration.19 Hence, the
G. Lopez = 369.00 petitioners appealed to the Court of Appeals.20
3. Ordering the same respondents to pay Roderick Calimlim and Ronald Rico On September 10, 2002, the Court of Appeals decided the petition as follows:
one thousand five hundred pesos each as indemnity; WHEREFORE, premises considered, the Court MODIFIES the Decision of the
Summary: respondent NLRC in this wise: (1) The Court declares that the private respondents
Roderick A. Calimlim and Jose Abalos [should be Ronald T. Rico] were illegally
R. Calimlim = P4,089.00
dismissed by petitioner Floren Hotel/Ligaya Chu who is ORDERED to reinstate them
R. Rico = 4,089.00 to their former positions without loss of [seniority] rights, with full backwages and other
J. Abalos = 2,589.00 benefits until they are actually reinstated; but if reinstatement is no longer possible,
L. Bautista = 2,589.00 Floren Hotel/Ligaya Chu shall pay their separation pay in addition to their backwages.
G. Lopez = 2,589.00 (2) Declaring private respondents Lito Bautista, Jun Abalos and Gloria Lopez to have
abandoned their employment, and, therefore, not entitled to either backwages nor
TOTAL AWARD = P15,945.00 separation pay; and (3) ORDERING Floren Hotel/Ligaya Chu to pay all the private
All other claims of the complainants including moral and exemplary damages respondents their 13thmonth pay and incentive leave pay as computed in the Decision
are hereby denied/dismissed for want of merit. of the Labor Arbiter, to wit:
SO ORDERED.10 Proportionate 13th month pay:
The Labor Arbiter found that Calimlim, Rico, and Bautista did not report for work and
a) Roderick Calimlim (daily wage as of June 4, 1998 = plus P148.00 x
they did not show any order of dismissal, thus constructively, they abandoned their
30 days
work and were not illegally dismissed. The Labor Arbiter also ruled that Calimlim and
Rico’s demotion and reassignment were valid exercises of management prerogatives. P4,440 x 6 months (Jan. to June 1998) P26,640 divided by 12 (one
The reassignment was intended to enable management to supervise them more closely year) = P2,220.00;
and, in any event, did not involve a diminution of wages.11 The Labor Arbiter, however,
b) Ronald Rico = P2,220.00
held petitioners liable for indemnity to Calimlim and Rico for not observing the twin
notices rule. c) Jun Abalos = P2,220.00
On the absence of any suspension order or notice of dismissal12 concerning Abalos
and Lopez, the Labor Arbiter held that the allegation that they were orally dismissed d) Lito Bautista = P2,220.00
was insufficient, self-serving, and baseless.
e) Gloria Lopez = P2,220.00
Private respondents appealed to the National Labor Relations Commission (NLRC).
They averred that the Labor Arbiter committed grave abuse of discretion in ruling (1) Service Incentive Leave:
that they abandoned their work, and (2) that the immediate filing of their complaints for R. Calimlim (2 ½ days= P 369.00
illegal dismissal where they prayed for reinstatement, did not mean they abandoned salary)
their jobs. They stressed that the two elements of abandonment were not proven and
R. Rico = 369.00
that petitioners failed to comply with the two-notice rule.13 Private respondents likewise
insisted that damages were due them, because their dismissal was attended with bad J. Abalos = 369.00
faith and malice.14 L. Bautista = 369.00
On March 22, 2000, the NLRC rendered its decision.15 It reversed the decision of the G. Lopez = 369.00
Labor Arbiter and ordered the hotel management to immediately reinstate 3. Ordering the same respondents to pay Roderick Calimlim and Ronald Rico one
complainants-appellants to their former positions without loss of seniority rights, with thousand five hundred pesos each as indemnity;
full backwages and other benefits until they are actually reinstated. In the event that Summary:
reinstatement was no longer possible, the respondent-appellees should pay herein
private respondents their separation pay in addition to the payment of their full R. Calimlim = P4,089.00
backwages; their incentive leave pay and their 13th month pay, together with P1,000 to R. Rico = 4,089.00
each of them as indemnity.16 J. Abalos = 2,589.00
The NLRC concluded that petitioners failed to prove that private respondents had L. Bautista = 2,589.00
abandoned their work. Petitioners likewise failed to serve private respondents notices G. Lopez = 2,589.00
of termination based on abandonment. The NLRC added that Calimlim and Rico were
TOTAL AWARD = P15,945.00
constructively dismissed when they were demoted from room boys to janitors and
reclassified as probationary employees.17 However, the NLRC denied private SO ORDERED.21
respondents’ claim for damages and attorney’s fees. It found no evidence that The Court of Appeals agreed with the NLRC that the June 13, 1998, memorandum
petitioners acted maliciously or in bad faith in dismissing the five private respondents.18 demoting Calimlim and Rico to janitors and reclassifying them as probationary
employees constituted constructive discharge. The Court of Appeals likewise ruled that
their right to due process was violated when they were imposed the additional penalties
of demotion from room boys to janitors, reassignment as part-time employees, and
change of their status from regular to probationary for other alleged offenses for which
they were not given notice.22
But the Court of Appeals held that the NLRC committed grave abuse of discretion in
declaring that Bautista, Abalos and Lopez were illegally dismissed, since they
presented no other piece of evidence besides the allegations in their position
papers.23 The appellate court brushed aside the issue that petitioners’ failure to serve
notices of termination was due to the immediate filing of the complaints for illegal
dismissal which made the service of such notices superfluous.24
Petitioners received a copy of the decision on September 20, 2002. On October 3,
2002, they filed the instant appeal, raising the following errors:
(a)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN
UPHOLDING THE FINDINGS OF THE RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION DECLARING RESPONDENTS CALIMLIM AND RICO
TO HAVE BEEN CONSTRUCTIVELY DISMISSED FROM THE SERVICE, SOLELY
ON THE BASIS OF THE MEMORANDUM DATED JUNE 13, 1998. THE COURT OF
APPEALS MISINTERPRETED AND MISAPPRECIATED THE IMPORT OF THE
SAID MEMORANDUM VIS-À-VIS THE RULING OF THE HONORABLE COURT ON
CONSTRUCTIVE DISMISSAL.
(b)
THE COURT OF APPEALS ERRED IN ORDERING THE PETITIONERS TO PAY
THE RESPONDENTS-EMPLOYEES THEIR PROPORTIONATE 13TH MONTH PAY
AND SERVICE INCENTIVE LEAVE AND IN ORDERING THE PETITIONERS TO
PAY RESPONDENTS CALIMLIM AND RICO P1,500.00 EACH AS INDEMNITY.25
Private respondents, for their part, received a copy of the decision on September 23,
2002. On October 7, 2002, the private respondents except Calimlim filed a motion for
reconsideration. They pointed out the typographical error in the dispositive portion of
the Court of Appeals decision which declared that it was Calimlim and a certain Jose
Abalos who were constructively dismissed.26
They raised the following errors:
...
II. The Honorable Court gravely erred in holding that Lito Bautista, Gloria Lopez and
Jun Abalos were not illegally dismissed as they abandoned their jobs.
III The Honorable Court gravely erred in giving due course to the petition despite the
fact that it was not sufficient in form as it was not accompanied by copies of all
pleadings and documents relevant and pertinent thereto.27
On November 20, 2002, the Court of Appeals required management, herein petitioners,
to comment on the motion. Upon receipt of petitioners’ comment, however, the Court
of Appeals issued a resolution on March 29, 2004, holding in abeyance the action on
said motion for reconsideration by the concerned employees, herein private
respondents, pending final resolution by this Court of the instant petition.28
In this petition now before us, we find four issues for our resolution: (1) whether the
Court of Appeals erred in giving due course to the petition for certiorari filed before the
appellate court; (2) whether the private respondents were illegally dismissed; (3)
whether the Court of Appeals erred in ordering petitioners to pay Calimlim and Rico
indemnity of P1,500; and (4) whether the appellate court erred in ordering petitioners
to pay all of private respondents their proportionate 13th month pay and incentive leave
pay.
On the first issue, private respondents argue that the failure of petitioners to attach
copies of the position papers to their petition for certiorari before the Court of Appeals
was fatal to their cause. Private respondents point out that petitioners’ allegation (that
the NLRC decision holding that Bautista, Abalos and Lopez had been illegally
dismissed) was not supported by substantial evidence. They add that the NLRC erred
in disregarding the material evidence adduced by petitioners. Hence, it was essential
that the evidence for the parties contained in their position papers be attached to the
petition as required by Section 1, Rule 65 of the Rules of Court.29
We find no merit in private respondents’ insistence on procedural flaws. Acceptance of
a petition for certiorari as well as the grant of due course thereto is addressed to the
sound discretion of the court.30 Section 1, Rule 65 of the Rules of Court in relation to
Section 3, Rule 46 of the same rules does not specify the precise documents, pleadings
or parts of the records that should be appended to the petition other than the judgment,
final order, or resolution being assailed. The Rules only state that such documents,
pleadings or records should be relevant or pertinent to the assailed resolution, judgment
or orders.31 Here the pieces of evidence, which petitioners alleged had been arbitrarily
disregarded, were duly annexed to the petition. Also, the material allegations of the
position papers were summarized and discussed extensively in the decision of the
Labor Arbiter, a copy of which was also made part of the petition. It does not appear in
this case that in deciding to give due course to the petition for certiorari, the Court of
Appeals committed any error that prejudiced the substantial rights of the parties. There
is, therefore, no reason for this Court to disturb the appellate court’s determination that
the copies of the pleadings and documents attached to the petition were sufficient to
make out a prima facie case.
Nonetheless, on the second issue, we find that the Court of Appeals erred in reversing
the NLRC decision and in holding that Bautista, Abalos and Lopez were not illegally
dismissed, but had abandoned their jobs.
Petitioners claimed that all five private respondents were guilty of abandoning their jobs.
Thus, it was incumbent upon petitioners to show that the two requirements for a valid
dismissal on the ground of abandonment existed in this case. Specifically, petitioners
needed to present, for each private respondent, evidence not only of the failure to report
for work or that absence was without valid or justifiable reasons, but also of some overt
act showing the private respondent’s loss of interest to continue working in his or her
job.32
In our view, petitioners failed to adduce sufficient evidence to prove the charge of
abandonment. Petitioners merely presented joint affidavits from hotel supervisors
Agustin Aninag and Lourdes Cantago and other hotel employees showing that
Calimlim, Rico, and Bautista simply went on absence without leave after they were
confronted with certain irregularities, and that Abalos and Lopez likewise just left their
employment, also without filing leaves of absence.33 Those joint affidavits, however,
are insufficient as they do not show that the absence of Calimlim, Rico, Bautista, Abalos
and Lopez were unjustified. More important, they do not show any overt act that proves
that private respondents unequivocally intended to sever their working relationship with
the petitioners. We have held that mere absence from work does not constitute
abandonment.34
If it was true that private respondents abandoned their jobs, then petitioners should
have served them with a notice of termination on the ground of abandonment as
required under Sec. 2, Rule XIV, Book V, Rules and Regulation Implementing the Labor
Code, in effect at that time. Said Section 2 provided that:
Notice of Dismissal. Any employer who seeks to dismiss a worker shall furnish him
a written notice stating the particular acts or omission constituting the grounds for
his dismissal. In cases of abandonment of work, the notice shall be served at the
worker’s last known address.
But petitioners failed to comply with the foregoing requirement, thereby bolstering
further private respondents’ claim that they did not abandon their work but were illegally
dismissed.35
Indeed, we find that none of the private respondents in this case had any intention to
sever their working relationship. Just days after they were dismissed, private
respondents Calimlim, Rico, Bautista, Abalos and Lopez filed complaints to protest their
dismissals. The well-established rule is that an employee who takes steps to protest
his layoff cannot be said to have abandoned his work.36
That private respondents all desired to work in the hotel is further shown by the fact
that during the proceedings before the Labor Arbiter, shortly after private respondents
received petitioners’ position paper where the latter averred that private respondents
were never terminated, private respondents filed a manifestation and motion asking
that petitioners be ordered to allow them back to work. This is nothing if not an
unequivocal expression of eagerness to resume working.
We reiterate here the settled rule that in illegal dismissal cases, the employer bears the
burden of showing that the dismissal was for a just or authorized cause.37 Failure by
the employer to discharge this burden, as in this case, would necessarily mean that the
dismissal is not justified, and therefore illegal.38
As regards Calimlim and Rico, the NLRC further found that petitioners constructively
dismissed both. Before us, petitioners now argue that the Court of Appeals
misconstrued the memorandum of June 13, 1998. They insist that they had no intention
of dismissing Calimlim and Rico, as shown by the very fact that the memorandum itself
expressly allows Calimlim and Rico to return to work after they submit their written
explanations for the drinking incident which happened on June 6, 1998.39 Rather than
a constructive dismissal, petitioners argue that the temporary transfer of Calimlim and
Rico to janitorial positions was a valid exercise of the management prerogative to
assign their employees to where they would be of the most benefit to the hotel. This
temporary reassignment, according to the management, was intended solely to prevent
Calimlim and Rico from repeating their infractions by denying them access to the hotel
rooms and keeping them busy and easier to supervise in their new area assignments.40
Petitioners further argue that the terms of employment imposed in the memorandum
did not render continued employment impossible, unreasonable or unlikely because,
according to them, there was neither diminution of pay nor demotion involved. They
maintain that room boys and janitors receive the same wages and that the only
difference between the two is that room boys clean the rooms while janitors clean the
common areas.41
We are not persuaded by petitioners’ contention. For the transfer of the employee to
be considered a valid exercise of management prerogatives, the employer must show
that the transfer is not unreasonable, inconvenient or prejudicial to the employee;
neither would it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits. Should the employer fail to discharge this burden of proof, the
employee’s transfer shall be tantamount to constructive dismissal, which has been
defined as a quitting because continued employment is rendered impossible,
unreasonable or unlikely, as in an offer involving a demotion in rank and diminution in
pay.42
In this case, Calimlim and Rico were being forced to accept alternate work periods in
their new jobs as janitors, otherwise they would be unemployed. Not only did their new
schedule entail a diminution of wages, because they would only be allowed to work
every other week, the new schedule was also clearly for an undefined period. The June
13, 1998, memorandum did not state how long the schedule was to be effective.
Indeed, it appears that the period could continue for as long as management desired
it. These unreasonable new terms of employment were imposed in the memorandum
of June 13, 1998, which was issued two days before Calimlim and Rico returned from
their week-long suspension. They were imposed for alleged past infractions for which
neither Calimlim nor Rico was given the chance to be heard. Under the circumstances,
we fail to see how the temporary transfer of Calimlim and Rico could be a valid exercise
of management prerogatives. Even the employer’s right to demote an employee
requires the observance of the twin-notice requirement.43
As to the third issue, Article 279 of the Labor Code gives to Calimlim and Rico the right
to reinstatement without loss of seniority rights and other privileges or separation pay
in case reinstatement is no longer possible, and to his full backwages, inclusive of
allowances and other benefits. It was thus error for the Court of Appeals to affirm the
NLRC decision to award Calimlim and Rico indemnity in addition to the measure of
damages provided in Article 279. The award of indemnity is a penalty awarded only
when the dismissal was for just or authorized cause but where the twin-notice
requirement was not observed.44
With respect to the fourth issue, petitioners fault the appellate court for failing to state
why petitioners should pay respondents their proportionate 13th month pay and service
incentive leave pay.45 On this matter, we find that the appellate court committed no
error. Petitioners did not question the propriety of the award of proportionate 13thmonth
pay and service incentive leave in the Court of Appeals. They assailed the NLRC
decision on only one ground: "Respondent NLRC committed grave abuse of discretion
in reversing the Labor Arbiter’s decision insofar as it relates to the issues of illegal
dismissal." Hence, the correctness of the cited award in the NLRC ruling was never
brought before the appellate court and is deemed to have been admitted by petitioners.
It cannot therefore be raised anymore in this petition. The office of a petition for review
under Rule 45 is to review the decision of the Court of Appeals, not the NLRC. The
decision of the NLRC as regards the award of 13th month pay and service incentive
leave pay became binding on petitioners because the failure to question it before the
Court of Appeals amounts to an acceptance of the ruling. In any event, the award
appears to us amply supported by evidence and in accord with law.
WHEREFORE, the Decision dated September 10, 2002, of the Court of Appeals in CA-
G.R. SP No. 60685 is hereby MODIFIED. Petitioners Floren Hotel/Ligaya Chu, Dely
Lim, and Jose Chua Lim are held liable for illegally dismissing private respondents
Roderick A. Calimlim, Ronald T. Rico, Jun A. Abalos, Lito F. Bautista and Gloria B.
Lopez. Petitioners are ordered, (1) to reinstate private respondents to their former
positions without loss of seniority rights, with full backwages and other benefits until
they are actually reinstated or to pay their separation pay in addition to their backwages,
if reinstatement is no longer feasible; (2) to jointly and solidarily pay P2,589.00 to each
of the private respondents as proportionate 13th month pay and service incentive leave
pay for the period January to June 1998, as computed in the decision dated March 19,
1999, of the Labor Arbiter. No pronouncement as to costs.
SO ORDERED.
THIRD DIVISION to pre-empt the employer’s prerogative to grant salary increases to its employees. In
G.R. No. 72977 December 21, 1988 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
BIENVENIDO R. BATONGBACAL, petitioner, vs. ASSOCIATED BANK and
it was giving its other assistant vice-presidents.
NATIONAL LABOR RELATIONS COMMISSION, respondents.
Same; Same; Same; Same; Managerial Employee; Definition of, under Art.
Labor Relations; Resignation, meaning of; That courtesy resignations were
212(k) of the Labor Code; Case at bar.—Article 212(k) of the Labor Code defines a
utilized in government reorganizations did not give private respondent the right to use
managerial employee as “one who is vested with powers or prerogatives to lay down
it as well in its own reorganization and rehabilitation plan.—While it may be said that
and execute management policies and/or to hire, transfer, suspend, lay-off, recall,
the private respondent’s call for courtesy resignations was prompted by its
discharge, assign or discipline employees, or to effectively recommend such
determination to survive, we cannot lend legality to the manner by which it pursued its
managerial actions.” The same article provides that all employees not falling within said
goal. By directing its employees to submit letters of courtesy resignation, the bank in
definition are considered rank-and-file employees. Under Policy Instructions No. 8
effect forced upon its employees an act which they themselves should voluntarily do. It
which was issued by the then Secretary of Labor and which took effect on April 23,
should be emphasized that resignation per se means voluntary relinquishment of
1976, managerial employees are those (1) who have the power to lay down
a position or office. Adding the word “courtesy” did not change the essence of
management policies; (2) who have the power to hire, fire, demote, promote, etc.; and
resignation. That courtesy resignations were utilized in government reorganization did
(3) who have the power to recommend effectively (1) and (2). With these definitions, a
not give private respondent the right to use it as well in its own reorganization and
determination of whether petitioner is a managerial employee would have been easy
rehabilitation plan. There is no guarantee that all employers will not use it to rid
had the matter been properly threshed out below. The onus of proof on the matter fell
themselves arbitrarily of employees they do not like, in the guise of “stream-lining” its
on the private respondent but, as correctly observed by the Solicitor General, it did not
organization. On the other hand, employees would be unduly exposed to outright
present substantial proof that petitioner is vested with any of the powers and
termination of employment which is anathema to the constitutional mandate of security
prerogatives of a managerial employee. It merely relied upon provisions of the bank’s
of tenure.
amended by-laws specifically Article V, Section 2 and Article VI, Section 5 thereof.
Same; Same; Same; Dismissal; Insubordination may not be imputed to one who
Same; Same; Same; Same; The nature of the employee’s function and not the
refused to follow an unlawful order.—Petitioner’s dismissal was effected through a letter
nomenclature or title given to his job which determines whether the employee has rank-
“accepting” his resignation. Private respondent rationalizes that this was done, even if
and-file or managerial status.—The only other evidence on record from which the
petitioner did not actually submit such letter, so as not to jeopardize his chances of
functions of an assistant vice-president may be gleaned is the copy of petitioner’s
future employment. But it is also clear from its pleadings that private respondent
original appointment as such. It is stated therein that petitioner would “assist” the vice-
terminated petitioner’s employment for insubordination in view of his failure to comply
president in the performance of his job. Said function implies that he was not actually a
with the order to submit his letter of courtesy resignation. We hold, however, that
policy-determining employee but one who had to wait for assignments from his
insubordination may not be imputed to one who refused to follow an unlawful order.
superior. Notwithstanding that, both the labor arbiter and the NLRC proceeded from the
Same; Same; Same; Same; Loss of Confidence as a ground for dismissal must
presumption that petitioner was a managerial employee. A determination of the nature
be supported by satisfactory evidence.—Private respondent asserts that petitioner’s
of the functions of an assistant vice-president gains importance in the face of the
refusal to submit his letter of courtesy resignation was “sufficient reason to distrust him.”
variance of causes for the termination of employment of rank-and-file managerial
Loss of confidence as a ground for dismissal must be supported by satisfactory
employees. Much more so in the instant petition wherein the parties present
evidence. Even with respect to managerial employees who, under Policy Instructions
contradictory views on the status of petitioner. Of primordial consideration also is the
No. 8, may be dismissed for lack of confidence, loss of trust must be substantiated and
fact that it is the nature of the employees’ functions and not the nomenclature or title
clearly proven.
given to his job which determines whether the employee has rank-and-file or
Same; Same; Same; Same; No proof of malfeasance or misfeasance committed
managerial status.
by petitioner which jeopardized private respondent’s interest.—The record fails to show
Same; Same; Same; Same; Justice and equity demand that not only the factual
any valid reasons for terminating the employment of petitioner. There are no proofs of
issue of whether or not an assistant vice-president is a managerial employee but also
malfeasance or misfeasance committed by petitioner which jeopardized private
whether he is entitled to moral and exemplary damages, be considered.—We are
respondent’s interest. The latter’s allegations that petitioner was “purged” because he
aware that to remand this case below would mean further delay in its disposition,
sabotaged the bank and that he “contributed, directly or indirectly” to its downfall are
particularly as the petitioner is now around sixty-three years old. However, justice and
mere subjective conclusions unsubstantiated by hard facts. To clothe with legality
equity demand that not only the factual issue of whether or not an assistant vice-
petitioner’s dismissal for his failure to submit his letter of courtesy resignation is to add
president is a managerial employee but also whether or not petitioner is entitled to an
a ground for termination of employment to the provisions of the Labor Code.
award of moral and exemplary damages, should be considered. Indeed, the
Same; Same; Same; Same; Private respondent’s claim that it needed to trim
proceedings had below leave much to be desired.
down its employees as a self-preservation measure is belied by the amount of salaries
PETITION for certiorari to review the decision of the National Labor Relations
it was giving to its other assistant vice-presidents.—However, we agree with the
Commission.
Solicitor General and the NLRC that petitioner is not entitled to an award of the
FERNAN, C.J.:
difference between his actual salary and that received by the assistant vice-president
The issue in this petition for certiorari is whether or not an employer bank may legally
who had been given the salary next higher to his. There is a semblance of
dismiss its assistant vice-president for refusal to tender his courtesy resignation which
discrimination in this aspect of the bank’s organizational set-up but we are not prepared
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 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;
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.
SO ORDERED.8
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.
SO ORDERED. 9
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 needed to trim down its employees as a self-preservation measure is belied by the
respondent was, since 1981, in the throes of financial reverses due to the Dewey Dee amount of salaries it was giving its other assistant vice-presidents.
scandal. It was through the infusion of capital supplied by the Development Bank of the Notwithstanding the foregoing discussion, the Court cannot rule outright in favor of the
Philippines and the emergency loan provided by the Central Bank that private petitioner. There are factual issues which must be dealt with below.
respondent was able to redeem itself. Accordingly, to "streamline" its operation, the
A pivotal point to consider is whether petitioner is a managerial or a rank-and-file
new management of the bank called upon all its employees to submit their courtesy
employee. Petitioner claims that inspite of his pompous title of assistant vice-president,
resignations and considered all executive positions vacant. Private respondent claims
he is actually a rank-and-file employee. On the other hand, private respondent asserts
that those who submitted letters of resignation were allowed to re-apply for positions
that petitioner is a managerial employee because he is "not only a department/unit head
where their qualifications were best suited while those who did not submit such letters
but an assistant vice-president" who is ranked higher than a manager "by any standard"
were terminated from employment for their alleged deliberate refusal to cooperate in its
and therefore, to consider him a rank-and-file employee is "to stretch one's imagination
rehabilitation. 10
too far." 17
While it may be said that the private respondent's call for courtesy resignations was
Article 212(k) of the Labor Code defines a managerial employee as "one who is vested
prompted by its determination to survive, we cannot lend legality to the manner by
with powers or prerogatives to lay down and execute management policies and/or to
which it pursued its goal. By directing its employees to submit letters of courtesy
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to
resignation, the bank in effect forced upon its employees an act which they themselves
effectively recommend such managerial actions." The same article provides that all
should voluntarily do. It should be emphasized that resignation per
employees not falling within said definition are considered rank-and-file employees.
se means voluntary relinquishment of a position or office. 11 Adding the word "courtesy"
Under Policy Instructions No. 8 which was issued by the then Secretary of Labor and
did not change the essence of resignation. That courtesy resignations were utilized in
which took effect on April 23, 1976, managerial employees are those (1) who have the
government reorganization did not give private respondent the right to use it as well in
power to lay down management policies; (2) who have the power to hire, fire, demote.
its own reorganization and rehabilitation plan. There is no guarantee that all employers
promote, etc.; and (3) who have the power to recommend effectively (1) and (2).
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 With these definitions, a determination of whether petitioner is a managerial employee
to outright termination of employment which is anathema to the constitutional mandate would have been easy had the matter been properly threshed out below. The onus of
of security of tenure. 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
Petitioner's dismissal was effected through a letter "accepting" his resignation. Private
of the powers and prerogatives of a managerial employee. 18 It merely relied upon
respondent rationalizes that this was done, even if petitioner did not actually submit
provisions of the bank's amended by-laws specifically Article V, Section 2 and Article
such letter, so as not to jeopardize his chances of future employment. 12 But it is also
VI, Section 5 thereof. 19
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 The only other evidence on record from which the functions of an assistant vice-
courtesy resignation. We hold, however, that insubordination may not be imputed to president may be gleaned is the copy of petitioner's original appointment as such. It is
one who refused to follow an unlawful order. 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
Private respondent asserts that petitioner's refusal to submit his letter of courtesy
one who had to wait for assignments from his superior. Notwithstanding that, both the
resignation was "sufficient reason to distrust him." 13 Loss of confidence as a ground
labor arbiter and the NLRC proceeded from the presumption that petitioner was a
for dismissal must be supported by satisfactory evidence. Even with respect to
managerial employee.
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 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
The record fails to show any valid reasons for terminating the employment of petitioner.
rank-and-file managerial employees. Much more so in the instant petition wherein the
There are no proofs of malfeasance or misfeasance committed by petitioner which
parties present contradictory views on the status of petitioner. Of primordial
jeopardized private respondent's interest. The latter's allegations that petitioner was
consideration also is the fact that it is the nature of the employee's functions and not
"purged" because he sabotaged the bank 15 and that he "contributed, directly or
the nomenclature or title given to his job which determines whether the employee has
indirectly" to its downfall 16 are mere subjective conclusions unsubstantiated by hard
rank-and-file or managerial status. 20
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 We are aware that to remand this case below would mean further delay in its
of the Labor Code. 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
However, we agree with the Solicitor General and the NLRC that petitioner is not
vice-president is a managerial employee but also whether or not petitioner is entitled to
entitled to an award of the difference between his actual salary and that received by
an award of moral and exemplary damages, should be considered. Indeed, the
the assistant vice-president who had been given the salary next higher to his. There is
proceedings had below leave much to be desired.
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 We note with dismay the impracticality of the position paper method of disposing labor
employees. In this connection, we may point out that private respondent's claim that it 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.
Footnotes
1 Rollo, p. 28.
2 Rollo, p. 29.
3 Rollo, p. 30.
4 Rollo, p. 31.
5 Rollo, p. 58.
6 Rollo, p. 33.
7 Rollo pp. 34-36.
8 Rollo, pp. 81-82.
9 Rollo, p. 135.
10 Rollo, pp. 128-130.
11 See Ortiz v. Comelec, G.R. No. 78957, June 28,1988.
12 Rollo, p. 90.
13 Rollo, p. 190.
14 De Leon v. NLRC, G.R. No. 52056, October 30, 1980, 100 SCRA 691; St. Luke's
Hospital, Inc. v. NLRC, G.R. Nos. 54068 & 54142, August 30, 1982, 116 SCRA 240;
D.M. Consunji, Inc. v. NLRC, G.R. No. 71456, July 30, 1986,143 SCRA 204.
15 Rollo, p. 52.
16 Rollo, p. 192.
17 Rollo, p. 250.
18 Rollo, p. 208.
19 Article V, Section 2 provides that the board of directors may appoint any number of
vice-presidents and/or assistant vice-presidents as may be deemed necessary upon
the recommendation of the executive vice-president with the concurrence of the
president (Rollo, p. 65). Article VI, Section 5 on the other hand, states that the vice-
president and/or assistant vice-presidents shall perform such powers and duties as the
board of directors may, from time to time, prescribe according to the recommendation
of the president.
20 Engineering Equipment, Inc. v. NLRC, G.R. No. 59221, December 26, 1984,113
SCRA 752, 760.

F
o
SECOND DIVISION
G.R. No. 117418 January 24, 1996
STELLAR INDUSTRIAL SERVICES, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and ROBERTO H. PEPITO, respondents.
Labor Law; Dismissal; AWOL; Illness; No serious misconduct could be imputed
to an employee where he complied with company rule that in case of illness
necessitating absence of two days or more, the office should be informed beforehand
about the same, that is, on the first day of absence.—While there is no record to show
that approval was obtained by Pepito with regard to his absences, the fact remains that
he complied with the company rule that in case of illness necessitating absence of two
days or more, the office should be informed beforehand about the same, that is, on the
first day of absence. Since the cause of his absence could not have been anticipated,
to require prior approval would be unreasonable. On this score, then, no serious
misconduct may be imputed to Pepito. Necessarily, his dismissal from work, tainted as
it is by lack of just cause, was clearly illegal.
Same; Same; Same; Same; Medical Certificates; An employer is in error in
interpreting a medical certificate submitted by an employee in a strained and nitpicking
manner.—More importantly, private respondent duly presented the requisite medical
certificate. True, Stellar did not accept the veracity of the same, but it did so quite
erroneously. Carlos P. Callanga, petitioner’s vice-president for operations, interpreted
the certificate submitted by Pepito in the following strained and nitpicking manner. A
careful perusal and objective appreciation of the medical certificate in question, which
was properly signed by a physician whose existence and professional license number
was not questioned by petitioner, convince us to conclude otherwise. Handwritten by
the issuing doctor, it states in no uncertain terms: “This is to inform that I had examined
Roberto Pepito. He has already recovered from his intestinal abdominal pains suffered
last Nov. 2/90 to Dec. 14/90. He may resume his work anytime.”
Same; Same; Same; Same; Same; Management’s characterization of the
procurement of a medical certificate as an afterthought is baseless where such
certificate bears all the earmarks of regularity in its issuance—labor is entitled to at least
elementary fairness from management.—Again, there is no logic in Callanga’s
assumption that the certificate was obtained only as an afterthought. It should be noted
that Callanga required Pepito to make a written explanation regarding his absences
only on December 18, 1990. Pepito accordingly complied with the same and he
attached therewith the medical certificate which showed its date of issuance as
December 14, 1990. Thus, even before he was made to explain his absences, he
already had the medical certificate to prove the reason therefor. To characterize the
procurement of the certificate as an afterthought is consequently baseless, especially
considering that it bears all the earmarks of regularity in its issuance. Labor is entitled
to at least elementary fairness from management.
Same; Same; Previous infractions may be used as justification for an employee’s
dismissal from work only if in connection with a subsequent similar offense.—
Petitioner’s reliance on Pepito’s past infractions as sufficient grounds for his eventual
dismissal, in addition to his prolonged absences, is likewise unavailing. The correct rule
is that previous infractions may be used as justification for an employee’s dismissal
from work in connection with a subsequent similar offense. That is not the case here.
Stellar contends that Pepito’s service record shows that he was under preventive
suspension in October, 1979 due to gambling and that, at various days of certain
months in 1986, 1987, and 1988, he was issued several warnings for habitual tardiness.
Then, in October, 1988, he was asked to explain why he was carrying three sacks of
rice in violation of company rules. In the present case, private respondent’s absences,
as already discussed, were incurred with due notice and compliance with company
rules and he had not thereby committed a “similar offense” as those he had committed
in the past.
Same; Wages; Illegal Deductions; A mere board resolution of the directors, and
not by the majority of all the members of a labor organization, cannot validly allow
deductions from an employee’s salary; A written individual authorization duly signed by
the employee concerned is also a condition sine qua non for such deduction.—The
deduction could be characterized as a special assessment for a “Death Aid Program.”
Consequently, a mere board resolution of the directors, and not by the majority of all
the members, cannot validly allow such deduction. Also, a written individual
authorization duly signed by the employee concerned is a condition sine qua
non therefor. Employees are protected by law from unwarranted practices that have for
their object the diminution of the hard-earned compensation due them. Private
respondent herein must be extended that protection, especially in view of his lowly
employment status.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
DECISION
REGALADO, J.:
Imputing grave abuse of discretion by public respondent as its cause of concern in this
special civil action for certiorari, petitioner Stellar Industrial Services, Inc. (Stellar) seeks
the annulment of the decision,1 dated May 31, 1994, of the National Labor Relations
Commission in NLRC NCR CA No. 004326-93 and its resolution of July 21, 1994
denying petitioner's motion for reconsideration. Interestingly, this recourse is the
culmination of petitioner's sustained corporate and legal efforts directed against a mere
janitor who was formerly employed by it.
Stellar Industrial Services, Inc., an independent contractor engaged in the business of
providing manpower services, employed private respondent Roberto H. Pepito as a
janitor on January 27, 1975 and assigned the latter to work as such at the Maintenance
Base Complex of the Philippine Airlines (MBC-PAL) in Pasay City. There, Pepito toiled
for a decade and a half. According to petitioner, private respondent's years of service
at MBC-PAL were marred by various infractions of company rules ranging from
tardiness to gambling, but he was nevertheless retained as a janitor out of humanitarian
consideration and to afford him an opportunity to reform.2
Stellar finally terminated private respondent's services on January 22, 1991 because
of what it termed as Pepito's being "Absent Without Official Leave (AWOL)/Virtual
Abandonment of Work - Absent from November 2 - December 10, 1990." Private
respondent had insisted in a letter to petitioner dated December 2, 1990, to which was
attached what purported to be a medical certificate, that during the period in question
he was unable to report for work due to severe stomach pain and that, as he could
hardly walk by reason thereof, he failed to file the corresponding official leave of
absence.3
As petitioner disbelieved private respondent's explanation regarding his absences, the
latter contested his severance from employment before the Arbitration Branch of the
National Labor Relations Commission (NLRC) in Manila in a complaint docketed as
NLRC NCR-00-03-01869-91 for illegal dismissal, illegal deduction and underpayment
of wages under Wage Order NCR-001, with prayer for moral and exemplary damages
and attorney's fees. While the labor arbiter was of them view that Pepito was not entitled
to differential pay under said wage order, or to moral and exemplary damages for lack
of bad faith on the part of petitioner, he opined that private respondent had duly proved
that his 39-day absence was justified on account of illness and that he was illegally
dismissed without just cause.4
Thus the decision rendered on December 28, 1992 by Labor Arbiter Manuel R. Caday
decreed:
WHEREFORE, judgment is hereby rendered declaring the dismissal of the
complainant as illegal and ordering the respondent to immediately reinstate
complainant to his former position as Utilityman, without loss of seniority rights and
with full backwages and other rights and privileges appurtenant to his position until
he is actually reinstated. As computed, the judgment award in favor of the
complainant is stated hereunder:
Backwages
1/27/91 - 12/27/92 at P118. 00 per day P82,550.83
Refund of amount illegally deducted (3 years) 288.00
Grand Total P82,838.83
========
The respondent is further ordered to pay the complainant reasonable attorney's fees
equivalent to 10% of the amount recoverable by the complainant.5
As hereinbefore stated, said judgment of the labor arbiter was affirmed by respondent
commission. Petitioner's subsequent motion for reconsideration was likewise rebuffed
by the NLRC, hence the present remedial resort to this Court.
Petitioner contends that public respondent acted with grave abuse of discretion when
it discussed and resolved the issue of abandonment which petitioner had not, at any
time, raised before it for resolution. Further, petitioner considers it patently erroneous
for public respondent to rule that the medical certificate adduced by Pepito sufficiently
established the fact of sickness on his part which thereby justified his absences.
Additionally, it claims that respondent commission gravely erred when it did not
carefully examine the evidence, pointing out Pepito's errant behavior and conduct.6
Petitioner argues, moreover, that the award of back wages and attorney's fees was not
justified considering that Pepito was validly dismissed due to serious misconduct on his
part. Lastly, petitioner insists that the deductions it imposed upon and collected from
Pepito's salary was authorized by a board resolution of Stellar Employees Association,
of which private respondent was a member.7 The Court, however, is unable to perceive
or deduce facts constitutive of grave abuse of discretion in public respondent's
disposition of the controversy which would suffice to overturn its affirmance of the labor
arbiter's decision.
On the initial issue posed by petitioner, respondent commission should indeed have
refrained from passing upon the matter of abandonment, much less from considering
the same as the ground for petitioner's termination of private respondent's services.
The records of the case indicate that Pepito's employment was cut short by Stellar due
to his having violated a company rule which requires the filing of an official leave of
absence should an employee be unable to report for work, aside from the circumstance
that Stellar did not find credible Pepito's explanation that he was then suffering from
severe stomach and abdominal pains.
To be sure, public respondent may well have been misled by the fact that petitioner, in
dismissing Pepito, labelled his violation as "Absent Without Official Leave
(AWOL)/Virtual Abandonment.8 Respondent NLRC should have noted that the matter
of abandonment was never brought up as an issue before it and that Stellar never
considered Pepito as having abandoned his job. As a matter of fact, private respondent
was only considered by petitioner as absent until December 10, 1990.9 Pepito was
dismissed from work simply for going on leave without prior official approval and for
failing to justify his absence. This is evident from the fact that petitioner did not assail
Pepito's allegations that, at the start of his extended absence, he had informed Stellar,
through telephone calls to his superior at MBC-PAL, that he could not report for work
due to illness. Thus, while abandonment is indisputably a valid legal ground for
terminating one's employment, 10 it was a non-issue in this dispute. Be that as it may,
that misapprehension of the NLRC on this particular issue is not to be considered an
abuse of discretion of such gravity as to constitute reversible error.
In the main, therefore, what is truly at issue here is whether or not serious misconduct
for non-observance of company rules and regulations may be attributed to Pepito and,
if so, whether or not the extreme penalty of dismissal meted to him by Stellar may be
justified under the circumstances. We resolve both issues in the negative.
Stellar's company rules and regulations on the matter could not be any clearer, to wit:
Absence Without Leave
Any employee who fails to report for work without any prior approval from his
superior(s) shall be considered absent without leave.
In the case of an illness or emergency for an absence of not more than one (1) day,
a telephone call or written note to the head office, during working hours, on the day
of his absence, shall be sufficient to avoid being penalized.
In the case of an illness or an emergency for an absence of two (2) days or more,
a telephone call to the head office, during regular working hours, on the first day of
his absence, or a written note to the head office, (ex. telegram) within the first three
(3) days of his absence, and the submission of the proper documents (ex. medical
certificate) on the first day he reports after his absence shall be sufficient to avoid
being penalized.
1st offense - three (3) days suspension
2nd offense - seven (7) days suspension
3rd offense - fifteen (15) days suspension
4th offense - dismissal with a period of one (1) year.11
There was substantial compliance with said company rule by private respondent. He
immediately informed his supervisor at MBC-PAL of the fact that he could not report for
work by reason of illness. At the hearing, it was also established without contradiction
that Pepito was able to talk by telephone to one Tirso Pamplona, foreman at MBC-PAL,
and he informed the latter that he would be out for two weeks as he was not feeling
well. 12 Added to this is his letter to the chief of personnel which states that, on
November 2, 1990, he relayed to his supervisor at MBC-PAL his reason for not
reporting for work and that, thereafter, he made follow-up calls to their office when he
still could not render services. 13 As earlier noted, these facts were never questioned
nor rebutted by petitioner.
While there is no record to show that approval was obtained by Pepito with regard to
his absences, the fact remains that he complied with the company rule that in case of
illness necessitating absence of two days or more, the office should be informed
beforehand about the same, that is, on the first day of absence. Since the cause of his
absence could not have been anticipated, to require prior approval would be
unreasonable. On this score, then, no serious misconduct may be imputed to Pepito.
Necessarily, his dismissal from work, tainted as it is by lack of just cause, was clearly
illegal.
More importantly, private respondent duly presented the requisite medical certificate.
True, Stellar did not accept the veracity of the same, but it did so quite erroneously.
Carlos P. Callanga, petitioner's vice-president for operations, interpreted the certificate
submitted by Pepito in the following strained and nitpicking manner:
a) The medical certificate merely states that Pepito suffered from "alleged,
abdominal pain" from November 2, 1990 to December 14, 1990. It does not state
that the abdominal pain was so severe as to incapacitate him for (sic)work.
b) Because the medical certificate states that the abdominal pain was merely
"alleged," I had reason to believe that the doctor who issued it did not personally
know if such abdominal pain really existed for the period in question.
c) From the medical certificate, I gathered that the doctor who signed it examined
Pepito only on December 14, 1990, which is the date it appears to have been
issued. It does not state that said doctor actually treated Pepito for the period of his
absence.
d) The medical certificate also says Pepito was suffering from alleged abdominal
pains until December 14, 1990, but that he could resume work anytime thereafter.
This implies that he was physically fit to resume work anytime thereafter. However,
our records show that Pepito was absent only until December 10, 1990. If it is true
that Pepito's abdominal pains incapacitated him for (sic) work, he should have been
absent until December 14, 1990. These give me reason to believe that the medical
certificate was secured only as an afterthought and does not satisfactorily explain
Pepito's protracted absence.14
A careful perusal and objective appreciation of the medical certificate in question, which
was property signed by a physician whose existence and professional license number
was not questioned by petitioner, convince us to conclude otherwise. Handwritten by
the issuing doctor, it states in no uncertain terms:
This is to inform that I had examined Roberto Pepito. He has already recovered
from his intestinal abdominal pains suffered last Nov. 2/90 to Dec. 14/90.
He may resume his work anytime.15
Thus, nowhere in said certificate is there any indication that the abdominal pain suffered
by Pepito was only as alleged by him. It definitely states that Pepito was personally
examined by the physician and it can be clearly deduced from the affirmative
statements "(h)e has already recovered. . ." and "(h)e may resume his work anytime"
that Pepito was really not in a position to report for work from November 2 to December
14, 1990 on account of actual, and not merely alleged, intestinal abdominal pains. The
certificate further confirms Pepito's earlier information given by him on November 2,
1990 and which he duty relayed to his supervisor as the true reason for his inability to
work. Callanga obviously misread, we hope unwittingly, "intestinal abdominal pain" as
"alleged abdominal pain."
Again, there is no logic in Callanga's assumption that the certificate was obtained only
as an afterthought. It should be noted that Callanga required Pepito to make a written
explanation regarding his absences only on December 18, 1990. 16 Pepito accordingly
complied with the same and he attached therewith the medical certificate which showed
its date of issuance as December 14, 1990. 17 Thus, even before he was made to
explain his absences, he already had the medical certificate to prove the reason
therefor. To characterize the procurement of the certificate as an afterthought is
consequently baseless, especially considering that it bears all the earmarks of
regularity in its issuance. Labor is entitled to at least elementary fairness from
management.
Petitioner's reliance on Pepito's past infractions as sufficient grounds for his eventual
dismissal, in addition to his prolonged absences, is likewise unavailing. The correct rule
is that previous infractions may be used as justification for an employee's dismissal
from work in connection with a subsequent similar offense. 18 That is not the case here.
Stellar contends that Pepito's service record shows that he was under preventive
suspension in October, 1979 due to gambling and that, at various days of certain
months in 1986, 1987, and 1988, he was issued several warnings for habitual tardiness.
Then, in October, 1988, he was asked to explain why he was carrying three sacks of
rice in violation of company rules.
In the present case, private respondent's absences, as already discussed, were
incurred with due notice and compliance with company rules and he had not thereby
committed a "similar offense" as those he had committed in the past. Furthermore, as
correctly observed by the labor arbiter, those past infractions had either been
"satisfactorily explained, not proven, sufficiently penalized or condoned by the
respondent." In fact, the termination notice furnished Pepito only indicated that he was
being dismissed due to his absences from November 2, 1990 to December 10, 1990
supposedly without any acceptable excuse therefor. There was no allusion therein that
his dismissal was due to his supposed unexplained absences on top of his past
infractions of company rules. To refer to those earlier violations as added grounds for
dismissing him is doubly unfair to private respondent. Significantly enough, no
document or any other piece of evidence was adduced by petitioner showing previous
absences of Pepito, whether with or without official leave.
Regarding the amount deducted from Pepito's salary, Stellar stresses that said
deduction concerning death aid benefits is lawful since these were made in accordance
with Board Resolution No. 02-85 adopted on August 17, 1988 by the board of directors
of the Stellar Employees Association. However, Article 241(n) of the Labor Code and
the implementing rules thereon in Section 13(a), Rule VIII, Book III disallow such
deductions. Article 241(n) states that "(n)o special assessment or other extraordinary
fees may be levied upon the members of a labor organization unless authorized by a
written resolution of a majority of all the members of a general membership meeting
duly called for the purpose. . . ."
The deduction could be characterized as a special assessment for a "Death Aid
Program." Consequently, a mere board resolution of the directors, and not by the
majority of all the members, cannot validly allow such deduction. Also, a written
individual authorization duly signed by the employee concerned is a condition sine qua
non therefor. Employees are protected by law from unwarranted practices that have for
their object the diminution of the hard-earned compensation due them. 19 Private
respondent herein must be extended that protection, especially in view of his lowly
employment status.
IN VIEW OF THE FOREGOING, no grave abuse of discretion having been committed
by respondent National Labor Relations Commission in its decision and resolution
assailed in the case at bar, the instant petition of Stellar Industrial Services, Inc. is
hereby DISMISSED for lack of merit. SO ORDERED.
Footnotes
10 Nueva Ecija I Electric Cooperative, Inc. (NEECO-I) vs. Minister of Labor, et al., G.R.
No. 61965, April 3, 1990, 184 SCRA 25: Cando vs. National Labor Relations
Commission, et al., G.R. No. 91344, September 14, 1990, 189 SCRA 666.
18 Filipro, Inc., vs. Ople, et al., G.R. No. 72129, February 7, 1990, 182 SCRA 1.
19 Palacol, et al., vs. Calleja, etc., et al., G.R. No. 85333, February 26, 1990, 182 SCRA
710.
SECOND DIVISION
G.R. No. 49549 August 30, 1990
EVELYN CHUA-QUA, petitioner, vs. HON. JACOBO C. CLAVE, in his capacity as
Presidential Executive Assistant, and TAY TUNG HIGH SCHOOL,
INC., respondents.
Certiorari; Labor Laws; Findings of fact must be supported by substantial
evidence.—Considering that there was no formal hearing conducted, we are
constrained to review the factual conclusions arrived at by public respondent, and to
nullify his decision through the extraordinary writ of certiorari if the same is tainted by
absence or excess of jurisdiction or grave abuse of discretion. The findings of fact must
be supported by substantial evidence; otherwise, this Court is not bound thereby.
Same; Same; Dismissal; Burden of proving just and valid cause for dismissal of
an employee rests on his employer.—It would seem quite obvious that the avowed
policy of the school in rearing and educating children is being unnecessarily bannered
to justify the dismissal of petitioner. This policy, however, is not at odds with and should
not be capitalized on to defeat the security of tenure granted by the Constitution to
labor. In termination cases, the burden of proving just and valid cause for dismissing
an employee rests on the employer and his failure to do so would result in a finding that
the dismissal is unjustified.
PETITION for certiorari to review the resolution of the Presidential Executive Assistant.
REGALADO, J.:
This would have been just another illegal dismissal case were it not for the controversial
and unique situation that the marriage of herein petitioner, then a classroom teacher,
to her student who was fourteen (14) years her junior, was considered by the school
authorities as sufficient basis for terminating her services.
Private respondent Tay Tung High School, Inc. is an educational institution in Bacolod
City. Petitioner had been employed therein as a teacher since 1963 and, in 1976 when
this dispute arose, was the class adviser in the sixth grade where one Bobby Qua was
enrolled. Since it was the policy of the school to extend remedial instructions to its
students, Bobby Qua was imparted such instructions in school by petitioner. 1 In the
course thereof, the couple fell in love and on December 24, 1975, they got married in
a civil ceremony solemnized in Iloilo City by Hon. Cornelio G. Lazaro, City Judge of
Iloilo.2 Petitioner was then thirty (30) years of age but Bobby Qua being sixteen (16)
years old, consent and advice to the marriage was given by his mother, Mrs.
Concepcion Ong.3 Their marriage was ratified in accordance with the rites of their
religion in a church wedding solemnized by Fr. Nick Melicor at Bacolod City on January
10, 1976. 4
On February 4, 1976, private respondent filed with the sub-regional office of the
Department of Labor at Bacolod City an application for clearance to terminate the
employment of petitioner on the following ground: "For abusive and unethical conduct
unbecoming of a dignified school teacher and that her continued employment is inimical
to the best interest, and would downgrade the high moral values, of the school." 5
Petitioner was placed under suspension without pay on March 12, 1976. 6 Executive
Labor Arbiter Jose Y. Aguirre, Jr. of the National Labor Relations Commission, Bacolod
City, to whom the case was certified for resolution, required the parties to submit their
position papers and supporting evidence. Affidavits 7 were submitted by private
respondent to bolster its contention that petitioner, "defying all standards of decency,
recklessly took advantage of her position as school teacher, lured a Grade VI boy under
her advisory section and 15 years her junior into an amorous relation." 8 More
specifically, private respondent raised issues on the fact that petitioner stayed alone
with Bobby Qua in the classroom after school hours when everybody had gone home,
with one door allegedly locked and the other slightly open.
On September 17, 1976, Executive Labor Arbiter Jose Y. Aguirre, Jr., without
conducting any formal hearing, rendered an "Award" in NLRC Case No. 956 in favor of
private respondent granting the clearance to terminate the employment of petitioner. It
was held therein that —
The affidavits . . . although self-serving but were never disputed by the respondent
pointed out that before the marriage of respondent to Bobby Qua, fourteen (14)
years her junior and during her employment with petitioner, an amorous relationship
existed between them. In the absence of evidence to the contrary, the undisputed
written testimonies of several witnesses convincingly picture the circumstances
under which such amorous relationship was manifested within the premises of the
school, inside the classroom, and within the sight of some employees. While no
direct evidences have been introduced to show that immoral acts were committed
during these times, it is however enough for a sane and credible mind to imagine
and conclude what transpired and took place during these times. . . . 9
Petitioner, however, denied having received any copy of the affidavits referred to. 10
On October 7, 1976, petitioner appealed to the National Labor Relations Commission
claiming denial of due process for not having been furnished copies of the aforesaid
affidavits relied on by the labor arbiter. She further contended that there was nothing
immoral, nor was it abusive and unethical conduct unbecoming of a dignified school
teacher, for a teacher to enter into lawful wedlock with her student.11
On December 27, 1976, the National Labor Relations Commission unanimously
reversed the Labor Arbiter's decision and ordered petitioner's reinstatement with
backwages, with the following specific findings:
Affiant Maselliones deposed and said that he saw appellant and Qua sitting on the
student desk inside a classroom after classes. The depositions of affiants Despi and
Chin are of the same tenor. No statements whatever were sworn by them that they
were eyewitnesses to immoral or scandalous acts.
xxx xxx xxx
Even if we have to strain our sense of moral values to accommodate the conclusion
of the Arbiter, we could not deduce anything immoral or scandalous about a girl and
a boy talking inside a room after classes with lights on and with the door open.
xxx xxx xxx
Petitioner-appellee naively insisted that the clearance application was precipitated
by immoral acts which did not lend dignity to the position of appellant. Aside from
such gratuitous assertions of immoral acts or conduct by herein appellant, no
evidence to support such claims was introduced by petitioner-appellee. We
reviewed the the sequence of events from the beginning of the relationship between
appellant Evelyn Chua and Bobby Qua up to the date of the filing of the present
application for clearance in search of evidence that could have proved detrimental
to the image and dignity of the school but none has come to our attention. . . . 12
The case was elevated by private respondent to the Minister of Labor who, on March
30, 1977, reversed the decision of the National Labor Relations Commission. The
petitioner was, however, awarded six (6) months salary as financial assistance. 13
On May 20, 1977, petitioner appealed the said decision to the Office of the President
of the Philippines. 14 After the corresponding exchanges, on September 1, 1978 said
office, through Presidential Executive Assistant Jacobo C. Clave, rendered its decision
reversing the appealed decision. Private respondent was ordered to reinstate petitioner
to her former position without loss of seniority rights and other privileges and with full
back wages from the time she was not allowed to work until the date of her actual
reinstatement. 15
Having run the gamut of three prior adjudications of the case with alternating reversals,
one would think that this decision of public respondent wrote finis to petitioner's calvary.
However, in a resolution dated December 6, 1978, public respondent, acting on a
motion for reconsideration 16 of herein private respondent and despite opposition
thereto, 17 reconsidered and modified the aforesaid decision, this time giving due
course to the application of Tay Tung High School, Inc. to terminate the services of
petitioner as classroom teacher but giving her separation pay equivalent to her six (6)
months salary. 18
In thus reconsidering his earlier decision, public respondent reasoned out in his
manifestation/comment filed on August 14, 1979 in this Court in the present case:
That this Office did not limit itself to the legal issues involved in the case, but went
further to view the matter from the standpoint of policy which involves the delicate
task of rearing and educating of children whose interest must be held paramount in
the school community, and on this basis, this Office deemed it wise to uphold the
judgment and action of the school authorities in terminating the services of a teacher
whose actuations and behavior, in the belief of the school authorities, had spawned
ugly rumors that had cast serious doubts on her integrity, a situation which was
considered by them as not healthy for a school campus, believing that a school
teacher should at all times act with utmost circumspection and conduct herself
beyond reproach and above suspicion; 19
In this petition for certiorari, petitioner relies on the following grounds for the reversal of
the aforesaid resolution of public respondent, viz.:
1. The dismissal or termination of petitioner's employment, despite Tay Tung's claim
to the contrary, was actually based on her marriage with her pupil and is, therefore,
illegal.
2. Petitioner's right to due process under the Constitution was violated when the
hearsay affidavits of Laddy Maselliones, Eleuterio Despi, Pina D. Chiu, and Ong
Lee Bing, were admitted and considered in evidence without presenting the affiants
as witnesses and affording the petitioner the right to confront and cross-examine
them.
3. No sufficient proofs were adduced to show that petitioner committed serious
misconduct or breached the trust reposed on her by her employer or committed any
of the other grounds enumerated in Article 283 (Now Article 282) of the Labor Code
which will justify the termination of her employment. 20
We first dispose of petitioner's claim that her right to due process was violated. We do
not agree. There is no denial of due process where a party was afforded an opportunity
to present his side. Also, the procedure by which issues are resolved based on position
papers, affidavits and other documentary evidence is recognized as not violative of
such right. Moreover, petitioner could have insisted on a hearing to confront and cross-
examine the affiants but she did not do so, obviously because she was convinced that
the case involves a question of law. Besides, said affidavits were also cited and
discussed by her in the proceedings before the Ministry of Labor.
Now, on the merits. Citing its upright intention to preserve the respect of the community
toward the teachers and to strengthen the educational system, private respondent
submits that petitioner's actuations as a teacher constitute serious misconduct, if not
an immoral act, a breach of trust and confidence reposed upon her and, thus, a valid
and just ground to terminate her services. It argues that as a school teacher who
exercises substitute parental authority over her pupils inside the school campus,
petitioner had moral ascendancy over Bobby Qua and, therefore, she must not abuse
such authority and respect extended to her. Furthermore, it charged petitioner with
having allegedly violated the Code of Ethics for teachers the pertinent provision of
which states that a "school official or teacher should never take advantage of his/her
position to court a pupil or student." 21
On the other hand, petitioner maintains that there was no ground to terminate her
services as there is nothing wrong with a teacher falling in love with her pupil and,
subsequently, contracting a lawful marriage with him. She argued that she was
dismissed because of her marriage with Bobby Qua This contention was sustained in
the aforesaid decision of the National Labor Relations Commission thus:
. . . One thing, however, has not escaped our observation: That the application for
clearance was filed only after more than one month elapsed from the date of
appellant's marriage to Bobby Qua Certainly, such belated application for clearance
weakens instead of strengthening the cause of petitioner-appellee. The alleged
immoral acts transpired before the marriage and if it is these alleged undignified
conduct that triggered the intended separation, then why was the present
application for clearance not filed at that time when the alleged demoralizing effect
was still fresh and abrasive?22
After a painstaking perusal of the records, we are of the considered view that the
determination of the legality of the dismissal hinges on the issue of whether or not there
is substantial evidence to prove that the antecedent facts which culminated in the
marriage between petitioner and her student constitute immorality and/or grave
misconduct. To constitute immorality, the circumstances of each particular case must
be holistically considered and evaluated in the light of prevailing norms of conduct and
the applicable law. Contrary to what petitioner had insisted on from the very start, what
is before us is a factual question, the resolution of which is better left to the trier of facts.
Considering that there was no formal hearing conducted, we are constrained to review
the factual conclusions arrived at by public respondent, and to nullify his decision
through the extraordinary writ of certiorari if the same is tainted by absence or excess
of jurisdiction or grave abuse of discretion. The findings of fact must be supported by
substantial evidence; otherwise, this Court is not bound thereby.23
We rule that public respondent acted with grave abuse of discretion. As vividly and
forcefully observed by him in his original decision:
Indeed, the records relied upon by the Acting Secretary of Labor (actually the
records referred to are the affidavits attached as Annexes "A" to "D" of the position
paper dated August 10, 1976 filed by appellee at the arbitration proceedings) in
arriving at his decision are unbelievable and unworthy of credit, leaving many
question unanswered by a rational mind. For one thing, the affidavits refer to certain
times of the day during off school hours when appellant and her student were found
together in one of the classrooms of the school. But the records of the case present
a ready answer: appellant was giving remedial instruction to her student and the
school was the most convenient place to serve the purpose. What is glaring in the
affidavits is the complete absence of specific immoral acts allegedly committed by
appellant and her student. For another, and very important at that, the alleged acts
complained of invariably happened from September to December, 1975, but the
disciplinenary action imposed by appellee was sought only in February, 1976, and
what is more, the affidavits were executed only in August, 1976 and from all
indications, were prepared by appellee or its counsel. The affidavits heavily relied
upon by appellee are clearly the product of after-thought. . . . The action pursued
 by appellee in dismissing appellant over one month after her marriage, allegedly
based on immoral acts committed even much earlier, is open to basis of the action
sought seriously doubted; on the question. The basis of the action sought is
seriously doubted; on the contrary, we are more inclined to believe that appellee
had certain selfish, ulterior and undisclosed motives known only to itself. 24
As earlier stated, from the outset even the labor arbiter conceded that there was no
direct evidence to show that immoral acts were committed. Nonetheless, indulging in a
patently unfair conjecture, he concluded that "it is however enough for a sane and
credible mind to imagine and conclude what transpired during those times." 25 In
reversing his decision, the National Labor Relations Commission observed that the
assertions of immoral acts or conducts are gratuitous and that there is no direct
evidence to support such claim, 26 a finding which herein public respondent himself
shared.
We are, therefore, at a loss as to how public respondent could adopt the volte-face in
the questioned resolution, which we hereby reject, despite his prior trenchant
observations hereinbefore quoted. What is revealing however, is that the reversal of his
original decision is inexplicably based on unsubstantiated surmises and non
sequiturs which he incorporated in his assailed resolution in this wise:
. . . While admittedly, no one directly saw Evelyn Chua and Bobby Qua doing
immoral acts inside the classroom it seems obvious and this Office is convinced
that such a happening indeed transpired within the solitude of the classrom after
regular class hours. The marriage between Evelyn Chua and Bobby Qua is the best
proof which confirms the suspicion that the two indulged in amorous relations in that
place during those times of the day. . . . 27
With the finding that there is no substantial evidence of the imputed immoral acts, it
follows that the alleged violation of the Code of Ethics governing school teachers would
have no basis. Private respondent utterly failed to show that petitioner took advantage
of her position to court her student. If the two eventually fell in love, despite the disparity
in their ages and academic levels, this only lends substance to the truism that the heart
has reasons of its own which reason does not know. But, definitely, yielding to this
gentle and universal emotion is not to be so casually equated with immorality. The
deviation of the circumstances of their marriage from the usual societal pattern cannot
be considered as a defiance of contemporary social mores.
It would seem quite obvious that the avowed policy of the school in rearing and
educating children is being unnecessarily bannered to justify the dismissal of petitioner.
This policy, however, is not at odds with and should not be capitalized on to defeat the
security of tenure granted by the Constitution to labor. In termination cases, the burden
of proving just and valid cause for dismissing an employee rests on the employer and
his failure to do so would result in a finding that the dismissal is unjustified.
The charge against petitioner not having been substantiated, we declare her dismissal
as unwarranted and illegal. It being apparent, however, that the relationship between
petitioner and private respondent has been inevitably and severely strained, we believe
that it would neither be to the interest of the parties nor would any prudent purpose be
served by ordering her reinstatement.
WHEREFORE, the petition for certiorari is GRANTED and the resolution of public
respondent, dated December 6, 1978 is ANNULLED and SET ASIDE. Private
respondent Tay Tung High School, Inc. is hereby ORDERED to pay petitioner
backwages equivalent to three (3) years, without any deduction or qualification, and
separation pay in the amount of one (1) month for every year of service.
SO ORDERED.
FIRST DIVISION
G.R. No. 155421 July 7, 2004
ELMER M. MENDOZA, petitioner, vs.RURAL BANK OF LUCBAN, respondent.
Labor Law; Dismissals; Transfer; Labor laws discourage interference in
employers’ judgments concerning the conduct of their business.—Jurisprudence
recognizes the exercise of management prerogatives. For this reason, courts often
decline to interfere in legitimate business decisions of employers. Indeed, labor laws
discourage interference in employers’ judgments concerning the conduct of their
business. The law must protect not only the welfare of employees, but also the right of
employers.
Same; Same; Same; The right of employees to security of tenure does not give
them vested rights to their positions to the extent of depriving management of its
prerogatives to change their assignments or to transfer them; Managerial prerogatives,
however, are subject to limitations provided by law, collective bargaining agreements
are general principles of fair play and justice.—In the pursuit of its legitimate business
interest, management has the prerogative to transfer or assign employees from one
office or area of operation to another—provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause. This privilege is inherent in the right of employers to control
and manage their enterprise effectively. The right of employees to security of tenure
does not give them vested rights to their positions to the extent of depriving
management of its prerogative to change their assignments or to transfer them.
Managerial prerogatives, however, are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.
Same; Same; Same; Test for determining the validity of the transfer of
employees explained in Blue Dairy Corporation v. National Labor Relations
Commission.—The test for determining the validity of the transfer of employees was
explained in Blue Dairy Corporation v. NLRC as follows: “[L]ike other rights, there are
limits thereto. The managerial prerogative to transfer personnel must be exercised
without grave abuse of discretion, bearing in mind the basic elements of justice and fair
play. Having the right should not be confused with the manner in which that right is
exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that the transfer
is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden of proof, the employee’s transfer shall be
tantamount to constructive dismissal, which has been defined as a quitting because
continued employment is rendered impossible, unreasonable or unlikely; as an offer
involving a demotion in rank and diminution in pay. Likewise, constructive dismissal
exists when an act of clear discrimination, insensibility or disdain by an employer has
become so unbearable to the employee leaving him with no option but to forego with
his continued employment.”
Same; Same; Same; Employees may be transferred—based on their
qualifications, aptitudes and competencies—to positions in which they can function with
maximum benefit to the company.—Petitioner’s transfer was made in pursuit of
respondent’s policy to “familiarize bank employees with the various phases of bank
operations and further strengthen the existing internal control system” of all officers and
employees. We have previously held that employees may be transferred—based on
their qualifications, aptitudes and competencies—to positions in which they can
function with maximum benefit to the company. There appears no justification for
denying an employer the right to transfer employees to expand their competence and
maximize their full potential for the advancement of the establishment. Petitioner was
not singled out; other employees were also reassigned without their express consent.
PETITION for review on certiorari of the decision of the Court of Appeals.
DECISION
PANGANIBAN, J.:
The law protects both the welfare of employees and the prerogatives of management.
Courts will not interfere with business judgments of employers, provided they do not
violate the law, collective bargaining agreements, and general principles of fair play and
justice. The transfer of personnel from one area of operation to another is inherently a
managerial prerogative that shall be upheld if exercised in good faith -- for the purpose
of advancing business interests, not of defeating or circumventing the rights of
employees.
The Case
The Court applies these principles in resolving the instant Petition for Review1 under
Rule 45 of the Rules of Court, assailing the June 14, 2002 Decision2 and September
25, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 68030. The
assailed Decision disposed as follows:
"WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of merit."4
The challenged Resolution denied petitioner's Motion for Reconsideration.
The Facts
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued
Board Resolution Nos. 99-52 and 99-53, which read:
"Board Res. No. 99-52
"'RESOLVED AS IT IS HEREBY RESOLVED' that in line with the policy of the bank
to familiarize bank employees with the various phases of bank operations and
further strengthen the existing internal control system[,] all officers and employees
are subject to reshuffle of assignments. Moreover, this resolution does not preclude
the transfer of assignment of bank officers and employees from the branch office to
the head office and vice-versa."
"Board Res. No. 95-53
"Pursuant to Resolution No. 99-52, the following branch employees are hereby
reshuffled to their new assignments without changes in their compensation and
other benefits.
NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENT
JOYCE V. ZETA Bank Teller C/A Teller
CLODUALDO ZAGALA C/A Clerk Actg. Appraiser
ELMER L. MENDOZA Appraiser Clerk-Meralco Collection
CHONA R. MENDOZA Clerk-Meralco Collection Bank Teller"5
In a letter dated April 30, 1999, Alejo B. Daya, the bank's board chairman, directed
Briccio V. Cada, the manager of the bank's Tayabas branch, to implement the
reshuffle.6 The new assignments were to "be effective on May 1, 1999 without changes
in salary, allowances, and other benefits received by the aforementioned employees."7
On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza
expressed his opinion on the reshuffle, as follows:
"RE: The recent reshuffle of employees as per Board Resolution dated April 25,
1999
"Dear Sir:
"This is in connection with the aforementioned subject matter and which the
undersigned received on April 25, 1999.
"Needless to state, the reshuffling of the undersigned from the present position as
Appraiser to Clerk-Meralco Collection is deemed to be a demotion without any legal
basis. Before this action on your part[,] the undersigned has been besieged by
intrigues due to [the] malicious machination of a certain public official who is bruited
to be your good friend. These malicious insinuations were baseless and despite the
fact that I have been on my job as Appraiser for the past six (6) years in good
standing and never involved in any anomalous conduct, my being reshuffled to
[C]lerk-[M]eralco [C]ollection is a blatant harassment on your part as a prelude to
my termination in due time. This will constitute an unfair labor practice.
"Meanwhile, may I beseech your good office that I may remain in my position as
Appraiser until the reason [for] my being reshuffled is made clear.
"Your kind consideration on this request will be highly appreciated."8
On May 10, 1999, Daya replied:
"Dear Mr. Mendoza,
"Anent your undated letter expressing your resentment/comments on the recent
management's decision to reshuffle the duties of bank employees, please be
informed that it was never the intention (of management) to downgrade your
position in the bank considering that your due compensation as Bank Appraiser is
maintained and no future reduction was intended.
"Aside from giving bank employees a wider experience in various banking
operations, the reshuffle will also afford management an effective tool in providing
the bank a sound internal control system/check and balance and a basis in
evaluating the performance of each employee. A continuing bankwide reshuffle of
employees shall be made at the discretion of management which may include bank
officers, if necessary as expressed in Board Resolution No. 99-53, dated April 25,
1999. Management merely shifted the duties of employees, their position title [may
be] retained if requested formally.
"Being a standard procedure in maintaining an effective internal control system
recommended by the Bangko Sentral ng Pilipinas, we believe that the conduct of
reshuffle is also a prerogative of bank management."9
On June 7, 1999, petitioner submitted to the bank's Tayabas branch manager a letter
in which he applied for a leave of absence from work:
"Dear Sir:
"I wish I could continue working but due to the ailment that I always feel every now
and then, I have the honor to apply for at least ten (10) days sick leave effective
June 7, 1999.
"Hoping that this request [merits] your favorable and kind consideration and
understanding."10
On June 21, 1999, petitioner again submitted a letter asking for another leave of
absence for twenty days effective on the same date.11
On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint
before Arbitration Branch No. IV of the National Labor Relations Commission (NLRC).
The Complaint -- for illegal dismissal, underpayment, separation pay and damages --
was filed against the Rural Bank of Lucban and/or its president, Alejo B. Daya; and its
Tayabas branch manager, Briccio V. Cada. The case was docketed as NLRC Case
SRAB-IV-6-5862-99-Q.12
The labor arbiter's June 14, 2000 Decision upheld petitioner's claims as follows:
"WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring respondents guilty of illegal dismissal.
2. Ordering respondents to reinstate complainant to his former position without
loss of seniority rights with full backwages from date of dismissal to actual
reinstatement in the amount of P55,000.00 as of June 30, 2000.
3. Ordering the payment of separation pay if reinstatement is not possible in the
amount of P30,000.00 in addition to 13th month pay of P5,000.00 and the
usual P10,000.00 annual bonus afforded the employees.
4. Ordering the payment of unpaid salary for the period covering July 1-30, 1999
in the amount of P5,000.00
5. Ordering the payment of moral damages in the amount of P50,000.00.
6. Ordering the payment of exemplary damages in the amount of P25,000.00
7. Ordering the payment of Attorney's fees in the amount of P18,000.00 which
is 10% of the monetary award."13
On appeal, the NLRC reversed the labor arbiter.14 In its July 18, 2001 Resolution, it
held:
"We can conceive of no reason to ascribe bad faith or malice to the respondent bank
for its implementation of its Board Resolution directing the reshuffle of employees at
its Tayabas branch to positions other than those they were occupying. While at first
the employees thereby affected would experience difficulty in adjusting to their new
jobs, it cannot be gainsaid that the objective for the reshuffle is noble, as not only
would the employees obtain additional knowledge, they would also be more well-
rounded in the operations of the bank and thus help the latter further strengthen its
already existing internal control system.
"The only inconvenience, as [w]e see it, that the [petitioner] may have experienced is
that from an appraiser he was made to perform the work of a clerk in the collection of
Meralco payments, which he may have considered as beneath him and his
experience, being a pioneer employee. But it cannot be discounted either that other
employees at the Tayabas branch were similarly reshuffled. The only logical
conclusion therefore is that the Board Resolution was not aimed solely at the
[petitioner], but for all the other employees of the x x x bank as well. Besides, the
complainant has not shown by clear, competent and convincing evidence that he
holds a vested right to the position of Appraiser. x x x.
"How and by what manner a business concern conducts its affairs is not for this
Commission to interfere with, especially so if there is no showing, as in the case at
bar, that the reshuffle was motivated by bad faith or ill-will. x x x."15
After the NLRC denied his Motion for Reconsideration,16 petitioner brought before the
CA a Petition for Certiorari17 assailing the foregoing Resolution.
Ruling of the Court of Appeals
Finding that no grave abuse of discretion could be attributed to the NLRC, the CA
Decision ruled thus:
"The so-called 'harassment' which Mendoza allegedly experienced in the aftermath
of the reshuffling of employees at the bank is but a figment of his imagination as
there is no evidence extant on record which substantiates the same. His alleged
demotion, the 'cold shoulder' stance, the things about his chair and table, and the
alleged reason for the harassment are but allegations bereft of proof and are
perforce inadmissible as self-serving statements and can never be considered
repositories of truth nor serve as foundations of court decisions anent the resolution
of the litigants' rights.
"When Mendoza was reshuffled to the position of clerk at the bank, he was not
demoted as there was no [diminution] of his salary benefits and rank. He could even
retain his position title, had he only requested for it pursuant to the reply of the
Chairman of the bank's board of directors to Mendoza's letter protesting the
reshuffle. There is, therefore, no cause to doubt the reasons which the bank
propounded in support of its move to reshuffle its employees, viz:
1. to 'familiarize bank employees with the various phases of bank operations,' and
2. to 'further strengthen the existing internal control system' of the bank.
"The reshuffling of its employees was done in good faith and cannot be made the
basis of a finding of constructive dismissal.
"The fact that Mendoza was no longer included in the bank's payroll for July 1 to 15,
1999 does not signify that the bank has dismissed the former from its employ.
Mendoza separated himself from the bank's employ when, on June 24, 1999, while
on leave, he filed the illegal dismissal case against his employer for no apparent
reason at all."18
Hence, this Petition.19
The Issues
Petitioner raises the following issues for our consideration:
"I. Whether or not the petitioner is deemed to have voluntarily separated himself from
the service and/or abandoned his job when he filed his Complaint for constructive and
consequently illegal dismissal;
"II. Whether or not the reshuffling of private respondent'[s] employees was done in
good faith and cannot be made as the basis of a finding of constructive dismissal,
even as the [petitioner's] demotion in rank is admitted by both parties;
"III. Whether or not the ruling in the landmark case of Ruben Serrano vs. NLRC [and
Isetann Department Store (323 SCRA 445)] is applicable to the case at bar;
"IV. Whether or not the Court of Appeals erred in dismissing the petitioner's money
claims, damages, and unpaid salaries for the period July 1-30, 1999, although this
was not disputed by the private respondent; and
"V. Whether or not the entire proceedings before the Honorable Court of Appeals and
the NLRC are a nullity since the appeal filed by private respondent before the NLRC
on August 5, 2000 was on the 15th day or five (5) days beyond the reglem[e]ntary
period of ten (10) days as provided for by law and the NLRC Rules of Procedure."20
In short, the main issue is whether petitioner was constructively dismissed from his
employment.
The Court's Ruling
The Petition has no merit.
Main Issue:
Constructive Dismissal
Constructive dismissal is defined as an involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable or unlikely; when there is
a demotion in rank or a diminution of pay; or when a clear discrimination, insensibility
or disdain by an employer becomes unbearable to the employee.21 Petitioner argues
that he was compelled to file an action for constructive dismissal, because he had been
demoted from appraiser to clerk and not given any work to do, while his table had been
placed near the toilet and eventually removed.22 He adds that the reshuffling of
employees was done in bad faith, because it was designed primarily to force him to
resign.23
Management Prerogative
to Transfer Employees
Jurisprudence recognizes the exercise of management prerogatives. For this reason,
courts often decline to interfere in legitimate business decisions of employers.24 Indeed,
labor laws discourage interference in employers' judgments concerning the conduct of
their business.25 The law must protect not only the welfare of employees, but also the
right of employers.
In the pursuit of its legitimate business interest, management has the prerogative to
transfer or assign employees from one office or area of operation to another -- provided
there is no demotion in rank or diminution of salary, benefits, and other privileges; and
the action is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause.26 This privilege is inherent in the right
of employers to control and manage their enterprise effectively.27 The right of
employees to security of tenure does not give them vested rights to their positions to
the extent of depriving management of its prerogative to change their assignments or
to transfer them.28
Managerial prerogatives, however, are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.29 The test for
determining the validity of the transfer of employees was explained in Blue Dairy
Corporation v. NLRC30 as follows:
"[L]ike other rights, there are limits thereto. The managerial prerogative to transfer
personnel must be exercised without grave abuse of discretion, bearing in mind the
basic elements of justice and fair play. Having the right should not be confused with
the manner in which that right is exercised. Thus, it cannot be used as a subterfuge
by the employer to rid himself of an undesirable worker. In particular, the employer
must be able to show that the transfer is not unreasonable, inconvenient or prejudicial
to the employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. Should the employer fail to overcome this burden of
proof, the employee's transfer shall be tantamount to constructive dismissal, which
has been defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; as an offer involving a demotion in rank and
diminution in pay. Likewise, constructive dismissal exists when an act of clear
discrimination, insensibility or disdain by an employer has become so unbearable to
the employee leaving him with no option but to forego with his continued
employment."31
Petitioner's Transfer Lawful
The employer bears the burden of proving that the transfer of the employee has
complied with the foregoing test. In the instant case, we find no reason to disturb the
conclusion of the NLRC and the CA that there was no constructive dismissal. Their

finding is supported by substantial evidence -- that amount of relevant evidence that a
reasonable mind might accept as justification for a conclusion.32
Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank
employees with the various phases of bank operations and further strengthen the
existing internal control system"33 of all officers and employees. We have previously
held that employees may be transferred -- based on their qualifications, aptitudes and
competencies -- to positions in which they can function with maximum benefit to the
company.34 There appears no justification for denying an employer the right to transfer
employees to expand their competence and maximize their full potential for the
advancement of the establishment. Petitioner was not singled out; other employees
were also reassigned without their express consent.
Neither was there any demotion in the rank of petitioner; or any diminution of his salary,
privileges and other benefits. This fact is clear in respondent's Board Resolutions, the
April 30, 1999 letter of Bank President Daya to Branch Manager Cada, and the May
10, 1999 letter of Daya to petitioner.
On the other hand, petitioner has offered no sufficient proof to support his allegations.
Given no credence by both lower tribunals was his bare and self-serving statement that
he had been positioned near the comfort room, made to work without a table, and given
no work assignment.35 Purely conjectural is his claim that the reshuffle of personnel
was a harassment in retaliation for an alleged falsification case filed by his relatives
against a public official.36 While the rules of evidence prevailing in courts of law are not
controlling in proceedings before the NLRC,37 parties must nonetheless submit
evidence to support their contentions.
Secondary Issues:
Serrano v. NLRC Inapplicable
Serrano v. NLRC38 does not apply to the present factual milieu. The Court ruled therein
that the lack of notice and hearing made the dismissal of the employee ineffectual, but
not necessarily illegal.39 Thus, the procedural infirmity was remedied by ordering
payment of his full back wages from the time of his dismissal.40 The absence of
constructive dismissal in the instant case precludes the application of Serrano.
Because herein petitioner was not dismissed, then he is not entitled to his claimed
monetary benefits.
Alleged Nullity of NLRC
and CA Proceedings
Petitioner argues that the proceedings before the NLRC and the CA were void, since
respondent's appeal before the NLRC had allegedly been filed beyond the
reglementary period.41 A careful scrutiny of his Petition for Review42 with the appellate
court shows that this issue was not raised there. Inasmuch as the instant Petition
challenges the Decision of the CA, we cannot rule on arguments that were not brought
before it. This ruling is consistent with the due-process requirement that no question
shall be entertained on appeal, unless it has been raised in the court below.43
WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the
September 25, 2002 Resolution of the Court of Appeals are AFFIRMED. Costs against
petitioner. SO ORDERED.
Footnotes
6 Assailed Decision, pp. 2-3; rollo, pp. 34-35.
7 Letter of Alejo B. Daya dated April 30, 1999; rollo, p. 120.
8 Rollo, p. 121.
9 Letter of Daya dated May 10, 1999; rollo, p. 122.
10 Letter
of petitioner dated June 7, 1999; rollo, p. 123.
11 Letter
of petitioner dated June 21, 1999; rollo, p. 124.
12 Assailed Decision, p. 6; rollo, p. 38.
13 Decision of Labor Arbiter Waldo Emerson R. Gan dated June 14, 2000, p. 5-6; rollo,
pp. 145-146.
14 CA Decision dated June 14, 2002, pp. 11-12; rollo, pp. 43-44.
15 NLRC Resolution dated July 18, 2001, pp. 4-5; rollo, pp. 79-80.
16 Assailed Decision, p. 12; rollo, p. 44.
17 Rollo, pp. 51-74.
18 Assailed Decision, pp. 14-15; rollo, pp. 46-47.
19 This case was deemed submitted for resolution on June 9, 2003, upon this Court's
receipt of respondent's Memorandum, signed by Atty. Carlos Mayorico E. Caliwara.
Petitioner's Memorandum, signed by Atty. Manuel M. Maramba, was received by this
Court on April 23, 2003.
20 Petitioner's Memorandum, p. 10; rollo, p. 220. Original in upper case.
21 Blue Dairy Corporation v. NLRC, 373 Phil. 179, 186, September 14, 1999; Escobin
v. NLRC, 351 Phil. 973, 999, April 15, 1998; Philippine Japan Active Carbon
Corporation v. NLRC, 171 SCRA 164, 168, March 8, 1989.
22 Petitioner's Memorandum, pp. 11, 14; rollo, pp. 221, 224.
23 Id., p. 14; id., p. 224.
24 Metrolab Industries, Inc. v. Roldan-Confesor, 324 Phil. 416, 429, February 28, 1996.
25 Bontia v. NLRC, 325 Phil. 443, 452, March 18, 1996.
26 Lanzaderas v. Amethyst Security and General Services, Inc., 404 SCRA 505, June
20, 2003; Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 334 Phil. 84, 93,
January 2, 1997; Escobin v. NLRC, supra.
27 Ibid.
28 See Antonio H. Abad Jr., Compendium on Labor Law (2004), p. 55.
29 Philippine Airlines, Inc. v. NLRC, 225 SCRA 301, 308, August 13, 1993; University of
Sto. Tomas v. NLRC, 190 SCRA 758, 771, October 18, 1990.
30 Supra.
31 Id., p. 186, per Bellosillo, J.
32 Tan v. NLRC, 359 Phil. 499, 512, November 24, 1998. Substantial evidence is the
quantum of evidence required to establish a fact in cases before administrative and
quasi-judicial bodies like the NLRC (Equitable Banking Corporation v. NLRC, 273
SCRA 352, 373-374, June 13, 1997).
33 Board Resolution No. 99-52; rollo, p. 119.
34 Allied Banking Corporation v. Court of Appeals, GR No. 144412, November 18, 2003;
Blue Dairy Corporation v. NLRC, supra, p. 186; Philippine Japan Active Carbon
Corporation v. NLRC, supra.
35 Petitioner's Memorandum, p. 3; rollo, p. 213.
36 Ibid.
37 Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, supra, p. 92.
38 380 Phil. 416, January 27, 2000.
39 Id, p. 449. See herein ponente's Separate Opinion in Serrano. See also Dayan v.
Bank of Philippine Islands, 421 Phil. 620, 633, November 20, 2001.
40 Id, p. 451.
41 Petitioner's Memorandum, p. 20; rollo, p. 230.
42 Rollo, pp. 51-74.
43 Del Rosario v. Bonga, 350 SCRA 101, 108, January 23, 2001.
G.R. No. 150092. September 27, 2002.*
GLOBE TELECOM, INC., DELFIN LAZARO, JR., and ROBERTO GALANG,
petitioners, vs. JOAN FLORENDO-FLORES, respondent.
Labor Law; Appeals; Equity Jurisdiction; In the review of an NLRC decision
through a special civil action for certiorari, resolution is confined only to issues of
jurisdiction and grave abuse of discretion on the part of the labor tribunal; The principles
that the Supreme Court in the exercise of its equity jurisdiction may look into the records
of the case and re-examine the questioned findings, and that the Court is clothed with
ample authority to review matters, even if they are not assigned as errors in the appeal,
if it finds that their consideration is necessary to arrive at a just decision of the case,
are now necessarily adhered to and are applied by the Court of Appeals in its expanded
jurisdiction over labor cases elevated through a petition for certiorari.—In the review of
an NLRC decision through a special civil action for certiorari, resolution is confined only
to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal.
Hence, the Court refrains from reviewing factual assessments of lower courts and
agencies exercising adjudicative functions, such as the NLRC. Occasionally, however,
the Court is constrained to delve into factual matters where, as in the instant case, the
findings of the NLRC contradict those of the Labor Arbiter. In this instance, the Court in
the exercise of its equity jurisdiction may look into the records of the case and re-
examine the questioned findings. As a corollary, this Court is clothed with ample
authority to review matters, even if they are not assigned as errors in their appeal, if it
finds that their consideration is necessary to arrive at a just decision of the case. The
same principles are now necessarily adhered to and are applied by the Court of
Appeals in its expanded jurisdiction over labor cases elevated through a petition for
certiorari; thus, we see no error on its part when it made anew a factual determination
of the matters and on that basis reversed the ruling of the NLRC.
Same; Judgments; Dispositive Portions; Where there is conflict between the
dispositive portion of the decision and the body thereof, the dispositive portion controls
irrespective of what appears in the body.—Where there is conflict between the
dispositive portion of the decision and the body thereof, the dispositive portion controls
irrespective of what appears in the body. While the body of the decision, order or
resolution might create some ambiguity in the manner the court’s reasoning
preponderates, it is the dispositive portion thereof that finally invests rights upon the
parties, sets conditions for the exercise of those rights, and imposes the corresponding
duties or obligations. Hence, for the Court of Appeals to have affirmed the assailed
judgment is to adopt and uphold the NLRC finding of abandonment and its award of full
back wages to respondent as an “act of grace” from petitioners. However, we believe
this is not the proper view as the records reveal that respondent was constructively
dismissed from service.
Same; Illegal Dismissals; Words and Phrases; Constructive dismissal exists
where there is cessation of work because “continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay”; There is constructive dismissal even though an employee may not
have suffered any diminution in her basic salary but she was deprived of all benefits
due to another of her rank and position, benefits which she apparently used to
receive.—Constructive dismissal exists where there is cessation of work because
“continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay.” All these are discernible in
respondent’s situation. She was singularly edged out of employment by the unbearable
or undesirable treatment she received from her immediate superior Cacholo M. Santos
who discriminated against her without reason—not preparing and submitting her
performance evaluation report that would have been the basis for her increased salary;
not forwarding her project proposals to management that would have been the source
of commendation; diminishing her supervisor stature by assigning her to house-to-
house sales or direct sales; and withholding from her the enjoyment of bonuses,
allowances and other similar benefits that were necessary for her efficient sales
performance. Although respondent continued to have the rank of a supervisor, her
functions were reduced to a mere house-to-house sales agent or direct sales agent.
This was tantamount to a demotion. She might not have, suffered any diminution in her
basic salary but petitioners did not dispute her allegation that she was deprived of all
benefits due to another of her rank and position, benefits which she apparently used to
receive.
Same; Same; Abandonment; Requisites; A charge of abandonment is totally
inconsistent with the immediate filing of a complaint for illegal dismissal, more so when
it includes a prayer for reinstatement.—The unauthorized absence of respondent
should not lead to the drastic conclusion that she had chosen to abandon her work. To
constitute abandonment, there must be: (a) failure to report for work or absence without
valid or justifiable reason; and, (b) a clear intention, as manifested by some overt act,
to sever the employer-employee relationship, requisites that are negated by the
immediate filing by respondent Florendo-Flores of a complaint for constructive
dismissal against petitioners. A charge of abandonment is totally inconsistent with the
immediate filing of a complaint for illegal dismissal; more so, when it includes a prayer
for reinstatement.
Same; Demotion; Reduction in an employee’s functions which were originally
supervisory in nature to a mere house-to-house sales agent or direct sales agent
constitutes a demotion in rank.—The reduction of respondent’s functions which were
originally supervisory in nature to a mere house-to-house sales agent or direct sales
agent constitutes a demotion in rank. For this act of illegal dismissal, she deserves no
less than full back wages starting from the time she had been illegally dismissed until
her actual reinstatement to her former position without loss of seniority rights and other
benefits—earned, accrued and demandable. She shall continue to enjoy her benefits,
privileges and incentives including the use of the company car and “handyphone.”
Same; Management Prerogatives; Transfers; The managerial prerogative to
transfer personnel must be exercised without grave abuse of discretion—having the
right should not be confused with the manner that right is exercised.—The managerial
prerogative to transfer personnel must be exercised without grave abuse of discretion.
It must always bear in mind the basic elements of justice and fair play. Having the right
should not be confused with the manner that right is exercised. Thus, it cannot be used
as a subterfuge by the employer to rid himself of an undesirable worker.
Same; Constructive Dismissals; Burden of Proof; In constructive dismissal, the
employer has the burden of proving that the transfer and demotion of an employee are
for just and valid grounds such as genuine business necessity.—In constructive
dismissal, the employer has the burden of proving that the transfer and demotion of an
employee are for just and valid grounds such as genuine business necessity. The
employer must be able to show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee. It must not involve a demotion in rank or a diminution of
salary and other benefits. If the employer cannot overcome this burden of proof, the
employee’s demotion shall be tantamount to unlawful constructive dismissal.
Same; Social Justice; Proper regard for the welfare of the labor sector should not
dissuade the Court from protecting the rights of management such that an award of
back wages should be forthcoming only when valid grounds exist to support it.—It
should be noted that the award of backwages in the instant case is justified upon the
finding of illegal dismissal, and not under the principle of “act of grace” for past services
rendered. There are occasions when the Court exercises liberality in granting financial
awards to employees, but even then they contemplate only the award of separation pay
and/or financial assistance, and only as a measure of social justice when the
circumstances of the case so warrant, such as instances of valid dismissal for causes
other than serious misconduct or those reflecting on the employees’ moral character.
Proper regard for the welfare of the labor sector should not dissuade us from protecting
the rights of management such that an award of back wages should be forthcoming
only when valid grounds exist to support it.
Same; Damages; An award of actual and moral damages is not proper where the
dismissal is not shown to be attended by bad faith, or was oppressive to labor, or done
in a manner contrary to morals, good customs or public policy.—An award of actual
and moral damages is not proper as the dismissal is not shown to be attended by bad
faith, or was oppressive to labor, or done in a manner contrary to morals, good customs
or public policy. Exemplary damages are likewise not proper as these are imposed only
if moral, temperate, liquidated or compensatory damages are awarded.
PETITION for review on certiorari of a decision of the Court of Appeals.
BELLOSILLO, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking to annul and
set aside the Decision1 of the Court of Appeals of 25 May 2001 in CA-G.R. SP No.
60284 which affirmed the Decision of the National Labor Relations Commission of 28
January 2000 in NLRC RAB-CAR 05-0170-98, NLRC NCR CA No. 020270-99.2
Petitioner GLOBE TELECOM, INC. (GLOBE) is a corporation duly organized and
existing under the laws of the Philippines. Petitioners Delfin Lazaro, Jr. was its
President and Roberto Galang its former Director-Regional Sales. Respondent Joan
Florendo-Flores was the Senior Account Manager for Northern Luzon.
On 1 July 1998 Joan Florendo-Flores filed with the Regional Arbitration Branch of
the National Labor Relations Commission (NLRC) an amended complaint for
constructive dismissal against GLOBE, Lazaro, Galang, and Cacholo M. Santos, her
immediate superior, Luzon Head-Regional Sales. In her affidavit submitted as evidence
during the arbitration proceedings, Florendo-Flores bared that Cacholo M. Santos
never accomplished and submitted her performance evaluation report thereby
depriving her of salary increases, bonuses and other incentives which other employees
of the same rank had been receiving; reduced her to a house-to-house selling agent
(person-to-person sales agent or direct sales agent) of company products
(“handyphone”) despite her rank as supervisor of company dealers and agents; never
supported her in the sales programs and recommendations she presented; and,
withheld all her other benefits, i.e., gasoline allowance, per diems, representation
allowance, and car maintenance, to her extreme pain and humiliation.3
GLOBE and its co-petitioners claimed that after receiving her salary in the second
week of May 1998 Florendo-Flores went AWOL (Absent Without Leave) without
signifying through letter or any other means that she was resigning from her position;
that notwithstanding her absence and the filing of her case, respondent Florendo-
Flores’ employment was not terminated as shown by the fact that salary was still
provided her until July 1998 to be released upon her presentation of the attendance-
record sheet indicating that she already returned and reported for work; that
she continued to have the use of a company car and company “handy-phone” unit; that
she was replaced only when her absence became indefinite and intolerable as the
marketing operations in Northern Luzon began to suffer; that during the pre-trial
conference it was learned that Florendo-Flores’ complaint rested on her alleged
personal and private disagreement with her immediate superior Cacholo M. Santos;
that there was no official act from GLOBE or from other officers of the company,
including respondents Lazaro and Galang, which called for Florendo-Flores’
termination, diminution in rank, seniority and benefits, or would imply, even remotely,
any of the same; and, that Florendo-Flores filed the complaint without going through
the grievance process of GLOBE’s Human Resources Department and without
informing its officers of her problems with Cacholo M. Santos.
Labor Arbiter Monroe C. Tabingan declared Florendo-Flores to have been illegally
dismissed and ordered petitioners to reinstate her without loss of seniority rights and
full benefits; and to pay full back wages, inclusive of basic pay, allowances and bonuses
as prayed for in the complaint amounting to P307,625.00, exemplary damages in the
sum of P200,000.00, and ten percent (10%) of the total monetary award as attorney’s
fees. However, the Labor Arbiter set aside the claim of abandonment as the company
failed to send the requisite notice to Florendo-Flores,4 hence, there was no adherence
to procedural due process. Although he recognized that the problem brewed and
eventually boiled over due to the acts of Cacholo M. Santos, GLOBE’s former Head of
Regional Sales, Luzon Area, the Labor Arbiter found the company negligent in
monitoring all its key personnel, and thus assessed against it exemplary damages at
the same time deleting actual and moral damages.5
Petitioners appealed the decision to the NLRC which modified the judgment of the
Labor Arbiter. The NLRC ruled that petitioners did not dismiss Florendo-Flores but that
the latter actually abandoned her employment because of a disagreement with her
immediate superior which she failed to bring to the attention of GLOBE and its officers,
particularly petitioners Lazaro and Galang.6 However, the NLRC declared that if only
as an act of grace for the latter’s past services with the company, GLOBE, Lazaro and
Galang should be held accountable for the back wages of Florendo-Flores amounting
to P307,625.00 minus the amount of P63,000.00 for the value of the company car in
Florendo-Flores’ possession, or the net amount of P244,625.00.7
Both parties elevated the NLRC decision to the Court of Appeals, each side through
a petition for certiorari. In its Resolution of 2 September 2000 the appellate court
dismissed the petition of Florendo-Flores for failure to append the required verification
and certification of non-forum shopping,8 while it gave due course to the petition of
GLOBE, Lazaro and Galang.
In their petition before the appellate court, GLOBE, Lazaro and Galang averred that
the NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it ordered them to pay Florendo-Flores full back wages and damages
despite its express finding that they did not cause the dismissal of Florendo-Flores as
the latter had actually abandoned her employment on account of her personal
differences with her superior.
In its Decision of 25 May 2001 the Court of Appeals found that Florendo-Flores was
constructively dismissed and that payment of back wages and damages was in order.
On 21 June 2001 GLOBE, Lazaro and Galang filed a motion for reconsideration but the
motion was denied in the appellate court’s Resolution of 19 September 2001.
Petitioners pose the following questions in this petition: In a special civil action for
certiorari where factual findings are deemed to be final and conclusive, can the Court
of Appeals alter or substitute the findings of fact of the lower court/tribunal? In the face
of the finding of the NLRC that respondent abandoned her employment because of a
personal squabble with her immediate superior, and that petitioners had nothing to do
with the severance of Flores’ employment, can petitioners be held legally liable for back
wages while the guilty party Cacholo M. Santos is legally absolved of liability?
 Petitioners submit that the answers to both questions must be in the negative. They
argue that the appellate court can neither alter nor substitute the factual findings of the
NLRC as they are legally deemed to be final and conclusive in a certiorari proceeding.
They contend that a special civil action for certiorari is an extraordinary remedy created
not to correct mistakes in the factual findings or conclusions of the lower court or
tribunal, but a remedy intended to rectify jurisdictional errors and grave abuse of
discretion. Thus, the Court of Appeals cannot make its own factual findings and
substitute them for the factual findings of the NLRC, and on such basis render a
decision.
Petitioners further note that the appellate court failed to address the issues raised
in their petition. They reiterate their position that they cannot be held liable for payment
of back wages as an act of grace in view of the express finding by the NLRC that
respondent abandoned her employment because of a personal rift with her immediate
superior and not due to any act attributable to them. They stress that there can be no
liability in the absence of any wrongful act.
Invoking the principle of res inter alios acta declaring that the rights of a party
cannot be prejudiced by the act, declaration or omission of another, petitioners insist
that since the NLRC found that respondent’s problems arose from the acts and deeds
of Santos, he alone should be held liable. Petitioners find special exception to the
NLRC’s application of the concept of “act of grace”to justify the award since an “act of
grace” is not a source of demandable obligation. They argue that it is not within the
power of any judicial or administrative agency to compel an employer to be liberal.
In the review of an NLRC decision through a special civil action for certiorari,
resolution is confined only to issues of jurisdiction and grave abuse of discretion on the
part of the labor tribunal.9 Hence, the Court refrains from reviewing factual assessments
of lower courts and agencies exercising adjudicative functions, such as the NLRC.
Occasionally, however, the Court is constrained to delve into factual matters where, as
in the instant case, the findings of the NLRC contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into the
records of the case and re-examine the questioned findings.10 As a corollary, this Court
is clothed with ample authority to review matters, even if they are not assigned as errors
in their appeal, if it finds that their consideration is necessary to arrive at a just decision
of the case.11 The same principles are now necessarily adhered to and are applied by
the Court of Appeals in its expanded jurisdiction over labor cases elevated through a
petition for certiorari; thus, we see no error on its part when it made anew a factual
determination of the matters and on that basis reversed the ruling of the NLRC.
Glaring however is the discrepancy between the text of the decision of the appellate
court which declares that respondent Florendo-Flores “was unlawfully constructively
dismissed” from employment,12 and its dispositive portion which declares that “the
assailed judgment is affirmed.”13 It should be noted that the “assailed judgment”
referred to the NLRC Decision which declared that respondent was not illegally
dismissed but that she abandoned her employment. Even in the award of back wages
and exemplary damages the two (2) decisions are at odds: The award of back wages
made by the NLRC was a gratuity or an act of grace from petitioners while the award
made by the Court of Appeals could be assumed to be anchored on its finding of illegal
dismissal. How should the inconsistency be reconciled?
Where there is conflict between the dispositive portion of the decision and the body
thereof, the dispositive portion controls irrespective of what appears in the
body.14 While the body of the decision, order or resolution might create some ambiguity
in the manner the court’s reasoning preponderates, it is the dispositive portion thereof
that finally invests rights upon the parties, sets conditions for the exercise of those
rights, and imposes the corresponding duties or obligations.15 Hence, for the Court of
Appeals to have affirmed the assailed judgment is to adopt and uphold the NLRC
finding of abandonment and its award of full back wages to respondent as an “act of
grace” from petitioners.
However, we believe this is not the proper view as the records reveal that
respondent was constructively dismissed from service.
Constructive dismissal exists where there is cessation of work because “continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay.”16 All these are discernible in respondent’s
situation. She was singularly edged out of employment by the unbearable or
undesirable treatment she received from her immediate superior Cacholo M. Santos
who discriminated against her without reason—not preparing and submitting her
performance evaluation report that would have been the basis for her increased salary;
not forwarding her project proposals to management that would have been the source
of commendation; diminishing her supervisor stature by assigning her to house-to-
house sales or direct sales; and withholding from her the enjoyment of bonuses,
allowances and other similar benefits that were necessary for her efficient sales
performance. Although respondent continued to have the rank of a supervisor, her
functions were reduced to a mere house-to-house sales agent or direct sales agent.
This was tantamount to a demotion. She might not have, suffered any diminution in her
basic salary but petitioners did not dispute her allegation that she was deprived of all
benefits due to another of her rank and position, benefits which she apparently used to
receive.
Far from pointing to Santos alone as the source of her woes, respondent attributes
her degraded state to petitioners as well. Florendo-Flores cited petitioners’ apathy or
indifference to her plight as she was twice left out in a salary increase in August 1987
and May 1998, without petitioners giving her any reason.17 It eludes belief that
petitioners were entirely in the dark as the salary increases were granted to all
employees across-the-board but respondent was the only one left receiving a
P19,100.00 per month basic salary while the rest received a basic salary of almost
P35,000.00 per month.18 It is highly improbable that the exclusion of respondent had
escaped petitioners’ notice. The absence of an evaluation report from Santos should
have been noted by petitioners and looked into for proper action to have been made. If
a salary increase was unwarranted, then it should have been sufficiently explained by
petitioners to respondent.
Petitioners argue that respondent Florendo-Flores could have brought to their
attention the deplorable treatment she received from Santos by resorting to the
company’s grievance machinery so that the problems in her relationship with Santos
could then have been easily ironed out, but she did not. It remains uncontroverted that
respondent had inquired from petitioners the reason why her other benefits had been
withheld and sought clarification for her undeserved treatment but petitioner company
and Santos remained mum.19
Thus, contrary to the observation of the NLRC, the dispute was not a mere private
spat between respondent Florendo-Flores and her immediate superior Santos.
Granting that this was the case, it had exceeded the periphery of simple personal affairs
that overflowed into the realm of respondent’s employment.
Respondent narrates that sometime in June 1997 Santos wrote her a baseless
accusatory letter, and he together with GLOBE Sales Director Roberto Galang, one of
petitioners herein, verbally told her that she should resign from her job, but she
refused.20 Thereafter, in July 1997 and the months subsequent thereto all of not dissuade us from protecting the rights of management such that an award of back
respondent’s other benefits were withheld without any reason nor explanation from the wages should be forthcoming only when valid grounds exist to support it.
company.21 Even as petitioners endeavored to lay the blame on Santos alone, he would An award of actual and moral damages is not proper as the dismissal is not shown
not have been able to single-handedly mastermind the entire affair as to influence Sales to be attended by bad faith, or was oppressive to labor, or done in a manner contrary
Director Galang and manipulate the payroll. It only stands to reason that Santos was to morals, good customs or public policy.28 Exemplary damages are likewise not proper
acting pursuant to a management directive, or if not, then petitioners had condoned it, as these are imposed only if moral, temperate, liquidated or compensatory damages
or at the very least, were negligent in supervising all of their employees. As aptly are awarded.29
observed by the Labor Arbiter—
WHEREFORE, the judgment appealed from is MODIFIED. The Decision of the
x x x x it would appear however that the respondent company was negligent in Court of Appeals of 25 May 2001 in CA-G.R. SP No. 60284 affirming the Decision of
monitoring all its key personnel. For it is the bounden duty of the corporate officialdom the National Labor Relations Commission of 28 January 2000 declaring that
to constantly monitor their managerial staff if only to ascertain the smooth flow of work respondent Joan Florendo-Flores had abandoned her work is SET ASIDE. Petitioners
and operations, which includes the inter-personal relations of each and every key Globe Telecom, Inc., Delfin Lazaro, Jr., and Roberto Galang are ordered to pay
segment of the corporate machinery. For such, it must be assessed with just and respondent Joan Florendo-Flores full back wages from the time she was constructively
reasonable exemplary damages.22 dismissed on 15 May 1998 until the date of her effective reinstatement, without
The unauthorized absence of respondent should not lead to the drastic conclusion that qualification or deduction. Accordingly, petitioners are ordered to cause the immediate
she had chosen to abandon her work. To constitute abandonment, there must be: (a) reinstatement of respondent to her former position, without loss of seniority rights and
failure to report for work or absence without valid or justifiable reason; and, (b) a clear other benefits. No pronouncement as to costs.
intention, as manifested by some overt act, to sever the employer-employee SO ORDERED.
relationship,23requisites that are negated by the immediate filing by respondent
Florendo-Flores of a complaint for constructive dismissal against petitioners. A charge
of abandonment is totally inconsistent with the immediate filing of a complaint for illegal
dismissal; more so, when it includes a prayer for reinstatement.24
The reduction of respondent’s functions which were originally supervisory in nature
to a mere house-to-house sales agent or direct sales agent constitutes a demotion in
rank. For this act of illegal dismissal, she deserves no less than full back wages starting
from the time she had been illegally dismissed until her actual reinstatement to her
former position without loss of seniority rights and other benefits—earned, accrued and
demandable. She shall continue to enjoy her benefits, privileges and incentives
including the use of the company car and “handyphone.”
The managerial prerogative to transfer personnel must be exercised without grave
abuse of discretion. It must always bear in mind the basic elements of justice and fair
play. Having the right should not be confused with the manner that right is exercised.
Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable
worker.25
In constructive dismissal, the employer has the burden of proving that the transfer
and demotion of an employee are for just and valid grounds such as genuine business
necessity.26 The employer must be able to show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee. It must not involve a demotion in rank or
a diminution of salary and other benefits. If the employer cannot overcome this burden
of proof, the employee’s demotion shall be tantamount to unlawful constructive
dismissal.
It should be noted that the award of back wages in the instant case is justified upon
the finding of illegal dismissal, and not under the principle of “act of grace” for past
services rendered. There are occasions when the Court exercises liberality in granting
financial awards to employees, but even then they contemplate only the award of
separation pay and/or financial assistance, and only as a measure of social
justice when the circumstances of the case so warrant, such as instances of valid
dismissal for causes other than serious misconduct or those reflecting on the
employees’ moral character.27 Proper regard for the welfare of the labor sector should
THIRD DIVISION a day certain being understood to be ‘that which must necessarily come, although it
[G.R. No. 99359. September 2, 1992.] may not be known when.’ ” The term periodwas further defined to be, “Length of
existence; duration. A point of time marking a termination as of a cause or an activity;
ORLANDO M. ESCAREAL, Petitioner, v. NATIONAL LABOR RELATIONS
an end, a limit, a bound; conclusion; termination. A series of years, months or days in
COMMISSION, HON. MANUEL P. ASUNCION, Labor Arbiter, NLRC, National
which something is completed. A time of definite length. x x x the period from one fixed
Capital Region, PHILIPPINE REFINING COMPANY, INC., CESAR BAUTISTA and
date to another fixed date x x x.” The letter to the petitioner confirming his appointment
GEORGE B. DITCHING, Respondents.
does not categorically state when the period of employment would end. It stands to
Labor Laws; Dismissal; Redundancy, defined.—In Wiltshire File Co., Inc. vs. reason then that petitioner’s employment was not one with a specific period.
NLRC, this Court held that redundancy, for purposes of the Labor Code, exists where
Same; Separation pay and backwages.—In Torillo vs. Leogardo, Jr., an
the services of an employee are in excess of what is reasonably demanded by the
amplification was made on Article 279 of the Labor Code and the distinction between
actual requirements of the enterprise; a position is redundant when it is superfluous,
separation pay and backwages. Citing the case of Santos vs. NLRC, We held in the
and superfluity of a position or positions may be the outcome of a number of factors,
former: The normal consequences of a finding that an employee has been illegally
such as the overhiring of workers, a decreased volume of business or the dropping of
dismissed are, firstly, that the employee becomes entitled to reinstatement to his former
a particular product line or service activity previously manufactured or undertaken by
position without loss of seniority rights and, secondly, the payment of backwages
the enterprise. Redundancy in an employer’s personnel force, however, does not
corresponding to the period from his illegal dismissal up to actual reinstatement. x x x
necessarily or even ordinarily refer to duplication of work. That no other person was
Though the grant of reinstatement commonly carries with it an award of backwages,
holding the same position which the dismissed employee held prior to the termination
the inappropriateness or non-availability of one does not carry with it the
of his services does not show that his position had not become redundant. Private
inappropriateness or non-availability of the other. x x x Put a little differently, payment
respondent PRC had no valid and acceptable basis to declare the position of Pollution
of backwages is a form of relief that restores the income that was lost by reason of
Control and Safety Manager redundant as the same may not be considered as
unlawful dismissal; separation pay, in contrast, is oriented towards the immediate
superfluous; by the express mandate of the provisions earlier cited, said positions are
future, the transitional period the dismissed employee must undergo before locating a
required by law. Thus, it cannot be gainsaid that the services of the petitioner are in
replacement job.” Reinstatement then of the petitioner would have been proper.
excess of what is reasonably required by the enterprise. Otherwise, PRC would not
However, since he reached the mandatory retirement age on 21 July 1991,
have allowed ten (10) long years to pass before opening its eyes to that fact; neither
reinstatement is no longer feasible. He should thus be awarded his backwages from 16
would it have increased the petitioner’s salary to P23,100.00 a month effective 1 April
August 1988 to 21 July 1991, inclusive of allowances and the monetary equivalent of
1988. The latter by itself is an unequivocal admission of the specific and special need
the other benefits due him for that period, plus retirement benefits under the PRC’s
for the position and an open recognition of the valuable services rendered by the
compulsory retirement scheme which he would have been entitled to had he not been
petitioner. Such admission and recognition are inconsistent with the proposition that
illegally dismissed.
petitioner’s positions are redundant.
PETITION for review of the decision and resolution of the National Labor Relations
Same; Same; Security of tenure.—Thus, it is event from the foregoing that
Commission.
petitioner’s right to security of tenure was violated by the private respondent PRC. Both
the Constitution (Section 3, Article XIII) and the Labor Code (Article 279, P.D. 442, as DECISION
amended) enunciate this right as available to an employee. In a host of cases, this DAVIDE, JR., J.:
Court has upheld the employee’s right to security of tenure in the face of oppressive Petitioner seeks to set aside the Decision 1 dated 14 January 1991 and the Resolution
management behavior and management prerogative. Security of tenure is a right which 2 dated 13 May 1991 of the respondent National Labor Relations Commission
may not be denied on mere speculation of any unclear and nebulous basis. In this (hereinafter, NLRC) in NLRC Case No. 00-08-03412-88 entitled Orlando M. Escareal
regard, it could be concluded that the respondent PRC was merely in a hurry to v. Philippine Refining Company, Inc. The said Decision affirmed with modification the
terminate the services of the petitioner as soon as possible in view of the latter’s 19 February 1990 Decision 3 of the respondent Labor Arbiter Manuel P. Asuncion while
impending retirement; it appears that said company was merely trying to avoid paying the Resolution denied the motion for a reconsideration of the former.
the retirement benefits the petitioner stood to receive upon reaching the age of sixty
The dispositive portion of the respondent Labor Arbiter’s Decision reads:
(60). PRC acted in bad faith.
"WHEREFORE, the respondent is hereby ordered to pay the complainant his
Same; Employment contract with a fixed period; Compulsory retirement age.—
redundancy pay in accordance with existing company policy on the matter. This is
We cannot, however, subscribe to the theory of petitioner that his employment was for
without prejudice to the grant of additional benefits offered by the respondent during
a fixed definite period to end at the celebration of his sixtieth (60th) birthday because
the negotiation stage of the case, though it never materialized for failure of the parties
of the stipulation as to the retirement age of sixty (60) years. xxx. There is no indication
to reach an agreement.
that PRC intended to offer uninterrupted employment until the petitioner reached the
mandatory retirement age; it merely informs the petitioner of the compulsory retirement SO ORDERED."
age and the terms pertaining to the retirement. In Brent School, Inc. vs. Zamora, this The controversy stemmed from the dismissal of the petitioner from the private
Court, in upholding the validity of a contract of employment with a fixed or specific respondent Philippine Refining Company, Inc. (hereinafter, PRC) after almost eleven
period, declared that the “decisive determinant in term employment should not be the (11) years of gainful employment.
activities that the employee is called upon to perform, but the day certain agreed upon
by the parties for the commencement and termination of their employment relationship,
Petitioner was hired by the PRC for the position of Pollution Control Manager effective
on 16 September 1977 with a starting monthly pay of P4,230 00; 4 the employment
was made permanent effective on 16 March 1978. 5 The contract of employment
provides, inter alia, that his "retirement date will be the day you reach your 60th
birthday, but there is provision (sic) for voluntary retirement when you reach your 50th
birthday. Bases for the hiring of the petitioner are Letter of Instruction (LOI) No. 588
implementing the National Pollution Control Decree, P.D No. 984, dated 19 August
1977, the pertinent portion of which reads:
"1. All local governments, development authorities, government-owned or controlled
corporations, industrial, commercial and manufacturing establishments, and all other
public and private entities, whose functions involve the discharge or emission of
pollutants into the water, air and/or land resources or the operation, installation or
construction of any anti-pollution device, treatment work or facility, sewerage or
sewerage disposal system, shall each appoint and/or designate a Pollution Control
Officer."
and Memorandum Circular No. 02, 6 dated 3 August 1981 and implementing LOI No.
588, which amended Memorandum Circular No. 007, Series of 1977, issued by the
National Pollution Control Commission (NPCC), the pertinent portions of which read:
"Section 3. Appointment/Designation of Pollution Control Officer. — All local
governments, development authorities, government-owned or controlled corporations,
industrial and manufacturing establishments, and public and private entities falling
within the purview of Letter of Instruction No. 588, shall each appoint and/or designate
a Pollution Control Officer.
x x x redundancy payment under the scheme applying to employees who are 50 years old
Section 6. Employment Status-In the employment of Pollution Control Officer, the
following additional requirements shall be observed:
x x x notwithstanding, the PRC unilaterally circulated a clearance 11 dated 12 July 1988, to
(b) Private Entities — 1. Industrial and Manufacturing establishment and other private
entities with capitalization of one million pesos and above shall employ a full time
pollution control officer.
x x x letter dated 25 July 1988 threatening legal action. 13
Section 9. Accreditation of Pollution Control Officer. — A (sic) duly appointed and/or
designated pollution control officers shall submit copies of their designation and/or
appointments to the Commission within thirty (30) days from the date of such
designation/appointment together with their biodata and curriculum vitae for
accreditation purposes. In case of the termination of the appointment/designation of a
pollution control officer for any reason whatsoever, it shall be the responsibility of his
employer to inform the Commission of the same immediately to appoint/designate his
successor within thirty (30) days after said termination. (Emphasis supplied)"
On 1 April 1979, petitioner was also designated as Safety Manager pursuant to Article
162 of the Labor Code (P.D. 442, as amended) and the pertinent implementing rule
thereon. At the time of such designation, petitioner was duly accredited as a Safety
Practitioner by the Bureau of Labor Standards, Department of Labor and Employment
(DOLE) and the Safety Organization of the Philippines. Article 162 of the Labor Code,
as amended, provides:
ARTICLE 162. Safety and Health Standard. — The Secretary of Labor shall, by
appropriate orders, set and enforce mandatory occupational safety and health
standards to eliminate or reduce occupational safety and health hazards in all
workplaces and institute new, and update existing, programs to ensure safe and
healthful working conditions in all places of employment."
In addition, the pertinent rules on Occupational Health and Safety implementing the
Labor Code provide for the designation of full-time safety men to ensure compliance
with the safety requirements prescribed by the Bureau of Labor Standards. 7
Consequently, petitioner’s designation was changed to Pollution Control and Safety
Manager.
In the course of his employment, petitioner’s salary was regularly upgraded; the last
pay hike was granted on 28 March 1988 when he was officially informed 8 that his
salary was being increased to P23,100.00 per month effective 1 April 1988. This last
increase is indisputably a far cry from his starting monthly salary of P4,230.00.
Sometime in the first week of November 1987, private respondent George B. Ditching,
who was then PRC’s Personnel Administration Manager, informed petitioner about the
company’s plan to declare the position of Pollution Control and Safety Manager
redundant. Ditching attempted to convince petitioner to accept the redundancy offer or
avail of the company’s early retirement plan. Petitioner refused and instead insisted on
completing his contract as he still had about three and a half (3 1/2) years left before
reaching the mandatory retirement age of sixty (60).
On 15 June 1988, Jesus P. Javelona, PRC’s Engineering Department Manager and
petitioner’s immediate superior, formally informed the petitioner that the position of
"Safety and Pollution Control Manager will be declared redundant effective at the close
of work hours on 15th July 1988." 9 Petitioner was also notified that the functions and
duties of the position to be declared redundant will be absorbed and integrated with the
duties of the Industrial Engineering Manager; as a result thereof, the petitioner "will
receive full separation benefits provided under the PRC Retirement Plan and additional
and above and whose jobs have been declared redundant by Management."
Petitioner protested his dismissal via his 22 June 1988 letter to Javelona. 10 This
take effect on 15 July 1988, indicating therein that its purpose is for the petitioner’s
"early retirement" — and not redundancy. Petitioner confronted Javelona; the latter, in
his letter dated 13 July 1988, advised the former that the employment would be
extended for another month, or up to 15 August 1988. 12 Petitioner responded with a
Subsequently, or on 14 July 1988, Bernardo N. Jambalos III, respondent company’s
Industrial Relations Manager, sent a Notice of Termination 14 to the Ministry of Labor
and Employment (MOLE) informing the latter that the petitioner was being terminated
on the ground of redundancy effective 15 August 1988.
On 5 August 1988, petitioner had a meeting with private respondent Cesar Bautista
and Dr. Reynaldo Alejandro, PRC’s President and Corporate Affairs Director,
respectively. To his plea that he be allowed to finish his contract of employment as he
only had three (3) years left before reaching the mandatory retirement age, Bautista
retorted that the termination was final.
On 8 August 1988, petitioner presented to Javelona a computation 15 showing the
amount of P2,436,534.50 due him (petitioner) by way of employee compensation and
benefits.
On the date of the effectivity of his termination, petitioner was only fifty-seven (57) years
of age. He had until 21 July 1991, his sixtieth (60th) birth anniversary, before he would
have been compulsorily retired.
Also, on the date of effectivity of petitioner’s termination, 16 August 1988, Miguelito S.
Navarro, PRC’s Industrial Engineering Manager, was designated as the Pollution
Control and Safety Officer. Such appointment is evidenced by two (2) company
correspondences. In its letter dated 6 September 1988 to the Laguna Lake
Development Authority, 16 PRC informed the said Authority, to wit:
"With effect from 16 August 1988 the functions and duties of our Safety and Pollution
Control Officer has (sic) been integrated and absorbed with those of our Industrial
Engineering Manager.
x x x
The main tasks of our Industrial Engineering Manager, Mr. Miguelito S. Navarro, now
includes (sic) safety and pollution control.
Attached to (sic) the bio-data of Mr. Navarro for your accreditation as our designated
Pollution Control Officer."
In its letter to the Safety Organization of the Philippines 17 dated 14 December 1988,
PRC articulated Mr. Miguelito S. Navarro’s designation as "Safety Officer of Phil.
Refining Company."
In view of all this, petitioner filed a complaint for illegal dismissal with damages against
the private respondent PRC before the Arbitration Branch, NLRC, National Capital
Region; the case was docketed as NLRC-NCR Case No. 00-08-03412-88. 18 After trial,
respondent Labor Arbiter Manuel P. Asuncion rendered a decision dated 19 February
1990, the dispositive portion of which was quoted earlier.
Petitioner appealed the said decision to the NLRC which, in its decision of 14 January
1991, made the following findings:
"Respondent contended that complainant Orlando M. Escareal was employed as
Safety and Pollution Control Engineer on September 16, 1977; that as part of the
Company’s policy to streamline the work force and to keep the Organization more
effective, it allegedly declared redundant several positions from all levels and
departments of the company; that the position of ‘Safety and Pollution Control Manager’
which the herein complainant was holding at the time of dismissal, is one of those that
were affected; that the functions of Mr. Escareal were fused with the Industrial
Engineering Department, the latter being under the control and supervision of Mr.
Miguelito S. Navarro; that no replacement and/or new appointment to said questioned
position have (sic) been made; that respondent terminated complainant on the ground
of redundancy and offered him P458,929.00 a separation pay; and that the above
mentioned amount, is far above what complainant can get under the Labor Code, as
amended.
x x x its Memorandum only on 24 March 1992. 27
The determination as to the usefulness of a particular department or section as an
integral aspect of company prerogative, may not be questioned, the objective of which
being to (sic) achieve profitability. (Special Events Control Shipping Office Workers
Union v. San Miguel Corporation, 122 SCRA 557).
x x x DECISION OF THE RESPONDENT LABOR ARBITER THAT PETITIONER’S
To submit to the argument of herein Complainant that there is no basis in the
management’s decision to declare his position redundant is to deny the company of its
inherent prerogative, without due process of law.
x x x NAVARRO) WHO WAS IMMEDIATELY DESIGNATED AS A REPLACEMENT.
Turning to another issue of whether or not a fixed period of employment has been
concluded, suffice it to say that it lacks legal and factual basis.
x x x TO LACK OR IN (sic) EXCESS OF JURISDICTION IN DECLARING THAT
If indeed, a fixed period of contract of employment has been concluded under the
circumstances, the complainant would not have acceded to have undergone a
probationary period. The (sic) latter being a condition sine-qua non before he became
a regular worker. Consequently, the averment of breach of Contract pursuant to Article
1159, 1306 and 1308 of the New Civil Code of the Phils., is not in point. Additionally, to
subscribe to the protestation of herein complainant that the reference of the retirement
age at 60 in the company’s letter dated August 22, 1977 meant fixed duration is to tie
the hands of management in doing what is necessary to meet the exigencies of the
business . . ."
and then ruled that:
"WHEREFORE, the appealed decision is hereby Affirmed, with modification ordering
respondent-company to pay complainant his retirement pay in accordance with the
company policy and other benefits granted to him thereunder, less outstanding
obligations of the complainant with the company at the time of his dismissal." 19
Undaunted by this second setback, the petitioner filed a Motion for Reconsideration 20
of this decision on 25 January 1991. Private respondent PRC also filed its own motion
for reconsideration on the ground that petitioner is entitled to only one (1) benefit, and
not to both. In a Resolution promulgated on 13 May 1991, the NLRC’s First Division 21
ruled as follows:
"WHEREFORE, in view thereof, the complainant’s motion for reconsideration other
than his pecuniary interest is hereby Dismissed for lack of merit. Accordingly,
respondent-company (PRC) is ordered to pay Mr. Escareal’s redundancy benefits in
accordance with the company policy on the matter as follows:
(a) Retirement credit of 1.5 months pay for every year of service in the amount of
P363,825.00; and
(b) Ex-gratia, amounting to:
P81,496.80
——————
TOTAL P445,321.80"
As a consequence thereof, the instant petition was filed on 29 May 1991. 22 Private
respondent PRC filed its Comment on 21 August 1991 23 while the public respondent,
through the Office of the Solicitor General, filed its Comment on 10 October 1991. 24
On 16 October 1991, 25 this Court resolved, inter alia, to give due course to the petition
and require the parties to file their respective Memoranda Petitioner complied with this
Resolution on 12 December 1991; 26 public respondent NLRC, on the other hand, filed
In his thorough and exhaustive Memorandum, herein petitioner makes the following
assignment of errors:
"IRESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN (sic) EXCESS OF JURISDICTION IN AFFIRMING THE
TERMINATION AS POLLUTION CONTROL AND SAFETY MANAGER OF
RESPONDENT PRC ON THE GROUND OF REDUNDANCY WAS VALID —
TOTALLY IGNORING THE FACT THAT PETITIONER’S POSITION WAS NEVER
ABOLISHED BUT WAS MERELY GIVEN TO ANOTHER EMPLOYEE (MIGUELITO S.
II
RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
PETITIONER’S WRITTEN CONTRACT OF EMPLOYMENT WITH RESPONDENT
PRC WAS NOT FOR A DEFINITE PERIOD, AND THAT IT IS NOT VIOLATED
NOTWITHSTANDING THE FACT THAT RESPONDENT PRC PREMATURELY
SHORTENED PETITIONER’S RETIREMENT AGE AT 57 INSTEAD OF 60.
III
RESPONDENT NLRC COMMITTED A VERY SERIOUS ERROR AMOUNTING TO
LACK OR IN (sic) EXCESS OF JURISDICTION IN DECLARING THAT THE
PETITIONER IS NOT ENTITLED TO ANY SEPARATION PAY SUCH AS CASH
EQUIVALENT OF HIS ACCUMULATED VACATION AND SICK LEAVE CREDITS,
REDUNDANCY PAY, BONUSES, ETC., BUT ONLY TO HIS RETIREMENT
BENEFITS UNDER THE PRC RETIREMENT PLAN UP TO AUGUST 16, 1988 (DATE
OF HIS TERMINATION).
IV
RESPONDENT NLRC SERIOUSLY ERRED IN DECLARING THAT PETITIONER IS
NOT ENTITLED TO DAMAGES, NOTWITHSTANDING RESPONDENT PRC’S AND
ITS OFFICERS’ EVIDENT BAD FAITH, WANTON AND PATENT VIOLATION OF
PETITIONER’S WRITTEN CONTRACT OF EMPLOYMENT.
V positions, then there would be no reason for the unexplained delay in its
RESPONDENT NLRC GRAVELY ERRED IN NOT AWARDING PETITIONER AN
AMOUNT FOR ATTORNEY’S FEE EQUIVALENT TO TEN (10%) PERCENT OF THE
AMOUNT DUE, NOTWITHSTANDING THAT PETITIONER WAS COMPELLED TO
LITIGATE BY REASON OF HIS ILLEGAL DISMISSAL AND OF RESPONDENT PRC’S
AND ITS OFFICERS’ MALICIOUS AND WANTON ACTS." 28
We find for the petitioner.
Article 283 of the Labor Code provides:
"ARTICLE 283. Closure of establishment and reduction of personnel. — The employer
may also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or cessation
of operation of the establishment or undertaking unless the closing is for the purpose
of circumventing the provisions of this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher A fraction of at least six (6) months shall be considered one (1) whole year."
In Wiltshire File Co., Inc. v. NLRC, 29 this Court held that redundancy, for purposes of
the Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise; a position is
redundant when it is superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as the overhiring of workers, a decreased volume
of business or the dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. 30 Redundancy in an employer’s
personnel force, however, does not necessarily or even ordinarily refer to duplication
of work. That no other person was holding the same position which the dismissed
employee held prior to the termination of his services does not show that his position
had not become redundant.
Private respondent PRC had no valid and acceptable basis to declare the position of
Pollution Control and Safety Manager redundant as the same may not be considered
as superfluous; by the express mandate of the provisions earlier cited, said positions
are required by law. Thus, it cannot be gainsaid that the services of the petitioner are
in excess of what is reasonably required by the enterprise. Otherwise, PRC would not
have allowed ten (10) long years to pass before opening its eyes to that fact; neither
would it have increased the petitioner’s salary to P23,100.00 a month effective 1 April
1988. The latter by itself is an unequivocal admission of the specific and special need
for the position and an open recognition of the valuable services rendered by the
petitioner. Such admission and recognition are inconsistent with the proposition that
petitioner’s positions are redundant. It cannot also be argued that the said functions
were duplicative, and hence could be absorbed by the duties pertaining to the Industrial
Engineering Manager. If indeed they were, and assuming that the Industrial
Engineering department of the PRC had been created earlier, petitioner’s positions
should not have been created and filled up. If, on the other hand, the department was
created later, and there is no evidence to this effect, and it was to absorb the petitioner’s
implementation, the restructuring then should have been executed long before the
salary increases in petitioner’s favor. That petitioner’s positions were not duplicitous is
best evidenced by the PRC’s recognition of their imperative need thereof, this is
underscored by the fact that Miguelito S. Navarro, the company’s Industrial Engineering
Manager, was designated as Pollution Control and Safety Manager on the very same
day of petitioner’s termination. While the petitioner had over ten (10) years of
experience as a pollution control and safety officer, Navarro was a virtual greenhorn
lacking the requisite training and experience for the assignment. A cursory perusal of
his bio-data 31 reveals that it was only several months after his appointment that he
attended his first Occupational Safety & Health Seminar (14-17 November 1988),
moreover, it was only after his second seminar (Loss Control Management Seminar —
6-9 December 1988) that the PRC requested his accreditation with the Safety
Organization of the Philippines. 32 In trying to prop up Navarro’s competence for the
position, PRC alleges that the former finished from the University of the Philippines with
a degree in Chemical Engineering, took some units in pollution in the process and had
"undergone job training in pollution in cement firms through the Bureau of Mines." 33
Compared to the training and experience of the petitioner, Navarro’s orientation would
seem to pale.
The private respondent alleges further 34 that its decision to declare petitioner’s
position as redundant "stemmed from its well-considered view that in order for the
corporation’s safety and pollution program to be more effective, such program would
have to be tied up with the functions of the Industrial Engineering Manager." It is further
posited that since the job of safety and pollution engineer "requires coordination with
operating departments, knowledge of the manufacturing processes, and adequate
presence in plant areas, a task which the company’s safety and pollution control officer
would not be up to as he works singlehandedly, it is only the Industrial Engineer,
commanding a department of five (5) engineers and one (1) clerk, who can live up to
corporate expectations. Indeed, the proposition that a department manned by a number
of engineers presumably because of the heavy workload, could still take on the
additional responsibilities which were originally reposed in an altogether separate
section headed by the petitioner, is difficult to accept. It seems more reasonable to view
the set-up which existed before the termination as being more conducive to efficient
operations. And even if We were to sustain PRC’s explanation, why did it so suddenly
incorporate functions after the separate position of Pollution and Safety Control
Manager had existed for over ten (10) years? No effort whatsoever was undertaken to
gradually integrate both functions over this span of time. Anent this specific point, all
that the private respondent has to say is that the declaration of redundancy was made
pursuant to its continuing program, which has been ongoing for the past ten (10) years,
of streamlining the personnel complement and maintaining a lean and effective
organization. 35
Furthermore, if PRC felt that either the petitioner was incompetent or that the task could
be performed by someone more qualified, then why is it that the person designated to
the position hardly had any experience in the field concerned? And why reward the
petitioner, barely five (5) months before the dismissal, with an increase in salary?
Assuming PRC’s good faith, it would still seem quite surprising that it did not at least
provide a transition period wherein the Industrial Engineering Manager would be
adequately trained for his new assignment; such reckless conduct is not the expected
behavior of a well-oiled and progressive multinational company. Petitioner himself
could have very well supervised a training and familiarization program which could have
taken the remaining three (3) years of his employment. But no such move was initiated.
Instead, a clever scheme to oust the petitioner from a position held for so long was
hatched and implemented. On the very same day of petitioner’s termination, the
position vacated was resurrected and reconstituted as a component of the position of
Industrial Engineering Manager. After more than ten (10) years of unwavering service
and loyalty to the company, the petitioner was so cruelly and callously dismissed.
What transpired then was a substitution of the petitioner by Miguelito S. Navarro. If
based on the ground of redundancy, such a move would be invalid as the creation of
said position is mandated by the law; the same cannot therefore be declared redundant.
If the change was effected to consolidate the functions of the pollution control and
safety officer with the duties of the Industrial Engineering Manager, as private
respondent postulates, such substitution was done in bad faith for as had already been
pointed out, Miguelito S. Navarro was hardly qualified for the position. If the aim was to
generate savings in terms of the salaries that PRC would not be paying the petitioner
any more as a result of the streamlining of operations for improved efficiency, such a
move could hardly be justified in the face of PRC’s hiring of ten (10) fresh graduates for
the position of Management Trainee 36 and advertising for vacant positions in the
Engineering/Technical Division at around the time of the termination. 37 Besides, there
would seem to be no compelling reason to save money by removing such an important
position. As shown by their recent financial statements, PRC’s year-end net profits had
steadily increased from 1987 to 1990. 38 While concededly, Article 283 of the Labor
Code does not require that the employer should be suffering financial losses before he
can terminate the services of the employee on the ground of redundancy, it does not
mean either that a company which is doing well can effect such a dismissal whimsically
or capriciously. The fact that a company is suffering from business losses merely
provides stronger justification for the termination.
The respondent NLRC 39 relied on Wiltshire File Co., v. NLRC 40 in declaring that the
employer has no legal obligation to keep in its payroll more employees than are
necessary for the operation of its business. Aside from the fact that in the case at bar,
there was no compelling reason to dismiss the petitioner as the company was not
incurring any losses, the position declared redundant in the Wiltshire case was that of
a Sales Manager, a management created position. In the case at bar, petitioner’s
position is one created by law.
The NLRC adds further that the termination was effected in the exercise of
management prerogative and that account should also be taken of the "life of the
company which is . . . an active pillar of our economy and upon whose existence still
depends the livelihood of a great number of workers." 41 It goes on to observe that"
[t]he records are bereft of proof which could have been the basis of vengeful termination
other than the company’s legitimate objective to trim its work force." 42 In the face of
the circumstances surrounding the dismissal, this Court finds it extremely difficult to
give credence to such conclusions.
Thus, it is evident from the foregoing that petitioner’s right to security of tenure was
violated by the private respondent PRC. Both the Constitution (Section 3, Article XIII)
and the Labor Code (Article 279, P.D. 442, as amended) enunciate this right as
available to an employee. In a host of cases, this Court has upheld the employee’s right
to security of tenure in the face of oppressive management behavior and management
prerogative. 43 Security of tenure is a right which may not be denied on mere
speculation of any unclear and nebulous basis. 44
In this regard, it could be concluded that the respondent PRC was merely in a hurry to
terminate the services of the petitioner as soon as possible in view of the latter’s
impending retirement; it appears that said company was merely trying to avoid paying
the retirement benefits the petitioner stood to receive upon reaching the age of sixty
(60). PRC acted in bad faith.
Both the Labor Arbiter and the respondent NLRC clearly acted with grave abuse of
discretion in disregarding the facts and in deliberately closing their eyes to the unlawful
scheme resorted to by the PRC.
We cannot, however, subscribe to the theory of petitioner that his employment was for
a fixed definite period to end at the celebration of his sixtieth (60th) birthday because
of the stipulation as to the retirement age of sixty (60) years. The Solicitor General’s
refutation, to wit:
"A perusal of the provision in the August 22, 1977 letter cited by petitioner merely
informs him of the company policy which pegs the compulsory retirement age of its
employees at 60 and which commences on the date of the employee’s 60th birthday.
It likewise informs him that the company recognizes the right of the employee to retire
voluntarily, which option can be availed of when the employee reaches his 50th
birthday. Clearly, the cited provision is limited solely to the pertinent issue of retirement."
45 is correct.
An examination of the contents of the contract of employment 46 yields the conclusion
arrived at by the Solicitor General. There is no indication that PRC intended to offer
uninterrupted employment until the petitioner reached the mandatory retirement age, it
merely informs the petitioner of the compulsory retirement age and the terms pertaining
to the retirement.
In Brent School, Inc. v. Zamora, 47 this Court, in upholding the validity of a contract of
employment with a fixed or specific period, declared that the "decisive determinant in
term employment should not be the activities that the employee is called upon to
perform, but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship, a day certain being understood to be ‘that
which must necessarily come, although it may not ‘be known when.’" 48 The term
period was further defined to be, "Length of existence; duration. A point of time marking
a termination as of a cause or an activity; an end, a limit, a bound; conclusion;
termination. A series of years, months or days in which something is completed. A time
of definite length. . . . the period from one fixed date to another fixed date . . ." 49
The letter to the petitioner confirming his appointment does not categorically state when
the period of employment would end. It stands to reason then that petitioner’s
employment was not one with a specific period.
Coming to the third assigned error, since We have concluded that the petitioner’s
dismissal was illegal and can not be justified under a valid redundancy initiative, Article
283 of the Labor Code, as amended, on the benefits to be received by the dismissed
employee in the case of redundancy, retrenchment to prevent losses, closure of
business or the installation of labor saving devices, is not applicable. Instead, We apply
Article 279 thereof which provides, in part, that 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."
In Torillo v. Leagardo, Jr., 50 an amplification was made on Article 279 of the Labor
Code and the distinction between separation pay and backwages. Citing the case of
Santos v. NLRC, 51 We held in the former:
"The normal consequences of a finding that an employee has been illegally dismissed
are, firstly, that the employee becomes entitled to reinstatement to his former position
without loss of seniority rights and, secondly, the payment of backwages corresponding
to the period from his illegal dismissal up to actual reinstatement.
x x x
Though the grant of reinstatement commonly carries with it an award of backwages,
the inappropriateness or non-availability of one does not carry with it the
inappropriateness or non-availability of the other.
x x x
Put a little differently, payment of backwages is a form of relief that restores the income
that was lost by reason of unlawful dismissal, separation pay, in contrast, is oriented
towards the immediate future, the transitional period the dismissed employee must
undergo before locating a replacement job."
Reinstatement then of the petitioner would have been proper. However, since he
reached the mandatory retirement age on 21 July 1991, reinstatement is no longer
feasible. He should thus be awarded his backwages from 16 August 1988 to 21 July
1991, inclusive of allowances and the monetary equivalent of the other benefits due
him for that period, plus retirement benefits under the PRC’s compulsory retirement
scheme which he would have been entitled to had he not been illegally dismissed.
Finally, anent the last two (2) assigned errors, this Court notes that in his complaint and
the attached Affidavit-Complaint, 52 petitioner does not mention any claim for damages
and attorney s fees; furthermore, no evidence was offered to prove them. An award
therefor would not be justified.
WHEREFORE, judgment is hereby rendered GRANTING the petition, SETTING
ASIDE the Decision and Resolution of respondent National Labor Relations
Commission, dated 14 January 1991 and 13 May 1991, respectively in Labor Case No.
NLRC-NCR-00-08-03412-88 and ORDERING private respondent Philippine Refining
Co., Inc. to pay petitioner Orlando M. Escareal his backwages from 16 August 1988 to
21 July 1991 inclusive of allowances and the monetary equivalent of other benefits due
him for that period, as well as his retirement pay and other benefits provided under the
former’s compulsory retirement scheme. The respondent Labor Arbiter or his successor
is hereby directed to make the appropriate computation of these awards within twenty
(20) days from receipt of a copy of this Decision, which respondent Philippine Refining
Co., Inc. shall pay to the petitioner within ten (10) days from notice thereof.
Costs against private respondent Philippine Refining Co., Inc. SO ORDERED.
FIRST DIVISION
G.R. No. 164518 January 25, 2006
INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL PLYWOOD GROUP
CORPORATION, TOMAS TANGSOC, JR., LORENZO TANGSOC and TOMAS
TAN, Petitioners vs. VIRGILIO ABABON, IGNACIO ABACAJEN, ANGELINA ABAY-
ABAY, EDITH ABREA, SAMUEL ABREA, BIENVENIDO ACILO, RODRIGO ACILO,
VICTOR ACILO, ARTURO ADVINCULA, GERTRUDES AMPARO, VIRGILIO
ANTONIO, MILA ARQUITA, PRUDENCIO ARQUITA, ALBERT ATON, WARLITA
AUTIDA, ALICIA AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO
BANATE, LOLITA BATAN, RAMIL BUTALON, CARMILITA CAINGLES, VICENTE
CAHARIAN, BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA
CARILLO, ALGER CORBETA, GREGORIO DABALOS, TERESITA DABALOS,
VENERANDO DALAUTA, RICARDO DANGCULOS, MONTANO DAPROSA,
LUISITO DIAZ, FELIZARDO DUMULAO, EDITHA DUMANON, ALFREDO
FAELNAR, RAUL FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO
GAMBE, VERGINITA GANGCA, RUPERTO GORGONIO, ROMEO HERRERO,
SERGIO HORO-HORO, FRANCISCO IBARRA, ABRAHAM JALE, DANDY
LABITAD, ANTONINA LAMBANG, ERNESTO LAUSA, VICTORIA LOOD, NEMESIO
LOPE, JR., ESCARLITO MADLOS, MARCOS MAKINANO, REMEGIO MAKINANO,
VICENTE MAKINANO, REYNALDO MASUHAY, HELEN MARATAS, ELIZABETH
MENDOZA, GUILBERTA MONTEROSO, GILDA NAVALTA, PILAR NAVARRO,
SIMPORIANO NUÑEZ, JR., ELISEO ORONGAN, ARMANDO OROPA, ASUNCION
OROPA, JOSE EDWIN OROPA, BALDEMAR PAGALAN, BARTOLOME PAGALAN,
DAMASO PALOMA, MANALO PLAZA, JEREMIAS PELAEZ, FRANCISCO
PICARDAL, HERMINIA PUBLICO, ROMULO QUINTOS, FIDEL QUITA, FELICIANO
RANADA, RODOLFO RARU, LEAN CILDRIC RODRIGUEZ, SAMUEL SAROMINES,
NATIVIDAD SIGNAR, CHERRIE SON, SAMUEL TAGUPA, VICTOR TAGUPA,
BRIGIDA TABANAO, PEDRO TABANAO, ROBERTO TABANAO, MARIA TAN,
RONNIE TAN, TOLENTINO TEE, ROGELIO TAMADA, MINDA TUMAOB and
ROBERTO TUTOR, Respondents.
x--------------------------------------x
G.R. No. 164965 January 25, 2006
VIRGILIO ABABON, IGNACIO ABACAJEN, ANGELINA ABAY-ABAY, EDITH
ABREA, SAMUEL ABREA, BIENVENIDO ACILO, RODRIGO ACILO, VICTOR
ACILO, ARTURO ADVINCULA, GERTRUDES AMPARO, MILA ARQUITA, VIRGILIO
ANTONIO, PRUDENCIO ARQUITA, ALBERT ATON, WARLITA AUDITA, ALICIA
AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO BANATE, LOLITA
BATAN, RAMIL BUTALON, CARMELITA CAINGLES, VICENTE CAHARIAN,
BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA CARILLO,
ALGIER CORBETA, GREGORIO DABALOS, TERESITA DABALOS, VENERANDO
DALAUTA, RICARDO DANGCULOS, MONTANO DAPROSA, LUISITO DIAZ,
FELIZARDO DUMULAO, EDITHA DUMANON, ALFREDO FAELNAR, RAUL
FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO GAMBE, VIRGINITA
GANGCA, RUPERTO GORGONIO, ROMEO HERRERO, SERGIO HOR-HORO,
FRANCISCO IBARRA, ABRAHAM JALE, DANDY LABITAD, ANTONINA
LAMBANG, ERNESTO LAUSA, VICTORIA LOOD, NEMESIO LOPE, JR.,
ESCARLITO MADLOS, MARCOS MAKINANO, REMEGIO MAKINANO, VICENTE
MAKINANO, REYNALDO MAHUSAY, HELEN MARATAS, ELIZABETH MENDOZA,
GUILBERTA MONTEROSO, GILDA NAVALTA, PILAR NAVARRO, SIMPORIANO
NUÑEZ, JR., ELISEO ORONGAN, ARMANDO OROPA, ASUNCION OROPA, JOSE
EDWIN OROPA, BALDEMAR PAGALAN, BARTOLOME PAGALAN, DAMASO
PALOMA, MANALO PLAZA, JEREMIAS PELAEZ, FRANCISCO PICARDAL,
HERMINIA PUBLICO, ROMULO QUINTOS, FIDEL QUITA, FELICIANO RANADA,
RODOLFO RARU, LEAN CILDRIC RODRIGUEZ, SAMUEL SAROMINES,
NATIVIDAD SIGNAR, CHERRIE SON, SAMUEL TAGUPA, VICTOR TAGUPA,
BRIGIDA TABANAO, PEDRO TABANAO, ROBERTO TABANAO, MARIA TAN,
RONNIE TAN, TOLENTINO TEE, ROGELIO TAMADA, MINDA TUMAOB, and
ROBERTO TUTOR, Petitioners, vs.THE HONORABLE COURT OF APPEALS,
INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL PLYWOOD GROUP
CORPORATION, TOMAS TANGSOC, JR., LORENZO TANGSOC and TOMAS
TAN, Respondents.
Remedial Law; Judgments; Rule that once a judgment has become final and
executory, it can no longer be disturbed, altered or modified admits of exceptions in
cases of special and exceptional nature.—Once a judgment has become final and
executory, it can no longer be disturbed, altered or modified. However, this rule admits
of exceptions in cases of special and exceptional nature as we held in Industrial Timber
Corporation v. National Labor Relations Commission, 233 SCRA 597 (1994).
Same; Same; Facts and circumstances of these consolidated cases warrants
liberality in the application of technical rules and procedure.—A careful scrutiny of the
facts and circumstances of these consolidated cases warrants liberality in the
application of technical rules and procedure. We agree with the NLRC that substantial
justice is best served by allowing the petition for relief despite procedural defect of filing
the motion for reconsideration three days late, for to rule otherwise, a greater injustice
would be done to ITC by ordering it to reinstate the employees to their former positions
that no longer exist due to valid and legitimate cessation of business and pay huge
judgment award.
Same; Same; In any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of law or equity shall not be
controlling.—Under Article 218 (c) of the Labor Code, the NLRC may, in the exercise
of its appellate powers, correct, amend, or waive any error, defect or irregularity
whether in substance or in form. Further, Article 221 of the same code provides that in
any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity shall not be controlling and it is the spirit
and intention of this Code that the Commission and its members and the Labor Arbiters
shall use every and all reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law or procedure, all in the interest
of due process.
Labor Law; Management Prerogative; One of the rights accorded an employer is
the right to close an establishment or undertaking; The only limitation being that the
closure must not be for the purpose of circumventing the provisions on termination of
employment embodied in the Labor Code.—Work is a necessity that has economic
significance deserving legal protection. The social justice and protection to labor
provisions in the Constitution dictate so. On the other hand, employers are also
accorded rights and privileges to assure their self-determination and independence,
and reasonable return of capital. This mass of privileges comprises the so-
called management prerogatives. Although they may be broad and unlimited in scope,
the State has the right to determine whether an employer’s privilege is exercised in a
manner that complies with the legal requirements and does not offend the protected
rights of labor. One of the rights accorded an employer is the right to close an
establishment or undertaking. The right to close the operation of an establishment or
undertaking is one of the authorized causes in terminating employment of workers, the
only limitation being that the closure must not be for the purpose of circumventing the
provisions on termination of employment embodied in the Labor Code.
Same; Same; It would be stretching the intent and spirit of the law if a court
interferes with management’s prerogative to close or cease its business operations just
because the business is not suffering from any loss or because of the desire to provide
the workers continued employment.—A reading of the foregoing law shows that a
partial or total closure or cessation of operations of establishment or undertaking may
either be due to serious business losses or financial reverses or otherwise. Under the
first kind, the employer must sufficiently and convincingly prove its allegation of
substantial losses, while under the second kind, the employer can lawfully close shop
anytime as long as cessation of or withdrawal from business operations was bona
fide in character and not impelled by a motive to defeat or circumvent the tenurial rights
of employees, and as long as he pays his employees their termination pay in the
amount corresponding to their length of service. Just as no law forces anyone to go into
business, no law can compel anybody to continue the same. It would be stretching the
intent and spirit of the law if a court interferes with management’s prerogative to close
or cease its business operations just because the business is not suffering from any
loss or because of the desire to provide the workers continued employment.
Same; Same; Requirements necessary for a valid cessation of business
operations.—Under Article 283 of the Labor Code, three requirements are necessary
for a valid cessation of business operations: (a) service of a written notice to the
employees and to the DOLE at least one month before the intended date thereof; (b)
the cessation of business must be bona fide in character; and (c) payment to the
employees of termination pay amounting to one month pay or at least one-half month
pay for every year of service, whichever is higher.
Same; Same; While an employer is under no obligation to conduct hearings
before effecting termination of employment due to authorized cause, the law requires
that it must notify the DOLE and its employees at least one month before the intended
date of closure.—Although the closure was done in good faith and for valid reasons,
we find that ITC did not comply with the notice requirement. While an employer is under
no obligation to conduct hearings before effecting termination of employment due to
authorized cause, however, the law requires that it must notify the DOLE and its
employees at least one month before the intended date of closure.
PETITIONS for review on certiorari of the decision and resolution of the Court of
Appeals.
DECISION
YNARES-SANTIAGO, J.:
Before us are two petitions for review under Rule 45 of the Rules of Court. G.R. No.
164518 assails the October 21, 2002 Decision1 of the Court of Appeals, in CA-GR. SP
No. 51966, which set aside the May 24, 1995 Decision2 of the National Labor Relations
Commission (NLRC), as well as the July 16, 2004 Resolution3 denying its motion for
reconsideration. G.R. No. 164965 assails only the July 16, 2004 Resolution of the Court
of Appeals which denied their partial motion for reconsideration. These cases were
consolidated because they arose out of the same facts set forth below.
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located
at Agusan, Pequeño, Butuan City, leased to Industrial Timber Corporation (ITC) on
August 30, 1985 for a period of five years.4 Thereafter, ITC commenced operation of
the plywood plant and hired 387 workers.
On March 16, 1990, ITC notified the Department of Labor and Employment (DOLE)
and its workers that effective March 19, 1990 it will undergo a "no plant operation" due
to lack of raw materials and will resume only after it can secure logs for milling.5
Meanwhile, IPGC notified ITC of the expiration of the lease contract in August 1990
and its intention not to renew the same.
On June 26, 1990, ITC notified the DOLE and its workers of the plant’s shutdown due
to the non-renewal of anti-pollution permit that expired in April 1990.6 This fact and the
alleged lack of logs for milling constrained ITC to lay off all its workers until further
notice. This was followed by a final notice of closure or cessation of business operations
on August 17, 1990 with an advice for all the workers to collect the benefits due them
under the law and CBA.7
On October 15, 1990, IPGC took over the plywood plant after it was issued a Wood
Processing Plant Permit No. WPR-1004-081791-042,8 which included the anti-pollution
permit, by the Department of Environment and Natural Resources (DENR)
coincidentally on the same day the ITC ceased operation of the plant.
This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal
dismissal, unfair labor practice and damages. They alleged, among others, that the
cessation of ITC’s operation was intended to bust the union and that both corporations
are one and the same entity being controlled by one owner.
On January 20, 1992, after requiring both parties to submit their respective position
papers, Labor Arbiter Irving A. Petilla rendered a decision which refused to pierce the
veil of corporate fiction for lack of evidence to prove that it was used to perpetuate fraud
or illegal act; upheld the validity of the closure; and ordered ITC to pay separation pay
of ½ month for every year of service. The dispositive portion of the decision reads:
PREMISES CONSIDERED, judgment is hereby rendered ordering respondent
Industrial Timber Corporation (ITC) to pay herein ninety-seven individual complainants
their separation pay at the rate of one-half (1/2) month’s pay for every year of service,
a fraction of at least six (6) months to be considered as one whole year, reckoned until
August 1990.
All other claims of complainants are hereby ordered DISMISSED for want of merit.
SO ORDERED.9
Ababon, et al. appealed to the NLRC. On May 20, 1993, the NLRC set aside the
decision of the Labor Arbiter and ordered the reinstatement of the employees to their
former positions, and the payment of full back wages, damages and attorney’s fees.10
ITC and IPGC filed a Motion for Reconsideration through JRS, a private courier, on
June 24, 1993.11 However, it was dismissed for being filed out of time having been filed
only on the date of actual receipt by the NLRC on June 29, 1993, three days after the
last day of the reglamentary period.12 Thus, they filed a Petition for Relief from
Resolution,13 which was treated as a second motion for reconsideration by the NLRC
and dismissed for lack of merit in a Resolution dated September 29, 1994.14
From said dismissal, petitioners filed a Notice of Appeal with the Supreme
Court.15 Subsequently, they filed a Motion for Reconsideration/Second Petition for
Relief with the NLRC.16
On December 7, 1994, the Supreme Court dismissed the Notice of Appeal for being a
wrong mode of appeal from the NLRC decision.17 On the other hand, the NLRC granted
the Second Petition for Relief and set aside all its prior decision and resolutions. The
dispositive portion of the May 24, 1995 decision reads:
WHEREFORE, the decision of this Commission dated May 10, 1993 and its
subsequent resolutions dated June 22, 1994 and September 29, 1994 are Set Aside
and Vacated. Accordingly, the appeal of complainants is Dismissed for lack of merit
and the decision of the Labor Arbiter dated January 20, 1992 is Reinstated and hereby
Affirmed.
SO ORDERED.18
On October 2, 1995, Virgilio Ababon, et al. filed a Petition for Certiorari with the
Supreme Court, which was docketed as G.R. No. 121977.19 However, pursuant to our
ruling in St. Martin’s Funeral Home v. NLRC, we referred the petition to the Court of
Appeals for appropriate action and disposition.20
On October 21, 2002, the Court of Appeals rendered a decision setting aside the May
24, 1995 decision of the NLRC and reinstated its May 20, 1993 decision and September
29, 1993 resolution, thus:
WHEREFORE, the petition is GRANTED. The decision dated May 24, 1995 of the
National Labor Relations Commission is ANNULLED and SET ASIDE, with the result
that its decision dated May 20, 1993 and resolution dated September 29, 1994 are
REINSTATED.
SO ORDERED.21
Both parties filed their respective motions for reconsideration which were denied,
hence, the present consolidated petitions for review based on the following assigned
errors:
In G.R. No. 164518
THE COURT OF APPEALS ERRED IN LIBERALLY APPLYING THE RULES OF
PROCEDURE WITH RESPECT TO RESPONDENTS BUT BEING RIGID IN ITS
APPLICATION AS REGARDS PETITIONERS.22
In G.R. No. 164965
WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED A REVERSIBLE
ERROR WHEN IT REFUSED TO APPLY SECTION 279 OF THE LABOR CODE AS
AMENDED BY RA 6715 TO MODIFY THE DECISION OF 20 MAY 1993 WITH
RESPECT TO BACKWAGES FOR PETITIONERS.23
ITC and IPGC contend that the Court of Appeals erred in reversing the May 24, 1995
decision of the NLRC since its May 20, 1993 decision had become immutable for their
failure to file motion for reconsideration within the reglementary period. While they admit
filing their motion for reconsideration out of time due to excusable negligence of their
counsel’s secretary, however, they advance that the Court of Appeals should have
relaxed the rules of technicality in the paramount interest of justice, as it had done so
in favor of the employees, and ruled on the merits of the case; after all, the delay was
just three days.
Ordinarily, once a judgment has become final and executory, it can no longer be
disturbed, altered or modified. However, this rule admits of exceptions in cases of
special and exceptional nature as we held in Industrial Timber Corporation v. National
Labor Relations Commission:24
It is true that after a judgment has become final and executory, it can no longer be
modified or otherwise disturbed. However, this principle admits of exceptions, as where
facts and circumstances transpire which render its execution impossible or unjust and
it therefore becomes necessary, ‘in the interest of justice, to direct its modification in
order to harmonize the disposition with the prevailing circumstances.’
A careful scrutiny of the facts and circumstances of these consolidated cases warrants
liberality in the application of technical rules and procedure. We agree with the NLRC
that substantial justice is best served by allowing the petition for relief despite
procedural defect of filing the motion for reconsideration three days late, for to rule
otherwise, a greater injustice would be done to ITC by ordering it to reinstate the
employees to their former positions that no longer exist due to valid and legitimate
cessation of business and pay huge judgment award.25
Moreover, under Article 218 (c) of the Labor Code, the NLRC may, in the exercise of
its appellate powers, correct, amend, or waive any error, defect or irregularity whether
in substance or in form. Further, Article 221 of the same code provides that in any
proceeding before the Commission or any of the Labor Arbiters, the rules of evidence
prevailing in courts of law or equity shall not be controlling and it is the spirit and
intention of this Code that the Commission and its members and the Labor Arbiters
shall use every and all reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law or procedure, all in the interest
of due process.26
Also, the rule under Section 14 of Rule VII of the New Rules of Procedure of the NLRC
that a motion for reconsideration of any order, resolution or decision of the Commission
shall not be entertained except when based on palpable or patent errors, provided that
the motion is under oath and filed within 10 calendar days from receipt of the order,
resolution or decision should not be interpreted as to sacrifice substantial justice to
technicality. It should be borne in mind that the real purpose behind the limitation of the
period is to forestall or avoid an unreasonable delay in the administration of justice,
from which the NLRC absolved ITC and IPGC because the filing of their motion for
reconsideration three days later than the prescribed period was due to excusable
negligence. Indeed, the "Court has the power to except a particular case from the
operation of the rule whenever the purposes of justice requires it because what should
guide judicial action is that a party is given the fullest opportunity to establish the merits
of his action or defense rather than for him to lose life, honor, or property on mere
technicalities."27
We now come to the main issues of whether Ababon, et al. were illegally dismissed
due to the closure of ITC’s business; and whether they are entitled to separation pay,
backwages, and other monetary awards.
Work is a necessity that has economic significance deserving legal protection. The
social justice and protection to labor provisions in the Constitution dictate so. On the
other hand, employers are also accorded rights and privileges to assure their self-
determination and independence, and reasonable return of capital. This mass of
privileges comprises the so-called management prerogatives. Although they may be
broad and unlimited in scope, the State has the right to determine whether an
employer's privilege is exercised in a manner that complies with the legal requirements
and does not offend the protected rights of labor. One of the rights accorded an
employer is the right to close an establishment or undertaking.28
The right to close the operation of an establishment or undertaking is one of the
authorized causes in terminating employment of workers, the only limitation being that
the closure must not be for the purpose of circumventing the provisions on termination
of employment embodied in the Labor Code.
Article 283 of the Labor Code provides:
ART. 283. Closure of establishment and reduction of personnel. – The employer may
also terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher.1awphi1.net In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation pay shall be equivalent
to one (1) month pay or to at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year.
A reading of the foregoing law shows that a partial or total closure or cessation of
operations of establishment or undertaking may either be due to serious business
losses or financial reverses or otherwise. Under the first kind, the employer must
sufficiently and convincingly prove its allegation of substantial losses,29 while under the
second kind, the employer can lawfully close shop anytime30 as long as cessation of or
withdrawal from business operations was bona fide in character and not impelled by a
motive to defeat or circumvent the tenurial rights of employees,31 and as long as he
pays his employees their termination pay in the amount corresponding to their length
of service.32Just as no law forces anyone to go into business, no law can compel
anybody to continue the same. It would be stretching the intent and spirit of the law if a
court interferes with management's prerogative to close or cease its business
operations just because the business is not suffering from any loss or because of the
desire to provide the workers continued employment.33
In sum, under Article 283 of the Labor Code, three requirements are necessary for a
valid cessation of business operations: (a) service of a written notice to the employees
and to the DOLE at least one month before the intended date thereof; (b) the cessation
of business must be bona fide in character; and (c) payment to the employees of
termination pay amounting to one month pay or at least one-half month pay for every
year of service, whichever is higher.
In these consolidated cases, we find that ITC’s closure or cessation of business was
done in good faith and for valid reasons.
The records reveal that the decision to permanently close business operations was
arrived at after a suspension of operation for several months precipitated by lack of raw
materials used for milling operations, the expiration of the anti-pollution permit in April
1990, and the termination of the lease contract with IPGC in August 1990 over the
plywood plant at Agusan, Pequeño, Butuan City. We quote with approval the
observation of the Labor Arbiter:
As borne out from the records, respondent ITC actually underwent ‘no plant operation’
since 19 March 1990 due to lack of log supply. This fact is admitted by complainants
(Minutes of hearing, 28 October 1991). Since then several subsequent incidents
prevented respondent ITC to resume its business operations e.g. expiration and non-
renewal of the wood processing plant permit, anti-pollution permit, and the lease
contract on the plywood plant. Without the raw materials respondent ITC has nothing
to produce. Without the permits it cannot lawfully operate the plant. And without the
contract of lease respondent ITC has no option but to cease operation and turn over
the plant to the lessor.34 (Emphasis supplied)
Moreover, the lack of raw materials used for milling operations was affirmed in Industrial
Timber Corporation v. National Labor Relations Commission35 as one of the reasons
for the valid closure of ITC’s Butuan Logs Plant in 1989. In said case, we upheld the
management prerogative to close the plant as the only remedy available in order to
prevent imminent heavy losses on account of high production costs, erratic supply of
raw materials, depressed prices and poor market conditions for its wood products.
In Shoppers Gain Supermarket v. National Labor Relations Commission,36 we held that
the non-renewal of petitioner corporation’s lease contract and its consequent closure
and cessation of operations may be considered an event beyond petitioner’s control, in
the nature of a force majeure situation. As such, it amounts to an authorized cause for
termination of the private respondents.
Having established that ITC’s closure of the plywood plant was done in good faith and
that it was due to causes beyond its control, the conclusion is inevitable that said
closure is valid. Consequently, Ababon, et al. could not have been illegally dismissed
to be entitled to full backwages. Thus, we find it no longer necessary to discuss the
issue regarding the computation of their backwages. However, they are entitled to
separation pay equivalent to one month pay or at least one-half month pay for every
year of service, whichever is higher.
Although the closure was done in good faith and for valid reasons, we find that ITC did
not comply with the notice requirement. While an employer is under no obligation to
conduct hearings before effecting termination of employment due to authorized
cause,37 however, the law requires that it must notify the DOLE and its employees at
least one month before the intended date of closure.
In the case at bar, ITC notified its employees and the DOLE of the ‘no plant operation’
on March 16, 1990 due to lack of raw materials. This was followed by a ‘shut down’
notice dated June 26, 1990 due to the expiration of the anti-pollution permit. However,
this shutdown was only temporary as ITC assured its employees that they could return
to work once the renewal is acted upon by the DENR. On August 17, 1990, the ITC
sent its employees a final notice of closure or cessation of business operations to take
effect on the same day it was released. We find that this falls short of the notice
requirement for termination of employment due to authorized cause considering that
the DOLE was not furnished and the notice should have been furnished both the
employees and the DOLE at least one month before the intended date of
closure.1awphi1.net
In Ariola v. Philex Mining Corporation,38 we held:
In Agabon v. National Labor Relations Commission and Jaka Food Processing
Corporation v. Pacot, the Court sustained the dismissals for just cause under Article
282 and for authorized cause under Article 283 of the Labor Code, respectively, despite
non-compliance with the statutory requirement of notice and hearing. The grounds for
the dismissals in those cases, namely, neglect of duty and retrenchment, remained
valid because the non-compliance with the notice and hearing requirement in the Labor
Code did not undermine the validity of the grounds for the dismissals. Indeed, to
invalidate a dismissal merely because of a procedural defect creates absurdity and runs
counter to public interest. We explained in Agabon:
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized
causes but not complying with statutory due process may have far-reaching
consequences.
This would encourage frivolous suits, where even the most notorious violators of
company policy are rewarded by invoking due process. This also creates absurd
situations where there is a just or authorized cause for dismissal but a procedural
infirmity invalidates the termination. Let us take for example a case where the employee
is caught stealing or threatens the lives of his co-employees or has become a criminal,
who has fled and cannot be found, or where serious business losses demand that
operations be ceased in less than a month. Invalidating the dismissal would not serve
 22
public interest. It could also discourage investments that can generate employment in Id. at 21.
the local economy. 23 Rollo (G.R. No. 164965), p. 22.
Where the dismissal is based on an authorized cause under Article 283 of the Labor 24 G.R. No. 111985, June 30, 1994, 233 SCRA 597, 601.
Code but the employer failed to comply with the notice requirement, the sanction should 25 Rollo (G.R. No. 164518), p. 93.
be stiff as the dismissal process was initiated by the employer’s exercise of his 26 See Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16, 2005, 458 SCRA
management prerogative, as opposed to a dismissal based on a just cause under
Article 282 with the same procedural infirmity where the sanction to be imposed upon 609, 628.
27 Philippine Commercial Industrial Bank v. Cabrera, G.R. No. 160368, March 31, 2005,
the employer should be tempered as the dismissal process was, in effect, initiated by
an act imputable to the employee.39 454 SCRA 792, 801.
28 Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, September 16, 2005, SC E-
In light of the factual circumstances of the cases at bar, we deem it wise and reasonable
to award P50,000.00 to each employee as nominal damages. Library.
29 Alabang Country Club, Inc. v. National Labor Relations Commission, G.R. No.
WHEREFORE, in view of the foregoing, the October 21, 2002 Decision of the Court of
Appeals in CA-GR. SP No. 51966, which set aside the May 24, 1995 Decision of the 157611, August 9, 2005, SC E-Library.
NLRC, as well as the July 16, 2004 Resolution denying ITC’s motion for 30 Id.
reconsideration, are hereby REVERSED. The May 24, 1995 Decision of the NLRC 31 Danzas Intercontinental, Inc. v. Daguman, G.R. No. 154368, April 15, 2005, 456
reinstating the decision of the Labor Arbiter finding the closure or cessation of ITC’s SCRA 382, 393.
business valid, is AFFIRMED with the MODIFICATIONS that ITC is ordered to pay 32 Capitol Medical Center, Inc. v. Meris, supra note 28.
separation pay equivalent to one month pay or to at least one-half month pay for every
33 Alabang Country Club, Inc. v. NLRC, supra note 29.
year of service, whichever is higher, and P50,000.00 as nominal damages to each
employee. 34 Rollo (G.R. No. 164518), p. 64.

SO ORDERED. 35 339 Phil. 395, 401, 404-405 (1997).

Footnotes 36 328 Phil. 756, 771 (1996).

1 Rollo (G.R. No. 164518), pp. 41-52. Penned by Associate Justice Edgardo P. Cruz 37 See Wiltshire File Co., Inc. v. National Labor Relations Commission, G.R. No. 82249,

and concurred in by Associate Justices Oswaldo D. Agcaoili and Amelita G. Tolentino. February 7, 1991, 193 SCRA 665, 676.
2 Id. at 85-101. Penned by Commissioner Musib M. Buat and concurred in by Leon G. 38 G.R. No. 147756, August 9, 2005, SC E-Library.

Gonzaga, Jr. Commissioner Oscar N. Abella, dissented. 39 San Miguel Corporation v. Aballa, G.R. No. 149011, June 28, 2005, 461 SCRA 392,
3 Id. at 53-54.
431.
4 CA rollo, pp. 130-131.

5 Id. at 121.

6 Id. at 122.

7 Id. at 123.

8 Id. at 124.

9 Rollo (G.R. No. 164518), p. 68.

10 Id. at 83-84. Penned by Commissioner Oscar N. Abella and concurred in by

Commissioners Leon G. Gonzaga, Jr. and Musib M. Buat.

11 CA rollo, pp. 214-222.

12 Id. at 223-225.

13 Id. at 227-235.

14 Id. at 236-240.

15 Id. at 256-259, docketed as G.R. No. 117825.

16 Id. at 241.

17 Id. at 260.

18 Rollo (G.R. No. 164518), p. 100.

19 CA rollo, pp. 4-26.

20 Id. at 610.

21 Rollo (G.R. No. 164518), p. 52.

EN BANC employee relationship. The record of an employee is a relevant consideration in
G.R. No. 158693 November 17, 2004 determining the penalty that should be meted out to him.
Same; Same; The employer may not be compelled to continue to employ such
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners, vs. NATIONAL LABOR
persons whose continuance in the service will patently be inimical to his interests.—
RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and
The law imposes many obligations on the employer such as providing just
VICENTE ANGELES, respondents.
compensation to workers, observance of the procedural requirements of notice and
Labor Law; Administrative Law; If the factual findings of the NLRC and the Labor
hearing in the termination of employment. On the other hand, the law also recognizes
Arbiter are conflicting, the reviewing court may delve into the records and examine for
the right of the employer to expect from its workers not only good performance,
itself the questioned findings.—It is well-settled that findings of fact of quasi-judicial
adequate work and diligence, but also good conduct and loyalty. The employer may
agencies like the NLRC are accorded not only respect but even finality if the findings
not be compelled to continue to employ such persons whose continuance in the service
are supported by substantial evidence. This is especially so when such findings were
will patently be inimical to his interests.
affirmed by the Court of Appeals. However, if the factual findings of the NLRC and the
Same; Same; Dismissals based on just causes contemplate acts or omissions
Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the
attributable to the employee while dismissals based on authorized causes involve
records and examine for itself the questioned findings. Accordingly, the Court of
grounds under the Labor Code which allow the employer to terminate employees.—
Appeals, after a careful review of the facts, ruled that petitioners’ dismissal was for a
Dismissals based on just causes contemplate acts or omissions attributable to the
just cause. They had abandoned their employment and were already working for
employee while dismissals based on authorized causes involve grounds under the
another employer.
Labor Code which allow the employer to terminate employees. A termination for an
Same; Dismissal of Employees; To dismiss an employee, the law requires not
authorized cause requires payment of separation pay. When the termination of
only the existence of a just and valid cause but also enjoins the employer to give the
employment is declared illegal, reinstatement and full backwages are mandated under
employee the opportunity to be heard and to defend himself.—To dismiss an employee,
Article 279. If reinstatement is no longer possible where the dismissal was unjust,
the law requires not only the existence of a just and valid cause but also enjoins the
separation pay may be granted.
employer to give the employee the opportunity to be heard and to defend himself.
Same; Same; Due Process; Notice Requirement; Procedurally, (1) if the
Article 282 of the Labor Code enumerates the just causes for termination by the
dismissal is based on a just cause under Article 282 of the Labor Code, the employer
employer: (a) serious misconduct or willful disobedience by the employee of the lawful
must give the employee two written notices and a hearing or opportunity to be heard if
orders of his employer or the latter’s representative in connection with the employee’s
requested by the employee before terminating the employment, and (2) if the dismissal
work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful
is based on authorized causes under Articles 283 and 284, the employer must give the
breach by the employee of the trust reposed in him by his employer or his duly
employee and the Department of Labor and Employment written notices 30 days prior
authorized representative; (d) commission of a crime or offense by the employee
to the effectivity of his separation; Failure to observe due process in a dismissal for just
against the person of his employer or any immediate member of his family or his duly
or authorized cause does not invalidate the dismissal but makes the employer liable for
authorized representative; and (e) other causes analogous to the foregoing.
non-compliance with the procedural requirements of due process.—Procedurally, (1) if
Same; Same; Abandonment; Words and Phrases; Abandonment is the
the dismissal is based on a just cause under Article 282, the employer must give the
deliberate and unjustified refusal of an employee to resume his employment—it is a
employee two written notices and a hearing or opportunity to be heard if requested by
form of neglect of duty, hence, a just cause for termination of employment by the
the employee before terminating the employment: a notice specifying the grounds for
employer.—Abandonment is the deliberate and unjustified refusal of an employee to
which dismissal is sought a hearing or an opportunity to be heard and after hearing or
resume his employment. It is a form of neglect of duty, hence, a just cause for
opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is
termination of employment by the employer. For a valid finding of abandonment, these
based on authorized causes under Articles 283 and 284, the employer must give the
two factors should be present: (1) the failure to report for work or absence without valid
employee and the Department of Labor and Employment written notices 30 days prior
or justifiable reason; and (2) a clear intention to sever employer-employee relationship,
to the effectivity of his separation. From the foregoing rules four possible situations may
with the second as the more determinative factor which is manifested by overt acts from
be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for
which it may be deduced that the employees has no more intention to work. The intent
an authorized cause under Article 283, or for health reasons under Article 284, and due
to discontinue the employment must be shown by clear proof that it was deliberate and
process was observed; (2) the dismissal is without just or authorized cause but due
unjustified.
process was observed; (3) the dismissal is without just or authorized cause and there
Same; Same; Same; Moonlighting; Subcontracting for another company clearly
was no due process; and (4) the dismissal is for just or authorized cause but due
shows the intention to sever the employer-employee relationship; The record of an
process was not observed. In the first situation, the dismissal is undoubtedly valid and
employee is a relevant consideration in determining the penalty that should be meted
the employer will not suffer any liability. In the second and third situations where the
out to him.—In February 1999, petitioners were frequently absent having subcontracted
dismissals are illegal, Article 279 mandates that the employee is entitled to
for an installation work for another company. Subcontracting for another company
reinstatement without loss of seniority rights and other privileges and full backwages,
clearly showed the intention to sever the employer-employee relationship with private
inclusive of allowances, and other benefits or their monetary equivalent computed from
respondent. This was not the first time they did this. In January 1996, they did not report
the time the compensation was not paid up to the time of actual reinstatement. In the
for work because they were working for another company. Private respondent at that
fourth situation, the dismissal should be upheld. While the procedural infirmity cannot
time warned petitioners that they would be dismissed if this happened again. Petitioners
be cured, it should not invalidate the dismissal. However, the employer should be
disregarded the warning and exhibited a clear intention to sever their employer-
held liable for non-compliance with the procedural requirements of due process.
 Same; Same; Same; Same; The fact that the employee may not be residing in
the address indicated in the employer’s records does not excuse the employer from
sending the notices to the employee’s last known address.—The present case squarely
falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company.
Private respondent, however, did not follow the notice requirements and instead argued
that sending notices to the last known addresses would have been useless because
they did not reside there anymore. Unfortunately for the private respondent, this is not
a valid excuse because the law mandates the twin notice requirements to the
employee’s last known address. Thus, it should be held liable for non-compliance with
the procedural requirements of due process.
Same; Same; Same; Same; The Court believes that the ruling in Serrano v.
National Labor Relations Commission, 323 SCRA 445 (2000), did not consider the full
meaning of Article 279 of the Labor Code which provision means that the termination
is illegal only if it is not for any of the justified or authorized causes provided by law and
that payment of backwages and other benefits, including reinstatement, is justified only
if the employee was unjustly dismissed; The fact that the Serrano ruling can cause
unfairness and injustice which elicited strong dissent has prompted the Court to revisit
the doctrine.—The rationale for the re-examination of the Wenphildoctrine
in Serrano was the significant number of cases involving dismissals without requisite
notices. We concluded that the imposition of penalty by way of damages for violation
of the notice requirement was not serving as a deterrent. Hence, we now required
payment of full backwages from the time of dismissal until the time the Court finds the
dismissal was for a just or authorized cause. Serrano was confronting the practice of
employers to “dismiss now and pay later” by imposing full backwages. We believe,
however, that the ruling in Serrano did not consider the full meaning of Article 279 of
the Labor Code which states: 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. This means that the termination is
illegal only if it is not for any of the justified or authorized causes provided by law.
Payment of backwages and other benefits, including reinstatement, is justified only if
the employee was unjustly dismissed. The fact that the Serrano ruling can cause
unfairness and injustice which elicited strong dissent has prompted us to revisit the
doctrine.
Same; Same; Same; Constitutional Law; The Due Process Clause in Article III,
Section 1 of the Constitution embodies a system of rights based on moral principles so
deeply imbedded in the traditions and feelings of our people as to be deemed
fundamental to a civilized society as conceived by our entire history.—To be sure, the
Due Process Clause in Article III, Section 1 of the Constitution embodies a system of
rights based on moral principles so deeply imbedded in the traditions and feelings of
our people as to be deemed fundamental to a civilized society as conceived by our
entire history. Due process is that which comports with the deepest notions of what is
fair and right and just. It is a constitutional restraint on the legislative as well as on the
executive and judicial powers of the government provided by the Bill of Rights.
Same; Same; Same; Same; Statutory due process should be differentiated from
failure to comply with constitutional due process—constitutional due process protects
the individual from the government and assures him of his rights in criminal, civil or
administrative proceedings while statutory due process found in the Labor Code and
Implementing Rules protects employees from being unjustly terminated without just
cause after notice and hearing.—Due process under the Labor Code,
like Constitutional due process,has two aspects: substantive, i.e., the valid and
authorized causes of employment termination under the Labor Code; and
procedural, i.e., the manner of dismissal. Procedural due process requirements for
dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise
known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by
Department Order Nos. 9 and 10. Breaches of these due process requirements violate
the Labor Code. Therefore statutory due process should be differentiated from failure
to comply with constitutional due process. Constitutional due process protects the
individual from the government and assures him of his rights in criminal, civil or
administrative proceedings; while statutory due process found in the Labor Code and
Implementing Rules protects employees from being unjustly terminated without just
cause after notice and hearing.
Same; Same; Same; The better rule is to abandon the Serrano doctrine and to
follow Wenphil v. National Labor Relations Commission, 170 SCRA 69 (1989), by
holding that the dismissal was for just cause but imposing sanctions on the employer,
which sanctions, however, must be stiffer than that imposed in Wenphil.—After carefully
analyzing the consequences of the divergent doctrines in the law on employment
termination, we believe that in cases involving dismissals for cause but without
observance of the twin requirements of notice and hearing, the better rule is to abandon
the Serranodoctrine and to follow Wenphilby holding that the dismissal was for just
cause but imposing sanctions on the employer. Such sanctions, however, must be
stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve
a fair result by dispensing justice not just to employees, but to employers as well.
Same; Same; Same; The constitutional policy to provide full protection to labor is
not meant to be a sword to oppress employers—the commitment of this Court to the
cause of labor does not prevent it from sustaining the employer when it is in the right.—
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized
causes but not complying with statutory due process may have far-reaching
consequences. This would encourage frivolous suits, where even the most notorious
violators of company policy are rewarded by invoking due process. This also creates
absurd situations where there is a just or authorized cause for dismissal but a
procedural infirmity invalidates the termination. Let us take for example a case where
the employee is caught stealing or threatens the lives of his co-employees or has
become a criminal, who has fled and cannot be found, or where serious business losses
demand that operations be ceased in less than a month. Invalidating the dismissal
would not serve public interest. It could also discourage investments that can generate
employment in the local economy. The constitutional policy to provide full protection to
labor is not meant to be a sword to oppress employers. The commitment of this Court
to the cause of labor does not prevent us from sustaining the employer when it is in the
right, as in this case. Certainly, an employer should not be compelled to pay employees
for work not actually performed and in fact abandoned. The employer should not be
compelled to continue employing a person who is admittedly guilty of misfeasance or
malfeasance and whose continued employment is patently inimical to the employer.
The law protecting the rights of the laborer authorizes neither oppression nor self-
destruction of the employer.
Same; Same; Social Justice; An employee who is clearly guilty of conduct
violative of Article 282 should not be protected by the Social Justice Clause of the
Constitution—social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be
equally and evenly extended to all groups as a combined force in our social and
economic life; Social justice is not based on rigid formulas set in stone—it has to allow
for changing times and circumstances.—An employee who is clearly guilty of conduct
violative of Article 282 should not be protected by the Social Justice Clause of the
Constitution. Social justice, as the term suggests, should be used only to correct an
injustice. As the eminent Justice Jose P. Laurel observed, social justice must be
founded on the recognition of the necessity of interdependence among diverse units of
a society and of the protection that should be equally and evenly extended to all groups
as a combined force in our social and economic life, consistent with the fundamental
and paramount objective of the state of promoting the health, comfort, and quiet of all
persons, and of bringing about “the greatest good to the greatest number.” This is not
to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and
related cases. Social justice is not based on rigid formulas set in stone. It has to allow
for changing times and circumstances.
Same; Same; Due Process; The violation of an employee’s right to statutory due
process by the employer warrants the payment of indemnity in the form of nominal
damages, the amount of which is addressed to the sound discretion of the court, taking
into account the relevant circumstances.—The violation of the petitioners’ right to
statutory due process by the private respondent warrants the payment of indemnity in
the form of nominal damages. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant circumstances. Considering the
prevailing circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to deter employers from
future violations of the statutory due process rights of employees. At the very least, it
provides a vindication or recognition of this fundamental right granted to the latter under
the Labor Code and its Implementing Rules.
Same; Evidence; Payment; Burden of Proof; As a general rule, one who pleads
payment has the burden of proving it—even where the employee must allege non-
payment, the general rule is that the burden rests on the employer to prove payment,
rather than on the employee to prove non-payment.—We affirm the ruling of the
appellate court on petitioners’ money claims. Private respondent is liable for petitioners’
holiday pay, service incentive leave pay and 13th month pay without deductions. As a
general rule, one who pleads payment has the burden of proving it. Even where the
employee must allege non-payment, the general rule is that the burden rests on the
employer to prove payment, rather than on the employee to prove non-payment. The
reason for the rule is that the pertinent personnel files, payrolls, records, remittances
and other similar documents—which will show that overtime, differentials, service
incentive leave and other claims of workers have been paid—are not in the possession
of the worker but in the custody and absolute control of the employer.
Same; Wages; Thirteenth Month Pay; The 13th month pay is included in the
definition of wage under Article 97(f) of the Labor Code from which the employer is
prohibited under Article 113 from making any deductions without the employee’s
knowledge and consent.—Anent the deduction of SSS loan and the value of the shoes
from petitioner Virgilio Agabon’s 13th month pay, we find the same to be unauthorized.
The evident intention of Presidential Decree No. 851 is to grant an additional income in
the form of the 13th month pay to employees not already receiving the same so as “to
further protect the level of real wages from the ravages of world-wide inflation.” Clearly,
as additional income, the 13th month pay is included in the definition of wage under
Article 97(f) of the Labor Code, to wit: (f) “Wage” paid to any employee shall mean the
remuneration or earnings, however designated, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece, or commission basis, or
other method of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee . . .” from which an employer is prohibited
under Article 113 of the same Code from making any deductions without the
employee’s knowledge and consent. In the instant case, private respondent failed to
show that the deduction of the SSS loan and the value of the shoes from petitioner
Virgilio Agabon’s 13th month pay was authorized by the latter. The lack of authority to
deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same
as one of his money claims against private respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision1 of the Court of Appeals dated
January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor
Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00.
Private respondent Riviera Home Improvements, Inc. is engaged in the business of
selling and installing ornamental and construction materials. It employed petitioners
Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January
2, 19922 until February 23, 1999 when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money
claims3 and on December 28, 1999, the Labor Arbiter rendered a decision declaring the
dismissals illegal and ordered private respondent to pay the monetary claims. The
dispositive portion of the decision states:
WHEREFORE, premises considered, We find the termination of the complainants
illegal. Accordingly, respondent is hereby ordered to pay them their backwages up
to November 29, 1999 in the sum of:
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
and, in lieu of reinstatement to pay them their separation pay of one (1) month for
every year of service from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service
incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay
for holidays and rest days and Virgilio Agabon's 13th month pay differential
amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the
aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED
SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE
HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT &
93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of
Julieta C. Nicolas, OIC, Research and Computation Unit, NCR.
SO ORDERED.4
On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners
had abandoned their work, and were not entitled to backwages and separation pay.
The other money claims awarded by the Labor Arbiter were also denied for lack of
evidence.5
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari
with the Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal
because they had abandoned their employment but ordered the payment of money
claims. The dispositive portion of the decision reads:
 WHEREFORE, the decision of the National Labor Relations Commission is
REVERSED only insofar as it dismissed petitioner's money claims. Private
respondents are ordered to pay petitioners holiday pay for four (4) regular holidays
in 1996, 1997, and 1998, as well as their service incentive leave pay for said years,
and to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in
the amount of P2,150.00.
SO ORDERED.6
Hence, this petition for review on the sole issue of whether petitioners were illegally
dismissed.7
Petitioners assert that they were dismissed because the private respondent refused to
give them assignments unless they agreed to work on a "pakyaw" basis when they
reported for duty on February 23, 1999. They did not agree on this arrangement
because it would mean losing benefits as Social Security System (SSS) members.
Petitioners also claim that private respondent did not comply with the twin requirements
of notice and hearing.8
Private respondent, on the other hand, maintained that petitioners were not dismissed
but had abandoned their work.9 In fact, private respondent sent two letters to the last
known addresses of the petitioners advising them to report for work. Private
respondent's manager even talked to petitioner Virgilio Agabon by telephone sometime
in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving
40,000 square meters of cornice installation work. However, petitioners did not report
for work because they had subcontracted to perform installation work for another
company. Petitioners also demanded for an increase in their wage to P280.00 per day.
When this was not granted, petitioners stopped reporting for work and filed the illegal
dismissal case.10
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 were affirmed by the Court of
Appeals.11 However, if the factual findings of the NLRC and the Labor Arbiter are
conflicting, as in this case, the reviewing court may delve into the records and examine
for itself the questioned findings.12
Accordingly, the Court of Appeals, after a careful review of the facts, ruled that
petitioners' dismissal was for a just cause. They had abandoned their employment and
were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid
cause but also enjoins the employer to give the employee the opportunity to be heard
and to defend himself.13 Article 282 of the Labor Code enumerates the just causes for
termination by the employer: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latter's representative in connection
with the employee's 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 his 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.
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.14 It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer.15 For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-employee relationship, with the
second as the more determinative factor which is manifested by overt acts from which
it may be deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate and
unjustified.16
In February 1999, petitioners were frequently absent having subcontracted for an
installation work for another company. Subcontracting for another company clearly
showed the intention to sever the employer-employee relationship with private
respondent. This was not the first time they did this. In January 1996, they did not report
for work because they were working for another company. Private respondent at that
time warned petitioners that they would be dismissed if this happened again. Petitioners
disregarded the warning and exhibited a clear intention to sever their employer-
employee relationship. The record of an employee is a relevant consideration in
determining the penalty that should be meted out to him.17
In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented
from work without leave or permission from his employer, for the purpose of looking for
a job elsewhere, is considered to have abandoned his job. We should apply that rule
with more reason here where petitioners were absent because they were already
working in another company.
The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice and
hearing in the termination of employment. On the other hand, the law also recognizes
the right of the employer to expect from its workers not only good performance,
adequate work and diligence, but also good conduct19 and loyalty. The employer may
not be compelled to continue to employ such persons whose continuance in the service
will patently be inimical to his interests.20
After establishing that the terminations were for a just and valid cause, we now
determine if the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of
the Omnibus Rules Implementing the Labor Code:
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.
In case of termination, the foregoing notices shall be served on the employee's last
known address.
Dismissals based on just causes contemplate acts or omissions attributable to the
employee while dismissals based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate employees. A termination for an
authorized cause requires payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full backwages are mandated under
Article 279. If reinstatement is no longer possible where the dismissal was unjust,
separation pay may be granted.
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.
From the foregoing rules four possible situations may be derived: (1) the dismissal is
for a just cause under Article 282 of the Labor Code, for an authorized cause under
Article 283, or for health reasons under Article 284, and due process was observed; (2)
the dismissal is without just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due process; and (4) the
dismissal is for just or authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer
any liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates
that the employee is entitled to reinstatement without loss of seniority rights and other
privileges and full backwages, inclusive of allowances, and other benefits or their
monetary equivalent computed from the time the compensation was not paid up to the
time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity
cannot be cured, it should not invalidate the dismissal. However, the employer should
be held liable for non-compliance with the procedural requirements of due process.
The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not follow the notice requirements
and instead argued that sending notices to the last known addresses would have been
useless because they did not reside there anymore. Unfortunately for the private
respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employee's last known address.21 Thus, it should be held liable for
non-compliance with the procedural requirements of due process.
A review and re-examination of the relevant legal principles is appropriate and timely
to clarify the various rulings on employment termination in the light of Serrano v.
National Labor Relations Commission.22
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was
not given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations
Commission,23 we reversed this long-standing rule and held that the dismissed
employee, although not given any notice and hearing, was not entitled to reinstatement
and backwages because the dismissal was for grave misconduct and insubordination,
a just ground for termination under Article 282. The employee had a violent temper and
caused trouble during office hours, defying superiors who tried to pacify him. We
concluded that reinstating the employee and awarding backwages "may encourage him
to do even worse and will render a mockery of the rules of discipline that employees
are required to observe."24 We further held that:
Under the circumstances, the dismissal of the private respondent for just cause
should be maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend
to private respondent his right to an investigation before causing his dismissal. The
rule is explicit as above discussed. The dismissal of an employee must be for just
or authorized cause and after due process. Petitioner committed an infraction of the
second requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before dismissing
petitioner from employment. Considering the circumstances of this case petitioner
must indemnify the private respondent the amount of P1,000.00. The measure of
this award depends on the facts of each case and the gravity of the omission
committed by the employer.25
The rule thus evolved: where the employer had a valid reason to dismiss an employee
but did not follow the due process requirement, the dismissal may be upheld but the
employer will be penalized to pay an indemnity to the employee. This became known
as the Wenphil or Belated Due Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed.
We held that the violation by the employer of the notice requirement in termination for
just or authorized causes was not a denial of due process that will nullify the
termination. However, the dismissal is ineffectual and the employer must pay full
backwages from the time of termination until it is judicially declared that the dismissal
was for a just or authorized cause.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the
significant number of cases involving dismissals without requisite notices. We
concluded that the imposition of penalty by way of damages for violation of the notice
requirement was not serving as a deterrent. Hence, we now required payment of full
backwages from the time of dismissal until the time the Court finds the dismissal was
for a just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now and pay later" by
imposing full backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of
Article 279 of the Labor Code which states:
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.
This means that the termination is illegal only if it is not for any of the justified or
authorized causes provided by law. Payment of backwages and other benefits,
including reinstatement, is justified only if the employee was unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong
dissent has prompted us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies
a system of rights based on moral principles so deeply imbedded in the traditions and
feelings of our people as to be deemed fundamental to a civilized society as conceived
by our entire history. Due process is that which comports with the deepest notions of
what is fair and right and just.26 It is a constitutional restraint on the legislative as well
as on the executive and judicial powers of the government provided by the Bill of Rights.
Due process under the Labor Code, like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process
requirements for dismissal are found in the Implementing Rules of P.D. 442, as
amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I,
Sec. 2, as amended by Department Order Nos. 9 and 10.27 Breaches of these due
process requirements violate the Labor Code. Therefore statutory due process should
be differentiated from failure to comply with constitutional due process.
Constitutional due process protects the individual from the government and assures
him of his rights in criminal, civil or administrative proceedings; while statutory due
process found in the Labor Code and Implementing Rules protects employees from
being unjustly terminated without just cause after notice and hearing.
In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just
and valid cause but the employee was not accorded due process. The dismissal was
upheld by the Court but the employer was sanctioned. The sanction should be in the
nature of indemnification or penalty, and depends on the facts of each case and the
gravity of the omission committed by the employer.
In Nath v. National Labor Relations Commission,29 it was ruled that even if the
employee was not given due process, the failure did not operate to eradicate the just
causes for dismissal. The dismissal being for just cause, albeitwithout due process, did
not entitle the employee to reinstatement, backwages, damages and attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v.
National Labor Relations Commission,30 which opinion he reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been properly
observed by an employer, it would not be right to order either the reinstatement of
the dismissed employee or the payment of backwages to him. In failing, however,
to comply with the procedure prescribed by law in terminating the services of the
employee, the employer must be deemed to have opted or, in any case, should be
made liable, for the payment of separation pay. It might be pointed out that the
notice to be given and the hearing to be conducted generally constitute the two-part
due process requirement of law to be accorded to the employee by the employer.
Nevertheless, peculiar circumstances might obtain in certain situations where to
undertake the above steps would be no more than a useless formality and where,
accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award,
in lieu of separation pay, nominal damages to the employee. x x x.31
After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but
without observance of the twin requirements of notice and hearing, the better rule is to
abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was
for just cause but imposing sanctions on the employer. Such sanctions, however, must
be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve
a fair result by dispensing justice not just to employees, but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized
causes but not complying with statutory due process may have far-reaching
consequences.
This would encourage frivolous suits, where even the most notorious violators of
company policy are rewarded by invoking due process. This also creates absurd
situations where there is a just or authorized cause for dismissal but a procedural
infirmity invalidates the termination. Let us take for example a case where the employee
is caught stealing or threatens the lives of his co-employees or has become a criminal,
who has fled and cannot be found, or where serious business losses demand that
operations be ceased in less than a month. Invalidating the dismissal would not serve
public interest. It could also discourage investments that can generate employment in
the local economy.
The constitutional policy to provide full protection to labor is not meant to be a sword to
oppress employers. The commitment of this Court to the cause of labor does not
prevent us from sustaining the employer when it is in the right, as in this
case.32 Certainly, an employer should not be compelled to pay employees for work not
actually performed and in fact abandoned.
The employer should not be compelled to continue employing a person who is
admittedly guilty of misfeasance or malfeasance and whose continued employment is
patently inimical to the employer. The law protecting the rights of the laborer authorizes
neither oppression nor self-destruction of the employer.33
It must be stressed that in the present case, the petitioners committed a grave offense,
i.e., abandonment, which, if the requirements of due process were complied with, would
undoubtedly result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be
protected by the Social Justice Clause of the Constitution. Social justice, as the term
suggests, should be used only to correct an injustice. As the eminent Justice Jose P.
Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be
equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."34
This is not to say that the Court was wrong when it ruled the way it did
in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set
in stone. It has to allow for changing times and circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-
management relations and dispense justice with an even hand in every case:
We have repeatedly stressed that social justice – or any justice for that matter – is
for the deserving, whether he be a millionaire in his mansion or a pauper in his
hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor
of the poor to whom the Constitution fittingly extends its sympathy and compassion.
But never is it justified to give preference to the poor simply because they are poor,
or reject the rich simply because they are rich, for justice must always be served for
the poor and the rich alike, according to the mandate of the law.35
Justice in every case should only be for the deserving party. It should not be presumed
that every case of illegal dismissal would automatically be decided in favor of labor, as
management has rights that should be fully respected and enforced by this Court. As
interdependent and indispensable partners in nation-building, labor and management
need each other to foster productivity and economic growth; hence, the need to weigh
and balance the rights and welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due
process should not nullify the dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee for the violation of his statutory rights, as ruled
in Reta v. National Labor Relations Commission.36 The indemnity to be imposed should
be stiffer to discourage the abhorrent practice of "dismiss now, pay later," which we
sought to deter in the Serrano ruling. The sanction should be in the nature of
indemnification or penalty and should depend on the facts of each case, taking into
special consideration the gravity of the due process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him.37
As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an
employer is liable to pay indemnity in the form of nominal damages to an employee
who has been dismissed if, in effecting such dismissal, the employer fails to comply
with the requirements of due process. The Court, after considering the circumstances
therein, fixed the indemnity at P2,590.50, which was equivalent to the employee's one
month salary. This indemnity is intended not to penalize the employer but to vindicate
or recognize the employee's right to statutory due process which was violated by the
employer.39
The violation of the petitioners' right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of
such damages is addressed to the sound discretion of the court, taking into account
the relevant circumstances.40 Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would
serve to deter employers from future violations of the statutory due process rights of
employees. At the very least, it provides a vindication or recognition of this fundamental
right granted to the latter under the Labor Code and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay
petitioners' holiday pay, service incentive leave pay and 13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners' money claims. Private
respondent is liable for petitioners' holiday pay, service incentive leave pay and 13th
month pay without deductions.
As a general rule, one who pleads payment has the burden of proving it. Even where
the employee must allege non-payment, the general rule is that the burden rests on the
employer to prove payment, rather than on the employee to prove non-payment. The
reason for the rule is that the pertinent personnel files, payrolls, records, remittances
and other similar documents – which will show that overtime, differentials, service
incentive leave and other claims of workers have been paid – are not in the possession
of the worker but in the custody and absolute control of the employer.41
In the case at bar, if private respondent indeed paid petitioners' holiday pay and service
incentive leave pay, it could have easily presented documentary proofs of such
monetary benefits to disprove the claims of the petitioners. But it did not, except with
respect to the 13th month pay wherein it presented cash vouchers showing payments
of the benefit in the years disputed.42 Allegations by private respondent that it does not
operate during holidays and that it allows its employees 10 days leave with pay, other
than being self-serving, do not constitute proof of payment. Consequently, it failed to
discharge the onus probandi thereby making it liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio
Agabon's 13th month pay, we find the same to be unauthorized. The evident intention
of Presidential Decree No. 851 is to grant an additional income in the form of the 13th
month pay to employees not already receiving the same43 so as "to further protect the
level of real wages from the ravages of world-wide inflation."44 Clearly, as additional
income, the 13th month pay is included in the definition of wage under Article 97(f) of
the Labor Code, to wit:
(f) "Wage" paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece , or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a written
or unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable value, as determined
by the Secretary of Labor, of board, lodging, or other facilities customarily furnished
by the employer to the employee…"
from which an employer is prohibited under Article 11345 of the same Code from making
any deductions without the employee's knowledge and consent. In the instant case,
private respondent failed to show that the deduction of the SSS loan and the value of
the shoes from petitioner Virgilio Agabon's 13th month pay was authorized by the latter.
The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio
Agabon included the same as one of his money claims against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded by the Labor
Arbiter ordering the private respondent to pay each of the petitioners holiday pay for
four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive
leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio
Agabon's thirteenth month pay for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the
Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that
petitioners' Jenny and Virgilio Agabon abandoned their work, and ordering private
respondent to pay each of the petitioners holiday pay for four regular holidays from
1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same
period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month
pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that
private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each
of the petitioners the amount of P30,000.00 as nominal damages for non-compliance
with statutory due process.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-
Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and
Garcia, JJ., concur.
G.R. No. 219435 January 17, 2018
ALLIED BANKING CORPORATION, now merged with PHILIPPINE NATIONAL
BANK, Petitioner vs.REYNOLD CALUMPANG, Respondent
DECISION
VELASCO, J.:
The Case
Before the Court is a Petition for Review on Certiorari filed under Rule 45 of the Rules
of Court for the reversal and setting aside of the Decision1 dated September 12, 2014
and the Resolution2 dated June 9, 2015 of the Court of Appeals (CA) - Cebu City in CA-
G.R. CEB SP No. 02906, which affirmed the findings of the National Labor Relations
Commission (NLRC) and of the Labor Arbiter, declaring respondent to have been
illegally dismissed by petitioner.
The Facts
Petitioner Allied Banking Corporation3 ("Bank") and Race Cleaners, Inc. ("RCI"), a
corporation engaged in the business of janitorial and manpower services, had entered
into a Service Agreement whereby the latter provided the former with messengerial,
janitorial, communication, and maintenance services and the personnel therefor.4
On September 28, 2003, respondent Reynold Calumpang was hired as a janitor by RCI
and was assigned at the Bank's Tanjay City Branch ("the Branch"). He was tasked to
perform janitorial work and messengerial/errand services. His job required him to be
out of the Branch at times to nm errands such as delivering statements and checks for
clearing, mailing letters, among others.5
Petitioner, however, observed that whenever respondent went out on errands, it takes
a long time for him to return to the Branch. It was eventually discovered that during
these times, respondent was also plying his pedicab and ferrying passengers.
Petitioner also found out through several clients of the Branch who informed the Bank
Manager, Mr. Oscar Infante, that respondent had been borrowing money from them.
Because of these acts, Mr. Infante informed respondent that his services would no
longer be required at the Branch.6
Disgruntled, respondent thereafter filed a complaint for illegal dismissal and
underpayment of wages against petitioner before the NLRC,7 which was docketed as
RAB VII-07-0094-2005-D.8
In his position paper, respondent asserted that the four-fold test of employer-employee
relationship is present between him and the Bank.9 First, he averred that he was a
regular employee of the Bank assigned as a Janitor of the Branch with a salary of
₱4,200 payable every 15 days each month, and assigned such other tasks essential
and necessary for the Bank's business.10
He alleged that petitioner engaged his services and exercised direct control and
supervision over him through the Branch Head, Oscar Infante, not only as to the results
of his work but also as to the means and methods by which the same was to be
accomplished. According to respondent, Infante gives the direct orders on the work to
be done and accomplished during working days, such as "m[o]pping, cleaning the
comfort room of the [B]ank, arrang[ing] furniture and fixture, bank documents, throw[ing]
garbage/waste disposal, cleaning the windows, tables and teller cage" as well as
directing him to "do messengerial/errand services such as mailing of letters, delivery of
bank statements and deliver[ing] checks for clearing."11
As regards the payment of salary, respondent claimed that it was the Branch that
directly paid his salaries and wages every "quincina."12 As for the power of dismissal,
respondent further alleged that it was petitioner Bank, through its Branch Head, who
terminated his services.13
For its part, petitioner alleged that respondent was not its employee, but that of RCI,
with which it had entered into a Service Agreement to provide "messengerial, janitorial,
communications and maintenance services and the personnel therefor."14 It claimed
that while respondent was required to be out of the Branch at times to accomplish his
tasks, it was observed that whenever he went out on these errands, he would take a
long time to return to the Branch. Petitioner eventually discovered that during these
times, respondent was "also plying his pedicab and ferrying passengers." Aside from
this, petitioner averred that several clients of the Branch informed Infante that
respondent had been borrowing money from them "owing to his familiarity with said
clients." Upon discovering these incidents, petitioner "had no choice but to have
complainant relieved and replaced." Accordingly, Infante informed respondent that his
services would no longer be required by the Branch.15
Petitioner denied the existence of any employer-employee relationship between itself
and respondent. It asserted that respondent was clearly an employee of RCI by virtue
of the Service Agreement which clearly indicated in Article XI thereof that there would
be no employer-employee relationship between RCI's employees and the Bank.16 It
further averred that RCI is a qualified job contractor because of its capitalization and
the fact that it exercised control and supervision over its employees deployed at the
branches of the petitioner in accordance with Rule VIII-A, Sec. 4, pars. (d) and (e) of
the Omnibus Rules Implementing the Labor Code.17
Furthermore, petitioner argued that it was merely exercising its prerogative under the
Service Agreement to seek the replacement or relief of any personnel assigned by RCI
when the Branch Head informed respondent that his services would no longer be
required at the Branch. According to petitioner, this decision to replace respondent was
not equivalent to termination of employment, especially since it was neither whimsical
nor arbitrary.18 Thus, petitioner concludes that, in the absence of any employer-
employee relationship between the parties, respondent had no cause of action against
petitioner for illegal dismissal, damages and other claims.19
Ruling of the Labor Arbiter
In its Decision20 dated March 28, 2006, the Labor Arbiter ruled in favor of respondent,
the dispositive portion of which reads:
WHEREFORE, foregoing considered, complainant is hereby declared to be an
employee of respondent Allied Banking Corporation. It is declared further that
complainant has been illegally dismissed. Respondent Allied Banking Corporation is
hereby ordered to reinstate complainant to his former position without loss of seniority
rights or privileges, with full backwages from the time his salary was withheld until his
actual reinstatement, which is tentatively computed in the amount of ₱37,800.00.
Should reinstatement be unfeasible for valid reasons, respondent is ordered to pay the
complainant separation pay of one month salary per year of service, a fraction of six
months is considered as one year which is computed in the amount of ₱46,200.
SO ORDERED.21
The Labor Arbiter held that there was an employer-employee relationship between
petitioner and respondent, based on the following findings: (a) Respondent rendered
services to petitioner for eleven (11) unbroken years; (b) There was no evidence of a
Service Agreement between petitioner and RCI; (c) There was no evidence of a request
for replacement of respondent made by petitioner with RCI; (d) Respondent was directly
paid by petitioner and not through RCI; (e) Respondent's work was directly controlled
and supervised by petitioner; (f) It was petitioner who terminated the services of
respondent with no participation of RCI whatsoever; and (g) RCI disowned any
employment relationship with respondent.22
Considering its finding of the existence of an employer-employee relationship between
petitioner and respondent, the Labor Arbiter further ruled that the reason and manner
by which respondent was terminated fell short of the requirements of the law since due
process was not observed. Accordingly, respondent was declared to have been illegally
dismissed and ordered to be reinstated without loss of seniority or privileges, with full
backwages.23
Aggrieved, petitioner immediately filed a Notice of Appeal and Memorandum of Appeal
with the NLRC, which was docketed as NLRC Case No. V-000628-2006.24
Ruling of the National Labor Relations Commission
The NLRC affirmed the decision of the Labor Arbiter in its Decision dated February 16,
2007, to wit:
WHEREFORE, premises considered, the appeal of respondent Allied Banking
Corporation is hereby DISMISSED for lack of merit and the appealed Decision is
AFFIRMED.
SO ORDERED.25
Agreeing with the Labor Arbiter's findings, the NLRC ruled that petitioner exercised all
the elements of an employer-employee relationship through the payment of wages,
control and supervision over complainant's work and the power of dismissal.26 The
NLRC discredited petitioner's argument that it merely exercised its prerogative to seek
for a replacement or relief of any personnel assigned by RCI absent any evidence that
it sought respondent's relief from RCI.27
Petitioner moved for the reconsideration of the NLRC Decision,28 but the same was
denied in a Resolution dated May 17, 2007.29 Thus, petitioner elevated the matter to
the CA in a petition which was docketed as CA-G.R. SP No. 02906.30
Ruling of the Court of Appeals
In the assailed Decision dated September 12, 2014, the CA denied the petition and
upheld the rulings of the Labor Arbiter and the NLRC. The dispositive portion of the
assailed Decision reads:
WHEREFORE, premises considered, the petition is hereby DENIED. The NLRC
Decision dated 16 February 2007 and the Resolution dated 17 May 2007, in RAB VII
Case No. 07-0094-2005-D, is AFFIRMED.
The Labor Arbiter is hereby ordered to re-compute the award of backwages and
separation pay in accordance with the above disquisitions.
SO ORDERED.31
The CA ruled that RCI is a labor-only contractor. It applied the test of independent
contractorship that "whether one claiming to be an independent contractor has
contracted to do work according to his own methods and without being subject to the
control of the employer, except only as to the results of the work" in determining that
RCI merely served as an agent of petitioner bank and that respondent was truly an
employee of petitioner.32
As to the issue of the propriety of respondent's dismissal, the CA affirmed the findings
of the Labor Arbiter and the NLRC that petitioner Bank failed to give respondent ample
opportunity to contest the legality of his dismissal since no notice of termination was
given to him. Consequently, the CA affirmed the award of reinstatement without loss of
seniority rights and other privileges, and his full backwages inclusive of allowances and
other benefits or their monetary equivalent, computed from the time his compensation
was withheld up to the time of his actual reinstatement.
Nevertheless, finding that there were strained relations between petitioner bank and
respondent, the CA ordered the award of separation pay in lieu of reinstatement,
equivalent to one (1) month salary for every year of service, with a fraction of a year of
at least six (6) months to be considered as one (1) whole year, to be computed from
the date he was hired until the finality of the decision, earning a legal interest at the rate
of six percent (6%) per annum until full satisfaction.
Petitioner filed a Motion for Reconsideration (of the Decision Dated 12 September
2014) with Entry of Appearance and Motion for Substitution of Party dated October 16,
2014,33 but it was denied in the assailed Resolution dated June 9, 2015.
Hence, this petition.
The Petition
Petitioner asserts that the CA erred in declaring RCI as a labor-only contractor. It claims
that RCI carried an independent business as reflected in the Service Agreement that
petitioner bank entered with RCI. Aside from the substantial capitalization of RCI,
petitioner bank avers that RCI exercises control and supervision over its personnel
deployed at its branches. Petitioner bank further argues that even assuming that
respondent's work is related to its business, such work is not necessary in the conduct
of the bank's principal business. Finally, petitioner contends that it does not have the
power to dismiss respondent and control his work based on the Service Agreement
with RCI.
Nevertheless, petitioner bank defends its right to ask for respondent's replacement
under Article IV of the Service Agreement. Petitioner reiterates that respondent's acts
of borrowing money from the bank's clients and plying/ferrying passengers for a fee
during his hour of duty constitute conduct which is prejudicial to the interest of petitioner.
Thus, in accordance with the Service Agreement, petitioner bank merely exercised its
right to change or have respondent replaced instead of imposing disciplinary measures
on him. According to petitioner, this act was erroneously construed by the CA as an
exercise of the power of control over or of dismissal of respondent.
In a Resolution34 dated September 28, 2015, We required respondent to comment on
the petition within ten (10) days from notice. However, respondent has failed to file any
comment thereon to date. Accordingly, respondent is deemed to have waived his right
to comment on the petition and the Court shall now proceed to rule on its merits.
The Issues
Petitioner raises the following issues:
1. Whether or not the CA erred in declaring that RCI is a laboronly contractor.
2. Whether or not the CA erred in declaring that there exists an employer-employee
relationship between the Bank and respondent.
3. Whether or not the CA erred in (i) declaring that respondent had been illegally
dismissed, and (ii) granting his monetary claims.
Essentially, the principal issue is whether the CA erred in affirming the NLRC Decision
which declared that RCI is a labor-only contractor, and in ordering the Labor Arbiter to
re-compute the award of backwages and separation pay.
The Court's Ruling
The petition is partly meritorious.
RCI is a labor-only contractor
Article 106 of the Labor Code provides the relations which may arise between an
employer, a contractor, and the contractors' employees, thus:
ART. 106. Contractor or subcontracting. - Whenever an employer enters into a contract
with another person for the performance of the former's work, the employees of the
contractor and of the latter's subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees
in accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed
under the contract, in the same manner and extent that he is liable to employees directly
employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or
prohibit the contracting out of labor to protect the rights of workers established under
the Code. In so prohibiting or restricting, he may make appropriate distinctions between
labor-only contracting and job contracting as well as differentiations within these types
of contracting and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.
There is labor-only contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal business
of such employer. In such cases, the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Permissible job contracting or subcontracting has been distinguished from labor-only
contracting such that permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out to a contractor or
subcontractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal, while labor-
only contracting, on the other hand, pertains to an arrangement where the contractor
or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal.35
These distinctions were laid out in the Omnibus Rules Implementing the Labor Code
thus:
SECTION 8. Job Contracting. - There is job contracting permissible under the Code if
the following conditions are met:
(a) The contractor carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof;
and
(b) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary
in the conduct of his business.
SECTION 9. Labor-only contracting. - (a) Any person who undertakes to supply workers
to an employer shall be deemed to be engaged in labor-only contracting where such
person:
(1) Does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which
are directly related to the principal business or operations of the employer in which
workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person
acting as contractor shall be considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the same manner and extent
as if the latter were directly employed by him.
(c) For cases not falling under this Rule, the Secretary of Labor and Employment
shall determine through appropriate orders whether or not the contracting out of
labor is permissible in the light of the circumstances of each case and after
considering the operating needs of the employer and the rights of the workers
involved. In such case, he may prescribe conditions and restrictions to insure the
protection and welfare of the workers.
As a general rule, a contractor is presumed to be a labor-only contractor, unless such
contractor overcomes the burden of proving that it has the substantial capital,
investment, tools and the like.36
In the present case, petitioner failed to establish that RCI is a legitimate labor contractor
as contemplated under the Labor Code. Except for the bare allegation of petitioner that
RCI had substantial capitalization, it presented no supporting evidence to show the
same. Petitioner never submitted financial statements from RCI. Even the Service
Agreement allegedly entered into between petitioner and RCI, upon which petitioner
relied to show that RCI was an independent contractor, had lapsed in August 2005, as
admitted by petitioner in its Position Paper.37 Notably, petitioner failed to allege when
the Service Agreement was executed, thus, making its claim that respondent was hired
by RCI and assigned to petitioner in 2003 even more ambiguous.
Aside from this, petitioner's claim that RCI exercised control and supervision over
respondent is belied by the fact that petitioner admitted that its own Branch Manager
had informed respondent that his services would no longer be required at the
Branch.38 This overt act shows that petitioner had direct control over respondent while
he was assigned at the Branch. Moreover, the CA is correct in finding that respondent's
work is related to petitioner's business and is characterized as part of or in pursuit of its
banking operations.
An employer-employee relationship exists between petitioner and respondent
A finding that a contractor is a labor-only contractor, as opposed to permissible job
contracting, is equivalent to declaring that there is an employer-employee relationship
between the principal and the employees of the supposed contractor, and the labor-
only contractor is considered as a mere agent of the principal, the real employer.39
In this case, petitioner bank is the principal employer and RCI is the labor-only
contractor. Accordingly, petitioner and RCI are solidarily liable for the rightful claims of
respondent.
Petitioner had valid grounds to dismiss respondent
It is an established principle that the dismissal of an employee is justified where there
was a just cause and the employee was afforded due process prior to dismissal.40 The
burden of proof to establish these twin requirements is on the employer, who must
present clear, accurate, consistent, and convincing evidence to that effect.41
The Labor Arbiter haphazardly declared that respondent was illegally dismissed when
it ruled that respondent's misconduct was not established since due process was not
observed.42 The NLRC also ruled in a similar manner and failed to address the grounds
for termination raised by petitioner, specifically respondent's transgressions.43While the
CA addressed the aspect of substantive due process, it simply disregarded the grounds
raised by petitioner and concluded that petitioner failed to discharge the burden of proof
that valid or authorized causes under the Labor Code exist.44
We, however, find that petitioner's basis for terminating respondent rests on valid and
legal grounds. At the very first instance, petitioner had already stressed in its position
paper that respondent was found committing conduct prejudicial to the interests of the
Branch when it was discovered that 1) respondent was plying his pedicab and ferrying
passengers during his work hours and 2) he had been borrowing money from several
clients of the Branch.
Nowhere in the records was it shown that respondent denied these imputations against
him.1âwphi1 Absent any denial on the part of respondent, the Court is constrained to
believe that respondent's silence can be construed as an admission of these
accusations against him.
The very nature of the actions imputed against respondent is serious and detrimental
to the Bank's operations and reputation. Thus, petitioner's decision to relieve
respondent from his employment is justified.
Respondent's right to procedural due process was violated
Nevertheless, We agree with the findings of the appellate court that there were
procedural lapses in the dismissal of respondent.
The importance of procedural due process was expounded by this Court in King of
Kings Transport, Inc. v. Mamac,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 calendar days from
receipt of the notice x x x. Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should contain a detailed narration
of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the
grounds under Art. 288 [of the Labor Code] is being charged against the employees.
(2) After serving the first notice, the employees should schedule and conduct a hearing
or conference wherein the employees will be given the opportunity to (1) explain and
clarify their defenses to the charge against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or counsel of their choice
x x x.
(3) After determining that termination is justified, the employer shall serve the
employees a written notice of termination indicating that:
(1) all the circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of their
employment.45 (emphasis in the original)
In the present case, it is uncontested that petitioner failed to give respondent ample
opportunity to contest the legality of his dismissal since he was neither given a notice
to explain nor a notice of termination. The first and second notice requirements have
not been properly observed; thus, respondent's dismissal, albeit with valid grounds, is
tainted with illegality.
The award of backwages and separation pay is deleted but respondent is entitled to
nominal damages
Considering that there were valid and substantive grounds to terminate respondent's
employment, the award of backwages and separation pay is deleted. However,
petitioner's violation of respondent's right to statutory procedural due process warrants
the payment of indemnity in the form of nominal damages.
Nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, and
not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for
the purpose of indemnification for a loss but for the recognition and vindication of a
right.46
In fixing the amount of nominal damages whose determination is addressed to our
sound discretion, the Court should take into account several factors surrounding the
case, such as: (1) the employer's financial, medical, and/or moral assistance to the sick
employee; (2) the flexibility and leeway that the employer allowed the sick employee in
performing his duties while attending to his medical needs; (3) the employer's grant of
other termination benefits in favor of the employee; and (4) whether there was a bona
fide attempt on the part of the employer to comply with the twin-notice requirement as
opposed to giving no notice at all.47
Based on the factual considerations of the present case, We deem it appropriate to
award nominal damages in the amount of Thirty Thousand Pesos (₱30,000) in favor of
respondent as a result of petitioner's act of violating his right to procedural due process.
WHEREFORE, the petition is hereby PARTIALLY GRANTED. The Decision dated
September 12, 2014 and the Resolution dated June 9, 2015 of the Court of Appeals-
Cebu City in CA-G.R. CEB SP No. 02906 are
hereby AFFIRMED with MODIFICATION. Since Race Cleaners Inc. is a labor-only
contractor, petitioner Allied Banking Corporation now merged with Philippine National
Bank is declared to be the employer of respondent Reynold Calumpang, whose
dismissal is declared to be substantively valid for being based on sufficient and valid
grounds. However, he was denied his right to procedural due process for lack of the
required twin notices to explain and of dismissal.
Consequently, petitioner is ordered to pay respondent nominal damages in the amount
of ₱30,000 for its non-compliance with procedural due process.
SO ORDERED.
Footnotes
35
Sasan, Sr. v. National Labor Relations Commission 4th Division, G.R. No. 176240, October 17,
2008, 569 SCRA 670.
36
Diamond Farms, Inc. v. Southern Philippines Federation of Labor (SPFL)-Workers Solidarity of
DARBMUPCO/Diamond-SPFL, G.R. Nos. 173254-55 & 173263, January 13, 2016.
39
Diamond Farms, Inc. v. Southern Philippines Federation of Labor (SPFL)-Workers Solidarity of
DARBMUPCO/Diamond-SPFL, supra note 36.
40
Olympia Housing, Inc. v. Allan Lapastora and Irene Ubalubao, G.R. No. 187691, Jan 13, 2016.
41
Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez, G.R. No. 170181, June 26, 2008,
555 SCRA 537.
46
Libcap Marketing Corp., Johanna J. Celiz, and Ma. Lucia G. Mondragon v. Lanny Jean B.
Baquial, G.R. No. 192011, June 30, 2014.
47
Marlo A. Deoferio v. Intel Technology Philippines, Inc. and/or Mike Wentling. G.R. No. 202996,
June 18. 2014, 726 SCRA 679.
G.R. No. 205813 January 10, 2018
ALFREDO F. LAY A, JR., Petitioner vs. COURT OF APPEALS, NATIONAL LABOR
RELATIONS COMMISSION, PHILIPPINE VETERANS BANK and RICARDO A.
BALBIDO, JR., Respondents
Remedial Law; Motion for Reconsideration; As a general rule, second and
subsequent motions for reconsideration are forbidden.—As a general rule, second and
subsequent motions for reconsideration are forbidden. Nevertheless, there are
situations in which exceptional circumstances warrant allowing such motions for
reconsideration, and for that reason the Court has recognized several exceptions to the
general rule. We have extensively expounded on the exceptions in McBurnie v.
Ganzon, 707 SCRA 646 (2013), where we observed: At the outset, the Court
emphasizes that second and subsequent motions for reconsideration are, as a general
rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that “[n]o second
motion for reconsideration of a judgment or final resolution by the same party shall be
entertained.” The rule rests on the basic tenet of immutability of judgments. “At some
point, a decision becomes final and executory and, consequently, all litigations must
come to an end.” The general rule, however, against second and subsequent motions
for reconsideration admits of settled exceptions. For one, the present Internal Rules of
the Supreme Court, particularly Section 3, Rule 15 thereof, provides: Sec. 3. Second
motion for reconsideration.—The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher
interest of justice by the Court En Banc upon a vote of at least two-thirds of its actual
membership. There is reconsideration “in the higher interest of justice” when the
assailed decision is not only legally erroneous, but is likewise patently unjust
and potentially capable of causing unwarranted and irremediable injury or
damage to the parties. A second motion for reconsideration can only be entertained
before the ruling sought to be reconsidered becomes final by operation of law or by the
Court’s declaration.
Same; Same; The Supreme Court (SC) may entertain second and subsequent
motions for reconsideration when the assailed decision is legally erroneous, patently
unjust and potentially capable of causing unwarranted and irremediable injury or
damage to the parties.—The Court may entertain second and subsequent motions for
reconsideration when the assailed decision is legally erroneous, patently unjust and
potentially capable of causing unwarranted and irremediable injury or damage to the
parties. Under these circumstances, even final and executory judgments may be set
aside because of the existence of compelling reasons.
Banks and Banking; Philippine Veterans Bank; By restoring Philippine Veterans
Bank (PVB) as envisioned by Republic Act (RA) No. 3518,and by providing that the
creation of the PVB would be in accord with the Corporation Code, the General
Banking Act, and other related laws, Congress undeniably bestowed upon the PVB the
personality of a private commercial bank through RA No. 7169.—We also note that
Congress enacted Republic Act No. 7169, whereby it acknowledged the Filipino
veterans of World War II as the owners of PVB, but their ownership had not been fully
realized despite the implementation of Republic Act No. 3518. As one of the
mechanisms to rehabilitate PVB, Congress saw fit to modify PVB’s operations, capital
structure, articles of incorporation and bylaws through the enactment of Republic Act
No. 7169. By restoring PVB as envisioned by Republic Act No. 3518, and by providing
that the creation of the PVB would be in accord with the Corporation Code, the General
Banking Act, and other related laws, Congress undeniably bestowed upon the PVB the
personality of a private commercial bankthrough Republic Act No. 7169. In that regard,
Section 8 of Republic Act No. 7169 directed the Filipino veterans to raise
P750,000,000.00 in total unimpaired capital accounts, prior to PVB’s reopening, but
excused the Government from making any new capital infusion.
Remedial Law; Civil Procedure; Findings of Fact; There is now no dispute that
the Court of Appeals (CA) can make a determination whether the factual findings by
the National Labor Relations Commission (NLRC) or the Labor Arbiter (LA) were based
on the evidence and in accord with pertinent laws and jurisprudence.—There is now no
dispute that the CA can make a determination whether the factual findings by the NLRC
or the Labor Arbiter were based on the evidence and in accord with pertinent laws and
jurisprudence. The significance of this clarification is that whenever the decision of the
CA in a labor case is appealed by petition for review on certiorari, the Court can
competently delve into the propriety of the factual review not only by the CA but also
by the NLRC. Such ability is still in pursuance to the exercise of our review jurisdiction
over administrative findings of fact that we have discoursed on in several rulings,
including Aklan Electric Coooperative, Inc. v. National Labor Relations Commission,
323 SCRA 258 (2000), where we have pointed out: while administrative findings of fact
are 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. Factual findings of administrative agencies
are not infallible and will be set aside when they fail the test of arbitrariness.
Labor Law; Termination of Employment; Retirement; Retirement Plans;
Retirement plans allowing employers to retire employees who have not yet reached the
compulsory retirement age of sixty-five (65) years are not per se repugnant to the
constitutional guaranty of security of tenure, provided that the retirement benefits are
not lower than those prescribed by law.—The employers and employees may agree to
fix the retirement age for the latter, and to embody their agreement in either their
collective bargaining agreements (CBAs) or their employment contracts. Retirement
plans allowing employers to retire employees who have not yet reached the compulsory
retirement age of 65 years are not per serepugnant to the constitutional guaranty of
security of tenure, provided that the retirement benefits are not lower than those
prescribed by law.
Same; Same; Same; The mere mention of the retirement plan in the letter of
appointment did not sufficiently inform the petitioner of the contents or details of the
retirement program.—The mere mention of the retirement plan in the letter of
appointment did not sufficiently inform the petitioner of the contents or details of the
retirement program. To construe from the petitioner’s acceptance of his appointment
that he had acquiesced to be retired earlier than the compulsory age of 65 years would,
therefore, not be warranted. This is because retirement should be the result of the
bilateral act of both the employer and the employee based on their voluntary agreement
that the employee agrees to sever his employment upon reaching a certain age. That
the petitioner might be well aware of the existence of the retirement program at the time
of his engagement did not suffice. His implied knowledge, regardless of duration, did
not equate to the voluntary acceptance required by law in granting an early retirement
age option to the employee. The law demanded more than a passive acquiescence on
the part of the employee, considering that his early retirement age option involved
conceding the constitutional right to security of tenure.
Same; Same; Same; The pertinent rule on retirement plans does not presume
consent or acquiescence from the high educational attainment or legal knowledge of
the employee.—The Court disagrees with the view tendered by Justice Leonen to the
effect that the petitioner, because of his legal expertise and educational attainment,
could not now validly claim that he was not informed of the provisions of the retirement
program. The pertinent rule on retirement plans does not presume consent or
acquiescence from the high educational attainment or legal knowledge of the
employee. In fact, the rule provides that the acquiescence by the employee cannot be
lightly inferred from his acceptance of employment.
Same; Same; Same; Illegal Dismissals; With the petitioner having been thus
dismissed pursuant to the retirement provision that he had not knowingly and voluntarily
agreed to, Philippine Veterans Bank (PVB) was guilty of illegal dismissal as to him.—
To stress, company retirement plans must not only comply with the standards set by
the prevailing labor laws but must also be accepted by the employees as
commensurate to their faithful services to the employer within the requisite period.
Although the employer could be free to impose a retirement age lower than 65 years
for as long its employees consented, the retirement of the employee whose intent to
retire was not clearly established, or whose retirement was involuntary is to be treated
as a discharge. With the petitioner having been thus dismissed pursuant to the
retirement provision that he had not knowingly and voluntarily agreed to, PVB was guilty
of illegal dismissal as to him. Being an illegally dismissed employee, he was entitled to
the reliefs provided under Article 279 of the Labor Code, to wit: Article 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.
Same; Same; Same; Same; Separation Pay; Considering that the petitioner’s
reinstatement is no longer feasible because of his having meanwhile reached the
compulsory retirement age of sixty-five (65) years by June 11, 2012, he should be
granted separation pay.—Considering that the petitioner’s reinstatement is no longer
feasible because of his having meanwhile reached the compulsory retirement age of
65 years by June 11, 2012, he should be granted separation pay. In this regard,
retirement benefits and separation pay are not mutually exclusive. The basis for
computing the separation pay should accord with Section 4, Article III of PVB’s
retirement plan. Hence, his full backwages should be computed from July 18, 2007 —
the date when he was illegally dismissed — until his compulsory retirement age of 65
years on June 11, 2012. Such backwages shall all be subject to legal interest of
12% per annum from July 18, 2007 until June 30, 2013, and then to legal interest of
6% interest per annum from July 1, 2013 until full satisfaction, conformably with Nacar
v. Gallery Frames, 703 SCRA 439 (2013).
DECISION
BERSAMIN, J.:
An employee in the private sector who did not expressly agree to the terms of an early
retirement plan cannot be separated from the service before he reaches the age of 65
years. The employer who retires the employee prematurely is guilty of illegal dismissal,
and is liable to pay his backwages and to reinstate him without loss of seniority and
other benefits, unless the employee has meanwhile reached the mandatory retirement
age under the Labor Code, in which case he is entitled to separation pay pursuant to
theterms of the plan, with legal interest on the backwages and separation pay reckoned
from the finality of the decision.
The Case
The petitioner seeks the review and reversal of the adverse decision promulgated on
August 31, 2012,1 whereby the Court of Appeals (CA) upheld the ruling of the National
Labor Relations Commission (NLRC) dated June 21, 2010 affirming the dismissal of
his complaint for illegal dismissal by the Labor Arbiter.
Antecedents
The CA summarized the factual antecedents as follows:
On 1 June 2001, petitioner Alfredo F. Laya, Jr. was hired by respondent Philippine
Veterans Bank as its Chief Legal Counsel with a rank of Vice President. Among others,
the terms and conditions of his appointment are as follows; (sic)
"3. As a Senior Officer of the Bank, you are entitled to the following executive ben[e]fits:
• Car Plan limit of ₱700,000.00, without equity on your part; a gasoline subsidy of 300
liters per month and subject further to The Car Plan Policy of the Bank.
• Membership in a professional organization in relation to your profession and/or
assigned functions in the Bank.
• Membership in the Provident Fund Program/Retirement Program.
• Entitlement to any and all other basic and fringe benefits enjoyed by the officers; core
of the Bank relative to Insurance covers, Healthcare Insurance, vacation and sick
leaves, among others."
On the other hand, private respondent has its Retirement Plan Rules and Regulations
which provides among others, as follows:
ARTICLE IV
RETIREMENT DATES
Section 1. Normal Retirement. The normal retirement date of a Member shall be the
first day of the month coincident with or next following his attainment of age 60.
Section 2. Early Retirement. A Member may, with the approval of the Board of
Directors, retire early on the first day of any month coincident with or following his
attainment of age 50 and completion of at least 10 years of Credited Service.
Section 3. Late Retirement. A Member may, with the approval of the Board of Directors,
extend his service beyond his normal retirement date but not beyond age 65. Such
deferred retirement shall be on a case by case and yearly extension basis.
On 14 June, 2007, petitioner was informed thru letter by the private respondent of his
retirement effective on 1 July 2007. On 21 June 2007 petitioner wrote Col. Emmanuel
V. De Ocampo, Chairman of respondent bank, requesting for an extension of his tenure
for two (2) more years pursuant to the Bank's Retirement Plan (Late Retirement).
On 26 June 2008, private respondent issued a memorandum directing the petitioner to
continue to discharge his official duties and functions as chief legal counsel pending his
request. However on 18 July 2007, petitioner was informed thru its president Ricardo
A. Balbido Jr. that his request for an extension of tenure was denied.2
According to the petitioner, he was made aware of the retirement plan of respondent
Philippine Veterans Bank (PVB) only after he had long been employed and was shown
a photocopy of the Retirement Plan Rules and Regulations,3 but PVB's President
Ricardo A. Balbido, Jr. had told him then that his request for extension of his service
would be denied "to avoid precedence."4 He sought the reconsideration of the denial of
the request for the extension of his retirement,5 but PVB certified his retirement from
the service as of July 1, 2007 on March 6, 2008.6
On December 24, 2008, the petitioner filed his complaint for illegal dismissal against
PVB and Balbido, Jr. in the NLRC to protest his unexpected retirement.7
Ruling of the Labor Arbiter
On August 28, 2009, the Labor Arbiter rendered a decision dismissing the complaint
for illegal dismissal,8 to wit:
WHEREFORE, the charge of illegal dismissal and money claims raised by the
complainant, together with the counterclaim raised by the respondents are DISMISSED
for lack of merit but by reason of a flaw in the denial of complainant's application for
term extension as discussed above, the respondent bank is hereby ordered to pay the
complainant the amount of ₱200,000.00 by way of reasonble (sic) indemnity.
Ricardo Balbido, Jr., is hereby dropped as party respondent.
SO ORDERED.9
After his motion for reconsideration was denied,10 the petitioner appealed to the
NLRC.11
Ruling of the NLRC
On June 21, 2010, the NLRC affirmed the dismissal of the petitioner's complaint, and
deleted the indemnity imposed by the Labor Arbiter,12 viz.:
WHEREFORE, premises considered the appeal of the complainant is hereby DENIED
for lack of merit. The appeal of respondents is GRANTED. The Decision below is
hereby AFFIRMED with MODIFICATION, deleting the award of indemnity to
complainant.
SO ORDERED.13
The petitioner assailed the ruling to the CA through certiorari.
Ruling of the CA
On August 31, 2012, the CA promulgated the now assailed decision,14 holding that the
petitioner's acceptance of his appointment as Chief Legal Officer of PVB signified his
conformity to the retirement program;15 that he could not have been unaware of the
retirement program which had been in effect since January 1, 1996;16 that the lowering
of the retirement age through the retirement plan was a recognized exception under
the provisions of Article 287 of the Labor Code; 17 that considering his failure to adduce
evidence showing that PVB had acted maliciously in applying the provisions of the
retirement plan to him and in denying his request for the extension of his service, PVB
's implementation of the retirement plan was a valid exercise of its management
prerogative.18
The CA denied the petitioner's motion for reconsideration on February 8, 2013.19
On April 8, 2013, the Court (First Division) denied the petition for review
on certiorari.20 In his motion for reconsideration, the petitioner not only prayed for the
reconsideration of the denial but also sought the referral of his petition to the Court En
Banc,21 arguing that the CA and the NLRC had erroneously applied laws and legal
principles intended for corporations in the private sector to a public instrumentality like
PVB;22 and that to allow the adverse rulings to stand would be to condone the creation
of a private corporation by Congress other than by a general law on incorporation.23
In its resolution promulgated on August 28, 2013, the Court (First Division) denied the
petitioner's motion for reconsideration, as well as his prayer to refer the case to the
Court En Banc. 24The entry of judgment was issued on December 6, 2013.25
The petitioner filed a second motion for reconsideration on December 18,
2013,26 whereby he expounded on the issues he was raising in his first motion for
reconsideration. He urged that the Court should find and declare PVB as a public
instrumentality; that the law applicable to his case was Presidential Decree No. 1146
(GSIS Law), which stipulated the compulsory retirement age of 65 years;27 and that the
compulsory retirement age for civil servants could not be "contracted out."28
On March 25, 2014, the Court En Banc accepted the referral of this case by the First
Division.29
On April 22, 2014, the Court En Banc required PVB and the Office of the Solicitor
General (OSG) to file their comments on the petitioner's second motion for
reconsideration.30
The comment of PVB poses several challenges to the petition.
In support of its first challenge, PVB contends that the Court should not have accepted
the referral of the case to the Banc because the First Division had already denied with
finality the petitioner's first motion for reconsideration, as well as his motion to refer the
case to the Banc;31 that the Court En Bane's acceptance of the case was in violation of
the principle of immutability of final judgments as well as of Section 3, Rule 15 of
the Internal Rules of the Supreme Court32to the effect that a second motion for
reconsideration could be allowed only "before the ruling sought to be reconsidered
becomes final by operation of law or by the Court's declaration;"33 and that the First
Division had correctly denied the petition for review because the issues raised therein
were factual matters that this mode of appeal could not review and pass upon.34
As its second challenge, PVB demurrs to the propriety of the petitioner's attack on its
corporate existence. It submits that he should not be allowed to pose such attack for
the first time in this appeal;35 that his argument was also an impermissible collateral
attack on the constitutionality of Republic Act No. 3518 and Republic Act No.
7169;36 and that his seeking a declaration of PVB as a public institution "partakes the
nature of a petition for declaratory relief which is an action beyond the original
jurisdiction of the Honorable Court."37
Nevertheless, PVB maintains that it is not a public or government entity for several
reasons, namely: (1) the Government does not own a single share in it;38 (2) the
Government has no appointee or representative in the Board of Directors, and is not
involved in its management;39 and (3) it does not administer government funds.40
PVB insists that its creation as a private bank with a special charter does not in any
way violate Section 16, Article XII of the Constitution,41 explaining:
Firstly, the mischief which the constitutional provision seeks to prevent, i.e., giving
certain individuals, families or groups special privileges denied to other citizens, will not
be present insofar as the Bank is concerned. As this Honorable Court observed
in Philippine Veterans Bank Employees Union-NUBE vs. Philippine Veterans Bank –
These stockholdings (of the veterans, widows, orphans or compulsory heirs) do not
enjoy any special immunity over and above shares of stock in any other corporation,
which are always subject to the vicissitudes of business. Their value may appreciate or
decline or the stocks may become worthless altogether. Like any other property, they
do not have a fixed but a fluctuating price. Certainly, the mere acceptance of these
shares of stock by the petitioners did not create any legal assurance from the
Government that their original value would be preserved and that the owners could not
be deprived of such property under any circumstance no matter how justified
Secondly, the obvious legislative intent is "to give meaning and realization to the
constitutional mandate to provide immediate and adequate care, benefits and other
forms of assistance to war veterans and veterans of military campaigns, their surviving
spouses and orphans" Article XVI, Section 7 of the Constitution states:
Section 7. The State shall provide immediate and adequate care, benefits and other
forms of assistance to war veterans and veterans of military campaigns, their surviving
spouses and orphans. Funds shall be provided therefor and due consideration shall be
given them in the disposition of agricultural lands of the public domain and, in
appropriate cases, in the utilization of natural resources.
The creation of Veterans Bank through Republic Act Nos. 3518 and 7169 should
therefore be taken in conjunction and harmonized with Section 16, Article XII of the
Constitution. The predilection of the said Republic Acts towards the welfare of the
veterans, their widows, orphans or compulsory heirs is supported by no less than a
constitutional provision. That Republic Act Nos. 3518 and 7169 do not fall within the
proscription against the creation of private corporations is readily apparent from the fact
that in both laws, the intendment of the legislature is that Veterans Bank will eventually
be operated, managed and exist under the general laws, i.e., Corporation Code and
General Banking Act. The mere circumstance that the charter was granted directly by
Congress does not signify that only Congress can modify or abrogate it by another
enactment.
Thirdly, the following mandate of Section 3 of Republic Act No. 7169 had been
accomplished:
"The operations and changes in the capital structure of the Veterans Bank, as well as
other amendments to its articles of incorporation and by-laws as prescribed under
Republic Act No. 3518, shall be in accordance with the Corporation Code, the General
Banking Act, and other related laws."
Pursuant hereto, the Bank had registered with the Securities and Exchange
Commission under its certificate of incorporation/registration number 24681. It has its
articles of incorporation and by-laws separate and distinct from the provisions of
Republic Act Nos. 3518 and 7169. The manner by which the Bank's Board of Directors
is to be organized and the Officers to be elected or appointed are stated in the by-laws.
The latest Definitive Information Sheet of the Bank indicates that as of April 30, 2014,
the total number of shareholders of record (common and preferred) is 383,852. There
had been 25,303,869 common shares and 3,611,556 preferred shares issued, none of
which belong to the government. It is thus operating under and by virtue of the
Corporation Code and the General Banking Act.42
Through its comment, the OSG presents an opinion favorable to the position of the
petitioner, opining upon the authority of Boy Scouts of the Philippines v. Commission
on Audit43 and Article 44 of the Civil Code44that PVB is a public corporation created in
the public interest, and a government instrumentality with juridical personality;45 hence,
the law governing the petitioner's compulsory retirement age was Republic Act No.
8291, and the compulsory retirement age for him should be 65 years.46
Issues
The following procedural and substantive issues are to be considered and resolved,
namely: (1) whether or not the Court could accept the petitioner's second motion for
reconsideration; (2) whether PVB is a private entity or a public instrumentality; and (3)
whether the petitioner was validly retired by PVB at age 60.
Ruling of the Court
In light of pertinent laws and relevant jurisprudence, the Court has ascertained, after
going over the parties' arguments and the records of the case, that the reconsideration
of the Court's resolutions promulgated on April 8, 2013 and August 28, 2013, and the
lifting of the entry of judgment made herein are in order; and that the appeal by the
petitioner should be given due course.
1. The Court En Banc properly accepted the petitioner's second motion for
reconsideration.
As a general rule, second and subsequent motions for reconsideration are
forbidden.47 Nevertheless, there are situations in which exceptional circumstances
warrant allowing such motions for reconsideration, and for that reason the Court has
recognized several exceptions to the general rule. We have extensively expounded on
the exceptions in McBurnie v. Ganzon,48 where we observed:
At the outset, the Court emphasizes that second and subsequent motions for
reconsideration are, as a general rule, prohibited. Section 2, Rule 52 of the Rules of
Court provides that "[n]o second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained." The rule rests on the basic tenet of
immutability of judgments. "At some point, a decision becomes final and executory and,
consequently, all litigations must come to an end."
The general rule, however, against second and subsequent motions for reconsideration
admits of settled exceptions. For one, the present Internal Rules of the Supreme Court,
particularly Section 3, Rule 15 thereof, provides:
Sec. 3. Second motion for reconsideration. - The Court shall not entertain a second
motion for reconsideration, and any exception to this rule can only be granted in the
higher interest of justice by the Court en bane upon a vote of at least two-thirds of its
actual membership. There is reconsideration "in the higher interest of justice" when the
assailed decision is not only legally erroneous, but is likewise patently unjust and
potentially capable of causing unwarranted and irremediable injury or damage to the
parties. A second motion for reconsideration can only be entertained before the ruling
sought to be reconsidered becomes final by operation of law or by the Court's
declaration.
xxxx
In a line of cases, the Court has then entertained and granted second motions
for reconsideration "in the higher interest of substantial justice," as allowed under
the Internal Rules when the assailed decision is "legally erroneous," "patently unjust"
and "potentially capable of causing unwarranted and irremediable injury or damage to
the parties." In Tirazona v. Philippine EDS Techno-Service, Inc. (PET, Inc.), we also
explained that a second motion for reconsideration may be allowed in instances of
"extraordinarily persuasive reasons and only after an express leave shall have been
obtained." In Apo Fruits Corporation v. Land Bank of the Philippines we allowed a
second motion for reconsideration as the issue involved therein was a matter of public
interest, as it pertained to the proper application of a basic constitutionallyguaranteed
right in the government's implementation of its agrarian reform program. In San Miguel
Corporation v. NLRC, the Court set aside the decisions of the LA and the NLRC that
favored claimants-security guards upon the Court's review of San Miguel Corporation's
second motion for reconsideration. In Vir-Jen Shipping and Marine Services, Inc. v.
NLRC, et al., the Court en bane reversed on a third motion for reconsideration the ruling
of the Court's Division on therein private respondents' claim for wages and monetary
benefits.
It is also recognized that in some instances, the prudent action towards a just
resolution of a case is for the Court to suspend rules of procedure, for "the power
of this Court to suspend its own rules or to except a particular case from its
operations whenever the purposes of justice require it, cannot be
questioned." In De Guzman v. Sandiganbayan, the Court, thus, explained:
[T]he rules of procedure should be viewed as mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always
be avoided. Even the Rules of Court envision this liberality. This power to suspend or
even disregard the rules can be so pervasive and encompassing so as to alter even
that which this Court itself has already declared to be final, as we are now compelled
to do in this case x x x.
xxxx
The Rules of Court was conceived and promulgated to set forth guidelines in the
dispensation of justice but not to bind and chain the hand that dispenses it, for
otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial
discretion. That is precisely why courts in rendering real justice have always been, as
they in fact ought to be, conscientiously guided by the norm that when on the balance,
technicalities take a backseat against substantive rights, and not the other way around.
Truly then, technicalities, in the appropriate language of Justice Makalintal, "should give
way to the realities of the situation." x x x.
Consistent with the foregoing precepts, the Court has then reconsidered even decisions
that have attained finality, finding it more appropriate to lift entries of judgments already
made in these cases. In Navarro v. Executive Secretary, we reiterated the
pronouncement in DeGuzman that the power to suspend or even disregard rules of
procedure can be so pervasive and compelling as to alter even that which this Court
itself has already declared final. The Court then recalled in Navarro an entry of
judgment after it had determined the validity and constitutionality of Republic Act No.
9355, explaining that:
Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment
in light of attendant extraordinary circumstances. The power to suspend or even
disregard rules of procedure can be so pervasive and compelling as to alter even that
which this Court itself had already declared final. In this case, the compelling concern
is not only to afford the movants-intervenors the right to be heard since they would be
adversely affected by the judgment in this case despite not being original parties
thereto, but also to arrive at the correct interpretation of the provisions of the [Local
Government Code (LGC)] with respect to the creation of local government units. x x x.
In Munoz v. CA, the Court resolved to recall an entry of judgment to prevent a
miscarriage of justice. This justification was likewise applied in Tan Tiac Chiong v. Hon.
Cosico, wherein the Court held that:
The recall of entries of judgments, albeit rare, is not a novelty. In Munoz v. CA, where
the case was elevated to this Court and a first and second motion for reconsideration
had been denied with finality, the Court, in the interest of substantial justice, recalled
the Entry of Judgment as well as the letter of transmittal of the records to the Court of
Appeals.
In Barnes v. Judge Padilla, we ruled:
[A] final and executory judgment can no longer be attacked by any of the parties or be
modified, directly or indirectly, even by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial justice
considering (a) matters of life, liberty, honor or property, (b) the existence of special or
compelling circumstances, (c) the merits of the case, (d) a cause not entirely
attributable to the fault or negligence of the party favored by the suspension of the rules,
(e) a lack of any showing that the review sought is merely frivolous and dilatory, and (t)
the other party will not be unjustly prejudiced thereby. (Citations omitted; underscoring
supplied)49
In short, the Court may entertain second and subsequent motions for reconsideration
when the assailed decision is legally erroneous, patently unjust and potentially capable
of causing unwarranted and irremediable injury or damage to the parties. Under these
circumstances, even final and executory judgments may be set aside because of the
existence of compelling reasons.
It is notable that the retirement program in question herein was established solely by
PVB as the employer. Although PVB could validly impose a retirement age lower than
65 years for as long as it did so with the employees' consent,50 the consent must be
explicit, voluntary, free, and uncompelled.51 In dismissing the petition for review
on certiorari, the Court's First Division inadvertently overlooked that the law required
the employees' consent to be express and voluntary in order for them to be bound by
the retirement program providing for a retirement age earlier than the age of 65 years.
Hence, the Court deems it proper to render a fair adjudication on the merits of the
appeal upon the petitioner's second motion for reconsideration. Furthermore, allowing
this case to be reviewed on its merits furnishes the Court with the opportunity to re-
examine the case in order to ascertain whether or not the dismissal produced results
patently unjust to the petitioner. These reasons do justify treating this case as an
exception to the general rule on immutability of judgments.
2. The pronouncement of the Court in Philippine Veterans Bank Employees
Union-NUBE v. The Philippine Veterans Bank is still doctrinal on the
status of the Philippine Veterans Bank as a private, not a government,
entity
In Philippine Veterans Bank Employees Union-NUBE v. The Philippine Veterans
Bank,52 we pertinently pronounced:
Coming now to the ownership of the Bank, we find it is not a government bank, as
claimed by the petitioners.1âwphi1 The fact is that under Section 3(b) of its charter,
while 51 % of the capital stock of the Bank was initially fully subscribed by the Republic
of the Philippines for and in behalf of the veterans, their widows, orphans or compulsory
heirs, the corresponding shares of stock were to be turned over within 5 years from the
organization by the Bank to the said beneficiaries who would thereafter have the right
to vote such common shares. The balance of about 49% was to be divided into
preferred shares which would be opened for subscription by any recognized veteran,
widow, orphans or compulsory heirs of said veteran at the rate of one preferred share
per veteran, on the condition that in case of failure of any particular veteran to subscribe
for any preferred share of stock so offered to him within thirty (30) days from the date
of receipt of notice, said share of stock shall be available for subscription to other
veterans in accordance with such rules or regulations as may be promulgated by the
Board of Directors. Moreover, under Sec. 6(a), the affairs of the Bank are managed by
a board of directors composed of eleven members, three of whom are ex
officio members, with the other eight being elected annually by the stockholders in the
manner prescribed by the Corporation Law. Significantly, Sec. 28 also provides as
follows:
Sec. 28. Articles of incorporation. - This Act, upon its approval, shall be deemed and
accepted to all legal intents and purposes as the statutory articles of incorporation or
Charter of the Philippine Veterans' Bank; and that, notwithstanding the provisions of
any existing law to the contrary, said Bank shall be deemed registered and duly
authorized to do business and operate as a commercial bank as of the date of approval
of this Act.
This point is important because the Constitution provides in its Article IX-B,
Section 2(1) that "the Civil Service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government-
owned or controlled corporations with original charters." As the Bank is not
owned or controlled by the Government although it does have an original charter
in the form of R.A. No. 3518, it clearly does not fall under the Civil Service and
should be regarded as an ordinary commercial corporation. Section 28 of the
said law so provides. The consequence is that the relations of the Bank with its
employees should be governed by the labor laws, under which in fact they have
already been paid some of their claims.53 (Bold underscoring supplied for emphasis)
Anent whether PVB was a government or a private entity, therefore, we declare that it
is the latter. The foregoing jurisprudential pronouncement remains to be good law, and
should be doctrinal and controlling.
We also note that Congress enacted Republic Act No. 7169,54 whereby it
acknowledged the Filipino veterans of World War II as the owners of PVB, but their
ownership had not been fully realized despite the implementation of Republic Act No.
3518.55 As one of the mechanisms to rehabilitate PVB, Congress saw fit to modify PVB'
s operations, capital structure, articles of incorporation and by-laws through the
enactment of Republic Act No. 7169.56By restoring PVB as envisioned by Republic Act
No. 3518,57 and by providing that the creation of the PVB would be in accord with
the Corporation Code, the General Banking Act, and other related laws, Congress
undeniably bestowed upon the PVB the personality of a private commercial
bank through Republic Act No. 7169. In that regard, Section 8 of Republic Act No. 7169
directed the Filipino veterans to raise ₱750,000,000.00 in total unimpaired capital
accounts, prior to PVB's reopening, but excused the Government from making any new
capital infusion, viz.:
Section 8. Transitory Provisions. - Without requiring new capital infusion either from the
Government or from outside investigators, the Filipino veterans of World War II who are
real owners-stockholders of the Veterans Bank shall cause the said bank to have at
least Seven hundred fifty million pesos (₱750,000,000.00) in total unimpaired capital
accounts prior to reopening pursuant to this Act as a commercial bank.
It is hereby provided that the Board of Trustees of the Veterans of World War II
(BTVWW II) created under Republic Act No. 3518 is hereby designated as trustee of
all issued but undelivered shares of stock.
With the Government having no more stake in PVB, there is no justification for the
insistence of the petitioner that PVB "is a public corporation masquerading as a private
corporation."58
3. Petitioner Alfredo Laya was not validly retired at age 60
Notwithstanding the rejection of the petitioner's insistence that PVB was a public
corporation, we find and declare that the petitioner was not validly retired at age 60.
Before going further, we clarify that the CA, in the exercise of its certiorari jurisdiction,
is limited to determining whether or not the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction. The remedy is the special civil action
for certiorari under Rule 65 of the Rules of Court brought in the CA, and once the CA
decides the case the party thereby aggrieved may appeal the decision of the CA by
petition for review on certiorari under Rule 45 of the Rules of Court.
However, rigidly limiting the authority of the CA to the determination of grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the NLRC does not
fully conform with prevailing case law, particularly St. Martin Funeral
Home v. NLRC,59 where we firmly observed that because of the "growing number of
labor cases being elevated to this Court which, not being a trier of fact, has at times
been constrained to remand the case to the NLRC for resolution of unclear or
ambiguous factual findings"60 the CA could more properly address petitions
for certiorari brought against the NLRC. Conformably with such observation made in St.
Martin Funeral Homes, we have then later on clarified that the CA, in its exercise of
its certiorari jurisdiction, can review the factual findings or even the legal conclusions of
the NLRC,61 viz.:
In St. Martin Funeral Home[s] v. NLRC, it was held that the special civil action
of certiorari is the mode of judicial review of the decisions of the NLRC either by this
Court and the Court of Appeals, although the latter court is the appropriate forum for
seeking the relief desired "in strict observance of the doctrine on the hierarchy of courts"
and that, in the exercise of its power, the Court of Appeals can review the factual
findings or the legal conclusions of the NLRC. The contrary rule in Jamer was thus
overruled.62
There is now no dispute that the CA can make a determination whether the factual
findings by the NLRC or the Labor Arbiter were based on the evidence and in accord
with pertinent laws and jurisprudence.
The significance of this clarification is that whenever the decision of the CA in a labor
case is appealed by petition for review on certiorari, the Court can competently delve
into the propriety of the factual review not only by the CA but also by the NLRC. Such
ability is still in pursuance to the exercise of our review jurisdiction over administrative
findings of fact that we have discoursed on in several rulings, including Aklan Electric
Coooperative, Inc. v. National Labor Relations Commission,63 where we have pointed
out:
While administrative findings of fact are 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.
Factual findings of administrative agencies are not infallible and will be set aside when
they fail the test of arbitrariness.64
The review of the findings of the CA becomes more compelling herein, inasmuch as it
appears that the CA did not appreciate the fact that the retirement plan was not the sole
prerogative of the employer, and that the petitioner was automatically made a member
of the plan. Upon reviewing the resolution by the NLRC, the CA simply concluded that
the petitioner's acceptance of the employment offer had carried with it his
acquiescence, which implied his knowledge of the plan, thus:
This Court finds petitioner's argument to be misplaced. It must be stressed that when
petitioner was appointed as Chief Legal Officer on 01 June 2001 among the terms and
conditions of his employment is the membership in the Provident Fund
Program/Retirement Program. Worthy to note that when petitioner accepted his
appointment as Chief Legal Officer, he likewise signified his conformity with the
provisions of the Retirement Program considering that the same has already been in
existence and effective since 1 January 1996, i.e. prior to his appointment. As such,
this Court is not convinced that petitioner was not aware of the private respondent's
retirement program.65
The retirement of employees in the private sector is governed by Article 287 of
the Labor Code:66
Art. 287. Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits
as he may have earned under existing laws and any collective bargaining agreement
and other agreements: Provided, however, That an employee's retirement benefits
under any collective bargaining and other agreements shall not be less than those
provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay x x x x.
Under the provision, the employers and employees may agree to fix the retirement age
for the latter, and to embody their agreement in either their collective bargaining
agreements (CBAs) or their employment contracts. Retirement plans allowing
employers to retire employees who have not yet reached the compulsory retirement
age of 65 years are not per se repugnant to the constitutional guaranty of security of
tenure, provided that the retirement benefits are not lower than those prescribed by
law.67
The CA concluded that the petitioner had agreed to be bound by the retirement plan of
PVB when he accepted the letter of appointment as its Chief Legal Counsel.
We disagree with the conclusion. We declare that based on the clear circumstances
herein the CA erred in so concluding.
The petitioner's letter of appointment pertinently stated:
3. As a Senior Officer of the Bank, you are entitled to the following executive
benefits:
•Car Plan limit of ₱700,000.00, without equity on your part; a gasoline subsidy of
300 liters per month and subject further to The Car Plan Policy of the Bank.
• Membership in a professional organization in relation to your profession and/or
assigned functions in the Bank.
• Membership in the Provident Fund Program/Retirement Program.
• Entitlement to any and all other basic and fringe benefits enjoyed by the officers;
core of the Bank relative to Insurance covers, Healthcare Insurance, vacation and
sick leaves, among others.68
Obviously, the mere mention of the retirement plan in the letter of appointment did not
sufficiently inform the petitioner of the contents or details of the retirement program. To
construe from the petitioner's acceptance of his appointment that he had acquiesced
to be retired earlier than the compulsory age of 65 years would, therefore, not be
warranted. This is because retirement should be the result of the bilateral act of both
the employer and the employee based on their voluntary agreement that the employee
agrees to sever his employment upon reaching a certain age.69
That the petitioner might be well aware of the existence of the retirement program at
the time of his engagement did not suffice. His implied knowledge, regardless of
duration, did not equate to the voluntary acceptance required by law in granting an early
retirement age option to the employee. The law demanded more than a passive
acquiescence on the part of the employee, considering that his early retirement age
option involved conceding the constitutional right to security of tenure.70
In Cercado v. Uniprom, Inc.,71 we have underscored the character of the employee's
consent in agreeing to the early retirement policy of the employer, viz.:
Acceptance by the employees of an early retirement age option must be explicit,
voluntary, free, and uncompelled. While an employer may unilaterally retire an
employee earlier than the legally permissible ages under the Labor Code, this
prerogative must be exercised pursuant to a mutually instituted early retirement plan.
In other words, only the implementation and execution of the option may be unilateral,
but not the adoption and institution of the retirement plan containing such option. For
the option to be valid, the retirement plan containing it must be voluntarily assented to
by the employees or at least by a majority of them through a bargaining
representative.72 (Bold emphasis supplied)
Furthermore, the petitioner's membership in the retirement plan could not be justifiably
attributed to his signing of the letter of appointment that only listed the minimum benefits
provided to PVB's employees. Indeed, in Cercado, we have declared that the
employee's consent to the retirement plan that came into being two years after the
hiring could not be inferred from her signature on the personnel action forms accepting
the terms of her job description, and compliance with the company policies, rules and
regulations, to wit:
We also cannot subscribe to respondent's submission that petitioner's consent to the
retirement plan may be inferred from her signature in the personnel action forms
containing the phrase: "Employee hereby expressly acknowledges receipt of and
undertakes to abide by the provisions of his/her Job Description, Company Code of
Conduct and such other policies, guidelines, rules and regulations the company may
prescribe."
It should be noted that the personnel action forms relate to the increase in petitioner's
salary at various periodic intervals. To conclude that her acceptance of the salary
increases was also, simultaneously, a concurrence to the retirement plan would be
tantamount to compelling her to agree to the latter. Moreover, voluntary and equivocal
acceptance by an employee of an early retirement age option in a retirement plan
necessarily connotes that her consent specifically refers to the plan or that she has at
least read the same when she affixed her conformity thereto.73
A perusal of PVB's retirement plan shows that under its Article III all the regular
employees of PVB were automatically admitted into membership, thus:
ARTICLE III
MEMBERSHIP IN THE PLAN
Section 1. Eligibility at Effective Date. Any Employee of the Bank as of January 1, 1996
shall automatically be a Member of the Plan as of such date.
Section 2. Eligibility after Effective Date. Any person who becomes an Employee after
January 1, 1996 shall automatically become a Member of the Plan on the date he
becomes a regular permanent Employee, provided he is less than 55 years old as of
such date.
Section 3. Continuation/Termination of Membership. Membership in the Plan shall be
concurrent with employment with the Bank, and shall cease automatically upon
termination of the Member's service with the Bank for any reason whatsoever.74 (Bold
underscoring supplied for emphasis)
Having thus automatically become a member of the retirement plan through his
acceptance of employment as Chief Legal Officer of PVB,75 the petitioner could not
withdraw from the plan except upon his termination from employment.
It is also notable that the retirement plan had been in existence since January 1,
1996,76 or more than five years prior to the petitioner's employment by PVB. The plan
was established solely by the PVB,77 and approved by its president.78 As such, the plan
was in the nature of a contract of adhesion,79 in respect to which the petitioner was
reduced to mere submission by accepting his employment, and automatically became
a member of the plan. With the plan being a contract of adhesion, to consider him to
have voluntarily and freely given his consent to the terms thereof as to warrant his being
compulsorily retired at the age of 60 years is factually unwarranted.
In view of the foregoing, the Court disagrees with the view tendered by Justice Leonen
to the effect that the petitioner, because of his legal expertise and educational
attainment, could not now validly claim that he was not informed of the provisions of
the retirement program. The pertinent rule on retirement plans does not presume
consent or acquiescence from the high educational attainment or legal knowledge of
the employee. In fact, the rule provides that the acquiescence by the employee cannot
be lightly inferred from his acceptance of employment.
Moreover, it was incumbent upon PVB to prove that the petitioner had been fully
apprised of the terms of the retirement program at the time of his acceptance of the
offer of employment. PVB did not discharge its burden, for the petitioner's appointment
letter apparently enumerated only the minimum benefits that he would enjoy during his
employment by PVB, and contained no indication of PVB having given him a copy of
the program itself in order to fully apprise him of the contents and details thereof.
Nonetheless, even assuming that he subsequently obtained information about the
program in the course of his employment, he still could not opt to simply withdraw from
the program due to his membership therein being automatic for the regular employees
of PVB.
To stress, company retirement plans must not only comply with the standards set by
the prevailing labor laws but must also be accepted by the employees as
commensurate to their faithful services to the employer within the requisite
period.80 Although the employer could be free to impose a retirement age lower than
65 years for as long its employees consented,81 the retirement of the employee whose
intent to retire was not clearly established, or whose retirement was involuntary is to be
treated as a discharge.82
With the petitioner having been thus dismissed pursuant to the retirement provision that
he had not knowingly and voluntarily agreed to, PVB was guilty of illegal dismissal as
to him. Being an illegally dismissed employee, he was entitled to the reliefs provided
under Article 27983 of the Labor Code, to wit:
Article 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.
Considering that the petitioner's reinstatement is no longer feasible because of his
having meanwhile reached the compulsory retirement age of 65 years by June 11,
2012, he should be granted separation pay. In this regard, retirement benefits and
separation pay are not mutually exclusive.84
The basis for computing the separation pay should accord with Section 4,85 Article III
of PVB's retirement plan. Hence, his full backwages should be computed from July 18,
2007 - the date when he was illegally dismissed - until his compulsory retirement age
of 65 years on June 11, 2012. Such backwages shall all be subject to legal interest of
12% per annum from July 18, 2007 until June 30, 2013, and then to legal interest of
6% interest per annum from July 1, 2013 until full satisfaction, conformably with Nacar
v. Gallery Frames.86
WHEREFORE, the Court GRANTS the petition for review
on certiorari; REVERSES and SETS ASIDE the decision promulgated by the Court of
Appeals on August 31, 2012; FINDS and DECLARES respondent PHILIPPINE
VETERANS BANK guilty of illegally dismissing the petitioner;
and ORDERS respondent PHILIPPINE VETERANS BANK to pay to the petitioner, as
follows: (a) backwages computed from July 18, 2007, the time of his illegal dismissal,
until his compulsory age of retirement, plus legal interest of 12% per annum from July
18, 2007 until June 30, 2013, and legal interest of 6% per annum from July 1, 2013 until
full satisfaction; (b) separation pay computed at the rate of 100% of the final monthly
salary received by the petitioner pursuant to Section 4, Article V of the PVB Retirement
Plan; and (c) the costs of suit.
The Court DIRECTS that any amount that the petitioner received from
respondent PHILIPPINE VETERANS BANKby virtue of his illegal retirement shall be
deducted from the amounts hereby awarded to him.
The Court DIRECTS the National Labor Relations Commission to facilitate the
computation and payment of the total monetary benefits and awards due to the
petitioner in accordance with this decision. SO ORDERED.
Footnotes
32
Section 3.Second Motion for Reconsideration. - The Court shall not entertain a second motion
for reconsideration, and any exception to this rule can only be granted in the higher interest of
justice by the Court en bane upon a vote of at least two-thirds of its actual membership. There is
reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by
the Court's declaration. x x x
44
Article 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created by law;
their personality begins as soon as they have been constituted according to law;
(3) Corporations, partnerships and associations for private interest or purpose to which the law
grants a juridical personality, separate and distinct from that of each shareholder, partner or
member. (35a).
47
Section 2, Rule 52 of the Rules of Court.
54
An Act to Rehabilitate the Philippine Veterans Bank Created Under Republic Act No. 3518,
Providing the Mechanisms Therefor, And For Other Purposes.
55
An Act Creating the Philippine Veterans Bank, And For Other Purposes.
56
Section 3 of R.A. No. 7169 states:
Section 3. Operations and Changes in the Capital Structure of the Veterans Bank and other
Amendments. - The operations and changes in the capital structure of the Veterans Bank, as
well as other amendments to its articles of incorporation and by-laws as prescribed under
Republic Act No. 3518, shall be in accordance with the Corporation Code, the General Banking
Act, and other related laws.
57
Sec. 4, R.A. No. 7169.
61
Agustilo v. Court of Appeals, G.R. No. 142875, September 7, 2001, 364 SCRA 740.
66
Now Article 302, pursuant to Republic Act No. 10151 (See DOLE Department Advisory No. 01,
series of 2015).
75
The appointment letter pertinently reads:
Dear Atty. Laya,
This is to inform your appointment as Chief Legal Officer with a rank of Vice President effective
01 June 2001 under the following terms and conditions:
1. Your appointment is on a regular status x x x:
xxxx
(CA Rollo, p. 160; bold emphasis supplied)
76
Section 3, Article I.
77
Section 1, Article I.
83
Now Article 294 pursuant to Republic Act No. 10151 (See DOLE Department Advisory No. 01,
series of 2015).
85
Section 4. Involuntary Separation Benefit. Any Member who is involuntarily separated from
service by the Bank for any cause not due to his own fault, misconduct, negligence, or fraud, shall
be entitled to receive a separation benefit computed in accordance with the retirement benefit
formula described in Section I of this Article or the applicable termination benefit under existing
laws whichever is greater. (CA Rollo, p. 124)
SECOND DIVISION
G.R. No. 153904 January 17, 2005
PNOC-EDC, NAZARIO VASQUEZ, President; MARCELINO TONGCO, Acting
Manager Project Operations & Manager, Project Development; JESUS
QUEVENCO, JR., Resident Manager, SNGP/PIPE; and REMEGIO B. CORNELIO,
Human Resource Officer, SNGP-PIPE, petitioners, vs. FREDERICK V.
ABELLA, respondent.
Labor Law; Dismissals; Reinstatement; Reinstatement presupposes that the
previous position from which one had been removed still exists, or that there is an
unfilled position more or less of a similar nature as this previously occupied by the
employee; An employee who is separated from his employment on a false or non-
existent cause is entitled to be reinstated to his former position because the separation
is illegal.—Reinstatement presupposes that the previous position from which one had
been removed still exists, or that there is an unfilled position more or less of a similar
nature as this previously occupied by the employee. Accordingly, an employee who is
separated from his employment on a false or nonexistent cause is entitled to be
reinstated to his former position because the separation is illegal. If the position is no
longer available for any other valid and justifiable reason, however, the reinstatement
of the illegally dismissed employee to his former position would neither be fair nor just.
The law itself can not exact compliance with what is impossible. Ad imposible tenetur.
The employer’s remedy is to reinstate the employee to a substantially equivalent
position without loss of seniority rights as provided for above.
Same; Same; Same; Management has wide latitude to regulate, according to his
own discretion and judgment, all aspects of employment, to the requirements of its
business.—In this jurisdiction, we recognize that management has wide latitude to
regulate, according to his own discretion and judgment, all aspects of employment, to
the requirements of its business. The scope and limits of the exercise of management
prerogative, however, should attain a state of equilibrium when pitted against the
constitutional right of labor to security of tenure.
Same; Same; Same; The managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion—not unnecessary, inconvenient nor
prejudicial to the displaced employee, meaning there is no demotion in rank or
diminution of salary, benefits and other privileges.—The rationale behind this rule is
that an employee’s right to security of tenure does not give him such a vested right in
his position as would deprive the company of its prerogative to change his assignment
or transfer him where he will be most useful. Especially so in this case where the
respondent was not appointed for a security assistant for a specified place but was only
designated therein. But of course, the managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion—not unnecessary, inconvenient
nor prejudicial to the displaced employee, meaning there is no demotion in rank or
diminution of salary, benefits and other privileges.
Same; Same; Insubordination; Requisites for Insubordination to Constitute a Just
Cause for Terminating Employment.—Insubordination or willful disobedience by an
employee, to constitute a just cause for terminating his employment, the orders,
regulations, or instructions of the employer or representative must be: 1. reasonable
and lawful; 2. sufficiently known to the employee; and 3. in connection with the duties
which the employee has been engaged to discharge.
Remedial Law; Compromises; Settlement of disputes by way of compromise, is
an accepted, nay desirable and encouraged practice in courts of law and administrative
tribunals.—The clause agreed to by the parties in the Joint Motion to Dismiss filed
before the NLRC was in the nature of a compromise agreement, i.e., “an agreement
between two or more persons, who for preventing or putting an end to a lawsuit, adjust
their difficulties by mutual consent in the manner which they agree on, and which
everyone of them prefers to the hope of gaining, balanced by the danger of losing.”
Settlement of disputes by way of compromise, is an accepted, nay desirable and
encouraged practice in courts of law and administrative tribunals. Generally favored in
law, such agreement is a bilateral act or transaction that is binding on the contracting
parties and is expressly acknowledged by the Civil Code as a juridical agreement
between them.
Same; Same; A compromise once approved by final orders of the court has the
force or res judicata between the parties and should not be disturbed except for vices
of consent or forgery.—Prevailing case law provides that “a compromise once approved
by final orders of the court has the force of res judicata between the parties and should
not be disturbed except for vices of consent or forgery. Hence, ‘a decision on a
compromise agreement is final and executory.’ Such agreement has the force of law
and is conclusive on the parties. It transcends its identity as a mere contract binding
only upon the parties thereto, as it becomes a judgment that is subject to execution in
accordance with the Rules. Judges therefore have the ministerial and mandatory duty
to implement and enforce it.” (Italics supplied.) Hence, compromise agreements duly
approved by the courts are considered the decisions in the particular cases they
involve.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
DECISION
CHICO-NAZARIO, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, with a prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order, seeking to set aside the Decision1 of the Court of
Appeals dated 30 January 2002 in CA-G.R. SP No. 54484, which affirmed, with
modification, the Decision2 of the National Labor Relations Commission (NLRC),
Fourth Division, Cebu City, dated 08 May 1998, reversing the Decision3 of the Labor
Arbiter dated 25 April 1997 in the consolidated cases RAB VII-07-0082-94-D and RAB
VII-08-0082-95-D.
Petitioner Philippine National Oil Company - Energy Development Corporation (PNOC-
EDC) is a government-owned and controlled corporation organized under the
Corporation Code of the Philippines, with Nazario Vasquez as its president; Marcelino
M. Tongco, Acting Manager, Project Development; Jesus Quevenco, Jr., Resident
Manager, Southern Negros Geothermal Plant (SNGP)/PIPE; and Remegio Cornelio,
Human Resource Officer, SNGP/PIPE. Private respondent Frederick V. Abella is an
employee of the petitioner company, assigned as a Security Assistant.
The Facts of the Case
On 01 June 1989, herein private respondent Frederick V. Abella started working with
herein petitioner PNOC-EDC as a probationary Security Assistant at its SNGP in Ticala,
Valencia, Negros Oriental. Subsequently, he became a regular employee.
Less than one year later, or on 20 April 1990, Abella was informed that his employment
with PNOC-EDC would be terminated effective 21 May 1990, allegedly due to a
company-wide reorganization pursuant to its Manpower Reduction Program, wherein
the position of Security Assistant at PNOC-EDC SNGP had been abolished.
Aggrieved, Abella filed a case of illegal dismissal, and for actual, moral, and exemplary
damages with the NLRC, Regional Arbitration Branch No. VII at Dumaguete City,
docketed as NLRC RAB VII-05-364-90-D, against the PNOC-EDC and its officers.
After hearing the parties, Labor Arbiter Geoffrey P. Villahermosa rendered a
Decision4 dated 27 August 1991, holding that Abella was illegally dismissed as the
company and its officers failed to show a "clear scheme and convincing proof of
reorganization," to wit:
WHEREFORE, premises considered judgment is hereby rendered ordering
respondents to reinstate complainant to his former position without loss of seniority
rights and privileges; his backwages from the time he was terminated on 21 May 1990
up to his actual reinstatement; his withheld second half salary for the month of May
1990 in the amount of P4,291.17; moral damages amounting to P30,000.00; exemplary
damages for public good amounting to P20,000.00 and 10% attorney’s fees from the
total adjudicated claims.
The computation of the award of the complainant is hereto attached and forms as [an]
integral part hereof.
All other claims are dismissed.
An appeal was timely filed with the NLRC.
Meanwhile, with said appeal still pending in the NLRC, the labor arbiter issued an
order5 dated 20 November 1991, directing the company to "admit back to work or
reinstate the complainant under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely reinstated in the
payroll."
Pursuant to the above order, Abella was reinstated in the payroll as a General Services
Assistant (PAL II), his original position of Security Assistant having been abolished by
virtue of the company-wide reorganization. According to the company, "the position is
of the same level as Assistant Security and had the same salary rate and benefits."6
On 11 February 1992, Abella, through counsel, wrote Quevenco, Resident Manager at
the SNGP, to protest his assignment in the payroll as General Services Assistant (PAL
II). Subsequently, he was again re-slotted in the payroll as a Pipeline Maintenance
Foreman, which, according to the petitioners, is another "position with the same salary
and benefits"7 as another Security Assistant. This "change" of position was classified
as a lateral transfer.8
On 24 August 1992, Abella wrote9 petitioner Quevenco,10 to request that he (Abella) be
physically reinstated and allowed to perform security functions. He wrote:
Engr. Jesus M. Quevenco, Jr.
Resident Manager
PNOC Energy Development Corporation
Southern Negros Geothermal Project
Ticala, Valencia
Negros Oriental
Sir:
This is to officially inform you that despite my lawyer’s letter11 dated February 11, 1992,
I am willing to perform security functions at PNOC-Energy Development Corporation,
Southern Negros Geothermal Project.
In view of this, may I request adjustments/arrangements with our Head Office so I can
immediately assume duty at your convenience.
Very respectfully yours,
(Sgd.) FREDERICK V. ABELLA12
Said request was granted on 27 October 1992 when Abella was temporarily13 detailed
as Security Assistant at SNGP’s PAL II Development Project, Northern Cotabato. But
on even date, he was also concomitantly designated as Acting Security Officer for the
entire SNGP due to the reassignment of the incumbent Security Officer to the Northern
Negros Geothermal Project of the company.141awphi1.nét
On 03 November 1992, Abella wrote a letter, this time addressed to Vasquez, then
Vice-President of the company, to confirm that he had assumed his security functions;
that he was open for negotiations regarding his case; and, that he hoped that his
appointment/work status would be normalized.
On 15 December 1992, in a telegraphic message, Tongco informed Abella to
immediately report to Mindanao I Geothermal Plant (MIGP), Kidapawan, North
Cotabato. In the same correspondence, Tongco defined private respondent’s duties
and functions and delimited the duration of his stay at MIGP as temporary, or for about
3 months only.
Shortly thereafter, or on 28 January 1993, Abella and the company agreed to settle
NLRC RAB Case No. VII-05-364-90-D. Abella consequently received the amount of
One Hundred Twenty-Four Thousand Eight Hundred Twenty-Four Pesos and Thirty-
One Centavos (P124,824.31) as settlement of the said case and by virtue of the said
agreement, both parties filed a Joint Motion to Dismiss15 before the NLRC, viz:
JOINT MOTION TO DISMISS
COMES NOW herein parties to the entitled case, to this Honorable Commission
respectfully state that –
1. Complainant has offered and Respondent has accepted a proposal to settle the
instant case amicably;
2. The parties have agreed to shoulder their respective costs;
3. All other claims, damages, and causes of action arising out of the instant case
are waived;
4. Consequently, the parties are no longer interested in pursuing and desire to
dismiss the case.
WHEREFORE, PREMISES CONSIDERED, it is hereby prayed that the instant case be
dismissed.16 (Emphasis supplied)
Acting on the Joint Motion to Dismiss, the NLRC issued a Resolution dated 22 February
1993, granting the above motion dismissing the appeal earlier filed before it, the
pertinent portions of which read:
… Submitted before Us is a joint motion to dismiss the instant case dated February 1,
1993, filed by both parties duly assisted by their respective counsel.
In view of the manifest intention of the parties to effect a settlement of the dispute
between them and it appearing that the terms of the instant motion is not contrary to
law, morals, public order, and public policy, the same is hereby granted. After all
"Compromise being the essence of labor justice should be honored."
WHEREFORE, in view of the foregoing, the instant joint motion to dismiss is hereby
granted. The appeal is hereby dismissed as prayed for by the parties. Let the records
of this case be forwarded to the Regional Arbitration Branch of origin for proper
disposition.17
An Entry of Finality of Judgment was subsequently entered in the books on 29 March
1993.
At this time, while carrying out security functions at MIGP, Kidapawan, North Cotabato,
Abella’s official item or position in the payroll was Maintenance Foreman, SNGP,
Valencia, Negros Oriental. Said state of affairs prompted the late Jerry T. Susas18 to
write Tongco about it and to recommend that "proper action be made in order to
harmonize security-related support services at MIGP."19
On 10 December 1993, Abella filed a motion for the issuance of a writ of execution of
the decision dated 27 August 1991, of the labor arbiter. Corollary to the said motion, he
informed Quevenco of his intention to report back to SNGP, Ticala, Valencia, Negros
Oriental, his original assignment prior to the filing of the 1991 case20 for illegal
dismissal.
On 31 January 1994, Abella received a show cause memorandum dated 28 January
1994 for his alleged absence without official leave (AWOL) and insubordination.
Responding to the above, Abella explained in a letter dated 02 February 1994 that his
position as SGS Maintenanceis in complete contravention of the decision of the labor
arbiter.21
On 01 March 1994, despite the above response, Abella was nevertheless transferred
to PNOC-EDC Leyte-A Geothermal Project, as a Security Assistant,22 a position that
was vacant at that time. Said transfer was accompanied by a Transfer or Change of
Position Form23 showing Abella’s change of official position from Pipeline Maintenance
Foreman to Security Assistant to be a lateral transfer.
On 24 May 1994, Tongco sent Abella a radiogram message instructing him to present
himself, this time at the Mt. Labo Geothermal Project, Camarines Norte, as a Security
Assistant. A second message followed emphasizing the need for Abella to report at the
said site not later than 25 May 1994. On 01 June 1994, Abella was once more instructed
to report to the petitioner company’s Mt. Labo Geothermal Project. Said order was
again accompanied by a Transfer or Change of Position Form24 stating the transfer of
Abella as a Security Assistant from Leyte to Mt. Labo to be a lateral transfer.
All the above-mentioned directives were disregarded or ignored.
In the intervening time, on 16 June 1994, the labor arbiter ruled on the motion for
execution filed by the complainant by issuing a Writ of Execution directing the Sheriff,
NLRC, Cebu City, to proceed to the premises of the company at Ticala, Valencia,
Negros Oriental, to effect and to cause the reinstatement of Abella either by physical
or by payroll reinstatement. On 17 June 1994, Sheriff Remegio B. Cornelio issued a
certification that per attached pay slip, private respondent had been reinstated in the
payroll with PNOC-EDC.
In the meantime, for failing to heed the directives of his supervisors, Abella received
another "show cause" memorandum dated 14 July 1994, from Tongco, ordering him to
explain in writing why no disciplinary action should be taken against him for
insubordination and for being AWOL.
Abella, in his reply25 dated 16 July 1994, countered that "he is not guilty of
insubordination since he was not reinstated to his former position as Security Assistant
at Ticala, Valencia, Negros Oriental, per Writ of Execution issued by the labor arbiter."
On 18 July 1994, claiming unfair and prejudicial treatment, Abella filed a complaint
before the NLRC, Sub-Regional Arbitration Branch No. VII, Dumaguete City, for unfair
labor practice, illegal suspension, nonpayment of mid-year bonus and 13th month pay
for 1990 and 1991, claim for hazard pay, and annual salary increase against the
company and its officers, docketed as NLRC Sub-RAB Case No. 07-0082-94-D.
Several months later, or on 06 October 1994, Abella received a notice26 of disciplinary
action of Grave Suspension with Final Warning, dated 28 September 1994, against
him.
In response, on 17 October 1994, Abella filed another complaint with the NLRC, against
the company and its officers, for unfair labor practice, illegal suspension, and
nonpayment of wages with damages, docketed as NLRC Sub-RAB Case No. 010-
0123-94-D.
Nevertheless, Abella continued working at SNGP, Ticala, Valencia, Negros Oriental,
until he was accordingly notified of his termination for cause. Thereafter, he filed a third
complaint with the NLRC against the company and its officers, this time for unfair labor
practice, illegal dismissal, and nonpayment of wages, with prayer for reinstatement and
payment of moral and exemplary damages as well as attorney’s fees docketed
as NLRC Sub-RAB Case No. 08-0082-95-D.
After hearing the parties, Labor Arbiter Geoffrey Villahermosa27 rendered a
consolidated Decision28 dated 25 April 1997, the dispositive portion of which states:
WEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the
respondents not guilty of unfair labor practice and illegally dismissing the complainant,
but however, as a measure of social justice and due to the afore-cited Supreme Court
Ruling, the respondents are directed to pay the complainant his separation pay
computed from June 1, 1989 to April 30, 1997 at one (1) month pay for every year of
service, . . .
In maintaining that Abella was not illegally dismissed, the labor arbiter opined that the
records of the case show that Abella was "reassigned from his position in Ticala,
Valencia, Negros Oriental, to that in Cotabato province by virtue of a memorandum
issued by Tongco which Abella readily accepted and agreed to said transfer," therefore
there is no valid basis for the claim that he was not validly reinstated.l^vvphi1.net Thus,
the charges of insubordination and AWOL committed by Abella fall squarely within the
provision of Rule 26 of the petitioner company’s rules and regulations as contained in
the "PNOC Rules and Regulations on Discipline." Said rules provide for a penalty
ranging up to dismissal even for the first offense.
On appeal, the NLRC reversed and set aside the Decision29 of the labor arbiter and
entered a new one, viz:
WHEREFORE, as above-disquisitioned the decision appealed from is REVERSED and
SET ASIDE and a new one ENTERED finding the dismissal illegal, hence complainant
should be ordered reinstated to his former position as Security Assistant SNGP
pursuant to the Decision of August 27, 1991 with full backwages from December 1,
1991 when he was illegally declared as AWOL up to his actual reinstatement.
The NLRC found that Abella was illegally dismissed "considering that at bar, the parties
had reached a settlement without vacating the decision (of the labor arbiter dated 27
August 1991), then the decision should be given its full force and effect," and as the
"[r]ecords show that he was never reinstated to his former position as admitted by the
correspondence of J.T. Susas dated 25 March 1993, memorandum of complainant
dated 17 September 1993 and letter of complainant’s counsel to Engr. Quevenco,
dated 03 January 1994." The tribunal further held that a "review of the facts and
circumstances of the case, we find that while the monetary consideration of the decision
of 27 August 1991 has been satisfied the reinstatement aspect of the decision remained
unsatisfied which prompted counsel to file a motion for the issuance of [a] writ of
execution." "The assignments of the complainants (sic) to the various positions could
not equate to full enforcement of the decision of 27 August 1991 considering that these
positions were not his former position and his assumption to these positions were under
protest."
There being a timely motion for reconsideration, the Honorable Commission, in a
Resolution30 dated 14 June 1999, reversed itself insofar as the order for reinstatement
and computation of backwages were concerned. Instead, the Commission held that
since Abella had already reached the retirement age of sixty (60) years, reinstatement
would no longer be possible. Necessarily, the computation of backwages should only
be from 01 December 1994 up to 15 January 1998. After 15 January 1998, Abella
should be given all the benefits due him under the retirement provision of the collective
bargaining agreement of the company.
With the denial of their motion for reconsideration, the company and its officers came
to the Court of Appeals via a petition for certiorari under Rule 65 of the Revised Rules
of Court and sought to nullify the abovestated NLRC Decision dated 08 May 1998 and
Resolution dated 14 June 1999.
On 27 February 2002, the appellate court promulgated the impugned
Decision31 dismissing the petition for lack of merit, the dispositive portion of which
states:
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit.
Accordingly, the assailed decision and resolution of the NLRC, Fourth Division, Cebu
City, are hereby AFFIRMED. No pronouncement as to cost.
The company and its officers’ motion for reconsideration having been denied, the
instant petition was filed with the following assignment of errors:
 I.
CONTRARY TO THE OPINION OF THE COURT OF APPEALS, IT IS NOT TRUE
THAT THE REINSTATEMENT OF RESPONDENT WAS NOT A FAITHFUL
COMPLIANCE OF THE PROVISIONS OF PARAGRAPH 3, ARTICLE 223 OF THE
LABOR CODE.
II.
CONTRARY TO THE OPINION OF THE COURT OF APPEALS, THE JOINT MOTION
TO DISMISS SUBMITTED BY PETITIONERS AND RESPONDENT BEFORE THE
FOURTH DIVISION OF THE NATIONAL LABOR RELATIONS COMMISSION, CEBU
CITY, SHOULD OPERATE TO DISMISS THIS CASE IN ITS TOTALITY, AND NOT
JUST THE APPEAL PENDING BEFORE THE SAID DIVISION.
III.
CONTRARY TO THE OPINION OF THE COURT OF APPEALS, THERE IS CLEAR
LEGAL AND FACTUAL BASIS TO HOLD RESPONDENT GUILTY OF THE
OFFENSES OF INSUBORDINATION AND OF INFRACTION OF COMPANY RULES
ON UNAUTHORIZED ABSENCES; HENCE, THE TERMINATION OF RESPONDENT
FROM EMPLOYMENT AFTER OBSERVANCE OF DUE PROCESS WAS LEGAL.32
The Ruling of the Court
The first and second issues question the validity of the actual reinstatement of the
private respondent following the order of the Labor Arbiter Geoffrey P. Villahermosa in
NLRC RAB VII-05-364-90-D.
The issue of reinstatement is addressed by paragraph three of Article 223 of the Labor
Code, to wit:
ART. 223. Appeal . . . .
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the payroll. The posting of a bond by
the employer shall not stay the execution for reinstatement provided herein.
The above-stated provision of the Labor Code, however, must be read in conjunction
with the implementing rules and regulations of the said law. Sec. 4(a) of Rule 1, Book
VI of the Rules and Regulations Implementing the Labor Code, provides that:
SEC. 4. Reinstatement to former position. – (a) An employee who is separated from
work without just cause shall be reinstated to his former position, unless such position
no longer exists at the time of his reinstatement, in which case he shall be given a
substantially equivalent position in the same establishment without loss of seniority
rights.[Emphasis supplied.]
Reinstatement presupposes that the previous position from which one had been
removed still exists, or that there is an unfilled position more or less of a similar nature
as this previously occupied by the employee.33
Accordingly, an employee who is separated from his employment on a false or
nonexistent cause is entitled to be reinstated to his former position because the
separation is illegal. If the position is no longer available for any other valid and
justifiable reason, however, the reinstatement of the illegally dismissed employee to his
former position would neither be fair nor just. The law itself can not exact compliance
with what is impossible. Ad imposible tenetur.34 The employer’s remedy is to reinstate
the employee to a substantially equivalent position without loss of seniority rights as
provided for above.1a\^/phi1.net
In the case at bar, strictly applying the rules provided above, private respondent Abella
should have been reinstated back to his old position as a Security Assistant at the
SNGP, Ticala, Valencia, Negros Oriental. Or, at the very least, since the position of
Security Assistant at Ticala, Valencia, Negros Oriental, had been abolished as claimed
by the petitioners, he should have been reinstated to another position that is
substantially equivalent to his former one. In reality, private respondent Abella was first
reinstated in the payroll, as a General Services Assistant and subsequently, as
a Pipeline Foreman, while he was actually discharging the functions of a Security
Assistant. As insisted by the petitioners, this situation was due to the fact that the
original position of the private respondent had already been abolished in the previous
company-wide reorganization35 in 1991.
But then, the private respondent was reslotted as Security Assistant when he was
transferred to the Leyte Geothermal Project. He was, thus, performing the functions of
a Security Assistant and at the same time occupying the official position of a Security
Assistant though in a geographically different location, when said position became
vacant.
Be that as it may, notwithstanding the above disquisitions, the atypical circumstances
in this case capitulate against the outright application of the said rules. Whether or not
the private respondent was validly reinstated per Order of the Labor Arbiter dated 27
August 1991, in NLRC RAB VII-05-364-90-D, is beside the point in view of the fact that
the Joint Motion to Dismiss filed by the parties in the earlier case contained a clause
whereby the parties agreed that "[a]ll other claims, damages and causes of action
arising out of the instant case are waived."
Regrettably, the Court of Appeals and the NLRC have overlooked this very important
fact.
The clause agreed to by the parties in the Joint Motion to Dismiss filed before the NLRC
was in the nature of a compromise agreement, i.e., "an agreement between two or more
persons, who for preventing or putting an end to a lawsuit, adjust their difficulties by
mutual consent in the manner which they agree on, and which everyone of them prefers
to the hope of gaining, balanced by the danger of losing."36 Settlement of disputes by
way of compromise, is an accepted, nay desirable and encouraged practice in courts
of law and administrative tribunals.37 Generally favored in law, such agreement is a
bilateral act or transaction that is binding on the contracting parties and is expressly
acknowledged by the Civil Code as a juridical agreement between them.
Prevailing case law provides that "a compromise once approved by final orders of the
court has the force of res judicata between the parties and should not be disturbed
except for vices of consent or forgery. Hence, ‘a decision on a compromise agreement
is final and executory.’ Such agreement has the force of law and is conclusive on the
parties. It transcends its identity as a mere contract binding only upon the parties
thereto, as it becomes a judgmentthat is subject to execution in accordance with the
Rules. Judges therefore have the ministerial and mandatory duty to implement and
enforce it."38 (Underlining supplied.) Hence, compromise agreements duly approved by
the courts are considered the decisions in the particular cases they involve.39
In the case at bar, when both parties agreed to waive "all other claims, damages and
causes of action" arising out of NLRC RAB VII-05-364-90-D, a compromise they
entered into in good faith absent any allegation otherwise, they did not only agree to
dismiss the appeal pending before the NLRC. Particularly, the private respondent also
agreed to receive One Hundred Twenty-Four Thousand Eight Hundred Twenty-Four
Pesos and Thirty-One Centavos (P124,824.31), thus, relinquishing his claim to the
Decision40 dated 27 August 1991, rendered by the labor arbiter in his favor. In return,
the petitioner company, to put an end to the labor dispute, acquiesced to have its appeal
before the NLRC dismissed.
The waiver, executed by the private respondent and the petitioner company in which
mutual concessions were given and mutual benefits were derived, was approved and
considered by the NLRC when it promulgated its Order dated 22 February 1993,
dismissing the appeal of the petitioners. Conformably, to cite jurisprudence, the
Compromise Agreement approved by the proper authority became the decision in this
particular case.
Settlements of this kind not only are recognized to be proper agreements but so
encouraged as well.41
Undoubtedly, the allegations of invalid reinstatement on the part of the petitioners are
a mere afterthought on private respondent’s part in a fascinating attempt to extricate
himself from an assignment that brought him to a far away place and caused him to be
separated from his family.
It is well to note that even if each party agreed to something that neither might have
actually wanted, except for the peace that would be brought by the avoidance of a
protracted litigation, still, the agreement must govern their relations. If the agreement
was voluntarily entered into and represents a reasonable settlement, it is binding on
the parties and may not later be disowned or conveniently forgotten, simply because of
a change of mind. It is only where there is clear proof that the waiver was wangled from
an unsuspecting or gullible person, or the terms of settlement are unconscionable on
its face, that the law will step in to annul the questionable transaction. But where it is
shown that the person making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as a valid and binding undertaking.42 In the case at
bar, the Joint Motion to Dismiss was not only signed by the private respondent, but by
his counsel as well.
The resolution of the third issue hinges upon a determination of the validity of the orders
directing the transfer of the private respondent from one site to another.
In this jurisdiction, we recognize that management has wide latitude to regulate,
according to his own discretion and judgment, all aspects of employment, to the
requirements of its business.43 The scope and limits of the exercise of management
prerogative, however, should attain a state of equilibrium when pitted against the
constitutional right of labor to security of tenure.
Of relevant significance in the case at bar is the right of the employer to transfer
employees in their work station. We have previously held that it is the employer’s
prerogative, based on its assessment and perception of its employees’ qualifications,
aptitudes and competence, to move them around in the various areas of its business
operations in order to ascertain where they will function with maximum benefit of the
company.44 This right flows from ownership and from the established rule that labor
(laws) do not authorize the substitution of judgment of the employer in the conduct of
his business, unless it is shown to be contrary to law, morals, or public policy.45
The rationale behind this rule is that an employee’s right to security of tenure does not
give him such a vested right in his position as would deprive the company of its
prerogative to change his assignment or transfer him where he will be most
useful.46 Especially so in this case where the respondent was not appointed for a
security assistant for a specified place but was only designated therein. But of course,
the managerial prerogative to transfer personnel must be exercised without grave
abuse of discretion --- not unnecessary, inconvenient nor prejudicial to the displaced
employee, meaning there is no demotion in rank or diminution of salary, benefits and
other privileges.
In this case, the private respondent was charged with insubordination for failing to heed
the directives of his superior transferring him from one site to another. The Court of
Appeals negated said charge and declared that when private respondent Abella failed
to obey the orders of the petitioners reinstating him to Leyte and Mt. Labo sites, said
failure cannot give rise to insubordination as private respondent Abella had the right to
be reinstated under the same terms as and conditions prevailing prior to his dismissal
on 21 May 1990, especially so when the latter’s refusal was premised on the fact that
the labor arbiter had earlier issued a Writ of Execution ordering the reinstatement of the
private respondent to his former position at PNOC-EDC SNGP, Ticala, Valencia,
Negros Oriental.
We do not agree.
First and foremost, as discussed earlier, the order of the labor arbiter reinstating the
private respondent to his former position in SNGP had already been superseded by the
agreement of both parties to waive "[a]ll other claims, damages and causes of action
arising out of the instant case . . . ." Consequently, the writ issued by the labor arbiter
executing the order of reinstatement had no leg to stand on. Secondly, the law does
not preclude the reinstatement of an employee, who has been separated from work
without just cause, to a substantially equivalent position in the same establishment
without loss of seniority rights, and with the same rank, salary and privileges,47 if the
former position is no longer available. Therefore, the claim of lack of insubordination
due to lack of valid reinstatement must fail.
Insubordination or willful disobedience by an employee, to constitute a just cause for
terminating his employment, the orders, regulations, or instructions of the employer or
representative must be:
1. reasonable and lawful;
2. sufficiently known to the employee; and
3. in connection with the duties which the employee has been engaged to discharge.
There is no doubt in this case that the assailed transfer orders fulfill the second and
third elements above-stated. Private respondent Abella was well informed of the orders
of transfer and said orders were well in connection with the security functions of the
private respondent. It is only the issue of reasonableness and lawfulness of said orders
that have to be elucidated on.
The reasonableness and lawfulness of an order, regulation, or instruction depend on
the circumstances availing in each case. Reasonableness pertains to the kind or
character of directives and commands and to the manner in which they are made.48
The petitioners aver that the orders were well within their managerial prerogative to
make and that there was never any agreement that private respondent Abella had to
be posted in a fixed place.
The appellate court, on the other hand, stated that its finding that the private respondent
was not guilty of insubordination and abandonment was based on the fact that the
dismissal of private respondent Abella was effected with bad faith, as it was intended
to punish him for refusal to heed his employer’s unreasonable orders.
The records of the present case fail to show any hint of truth to the declaration of the
appellate court.
A thorough review of the records of the case shows that there is a valid reason behind
the transfer of the private respondent to MIGP in Kidapawan, North Cotabato. As stated
in the telegraphic message received by the private respondent,
DMD-15
DMK-22
DEC 15/92
TO: ABC / SEP CC EBP / JLA / FVA / MBP / BMO
FR: MMT
IN VIEW OF APO’S CRITICAL SECURITY SITUATION, AS DISCUSSED WITH EBP,
FVABELLA WILL BE ASSIGNED TO MIGP IMMEDIATELY TO STRENGTHEN OUR
APO SECURITY COVERAGE. … FVA, WILL HANDLE OVERALL STRATEGIC
PLANNING. … PLS ADVISE FVA’S EARLIEST TRAVEL TO MIGP. …
EMC49
Nothing in the above message alludes to any bad faith on the part of the petitioners. In
truth, it is quite apparent that the order of transfer of the private respondent from Negros
Oriental to Northern Cotabato was due to the exigencies of the state of affairs in the
geothermal plants of the petitioner company. Other internal messages50 between the
petitioner company’s officers and employees also sustain the validity of the necessity
and lack of bad faith in ordering the transfer of the private respondent, to wit:
DMK-35
JAN. 06, 1993
TO: JLA CC: FVA/MBP
FM: MMT CC: EBP
WITH FVA’S PRESENCE IN M1GP, I EXPECT THAT WE WILL ATTAIN FF.
OBJECTIVES:
COMPLETE, FINALIZE AND PUT INTO EFFECT OUR CONTINGENCY
PLANS, SECUTIRY SOPS, ACCESS PROCEDURES AND CONDUCT
QEKVTYXELI/NJETTQ.
2. EFFECTIVE COORDINATION BOTH WITH HIGHER KETEXYJM
YVXBLJEXERQ AND SITE LPPEARJQ.
3. EFFECTIVE MONITORING AND CONTROL OF OUR SECURITY
PROVISIONS I.E. DTVR ZVYJNQ, KETEXYJM.
4. IMPROVE RELATIONS WITH KETEXYJM.
5. ADDRESS CONCERNS OF OUR STAFF REGARDING QRAVJEXM
ALCRJYZR. . . .
PLS. USE DAY 6 CODE.
2210H51
TO: JLA (KIDAP) FVA (DGTE) FR: MMT
CC: FCC (LABO) MBP (KIDAP)
AA. DUE TO THE ACCELERATED DRILLING AT LABO REQUIRING IMMEDIATE
SECURITY COORDINATION AND SETTING-UP, EFFECTIVE IMMEDIATELY
FVABELLA IS TRANSFERRED TO MT. LABO GEOTHERMAL PROJECT AS
SECURITY ASSISTANT. . .
BB. TO RDO. OPERATOR SNGP PLS ENSURE MESSAGE IS SENT TO FVA.
CC. TO FVA, ADVISE ME TRAVEL DETAILS.52
TO: FVA (DGTE) FR: MMT
CC: FCC (LABO)
THE SITUATION AT LABO IS CRITICAL AND YOU HAVE TO BE THERE
IMMEDIATELY. IT IS IMPERATIVE THAT YOU TRAVEL IMMEDIATELY, NOT
LATER THEN (sic) 25 MAY. ADVISE TRAVEL DETAILS.53
By virtue of the characteristic or nature of the functions of security personnel, rotation
and reassignment from one place to another, depending on the security needs of the
company, are well within the job description of the private respondent.
As explained, the orders to the private respondent to report to the Leyte Geothermal
Plant and, later on, to the Mt. Labo site in Camarines Norte undeniably met the
standards aforestated. What is more, the private respondent, when he accepted the
offer of employment with the petitioner company, was aware that there was a possibility
of a provincial assignment. When he accomplished his application for employment,54 in
answering the question: "Are you Willing To Accept A Provincial Assignment?" the
private respondent answered in the affirmative. Another irrefutable fact is that the
records of the case bear out that even before the first controversy55 arose between the
parties, the private respondent had been reassigned to at least three (3) different
locations. His first assignment with the petitioner company was in Negros Oriental. A
few months later, he was transferred to Camarines Norte; then again to Negros Oriental
in 1990. In fact, in a memorandum56 dated 24 January 1990, the private respondent
was one of the three security personnel directed to transfer from one assignment to
another.
Finally, it cannot be gainsaid that though the private respondent was assigned to
perform security functions at other different sites, he had been receiving the same
salary and benefits due a security personnel. Records even show that he was even
accorded hazard pay for the duties and functions he was currently executing.57
The Philippine Constitution, while inexorably committed towards the protection of the
working class from exploitation and unfair treatment, nevertheless mandates the policy
of social justice so as to strike a balance between an avowed predilection for labor, on
the one hand, and the maintenance of the legal rights of capital, the proverbial hen that
lays the golden egg, on the other. Indeed, we should not be unmindful of the legal norm
that justice is in every case for the deserving, to be dispensed with in the light of
established facts, the applicable law, and existing jurisprudence.58
WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision
dated 30 January 2002, of the Court of Appeals and its Resolution dated 29 May 2002,
denying the petitioners’ Motion for Reconsideration, are REVERSED and SET ASIDE.
No costs. SO ORDERED.
Footnotes
11 February 11, 1992
Mr. Jesus M. Quevenco, Jr.
Resident Manager
SNGP, PNOC-EDC
Tikala, Palinpinon
Valencia, Negros Oriental
Sir:
In the strongest terms possible, we protest and condemn your assignment of our client,
Frederick V. Abella, to perform security functions despite the fact that his telegraphic
assignment from your Head Office is as General Services Assistant (PAL II), another blatant
violation of the NLRC Decision.
Under the law, you have only two (2) options, which are: (1) payroll reinstatement and (2)
reinstatement to previous position.
Verily, we feel that you shall immediately make arrangements to rectify the above-mentioned
violations otherwise, we shall consequently construe your actions as malicious persecution
and/or unfair labor practice which are punishable by law.
Hoping for your kind and favorable consideration, we remain
Very truly yours, (SGD) HANSEL T. ANITO Counsel of Frederick V. Abella (NLRC Records, p.
0087)
SECOND DIVISION
G.R. No. 137863. March 31, 2005
BANK OF THE PHILIPPINE ISLANDS EMPLOYEES UNION and ZENAIDA
UY, Petitioners, vs. BANK OF THE PHILIPPINE ISLANDS, CARLOS FRAGANTE,
DELFIN SANTOS, ALBERTO JUGO and/or OSCAR CONTRERAS, Respondents.
Labor Law; Backwages; Mercury Drug Rule; The rule providing for the
entitlement of an illegally dismissed employee to only three years backwages “without
deduction or qualification” to obviate the need for further procedings in the course of
the execution, otherwise known as the “Mercury Drug Rule,” has long been
abandoned.—The rule providing for the entitlement of an illegally dismissed employee
to only three years backwages “without deduction or qualification” to obviate the need
for further proceedings in the course of execution, otherwise known as the “Mercury
Drug Rule,” has long been abandoned. In a long line of cases, we have stated that the
case of Mercury Drug, Co., Inc. v. CIR, is no longer applicable. To preclude the
recurrence of the situation where the employee, with folded arms, remains inactive in
the expectation that windfall would come to him and to speed up the process of
execution, the aforementioned Mercury Drugcase provided a remedy by ruling that an
employee whose illegal termination had lasted some years was entitled to backwages
for a fixed period “without further qualifications,” i.e., without need of taking account of
whatever he might have earned during such period, and deducting it from the amount
of recovery, by providing a base period of three years. The three-year-limit doctrine has
been consistently and uniformly applied by this Court over many years until the
promulgation of Republic Act No. 6715 which amended Article 279 of the Labor Code
in 1989.
Same; Same; Same; Statutes; R.A. No. 6715; Statutory Construction; A closer
adherence to the legislative policy behind R.A. No. 6715 points to “full backwages” as
meaning exactly that, i.e., without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his illegal dismissal—the
provision calling for “full backwages” to illegally dismissed employees is clear, plain and
free from ambiguity and, therefore, must be applied without attempted or strained
interpretation.—Verily, the evident legislative intent as expressed in Rep. Act No. 6715,
above-quoted, is that the backwages to be awarded to an illegally dismissed employee,
should not, as a general rule, be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal. The underlying reason for this ruling
is that the employee, while litigating the legality (illegality) of his dismissal, must still
earn a living to support himself and his family. Corollary thereto, full backwages have
to be paid by the employer as part of the price or penalty he has to pay for illegally
dismissing his employee. Thus, a closer adherence to the legislative policy behind Rep.
Act No. 6715 points to “full backwages” as meaning exactly that, i.e., without deducting
from backwages the earnings derived elsewhere by the concerned employee during
the period of his illegal dismissal. In other words, the provision calling for “full
backwages” to illegally dismissed employees is clear, plain and free from ambiguity
and, therefore, must be applied without attempted or strained interpretation.
Same; Same; Absent any exceptional circumstance, it is now settled that an
employee who is unjustly dismissed from work shall be entitled to full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent from the
time his compensation was withheld from him up to the time of his actual
reinstatement.— Under the factual circumstances of the case, the law and
jurisprudence prevailing, therefore, we find that the Court of Appeals committed a
reversible error in limiting the award of backwages for a fixed period of three years. The
illegal dismissal of petitioner Uy was effected in 1995, or after Rep. Act No. 6715 took
effect on 21 March 1989. Absent any exceptional circumstance, it is now settled that
an employee who is unjustly dismissed from work shall be entitled to full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent from the
time his compensation was withheld from him up to the time of his actual reinstatement.
Same; Same; Strained Relations Doctrine; Mere allegation of strained relations
to bar reinstatement is frowned upon; The doctrine of strained relations should be
strictly applied so as not to deprive an illegally dismissed employee of his right to
reinstatement—every labor dispute almost always results in “strained relations” and the
phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed
employee can never be reinstated.—We have oft said that mere allegation of strained
relations to bar reinstatement is frowned upon. In the case of PLDT, et al. v. Tolentino,
we reiterated our ruling in Quijano v. Mercury Drug Corp. wherein we propitiously said
that the strained relations doctrine should be strictly applied so as not to deprive an
illegally dismissed employee of his right to reinstatement. We further stated that: Well-
entrenched is the rule that an illegally dismissed employee is entitled to reinstatement
as a matter of right. Over the years, however, the case law developed that where
reinstatement is not feasible, expedient or practical, as where reinstatement would only
exacerbate the tension and strained relations between the parties, or where the
relationship between the employer and employee has been unduly strained by reason
of their irreconcilable differences, particularly where the illegally dismissed employee
held a managerial or key position in the company, it would be more prudent to order
payment of separation pay instead of reinstatement. Some unscrupulous employers,
however, have taken advantage of the overgrowth of this doctrine of “strained relations”
by using it as a cover to get rid of its employees and thus defeat their right to job
security. To protect labor’s security of tenure, we emphasize that the doctrine of
“strained relations” should be strictly applied so as not to deprive an illegally dismissed
employee of his right to reinstatement. Every labor dispute almost always results in
“strained relations” and the phrase cannot be given an overarching interpretation,
otherwise, an unjustly dismissed employee can never be reinstated.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
DECISION
CHICO-NAZARIO, J.:
This petition for review on certiorari under Rule 45 of the 1997 Rules on Civil
Procedure, as amended, seeks to partially reverse the Decision1 of 28 October 1998
and the Resolution2 of 08 March 1999 of the Court of Appeals, in CA-G.R. SP No.
47363, which affirmed with modification the Decision3 rendered by the Accredited
Voluntary Arbitrator dated 31 December 1997, in VA Case No. 08-001-97. The case
before the Voluntary Arbitrator was for illegal transfer and termination, with the latter
ruling in favor of the petitioners herein.
The facts as narrated by the Court of Appeals are quoted hereunder:
On 26 October 1995, respondent4 Zenaida V. Uy, former teller of the Escolta Branch of
BPI, shouted at her Senior Manager, petitioner5 Delfin D. Santos (Santos for brevity).
Uy was told to go to the office of the petitioner Carlos B. Fragante, BPI’s area head and
Assistant Vice President, to discuss her complaint. On the same date, AVP Fragante
told Uy to transfer to the nearby Plaza Cervantes Branch of BPI and report to its
operations manager to defuse (sic) the tense situation prevailing at the Escolta Branch.
On 27 October 1995, AVP Fragante received the report of the Escolta Branch Manager
(Santos) on the shouting incident, together with the written letter-reports of some
branch personnel. On the same day, AVP Fragante ordered Uy to transfer to the Plaza
Cervantes Branch. Upon receipt of the order, Uy commented that she will not transfer
and will await the result of the grievance meeting. The respondent BPI Employees
Union initiated a grievance proceeding against the BPI Management for the transfer of
Uy to the Plaza Cervantes Branch. A meeting was set for 30 October 1995. On 30
October 1995, AVP Fragante sent Uy a letter . . . directing her to explain within 24 hours
why no disciplinary action should be taken against her for insubordination, for not
paying heed to the order to transfer. Uy sent a reply on the same date . . . explaining
that she could not transfer from Escolta Branch because there was no proper turnover
of her accountabilities; that she was not able to do so on October 27, 1995 because
she was not allowed to open (as a teller); and, that since then she has been barred
from entering the bank premises. On the same day, a meeting was held to hear Uy’s
grievance relative to her transfer, but no agreement was reached. On 31 October 1995,
AVP Fragante sent Uy another letter . . . asking her to explain why no disciplinary action
should be taken against her for uttering disrespectful, discourteous, insulting and
unbecoming language to her superior, Senior Manager Delfin Santos. Uy sent an
undated reply thereto . . . reiterating why she could just not leave her position at the
Escolta Branch, and requesting that she be considered on leave starting November 2,
1995. On 13 November 1995, AVP Fragante wrote Uy another letter . . . directing her
to show cause on or before 16 November 1995 why no disciplinary action, including
possible termination, should be taken against her for the October 26, 1995 incident, for
insubordination or defiance to the transfer order, and for going on absence without
leave. A copy thereof was furnished the Union. Uy sent a reply letter dated November
20, 1995, asking for particulars relative to the alleged "highly disrespectful,
discourteous, insulting, threatening, and unbecoming language and behavior towards
your Manager, Delfin Santos" and on the alleged "past instances when she was
involved with quarrels with your co-employees," and alleging that she felt "binabastos
mo ako" (I was being sexually harassed) when he uttered "Dito ka na lang, marami and
[ang] lalaki dito" (You just stay here, there are plenty of men here), and when she
answered "Hindi ako mahilig sa lalaki" (I am not fond of men), he retorted, "Maski dito
ka na lang sa kuwarto ko" (You may just stay here in my room . . .). The union asked
for a suspension of the grievance machinery and for investigation of the "sexual
harassment" charge. On November 24, 1995, Uy requested Management through Mr.
Oscar L. Cervantes, for transfer to the Taft Avenue Branch to save on gasoline
expenses. Two meetings were held between the union side and the management side,
represented by Mr. Fragante’s superior, Senior Vice President Alberto Jugo and Senior
Manager Efren Tuble. When no agreement was reached, the management advised Uy
and the Union as well as their counsel that the management had no choice but to
terminate Uy. Both the union and Uy were sent copies of the Notice of Termination . . .
dated December 8, 1995, which had the following tenor:
NOTICE OF TERMINATION
Dear Ms. Uy:
This is to advise you of the termination of your employment effective December 14,
1995 on the grounds of gross disrespect/discourtesy towards an officer, insubordination
and absence without leave.
It has been established that you used highly disrespectful, discourteous, insulting,
threatening and unbecoming language and behavior towards your branch manager,
Delfin Santos, last October 26. Despite being given the chance to explain or justify your
actions, you chose to skirt the issue by pointing out that I am in no position to make a
conclusion as I was not around when the incident happened. You know fully well that
as Sales Director of North Manila area having supervision over Escolta Branch, such
incident was reported to me. Mr. Delfin Santos appropriately inhibited himself from
conducting the investigation for obvious reasons. We disagree with you when you
dismissed the incident as trivial. Moreover, the explanations you gave at our Head
Office were found wanting in circumstances that would absolve you or mitigate your
wrongdoing as said explanations in fact confirmed the findings at the branch level. With
regard to quarrels with your officemates, you can be considered as recidivist. You can
of course recall your quarrels, using very strong and insulting words, with your co-
employees Ms. Teresa Manalang last year and with Jocelyn Ng this year.
You refused to follow the transfer instruction to report to Cervantes Branch last October
27 alleging failure to properly turn over your accountabilities despite being in the branch
for practically the whole day on October 27. We have adequate procedure for the
opening of ‘pico’ boxes in the presence of witnesses in cases of refusal and AWOL.
In a further manifestation of your contempt towards managerial authority, you went on
absence without leave starting October 30. After refusing to receive all communications
sent to your residence, you tried to rectify this AWOL by sending an undated letter
received by us last November 6 wherein you declared yourself to be on leave beginning
November 2. You have since refused to report for work.
Under the circumstances, you left us with no alternative but to terminate your
employment with us.
(SGD.) CARLOS B. FRAGANTE
Asst. Vice President
Uy filed a case for illegal transfer and termination. On June 29, 1996, Labor Arbiter
Manuel R. Caday who initially heard and decided the case issued a decision declaring
the dismissal of Uy as illegal and ordering her reinstatement with full backwages and
10% attorney’s fees … BPI appealed the said decision to the National Labor Relations
Commission (NLRC) which rendered a decision on May 28, 1997, setting aside the
Labor Arbiter’s Decision for lack of jurisdiction, and ruling that the case falls under the
jurisdiction of a Voluntary Arbitrator.
The case was raffled to respondent Arbitrator Entuna, who requested the parties to
submit their respective position papers.6
The Voluntary Arbitrator, in his disputed Decision of 31 December 1997, adjudged:
WHEREFORE, premises considered, judgment is hereby rendered declaring the
dismissal of complainant Zenaida Uy as illegal and ordering the respondent Bank of
the Philippine Islands to immediately reinstate her to her position as bank teller of the
Escolta Branch without loss of seniority rights and with full backwages computed from
the time she was dismissed on December 14, 1995 until she is actually reinstated in
the service, and including all her other benefits which are benefits under their Collective
Bargaining Agreement (CBA).
For reasonable attorney’s fees, respondent is also ordered to pay complainant the
equivalent of 10% of the recoverable award in this case.7
The Motion for Reconsideration of the herein respondents BPI, et al., was subsequently
denied.
Aggrieved, they then filed a Petition for Review before the Court of Appeals assailing
the aforestated decision.
On 28 October 1998, the Court of Appeals issued the assailed decision affirming the
finding of the Voluntary Arbitrator that indeed Uy’s employment was illegally terminated.
The appellate court, however, modified the award for backwages by limiting it to three
years as well as finding that there was strained relations between the parties, to wit:
WHEREFORE, the judgment appealed from is AFFIRMED with
the MODIFICATION that instead of reinstatement, the petitioner Bank of the Philippine
Islands is DIRECTED to pay Uy back salaries not exceeding three (3) years and
separation pay of one month for every year of service. The said judgment
is AFFIRMED in all other respects.8
Both parties seasonably filed their respective motions for partial reconsideration of the
aforesaid decision but the appellate court denied them in a Resolution dated 08 March
1999.
Hence, the parties individually went to this Court via a Petition for Review on Certiorari.
The petition9 filed by herein respondents BPI, et al., however, was denied for their
failure to submit a certification duly executed by themselves that no other action or
proceeding involving the same issues raised in this case has been filed or is pending
before this Court, the Court of Appeals, or in the different divisions thereof, or in any
other tribunal or quasi-judicial agency, with the undertaking to inform the Court of any
similar case filed or pending in any court, tribunal or quasi-judicial agency that may
thereafter come to their knowledge in accordance with Section 4(e), Rule 45 in relation
to Section 5, Rule 7, Section 2, Rule 42, and Sections 4 and 5(d), Rule 56 of the Rules
of Court. The corresponding Entry of Judgment10 was entered in the Book of Entries of
Judgments on 22 September 1999.
For the reason above stated, only the following errors imputed by herein petitioners
Bank of the Philippine Islands Employees Union (BPIEU) and Uy to the appellate court
are in issue:
I to illegally dismissed employees is clear, plain and free from ambiguity and, therefore,
WITH DUE RESPECT, THE QUESTIONED RESOLUTION AND DECISION OF THE
HONORABLE COURT OF APPEALS ARE CONTRARY TO LAW INSOFAR AS
THEY LIMITED THE AWARD OF BACKWAGES TO THREE (3) YEARS; AND
II
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN HOLDING THAT STRAINED RELATIONS
EXIST BETWEEN THE BANK AND PETITIONER UY DESPITE THE FACT THAT THE
SHOUTING INCIDENT IS NOT SO SERIOUS AND IT INVOLVED ONLY PETITIONER
UY AND RESPONDENT DELFIN SANTOS.11
Anent the first issue, the petitioners contend that the decision of the appellate court
limiting the award of backwages to three (3) years is contrary to law and jurisprudence.
The petition is meritorious.
The rule providing for the entitlement of an illegally dismissed employee to only three
years backwages "without deduction or qualification" to obviate the need for further
proceedings in the course of execution, otherwise known as the "Mercury Drug
Rule,"12 has long been abandoned.
In a long line of cases,13 we have stated that the case of Mercury Drug, Co., Inc. v.
CIR,14 is no longer applicable. To preclude the recurrence of the situation where the
employee, with folded arms, remains inactive in the expectation that windfall would
come to him and to speed up the process of execution, the aforementioned Mercury
Drug case provided a remedy by ruling that an employee whose illegal termination had
lasted some years was entitled to backwages for a fixed period "without further
qualifications," i.e., without need of taking account of whatever he might have earned
during such period, and deducting it from the amount of recovery, by providing a base
period of three years. The three-year-limit doctrine has been consistently and uniformly
applied by this Court over many years until the promulgation of Republic Act No. 6715
which amended Article 279 of the Labor Code in 1989.
With the new law before us, we clarified the computation of backwages due an
employee on account of his illegal dismissal from employment in the case of Osmalik
Bustamante, et al. v. NLRC and Evergreen Farms, Inc.15 We held that the passing of
Republic Act No. 6715,16 particularly Section 34,17 which took effect on 21 March 1989,
amended Article 279 of the Labor Code, which now states in part:
ART. 279. Security of Tenure. - … 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.
Verily, the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted,
is that the backwages to be awarded to an illegally dismissed employee, should not, as
a general rule, be diminished or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal. The underlying reason for this ruling is that the
employee, while litigating the legality (illegality) of his dismissal, must still earn a living
to support himself and his family. Corollary thereto, full backwages have to be paid by
the employer as part of the price or penalty he has to pay for illegally dismissing his
employee. Thus, a closer adherence to the legislative policy behind Rep. Act. No. 6715
points to "full backwages" as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee during the
period of his illegal dismissal. In other words, the provision calling for "full backwages"
must be applied without attempted or strained interpretation.18
Consequently, in accordance with Section 34, Rep. Act No. 6715, employees illegally
dismissed after 21 March 1989 are entitled to their "full backwages," inclusive of other
benefits or their monetary equivalent, from the time their actual compensation was
withheld from them up to the time of their actual reinstatement.
Under the factual circumstances of the case, the law and jurisprudence prevailing,
therefore, we find that the Court of Appeals committed a reversible error in limiting the
award of backwages for a fixed period of three years. The illegal dismissal of petitioner
Uy was effected in 1995, or after Rep. Act No. 6715 took effect on 21 March 1989.
Absent any exceptional circumstance, it is now settled that an employee who is unjustly
dismissed from work shall be entitled to full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent from the time his compensation was
withheld from him up to the time of his actual reinstatement.19
Apropos the issue of non-reinstatement of petitioner Uy, the Court of Appeals held that
"in a number of cases, the High Court had allowed mere payment of severance pay,
when reinstatement would no longer be beneficial to either party in view of strained
relations between them."20 And, thus, in lieu of reinstatement, it ordered the payment
of separation pay instead.
The petitioners, on the other hand, posit that the material incidents of the case at bar
are but confined or personal to the individual respondents Delfin Santos and Carlos
Fragante. The other respondents, namely Alberto Jugo and Oscar Contreras were
impleaded merely because of their position in respondent BPI’s Human Resources
Department. In the words of the petitioners, "the controversy was a personal
matter between Ms. Uy and Messrs. Delfin Santos and Carlos Fragante."21 In addition,
they bolstered their position by relying on what this Court had to say in Globe-Mackay
Cable and Radio Corp. v. NLRC:22
Obviously, the principle of "strained relations" cannot be applied indiscriminately.
Otherwise, reinstatement can never be possible simply because some hostility is
invariably engendered between the parties as a result of litigation. That is human WHEREFORE, the instant petition is GRANTED. The assailed 28 October 1998
nature. Decision and 8 March 1999 Resolution of the Court of Appeals are hereby MODIFIED
Besides, no strained relations should arise from a valid and legal act of asserting one’s as follows: 1) respondent BPI is DIRECTED to pay petitioner Uy backwages from the
right; otherwise an employee who shall assert his right could be easily separated from time of her illegal dismissal until her actual reinstatement; and 2) respondent BPI is
the service, by merely paying his separation pay on the pretext that his relationship with ORDERED to reinstate petitioner Uy to her former position, or to a substantially
his employer had already become strained. equivalent one, without loss of seniority right and other benefits attendant to the
position. SO ORDERED.
Petitioners’ reliance is well placed.
Footnotes
We have oft said that mere allegation of strained relations to bar reinstatement is 13
frowned upon. Ferrer v. National Labor Relations Commission, G.R. No. 100898, 05 July 1993, 224 SCRA 410;
Pines City Educational Center v. NLRC, G.R. No. 96779, 10 November 1993, 227 SCRA
In the case of PLDT, et al. v. Tolentino,23 we reiterated our ruling in Quijano v. Mercury 655; Osmalik Bustamante, et. al. v. NLRC, G.R. No. 111651, 15 March 1996, 255 SCRA 145 &
Drug Corp.24 wherein we propitiously said that the strained relations doctrine should be 28 November 1996, 265 SCRA 61; Metro Transit Org., Inc. v. NLRC, 367 Phil. 259, 267, 31 May
strictly applied so as not to deprive an illegally dismissed employee of his right to 1999; Rutaquio v. National Labor Relations Commission, G.R. Nos. 97652-53, 19 October 1999,
reinstatement. We further stated that: 317 SCRA 1, 11; University of the Immaculate Concepcion v. UIC Teaching and Non-Teaching
Personnel and Employees Union, G.R. No. 144702, 31 July 2001, 362 SCRA 242; and Perpetual
Well-entrenched is the rule that an illegally dismissed employee is entitled to
Help Credit Cooperative, Inc. v. Faburada, G.R. No. 121948, 08 October 2001, 366 SCRA 693.
reinstatement as a matter of right. Over the years, however, the case law developed 16
AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE CONSTITUTIONAL
that where reinstatement is not feasible, expedient or practical, as where reinstatement RIGHTS OF WORKERS TO SELF-ORGANIZATION, COLLECTIVE BARGAINING AND
would only exacerbate the tension and strained relations between the parties, or where PEACEFUL CONCERTED ACTIVITIES, FOSTER INDUSTRIAL PEACE AND HARMONY,
the relationship between the employer and employee has been unduly strained by PROMOTE THE PREFERENTIAL USE OF VOLUNTARY MODES OF SETTLING LABOR
reason of their irreconcilable differences, particularly where the illegally dismissed DISPUTES, AND REORGANIZE THE NATIONAL LABOR RELATIONS COMMISSION,
employee held a managerial or key position in the company, it would be more prudent AMENDING FOR THESE PURPOSES CERTAIN PROVISIONS OF PRESIDENTIAL DECREE
to order payment of separation pay instead of reinstatement. Some unscrupulous NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES,
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.
employers, however, have taken advantage of the overgrowth of this doctrine of 17
SEC. 34. Article 279 of the Labor Code is hereby amended to read as follows:
"strained relations" by using it as a cover to get rid of its employees and thus defeat "ART. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate
their right to job security. the services of an employee except for a just cause or when authorized by this Title. An employee
To protect labor’s security of tenure, we emphasize that the doctrine of "strained who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
relations" should be strictly applied so as not to deprive an illegally dismissed employee rights and other privileges and to his full backwages, inclusive of allowances, and to his other
of his right to reinstatement. Every labor dispute almost always results in "strained benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement."
relations" and the phrase cannot be given an overarching interpretation, otherwise, an
unjustly dismissed employee can never be reinstated.
The said case went on further to quote our pronouncement in the case of Almira v. B.F.
Goodrich, Philippines, Inc.:25
This Court is cognizant of management’s right to select the people who will manage its
business as well as its right to dismiss them. However, this right cannot be abused. Its
exercise must always be tempered with compassion and understanding. As former
Chief Justice Enrique Fernando eloquently put it:
Where penalty less severe would suffice, whatever missteps may be committees by
labor ought not to be visited with consequence so severe. It is not only because of the
law’s concern for the workingmen. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those dependent on the wage-
earner. The misery and pain attendant on the loss of jobs then could be avoided if there
be acceptance of the view that under all the circumstances of a case, the workers
should not be deprived of their means of livelihood. Nor is this to condone what has
been done by them.
Moreover, it has been almost a decade since the incident that led to the dismissal of
petitioner Uy occurred. Petitioner Uy contends, and the respondents do not contradict,
that respondent Carlos Fragante has long been assigned in another area and Messrs.
Alberto Jugo and Oscar Contreras are no longer connected with respondent BPI.
Considering, thus, that there now appears no more basis for strained relations between
the present management and petitioner Uy, reinstatement is possible.
THIRD DIVISION
G.R. No. 158251 March 31, 2005
HANFORD PHILIPPINES, INCORPORATED and VICTOR TE, Petitioners, vs.
SHIRLEY JOSEPH, Respondent.
Labor Law; Resignation; Separation Pay; It is well to note that there is no
provision in the Labor Code which grants separation pay to employees who voluntarily
resigns.—It is well to note that there is no provision in the Labor Code which grants
separation pay to employees who voluntarily resign. Under the Code, separation pay
may be awarded only in cases when the termination of employment is due to: (a)
installation of labor saving devices, (b) redundancy, (c) retrenchment, (d) closing or
cessation of business operations, (e) disease of an employee and his continued
employment is prejudicial to himself or his co-employees, or (f) when an employee is
illegally dismissed but reinstatement is no longer feasible.
Same; Same; Same; An exception to the general rule that an employee who
voluntarily resigns is not entitled to separation pay is when it is stipulated in the
employment contract or CBA or such payment is authorized by the employer’s practice
or policy.—In Hinatuan Mining Corporation and/or the Manager versus National Labor
Relations and Margot Batister, we held that while it is true that under the Labor Code,
an employee who voluntarily resigns may not be granted separation pay, as in fact, the
general rule is that an employee who voluntarily resigns is not entitled to separation
pay, however, there is an exception, that is, when it is stipulated in the employment
contract or CBA or such payment is authorized by the employer’s practice or policy, as
in this case.
Same; Same; Same; If an employer could be liberal to those employees who
retired, there is no reason why it should not also extend such liberality to one who
resigned after serving the employer for 21 years.—Records show that petitioners
granted the employees mentioned earlier their separation pay upon their separation by
reason of their retirement. Under the Labor Code, retirement is not also a ground for
the grant of separation pay. If petitioners could be liberal to those employees who
retired, there is no reason why they should not also extend such liberality to respondent
considering that she served petitioner for twenty one years.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision1 of the Court of Appeals dated January
23, 2003 and its Resolution dated April 29, 2003 in CA-G.R. SP No. 60701.
On July 17, 1978, petitioner Hanford Philippines, Inc. (Hanford) hired Shirley Joseph,
herein respondent, as a sewer.
On August 10, 1998, respondent voluntarily tendered her resignation effective
September 17, 1998,2 which petitioner accepted the following day.3
Petitioner then paid respondent her last salary, 13th month pay and the cash
conversion of her unused vacation and sick leave.
On November 19, 1998,4 respondent sent a letter to petitioner requesting payment of
her separation pay pursuant to Section 1, Article IV of the Collective Bargaining
Agreement (CBA) quoted as follows:
SECTION 1. Regular employees or workers separated by the COMPANY because of
reduction of personnel and employees or workers who may be separated without
cause, or those whose services are terminated or are separated from work due to
suspension or cessation of operation shall be entitled to a termination pay in
accordance with law. The COMPANY shall give termination pay to those who
voluntarily resign due to the reasons heretofore stated subject to the following
terms and conditions:
a) 1 to 30 years of service shall be paid 20 days for every year of service;
b) 16 to 20 years of service to the COMPANY shall be paid 15 days pay for every year
of service;
c) 11 to 15 years of service to the COMPANY shall be paid 10 days pay for every year
of service; and
d) 5 to 10 years of service to the COMPANY shall be paid 5 days pay for every year of
service."5
Petitioner denied respondent’s request on the ground that under the Labor Code,
voluntary resignation is not one of the grounds which justifies the grant of separation
pay.6
On December 17, 1998, respondent filed with the Office of the Labor Arbiter a complaint
for the payment of her separation pay against petitioner Hanford and co-petitioner
Victor Te, docketed as NLRC NCR CN. 00-12-10238-98.
On May 20, 1999, the Labor Arbiter rendered a Decision7 granting respondent’s petition
and ordering petitioners to pay her separation pay in the amount of ₱93,820.00 as
authorized by Section 1, Article IV of the parties’ CBA.
On appeal, the National Labor Relations Commission (NLRC) rendered its
Resolution8 dated April 14, 2000 affirming the Labor Arbiter’s Decision.
Forthwith, petitioners filed their motion for reconsideration
but was denied by the NLRC in its Resolution9 dated July 24, 2000, prompting them to
file with the Court of Appeals a petition for certiorari under Rule 65 of the 1997 Rules
of Civil Procedure, as amended.
On January 23, 2003, the Appellate Court rendered its Decision10 dismissing the
petition.
The Court of Appeals held that the parties’ CBA clearly provides that petitioner Hanford
shall give termination pay to those who voluntarily resigned due to the following
reasons: reduction of personnel; employees or workers who may be separated without
cause; and those whose services are terminated due to suspension or cessation of
operation. Here, respondent voluntarily resigned. This separation from the service is
one "without cause" as provided by the CBA. Hence, pursuant thereto, petitioner is
entitled to a separation pay.
Petitioners filed a motion for reconsideration. However, it was denied by the Appellate
Court in a Resolution dated April 29, 2003.11
Hence, the present recourse. Petitioners contend that the Court of Appeals erred in
ruling that a resigned employee is entitled to separation pay under Section 1, Article IV
of the CBA.12
Respondent counters that the Decision of the Court of Appeals should not be disturbed.
She worked with petitioner company for twenty years but decided to resign believing
that pursuant to the CBA, she is entitled to a separation pay. She also avers that several
former employees of petitioner, namely: Astor Madamag, Danilo Suplito, Domingo
Bobis, Rosita Bobis, Evelyn Cunanan, Fe Viray, Doris Angeles and Dula Imperia, were
granted separation pay pursuant to the CBA and petitioners’ policy and practice.13
 13
It is well to note that there is no provision in the Labor Code which grants separation Id. at 66.
pay to employees who voluntarily resign. Under the Code, separation pay may be 14 G.R. No. 117394, February 21, 1997, 268 SCRA 622, citing CJC Trading, Inc. vs.
awarded only in cases when the termination of employment is due to: (a) installation of National Labor Relations Commission, G.R. No. 115884, July 20, 1995, 246 SCRA
labor saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of 724.
business operations, (e) disease of an employee and his continued employment is 15 Id.; Travelaire Tours Corp. and/or Christine B. Ojeda vs. National Labor Relations
prejudicial to himself or his co-employees, or (f) when an employee is illegally dismissed
Commission and Nenita I. Medelyn, G. R. No. 131523, August 20, 1998.
but
reinstatement is no longer feasible.
In Hinatuan Mining Corporation and/or the Manager versus National Labor Relations
and Margo Batister,14 we held that while it is true that under the Labor Code, an
employee who voluntarily resigns may not be granted separation pay, as in fact, the
general rule is that an employee who voluntarily resigns is not entitled to separation
pay, however, there is an exception, that is, when it is stipulated in the employment
contract or CBA or such payment is authorized by the employer’s practice or policy, as
in this case.15
As aptly held by the Labor Arbiter, the NLRC and the Court of Appeals, it is very clear
from the CBA that when an employee or worker voluntarily resigns due to, among
others, "separation from the company without cause," such as voluntary resignation,
then he is entitled to a separation pay.
Moreover, records show that petitioners granted the employees mentioned earlier their
separation pay upon their separation by reason of their retirement. Under the Labor
Code, retirement is not also a ground for the grant of separation pay. If petitioners could
be liberal to those employees who retired, there is no reason why they should not also
extend such liberality to respondent considering that she served petitioner for twenty
one years.
Our ruling in Philippine National Construction vs. NLRC finds application here, thus:
"In the interpretation of an employer’s program providing for separation benefits, all
doubts should be construed in favor of labor. After all, workers are the intended
beneficiaries of such program and our Constitution mandates a clear bias in favor of
the working class."
WHEREFORE, the petition is hereby DENIED. Costs against petitioners.
SO ORDERED.
Footnotes
1 Penned by Presiding Justice Cancio C. Garcia (now Associate Justice of this Court)

and concurred in by Associate Justices Eloy R. Bello. Jr. and Sergio L. Pestaño, both
retired.
2 Annex "C", Rollo at 37.

3 Annex "D", id. at 38.

4 Rollo at 76.

5 Annex "E", id. at 39.

6 Rollo at 77-78.

7 Id. at 40-44.

8 Id. at 45-52.

9 Id. at 53-54.

10 Id. at 26-34.

11 Id. at 36.

12 Id. at 15.
THIRD DIVISION
G.R. No. 135136 May 19, 1999
DELFIN A. BRION, petitioner, vs. SOUTH PHILIPPINE UNION MISSION OF THE
SEVENTH DAY ADVENTIST CHURCH, represented by PASTORS PATERNO DIAZ,
ULYSSES CAMAGAY, MANUEL DONATO and WENDELL SERRANO, respondents.
Labor Law; Retirement; Definition of Retirement; Pension schemes, while initially
humanitarian in nature, now concomitantly serve to secure loyalty and efficiency on the
part of employees.—Retirement has been defined as a withdrawal from office, public
station, business, occupation, or public duty.It is the result of a bilateral act of the
parties, a voluntary agreement between the employer and the employee whereby the
latter, after reaching a certain age, agrees and/or consents to sever his employment
with the former. In this connection, the modern socio-economic climate has fostered
the practice of setting up pension and retirement plans for private employees, initially
through their voluntary adoption by employers, and lately, established by legislation.
Pension schemes, while initially humanitarian in nature, now concomitantly serve to
secure loyalty and efficiency on the part of employees, and to increase continuity of
service and decrease the labor turnover, by giving to the employees some assurance
of security as they approach and reach the age at which earning ability and earnings
are materially impaired or at an end.
Same; Same; Same; Employer and employee are free to stipulate on retirement
benefits, as long as these do not fall below the floor limits provided by law.—It can be
gleaned that employer and employee are free to stipulate on retirement benefits, as
long as these do not fall below the floor limits provided by law.
Same; Same; Same; Pension and retirement plans create a contractual
obligation in which the promise to pay benefits is made in consideration of the continued
faithful service of the employee for the requisite period.—It has been held that “pension
and retirement plans create a contractual obligation in which the promise to pay benefits
is made in consideration of the continued faithful service of the employee for the
requisite period.In otherwords, before a right to retirement benefits or pension vests in
an employee, he must have met the stated conditions of eligibility with respect to the
nature of employment, age, and length of service. This is a condition precedent to his
acquisition of rights thereunder.
Same; Same; Same; Under the law, service for five years is enough to entitle an
employee who meets the requisite age to retirement benefits.—Under the SDA’s
theory, however, the right to a pension never really vests in an employee, there being
no fixed period for eligibility for retirement. The SDA insists that an employee must
“devote his life to the work of the Seventh-day Adventist Church” even after
retirement to continue enjoying retirement benefits. There is, thus, no definite length of
service provided as the SDA can withdraw retirement benefits at any time after
“retirement,” if it determines that a “retired employee” is not devoting his life to the work
of the church. Furthermore, the SDA’s eligibility requirement as to length of service is
even more stringent than that required by law. Under the Labor Code, “an employee
upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared the compulsory retirement age, who has served at least five
(5) years in the said establishment may retire and shall be entitled to retirement pay . .
.” Under the law, service for five years is enough to entitle an employee who meets the
requisite age to retirement benefits. However, the SDA would require its employees to
serve it for all his lifetime. It must be noted that petitioner has served the SDA for thirty-
four (34) years.
Same; Same; Same; The conditions of eligibility for retirement must be met at the
time of retirement at which juncture the right to retirement benefits or pension, if the
employee is eligible, vests in him.—The SDA’s theory negates the very concept of
retirement. As earlier defined, retirement means to withdraw from one’s office,
occupation, or duty. To require petitioner to continue “devoting his life to the work of the
Seventh-day Adventist Church” would mean that petitioner never really withdraws from
his office or occupation, that of working for the church. It is an oxymoron to retire an
employee and yet require him to continue working for the same employer. This Court
cannot, thus, give its imprimatur to SDA’s theory. We rule that the conditions of eligibility
for retirement must be met at the time of retirement at which juncture the right to
retirement benefits or pension, if the employee is eligible, vests in him.
Same; Same; Same; Pension plans formulated by an employer are to be
construed most strongly against the employer.—Pension and retirement plans, in line
with the Constitutional mandate of affording full protection to labor,must be liberally
construed in favor of the employee, it being the general rule that pension plans
formulated by an employer are to be construed most strongly against the employer.
Hence, where two constructions of a retirement plan are possible, one of which requires
the retiree to devote his life to the service of the church even after retirement, and the
other of which sanctions the severance by the retiree of his employment thereto at
retirement, this Court will not hesitate to adopt the latter interpretation.
Same; Same; Same; Upon the retirement of an employee or official in the public
or private service his employment is deemed terminated.—Bolstering this conclusion is
this Court’s observation in UST Faculty Union v. NLRCthat “upon the . . . retirement of
an employee or official in the public or private service his employment is deemed
terminated.” With the termination of employment, the right of the employer to control
the employee’s conduct, the so-called “control test” also terminates; hence, after
retirement, the SDA may no longer require petitioner to devote his life to the work of
the church, it having lost control over its erstwhile employee.
PETITION for review on certiorari of a decision of the Court of Appeals.
ROMERO, J.:
Blow, blow, thou winter wind,
Thou art not so unkind
As man's ingratitude. . .
[Shakespeare: As You Like It, Act II, sc. 7, Line 174]
Vilified as an ingrate by his erstwhile church, accused of being possessed by the devil,
and likened to the dog that bit the hand that fed him, petitioner Delfin A. Brion comes
to this Court with a novel question of law: Must the conditions for eligibility for retirement
be met only at the time retirement or are these conditions continuing ones which must
be complied with even after one has retired?
The facts are simple.
Petitioner Delfin A. Brion became a member of respondent South Philippine Union
Mission of the Seventh Day Adventist Church (hereafter SDA) sometime in 1949. He
worked his way up the ladder, starting as a literature evangelist, then a janitor or office
helper, until he became an ordained minister and president of the Northeastern
Mindanao Mission of the Seventh Day Adventist Church in Butuan City.
Respondent claims that due to corruption charge, petitioner was transferred to the
Davao Mission of the SDA. Thereafter, allegedly due to an act of indiscretion with a
masseuse, petitioner was demoted to the position of Sabbath School Director at the
Northern Mindanao Mission of the SDA located at Cagayan de Oro City. Here,
petitioner worked until he retired in 1983. As was the practice of the SDA, petitioner
was provided a monthly amount as a retirement benefit.
Sometime thereafter, petitioner got into an argument with Samuel Sanes, another
pastor of the SDA. This disagreement degenerated into rift between petitioner and the
SDA, culminating in the establishment by petitioner of a rival religious group which he
called the "Home Church." Petitioner succeeded in enticing a number of SDA member
to become part of his congregation even as he continued disparaging and criticizing
the SDA. Because of his actions, petitioner was excommunicated by the SDA and, on
July 3, 1993, his name was dropped from the Church Record Book. As a consequence
of his "disfellowship," petitioner's monthly retirement benefit was discontinued by the
SDA.
On December 21, 1995, petitioner filed an action for mandamus with the Regional Trial
Court of Cagayan de Oro City asking that the SDA restore his monthly retirement
benefit. On July 10, 1996, the trial court rendered a decision, the dispositive portion of
which reads:
WHEREFORE, premises considered, the Court finds in favor of plaintiff and hereby
orders defendant to pay the retirement benefits due to the plaintiff from October
1995 to the present and all subsequent monthly benefits that may be due to the
plaintiff until his demise. The Court finds no basis or no justification to the (sic) award
any damages considering that there is no showing of bad faith on the part of
defendant, since the latter acted in good faith and believing that it is within their right
to withhold the benefits that may be due to the plaintiff.
Without pronouncement as to cost.
SO ORDERED. 1
Aggrieved by the trial court's decision, the SDA filed an appeal with the Court of
Appeals, docketed therein as CA-G.R. SP No. 43846. On March 19, 1998, the appellate
court set aside the decision of the trial court and ordered the dismissal of petitioner's
complaint. Petitioner filed a motion for reconsideration, which was denied on August 3,
1998, hence this petition.
We find for petitioner.
The following provisions on retirement, contained in the General Conference Working
Policy of the SDA, are of primary importance in resolving the issue at hand:
[Paragraph] Z1010 Beneficiaries of Retirement Plan — The benefits of the
retirement plan are designed for those who have devoted their live to the work of
the Seventh-day Adventist Church and are eligible to retire for reasons of old age
and/or disability.
xxx xxx xxx
[Paragraph] Z1025 Termination of Benefits — The benefits shall terminate with the
decease of the beneficiary, except where there is an eligible surviving spouse
and/or children. 2
On the basis of these two provisions, the trial court ruled in favor of petitioner. In its own
words:
Going over the aforecited provisions in the Retirement Plan of defendant church, it
is very clear that the benefit of retirement provided therein are designed for those
who have devoted their lives to the work of the SDA. The word "have" in the quoted
provision refers to past acts rendered by the retiree to the defendant church. There
is no doubt that plaintiff has devoted his life to the service. That is the reason he is
qualified to receive the retirement benefit.
The second quoted provision does not impose any other cause of termination of the
benefit except the death of the beneficiary. Since there is no other condition that is
attached to the same except the death of the beneficiary, then the plaintiff must be
entitled to receive the benefits provided. The retirement benefit is not conditional,
but rather it is for past service that have already that have already been rendered.
The grant of retirement benefit is absolute since it is a reward for one who has
devoted his life to the defendant church up to the time plaintiff retired. 3
The above declaration was, however, refuted by the Court of Appeals when it stated in
its decision that:
In the first place, its ruling that the wording of paragraph Z1010 — that by using the
word "have," both parties intended to refer to past acts rendered by the retiree to
the Church — is erroneous. The provision was couched in the present tense, the
word "have" being used as an auxiliary verb prefixed to the past participial form of
the verb "devote." It is an elementary rule in grammar that the present perfect tense
is sued to refer to an action or condition that began in the past and continues to the
present or has just been completed. Such being the case, the SDA's argument that
a member must maintain loyalty and fealty to the Church for him to continue to
qualify for benefits gains ground. The use of word "lives" also implies that the
beneficiary devoted all of his life not just a part of it, to the work of the Church. On
the hand, the word "work", instead of "service," connotes the ministry of the Church,
to which one can be devoted by loyalty, if no longer active participation. 4
Furthermore, the Court of Appeals considered of great significance the fact that
petitioner had been "disfellowed" and expelled by SDA. Citing American Jurisprudence,
the appellate court held that:
It may preliminary be observed that the profession of priest or minister of any
denomination is held subject to its laws; he acquires it by compact, and is not
exempt from the proper discipline and authority of his church. A minister, in the legal
point of view, is a voluntary member of the association to which he belongs. The
position is not forced upon him; he seeks it. He accepts it with all its burdens and
consequences, with all the rules and laws and canons subsisting or to be made by
competent authority, and may, at pleasure and with impunity, abandon it. While a
member of the association, however, and having a full share in the benefits resulting
therefrom, he should adhere to its discipline, conform to its doctrines and mode of
worship, and obey its laws and canons.
The continuance, powers, and emoluments of a priest or minister depend on the
will of the church, and the sentence of the church judicatory in a proper case
deprives him of the position and the right to further salary or emoluments; hence,
upon the dissolution or suspension of the pastoral relation, or upon the expulsion of
a priest or minister from a pastorate, all right to further salary ceases.
xxx xxx xxx
Retirement has been defined as a withdrawal from office, public station, business,
occupation, or public duty. 6 It is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee whereby the latter, after reaching
a certain age, agrees and/or consents to sever his employment with the former. 7 In this
connection, the modern socio-economic climate has fostered the practice of setting up
pension and retirement plans for private employees, initially through their voluntary
adoption by employers, and lately, established by legislation. Pension schemes, while
initially humanitarian in nature, now concomitantly serve to secure loyalty and efficiency
on the part of employees, and to increase continuity of service and decrease the labor
turnover, by giving to the employees some assurance of security as they approach and
reach the age at which earning ability and earnings are materially impaired or at an
end. 8
It must be noted, however, that the nature of the rights conferred by a retirement or
pension plan depends in large measure upon the provisions of such particular plan.
The Labor Code provides:
Art. 287. Retirement. — Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements. . .
xxx xxx xxx
From the above, it can be gleaned that employer and employee are free to stipulate on
retirement benefits, as long as these do not fall below the floor limits provided by law.
Again, it has been held that "pension and retirement plans create a contractual
obligation in which the promise to pay benefits is made in consideration of the continued
faithful service of the employee for the requisite period. 9 In other words, before a right
to retirement benefits or pension vests in an employee, he must have met the stated
conditions of eligibility with respect to the nature of employment, age, and length of
service. This is a condition precedent to his acquisition of rights thereunder.
Under the SDA's theory, however, the right to a pension never really vests in an
employee, there being no fixed period for eligibility for retirement. The SDA insists that
an employee must "devote his life to the work of the Seventh-day Adventist Church"
even after retirement to continue enjoying retirement benefits. There is, thus, no definite
length of service provided as the SDA can withdraw retirement benefits at any time
after "retirement," if it determines that a "retired employee" is not devoting his life to the
work of the church. Furthermore, the SDA's eligibility requirement as to length of service
is even more stringent than that required by law. Under the Labor Code, "an employee
upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared the compulsory retirement age, who has served or least five
(5) years in the said establishment may retire and shall be entitled to retirement pay. .
." Under the law, service for five years is enough to entitle an employee who meets the
requisite age to retirement benefits. However, the SDA would require its employees to
serve it for all his lifetime. It must he noted that petitioner has served the SDA for thirty-
four (34) years.
Likewise, the SDA's theory negates the very concept of retirement. As earlier defined,
retirement means to withdraw from one's office, occupation, or duty. To require
petitioner to continue "devoting his life to the work of the Seventh-day Adventist Church"
would mean that petitioner never really withdraws from his office or occupation, that of
working for the church. It is an oxymoron to retire an employee and yet require him to
continue working for the same employer. This Court cannot, thus, give its imprimatur to
SDA's theory. We rule that the conditions of eligibility for retirement must be met at the
time of retirement at which juncture the right to retirement benefits or pension, if the
employee is eligible, vests in him.
In the present case, petitioner was adjudged by the SDA in 1983, to be qualified for
retirement, such that when it began paying petitioner retirement benefits in said year, it
must have been convinced that petitioner had "devoted his life to the work of the
Seventh-day Adventist Church." Having arrived at such a conclusion, it may not now
reverse this finding to the detriment of petitioner.
Furthermore, pension and retirement plans, in line with the Constitutional mandate of
affording full protection to labor, 10 must be liberally construed in favor of the employee,
it being the general rule that pension plans formulated by an employer are to be
construed most strongly against the employer. 11 Hence, where two constructions of a
retirement plan me possible, one of which requires the retiree to devote his life to the
service of the church even after retirement, and the other of which sanctions the
severance by the retiree of his employment thereto at retirement, this Court will not
hesitate to adopt the latter interpretation.
Bolstering this conclusion is this Court's observation in UST Faculty Union v.
NLRC 12 that "upon the. . . retirement of an employee or official in the public or private
service his employment is deemed terminated." With the termination of employment,
the right of the employer to control the employee's conduct, the so-called "control test"
also terminates; hence, after retirement, the SDA may no longer require petitioner to
devote his lift to the work of the church, it having lost control over its erstwhile employee.
Given the above disquisition, it can he seen that the importance placed by the appellate
court on petitioner's excommunication and "disfellowship" is misplaced. While it is true
that "upon the expulsion of a priest or minister from a pastorate, all right to further salary
cases," 13 this presupposes that the priest or minister is still on "active duty," so to
speak. Here, petitioner has already retired. Hence, he already had a vested right to
receive retirement benefits, a right which could not be taken away from him by
expulsion or excommunication, this not being a ground for termination of retirement
benefits under the SDA's retirement plan. In fact, under paragraph Z1025 of the SDA's
General Conference Working Policy, retirement benefits terminate only with the
decease of the beneficiary, an event which has not yet transpired here. The SDA must,
thus, pay petitioner his retirement benefits despite his establishment of a rival church
and his excommunication.
Again, while paying retirement benefits to petitioner may be odious and abhorrent to
the SDA, in the absence of any other stipulation for the termination of petitioner's
retirement benefits, the SDA must comply with its contractual obligations, the contract
being the law between the parties. As correctly pointed out by the trial court:
While what plaintiff is doing may be inimical, despicable or repulsive to the view of
defendant, it is of no consequence. Dura lex sed lex, the law is hard but that is the
law. Since the only condition for the termination of the same is death of (sic)
beneficiary, then the defendant cannot legally cut off what is due to the plaintiff. 14
In refutation of this point, the appellate court declared that:
[I]t is not only death which would terminate receipt of benefits under the retirement
plan, as per paragraph Z1025 of the GCWP; to this extent, the covenant must be
deemed subject to the implied condition that the beneficiary continues to be a
member in good standing of the church. The Court believes that such an
understanding is inherent in every relationship between the believer and his
church. 15
Obviously, the SDA would have petitioner cease and desist from organizing and
running a rival church. This is analogous to provisions limiting or prohibiting a retiree or
pensioner from engaging in a competitive business or accepting employment with a
business competitor, a clause not infrequently found in private retirement or pension
plans. The SDA, however, chose not to include such a provision in its General
Conference Working Policy. For its lack of foresight, it now seeks to extricate itself from
a messy situation through the assistance of the Court. This Court's pronouncement
in Vales v. Villa 16 seems particularly apropos:
 Courts cannot follow [a person] every step of his life and extricate him from bad
bargains, protect him from unwise investments, relieve him from one-sided
contracts, or annul the effects of foolish acts. Courts cannot constitute themselves
guardians of persons who are not legally incompetent. Courts operate not because
one person has been defeated or overcome by another, but because he has been
defeated or overcome illegally. Men may do foolish things, make ridiculous
contracts, use miserable judgment, and lose money by them — indeed, all they
have in the world; but not for that alone can the law intervene and restore. There
must be, in addition, a violation of law, the commission of what the law knows as an
actionable wrong, before the courts are authorized to lay hold of the situation and
remedy it.
Petitioner's establishment of a rival church hardly qualifies as an actionable wrong. In
fact, it is a perfectly legitimate exercise of one's freedom of religion enshrined in our
Constitution.
WHEREFORE, premises considered, the decision of the Court of Appeals dated March
19, 1998 is hereby REVERSED and SET ASIDE and the decision of the trial court dated
July 10, 1996 AFFIRMED in toto. No pronouncement as to costs.1âwphi1.nêt
SO ORDERED.
Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.
Purisima, J., Did not participate in the deliberations.
Footnotes
1 Rollo, p.30.
2 Ibid., p. 24.
3 Ibid., p. 29.
4 Ibid., p. 25.
5 Ibid., p. 24, citing 66 AmJur 2d. Religious Societies, § 28.
6 Webster's Third New International Dictionary.
7 Soberano v. Secretary of Labor, 99 SCRA 558 (1980).
8 60 AmJur 2d. Pension and Retirement Funds § 73.
9 Ibid., § 74.
10 Const., Art. XIII, Section 3.
11 Frietzsche v. First Western Bank and Trust Co., 336 P2d 589.
12 188 SCRA 400 (1990).
13 Rollo, p. 25.
14 Ibid., p. 30.
15 Ibid., p. 25-26.
16 35 Phil. 769 (1916).