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Aguilar vs. Burger Machine Holdings Corporation

*
G.R. No. 172062. October 30, 2006.

LORENZO MA. D.G. AGUILAR, petitioner, vs.


BURGER MACHINE HOLDINGS CORPORATION,
OSCAR E. RODRIGUEZ and MELCHOR V. DE
JESUS, JR., respondents.

Labor Law; Constructive Dismissals; Words and Phrases;


Constructive dismissal exists as an involuntary resignation
on the part of the employee due to the harsh, hostile and
unfavorable conditions set by the employer—it is an act
amounting to dismissal but made to appear as if it were not—
a dismissal in disguise.—Constructive dismissal exists as an
involuntary resignation on the part of the employee due to
the harsh, hostile and unfavorable conditions set by the
employer. In other words, it is an act amounting to dismissal
but made to appear as if it were not. In fact, the employee
who is constructively dismissed may be allowed to keep on
coming to work. Constructive dismissal is therefore a
dismissal in disguise. It is brought about where there is clear
discrimination, insensibility or disdain by an employer and
this becomes unbearable to the employee. The law recognizes
and resolves this situation in favor of employees in order to
protect their rights and interests from the coercive acts of the
employer. Whereas valid termination by the employee under
Art. 285 of the Labor Code contemplates such act to be
voluntary, an employee who is forced to relinquish the
position held through the employer’s unfair or unreasonable
acts is deemed to have been illegally terminated or

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discharged, as such the termination is implied to be


involuntary.
Same; Same; Transfers; For a transfer not to be
considered a constructive dismissal, the employer must be
able to show that such transfer is not unreasonable,
inconvenient, or prejudicial to the employee.—In constructive
dismissal cases, the employer has the burden of proving that
its conduct and action or the transfer of an employee are for
valid and legitimate grounds such as genuine business
necessity. Particularly, for a transfer not to be considered a
constructive dismissal, the employer must be able to show
that such transfer is not unreasonable, inconvenient, or
prejudicial to the employee. Failure of the employer to
overcome this burden of proof, the em-

_______________

* FIRST DIVISION.

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Aguilar vs. Burger Machine Holdings Corporation

ployee’s transfer shall no doubt be tantamount to


constructive dismissal.
Same; Same; Same; Due Process; While the due process
required by law is applied to dismissal cases, the same is also
applicable to the instant controversy where no reason was
stated why the employee was directed to turn over his
responsibilities to somebody else because it affects the status
and right of said employee to security of tenure.—In the
instant case, Burger Machine failed to discharge this burden.
The labor tribunals below correctly found that the
combination of the harsh actions of respondents rendered the
employment condition of petitioner hostile and unbearable
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for the following reasons: First, in the March 7, 2002


Memorandum of De Jesus, no reason was stated why
petitioner was directed to turn over BMNC to Centino. While
the due process required by law is applied to dismissal cases,
the same is also applicable to the instant controversy because
it affects the status and right of petitioner to security of
tenure. Note that the same Memorandum did not inform
petitioner of his next assignment thereby placing him in a
floating status. Burger Machine belatedly claimed in its
position paper that petitioner was relieved of his position
because of gross inefficiency. If this is the case, the action of
respondents was thus punitive in nature. With more reason
therefore that the ground for the turn over should be stated
in the Memorandum to apprise him of the cause of such
punitive action. This omission of the company is a trespass
not only of petitioner’s due process rights but also of the basic
respect and professional courtesy due him as an employee.
Same; Same; Same; The test of constructive dismissal is
whether a reasonable person in the employee’s position would
have felt compelled to give up his position under the
circumstances.—The test of constructive dismissal is whether
a reasonable person in the employee’s position would have
felt compelled to give up his position under the
circumstances. Based on the factual considerations in the
instant case, we hold that the hostile and unreasonable
working conditions of petitioner justified the finding of the
Labor Arbiter and the NLRC that petitioner was
constructively dismissed. Petitioner’s performance may not
have been exceptional as he ranked 14th in the quality food
service control survey for the 1st quarter of 2002. But he was
certainly not grossly inefficient as Burger Machine pictured
him to be. In fact, he received several citations and was able
to comply

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Aguilar vs. Burger Machine Holdings Corporation


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with the directive to reduce his shortages for the month of


November 2001. From all indications, there is really no
ground to dismiss petitioner for gross inefficiency. And, as
Burger Machine saw it, the only way to get rid of the latter
was to constructively dismiss him.
Same; Same; Damages; Moral damages may be recovered
only where the dismissal of the employee was tainted by bad
faith or fraud, or where it constituted an act oppressive to
labor, and done in a manner contrary to morals, good
customs, or public policy, while exemplary damages are
recoverable only if the dismissal was done in a wanton,
oppressive, or malevolent manner.—Petitioner was properly
awarded moral and exemplary damages. Moral damages may
be recovered only where the dismissal of the employee was
tainted by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to morals,
good customs, or public policy while exemplary damages are
recoverable only if the dismissal was done in a wanton,
oppressive, or malevolent manner. These damages, however,
are not intended to enrich petitioner and should therefore be
reduced to P50,000.00 each.

PETITION for review on certiorari of a decision of the


Court of Appeals.

The facts are stated in the opinion of the Court.


          Jandoc, Flores, Manuel Law Offices for
petitioner.
     Redemberto R. Villanueva for respondents.

YNARES-SANTIAGO, J.:

Assailed1 in this petition is the December 20, 2005


Decision of the Court of Appeals in CA-G.R. SP No.
87910 which declared that petitioner Lorenzo Ma. D.G.
Aguilar was not constructively
2
dismissed; and which
set aside the May 27, 2003

_______________

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1 Rollo, pp. 51-67. Penned by Associate Justice Portia Aliño


Hormachuelos and concurred in by Associate Justices Mariano C.
Del Castillo and Magdangal M. De Leon.
2 Id., at pp. 71- 92. Penned by Labor Arbiter Melquiades Sol D.
Del Rosario.

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Aguilar vs. Burger Machine Holdings Corporation

Decision of the Labor


3
Arbiter as well as the May 25,
2004 Resolution of the National Labor Relations
Commission (NLRC) both holding that petitioner was
constructively dismissed.
The facts show that respondent Burger Machine
Holdings Corporation (Burger Machine) is a domestic
corporation engaged in the business of food service.
Respondents Caesar B. Rodriguez, Fe Esperanza S.
Rodriguez, and Melchor V. De Jesus, Jr., (De Jesus)
are Burger Machine’s Chairperson, President, and
Vice-President, respectively.
On September 26, 2000, Burger Machine hired
petitioner as a Strategic Business Unit Manager
Trainee. On March 26, 2001 he was regularized and
assigned as Profit Center Manager of the Burger
Machine North Corporation (BMNC) and the overseer
of the Central Luzon Food Corporation (CLFC) and the
Eastern Luzon Food Corporation (ELFC). He was
likewise tasked to spearhead the expansion of their
outlets in Baguio City.
On June 26, 2001, petitioner was commended for his
valuable assistance and guidance4
to the trainee
managers of CLFC and ELFC. This was followed by
another commendation on July 6, 2001 for his guidance
to the trainee-manager of CLFC in achieving the
following: (a) highest NIBT as of May; (b) 2nd Best
ROI; (c) 3rd Highest ADS; (d) 3rd Highest Sales

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Growth as of May; (e) January—May Bad Debts of .5% 5


of Net Sales; and (f) Fastest Expanding Profit Center.
On October 9, 2001, however, Burger Machine
released the results of the audit of BMNC’s operation
showing that petitioner had not complied with the
company’s purchasing system policy manual and that
he made several purchases, the

_______________

3 Id. at pp. 93-108. Penned by Presiding Commissioner Raul T.


Aquino and concurred in by Commissioner Victoriano R. Calaycay.
4 Id., at p. 683.
5 Id., at p. 684. The meaning of the abbreviated items is not found
in the records.

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Aguilar vs. Burger Machine Holdings Corporation

amounts6 of which were beyond his authority to


approve. In reply thereto, petitioner attributed the
lapses in the approval of purchases to the lack of
information on the standard operating procedures of
the company.
On October 17, 2001, De Jesus directed petitioner to
cease from overseeing the CLFC and ELFC and to
concentrate on BMNC “to resolve faster all critical
problems such as 7
shortages, low ADS, low promo
compliance, etc.” On November 19, 2001, De Jesus
ordered him to reduce his gross sales 8shortages to 1%
or less by the end of November 2001. Petitioner was
able to reduce this shortage
9
to as low as 0.86% for the
month of November.
At the end of the year 2001, petitioner did not
receive his 14th month pay bonus of P35,000.00 while
the amount of P15,291.00 representing the alleged
unauthorized expenses was deducted from his salary.

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On March 7, 2002, De Jesus ordered petitioner to


turn over BMNC to Ms. Gloria Centino 10
“starting
March 12 up to the end of March.” No reason was
stated in the directive, neither was a new assignment
given to petitioner, thus he wrote a letter to
respondent Caesar B. Rodriguez, seeking an
explanation for the actions of De Jesus, to wit:

“Considering that my accomplishments and contribution to


the company have been acknowledged by my superiors, and
my colleagues as well, it is a puzzle to me why Sir [De Jesus]
—in a series of dialogues I have had with him since
September 2001—conveyed, reiterated, and insisted that I
resign under your strict and unbending personal
instructions. This turn of events have caused me and my
whole family: many sleepless night, anxiety, stress, and
tremendous pressure. Today, tragedy struck my whole family
when my wife lost our fourth child, a baby daughter, five-
months on the way to

_______________

6 Id., at pp. 689-691.


7 Id., at p. 694.
8 Id., at p. 700.
9 Id., at p. 701.
10 Id., at p. 706.

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maternity. I have, however, continued to give my best and


undivided service and commitment to my job and to the
company, in spite of the constant fear11that at anytime, I may
have to leave my job against my will.”

After the turn over of BMNC, petitioner went on an


approved leave of absence. On April 23, 2002, he was
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appointed as Profit Center Manager of Tatyana Foods


Corporation (TFC), a new project of Burger Machine to
be established in La Union,
12
Ilocos Sur, Ilocos Norte,
Cagayan and Isabela. Petitioner accepted the
appointment and started scouting for the area in
connection with the business plan.
On May 14, 2002, De Jesus informed petitioner that
he would instead be transferred to the National
Capital Region (NCR) to oversee the operations of the
People’s Dimsum (PD). On May 17, 2002, petitioner
figured in an accident while on his way to De Jesus’
office in Metro Manila. He was thus hospitalized and
was constrained to go on leave. He requested for cash
advance and financial assistance from the company for
his medical expenses but was denied.
On July 5, 2002, petitioner reported for work. On
July 16, 2002, De Jesus issued a memorandum
directing him to report at the Epifanio de los Santos
Avenue (EDSA) office of Burger Machine on July 13
17,
2002 and onwards from 9:00 a.m. up to 6:00 p.m.
On July 17, 2002, petitioner filed a complaint for
constructive dismissal contending that the totality of
respondents’ conduct constitutes harassment aimed to
pressure him to resign from his job. Respondents, on
the other hand, alleged that the transfer of the BMNC
operations to Centino was due to petitioner’s repeated
failure to achieve the passing rate for quality food
service control; that despite of this gross inefficiency,
he was given a new assignment; that the delay in

_______________

11 Id., at p. 707.
12 Id., at p. 714.
13 Id., at p. 270.

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Aguilar vs. Burger Machine Holdings Corporation
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assigning him to a new Profit Center was due to his


irregular attendance; that he was not able to assume
his responsibility as Profit Center Manager of TFC
because of his failure to go back to work and his
unreasonable demands; and that petitioner’s continued
absence prompted them to 14assign him at the EDSA
office starting July 17, 2002.
In its decision dated May 27, 2003, the Labor
Arbiter ruled that petitioner was constructively
dismissed and that respondent corporate officials of
Burger Machine are solidarily liable with the latter for
petitioner’s monetary awards. The dispositive portion
thereof, reads:

“CONFORMABLY WITH THE FOREGOING, judgment is


hereby rendered finding complainant to have been illegally
dismissed albeit constructively. Consequently, he should be
reinstated immediately as Profit [Center] Manager and paid
by respondent[s] in solidum, his backwages, which as of May
16, 2003 has already accumulated in the sum of P350,000.00.
In addition respondents, are solidarily ordered to pay
complainant,

a) His 14th month pay for 2002;


b) P500,000.00 as moral damages[;]
c) P350,000.00 as exemplary damages; and
d) 10% of the money awards for and as attorney’s fees.
15
SO ORDERED.”

The foregoing decision was affirmed by the NLRC in


its resolution dated May 25, 2004. Respondents filed a
motion for reconsideration but was denied on
September 17, 2004. On petition to the Court of
Appeals, the latter reversed the finding of the NLRC
and held that there was no constructive dismissal
because petitioner’s transfer to PD was without change
in rank and salary and was not shown to be humiliat-

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_______________

14 Id., at pp. 253-254.


15 Id., at pp. 91-92.

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Aguilar vs. Burger Machine Holdings Corporation

ing and prejudicial to petitioner. The decretal portion


thereof, states:

“WHEREFORE, upon the premises, the petition is


GRANTED and the Decision dated May 27, 2003 of the Labor
Arbiter, the [Resolution] dated May 25, 2004, and the
Resolution dated September 17, 2004 of the NLRC are
REVERSED and SET ASIDE. Private respondent’s
Complaint for constructive
16
dismissal is DISMISSED.
SO ORDERED.”

Hence, the instant petition.


The issue for resolution is whether petitioner was
constructively dismissed.
The Court rules in the affirmative.
Constructive dismissal exists as an involuntary
resignation on the part of the employee due to the
harsh, hostile and unfavorable conditions set by the
employer. In other words, it is an act amounting to
dismissal but made to appear as if it were not. In fact,
the employee who is constructively dismissed may be
allowed to keep on coming to work. Constructive
dismissal is therefore a dismissal in disguise. It is
brought about where there is clear discrimination,
insensibility or disdain by an employer and this
becomes unbearable to the employee. The law
recognizes and resolves this situation in favor of
employees in order to protect their rights and interests
from the coercive acts of the employer. Whereas valid
termination by the employee under Art. 285 of the

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Labor Code contemplates such act to be voluntary, an


employee who is forced to relinquish the position held
through the employer’s unfair or unreasonable acts is
deemed to have been illegally terminated or
discharged, 17as such the termination is implied to be
involuntary.

_______________

16 Id., at p. 66.
17 Globe Telecom, Inc. v. Florendo-Flores, G.R. No. 150092,
October 20, 2003, 390 SCRA 201; SC E-Library.

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Aguilar vs. Burger Machine Holdings Corporation

In constructive dismissal cases, the employer has the


burden of proving that its conduct and action or the
transfer of an employee are for valid and legitimate
grounds such as genuine business necessity.
Particularly, for a transfer not to be considered a
constructive dismissal, the employer must be able to
show that such transfer is not unreasonable,
inconvenient, or prejudicial to the employee. Failure of
the employer to overcome this burden of proof, the
employee’s transfer shall
18
no doubt be tantamount to
constructive dismissal.
In the instant case, Burger Machine failed to
discharge this burden. The labor tribunals below
correctly found that the combination of the harsh
actions of respondents rendered the employment
condition of petitioner hostile and unbearable for the
following reasons: First, in the March 7, 2002
Memorandum of De Jesus, no reason was stated why
petitioner was directed to turn over BMNC to Centino.
While the due process required by law is applied to
dismissal cases, the same is also applicable to the
instant controversy because it affects 19the status and
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19
right of petitioner to security of tenure. Note that the
same Memorandum did not inform petitioner of his
next assignment thereby placing him in a floating
status. Burger Machine belatedly claimed in its
position paper that petitioner was relieved of his
position because of gross inefficiency. If this is the case,
the action of respondents was thus punitive in nature.
With more reason therefore that the ground for the
turn over should be stated in the Memorandum to
apprise him of the cause of such punitive action. This
omission of the company is a trespass not only of
petitioner’s due process rights but also of the basic
respect and professional courtesy due him as an
employee.

_______________

18 Philippine Industrial Security Agency Corporation v. Aguinaldo,


G.R. No. 149974, June 15, 2005, 460 SCRA 229, 236.
19 Blue Dairy Corporation v. National Labor Relations
Commission, G.R. No. 129843, September 14, 1999, 314 SCRA 401,
409.

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Aguilar vs. Burger Machine Holdings Corporation

20
Second, petitioner repeatedly claimed that respondent
De Jesus was insisting on his resignation, yet the
latter never denied
21
said allegation in his November 26,
2002 affidavit. This only lends credence to the claim
of petitioner that the constant pressure of De Jesus for
him to quit his job rendered his employment with
Burger Machine unbearable. 22
Third, Burger Machine made an unauthorized
deduction on petitioner’s salary representing the
alleged expenses incurred without authority. The
burden of proving that no such deduction was made
lies with Burger Machine not only because it has
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custody of the records that might establish the same,


but also because as an employer, it is placed in a
position of a debtor who has the onus of establishing
payment of 23
the employee’s salary in full and without
deduction. Hence, its bare denials cannot overcome
the contention of petitioner that such deductions were
made.
Fourth, petitioner was subsequently appointed as
Profit Center Manager of the TFC but Burger Machine
recalled said

_______________

20 Rollo, pp. 707, 709, and 726.


21 Records, pp. 120-123.
22 Article 113 of the Labor Code provides:

ART. 113. Wage Deduction.—No employer, in his own behalf or in behalf of


any person, shall make any deduction from the wages of his employees,
except:

(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in
writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor.

23 Audion Electric Co., Inc. v. National Labor Relations


Commission, 367 Phil. 620, 632-633; 308 SCRA 340, 352-353 (1999).

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Aguilar vs. Burger Machine Holdings Corporation

appointment, again, without stating the reason


therefor, and worse without serving him any formal

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memorandum withdrawing the appointment.


Fifth, he was offered an assignment in the NCR,
specifically as Profit Center Manager of the PD but not
actually appointed as such. Burger Machine averred
that petitioner was ordered to report at the EDSA
office in connection with his PD assignment. However,
no such directive was contained in the July 16, 2002
Memorandum of De Jesus, thus:

“Effective today, 17 July 2002, and onwards, you are


officially expected to report to the undersigned in EDSA
office at 9:00 a.m. up to 6:00 p.m. As has been the Company
policy, you shall be required to log in and log out in the
required Managers’ records in order to get paid. All approval
of leaves and official business must be with the required
days/time of approval by the undersigned, not to mention,
the need for supporting documents to justify the requests.
Lastly, you shall be required to submit yourself to a medical
examination24
by the Company Physician to attest your fitness
for work.”

The foregoing Memorandum is actually a transfer of


petitioner to the EDSA office of Burger Machine which
we find to be oppressive inasmuch as petitioner and his
family are residents of Baguio City. The transfer would
mean that petitioner would be away from his family or
that he would bring 25
his entire family to Manila
entailing expenses. While the Court recognizes the 26
prerogative of an employer to transfer an employee,
we cannot apply the same in the instant case
considering that Burger Machine advanced no
justification or necessity for said transfer.
If the underlying reason for the posting of petitioner
at the EDSA office of Burger Machine was his series of
request for leave of absences, then the proper recourse
is to make him

_______________

24 Rollo, p. 270.

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25 Philippine Industrial Security Agency Corporation v. Aguinaldo,


supra note 18 at p. 236.
26 Id., at pp. 236-237.

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Aguilar vs. Burger Machine Holdings Corporation

explain for said absences and to impose the proper


penalty if necessary. It appears, however, that all said
requests for leave have valid bases, otherwise, they
would not have been approved by Burger Machine.
This only shows that the transfer of petitioner at the
EDSA office was to pressure him and to ultimately
ease him out of the company.
The test of constructive dismissal is whether a
reasonable person in the employee’s position would
have felt compelled to give up his position under the
circumstances. Based on the factual considerations in
the instant case, we hold that the hostile and
unreasonable working conditions of petitioner justified
the finding of the Labor Arbiter and the NLRC that
petitioner was constructively dismissed. Petitioner’s
performance may not have been exceptional as he
ranked 14th in the quality 27food service control survey
for the 1st quarter of 2002. But he was certainly not
grossly inefficient as Burger Machine pictured him to
be. In fact, he received several citations and was able
to comply with the directive to reduce his shortages for
the month of November 2001. From all indications,
there is really no ground to dismiss petitioner for gross
inefficiency. And, as Burger Machine saw it, the only
way to get rid of the latter was to constructively
dismiss him.
The Labor Arbiter and the NLRC’s findings that
petitioner 28
was constructively dismissed are binding on
this Court especially so that the contrary conclusion
of the Court of Appeals was based on the

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misapprehension of the factual antecedents of this


case. The appellate court focused only on the transfer
of petitioner to the PD in the NCR without taking into
consideration the entire factual milieu of the
controversy. Had the Court of Appeals done so, it
would have arrived at the same conclusion as the labor
tribunals below.

_______________

27 Rollo, p. 284.
28 Hda. Dapdap I v. National Labor Relations Commissions, 348
Phil. 785, 790; 285 SCRA 9, 14 (1998).

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Aguilar vs. Burger Machine Holdings Corporation

Anent the solidary liability for the constructive


dismissal of petitioner, the same cannot attach with
respect to respondents Caesar B. Rodriguez and Fe
Esperanza B. Rodriguez, Chairperson and President of
Burger Machine, respectively, considering that no
substantial evidence was presented to prove their
participation in the acts of respondent De Jesus. It was
only the latter who pressured petitioner to relinquish
his position and was the one responsible for the
issuance of the oppressive Memorandum transferring
petitioner to the EDSA office. Liability must likewise
be imputed to Burger Machine. The failure to exercise
proper diligence in the supervision
29
of its employees, is
ultimately its responsibility.
Petitioner was properly awarded moral and
exemplary damages. Moral damages may be recovered
only where the dismissal of the employee was tainted
by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to
morals, good customs, or public policy while exemplary
damages are recoverable only if the dismissal was done
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in a wanton, oppressive, or malevolent manner. These


damages, however, are not intended to enrich
petitioner and 30 should therefore be reduced to
P50,000.00 each.
The award of 14th month pay must be deleted.
Since the payment thereof is not required by law,
substantial evidence showing that Burger Machine has
the customary practice to give the same to its
employees, is necessary. This, petitioner failed to
satisfy.
The award of attorney’s fees is sustained based on
Article 111 of the Labor Code, Section 8, Rule VIII,
Book III of its Implementing Rules, and paragraph 7,
Article 2208 of the Civil Code. In actions for recovery of
wages or where an employee was forced to litigate and
thus incurred expenses to

_______________

29 Globe Telecom, Inc. v. Florendo-Flores, supra note 17.


30 Norkis Trading Co., Inc. v. National Labor Relations
Commission, G.R. No. 168159, August 19, 2005, 467 SCRA 461, 473.

279

VOL. 506, OCTOBER 30, 2006 279


Aguilar vs. Burger Machine Holdings Corporation

protect his rights and interests, a maximum of ten


percent (10%) of the total monetary award by way of
attorney’s fees is justifiable.
WHEREFORE, the December 20, 2005 Decision of
the Court of Appeals in CA-G.R. SP No. 87910 is
REVERSED and SET ASIDE. The May 27, 2003
Decision of the Labor Arbiter finding that petitioner
was constructively dismissed, is REINSTATED with
the following MODIFICATIONS: (a) Respondents
Caesar B. Rodriguez and Fe Esperanza B. Rodriguez
are absolved from personal liability; (b) the award of
14th month pay is deleted; and (c) the awards of moral
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3/16/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 506

and exemplary damages are reduced to P50,000.00


each.
SO ORDERED.

          Panganiban (C.J., Chairperson), Austria-


Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.

Judgment reversed and set aside.

Notes.—The failure of the employer to accept the


employees back after their absence constitutes
constructive discharge or dismissal. (Ala Mode
Garments, Inc. vs. National Labor Relations
Commission, 268 SCRA 497 [1997])
There are no menial jobs, only menial attitudes.
(Arrieta vs. National Labor Relations Commission, 279
SCRA 326 [1997])

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280

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