Labor Law II

G.R. No.
191823, October 05, 2016 - DEE JAY'S INN AND CAFE AND/OR MELINDA
FERRARIS, Petitioners, v. MA. LORINA RAÑESES, Respondent.
PHILIPPINE SUPREME COURT DECISIONS
FIRST DIVISION
G.R. No. 191823, October 05, 2016
DEE JAY'S INN AND CAFE AND/OR MELINDA FERRARIS, Petitioners, v. MA. LORINA
RAÑESES, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court filed by petitioners Dee Jay's Inn and Cafe (DJIC) and Melinda Ferraris (Ferraris)
assailing the following: 1) Decision1 dated April 29, 2009 of the Court of Appeals in CA-G.R. SP
No. 01877- MIN, which set aside the Resolutions dated August 30, 20062 and November 30,
20063 of the National Labor Relations Commission (NLRC) in NLRC CA No. M-009173-06 and
ordered the remand of the case to the Labor Arbiter for the computation of the monetary claims
due respondent Ma. Lorina P. Rañeses who was declared to have been illegally dismissed by
petitioners; and 2) Resolution4 dated February 8, 2010 of the appellate court in the same case,
which denied the Motion for Reconsideration of petitioners and the Motion for Partial
Reconsideration of respondent.
The factual antecedents are as follows:
chanRoblesvirtualLawlibraryPetitioner DJIC started its operation on December 8, 2002. It was

registered under Republic Act No. 9178 or the Barangay Micro Business Enterprises Act.
Petitioner Ferraris, the owner and manager of petitioner DJIC, engaged the services of
respondent and a certain Moonyeen J. Bura-ay (Moonyeen) as cashier and cashier/receptionist,
respectively, for a monthly salary of P3,000.00 each.5chanrobleslaw
Respondent filed before the Social Security System (SSS) Office a complaint against petitioner
Ferraris for non-remittance of SSS contributions. Respondent also filed before the NLRC City
Arbitration Unit (CAU) XII, Cotabato City, a complaint against petitioners for
underpayment/nonpayment of wages, overtime pay, holiday pay, service incentive leave pay,
13th month pay, and moral and exemplary damages, docketed as NLRC CAU Case No. RAB
12-01-00026-05.6chanrobleslaw
After conciliation efforts by the Labor Arbiter failed, the parties in NLRC CAU Case No. RAB 12-
01-00026-05 were ordered to submit their respective position papers. On September 8, 2005,
respondent filed her position paper, which already included a claim for illegal
dismissal.7chanrobleslaw
Respondent averred that sometime in January 2005, she asked from petitioner Ferraris the
latter's share as employer in the SSS contributions and overtime pay for the 11 hours of work
respondent rendered per day at petitioner DJIC. Petitioner Ferraris got infuriated and told
respondent to seek another employment. This prompted respondent to file her complaints
before the SSS Office and NLRC CAU XII. After learning of respondent's complaints, petitioner
Ferraris terminated respondent's employment on February 5, 2005. Respondent submitted the
Joint Affidavit of Mercy Joy Christine Bura-ay (Mercy) and Mea Tormo (Mea) to corroborate her
allegations.8chanrobleslaw
Petitioners countered that respondent and Moonyeen were not terminated from employment.
According to petitioners, petitioner DJIC incurred a shortage of P400.00 in its earnings for
February 4, 2005. That same day, petitioner Ferraris called respondent and Moonyeen for a
meeting but the two employees denied incurring any shortage. Petitioner Ferraris lost her
temper and scolded respondent and Moonyeen, and required them to produce the missing
P400.00. However, respondent and Moonyeen merely walked out and did not report back to
work anymore. To support their version of events, petitioners submitted the affidavit of Ma. Eva
Gorospe (Eva), another employee of petitioners.
Petitioners further claimed that it was respondent herself who requested that the SSS
contributions not be deducted from her salary because it would only diminish her take-home
pay. Thus, respondent received from petitioners the amount of SSS contributions, with the
undertaking that she would comply with the law by paying the SSS premiums herself as self
employed. Respondent recorded her weekly wages and payment of SSS premiums in a
notebook, which had since been missing.9chanrobleslaw
Petitioners additionally averred that since January 2002, respondent had been living in
petitioner Ferraris's ancestral home for free. Petitioner Ferraris even shouldered the cost of
P2,500.00 to have electrical connections installed at the house for the use of respondent and
her family. From 2002 to 2004, petitioner Ferraris admonished respondent several times for
bringing her child to work, which prevented respondent from concentrating on her job at
petitioner DJIC.10chanrobleslaw
On February 21, 2006, the Labor Arbiter rendered a Decision11 in favor of petitioners, but
granted respondent's claim for 13th month pay.
The Labor Arbiter did not give much credence to respondent's charge of illegal dismissal
because there was no positive or unequivocal act on the part of petitioners to support the
assertion that respondent was dismissed, thus:
chanRoblesvirtualLawlibrary
The resolution of this case hinges on our determination of whether or not [respondent] was
illegally dismissed for her to be entitled to her money claims,
xxxx
In her position paper, the [petitioner Ferraris] categorically denied having terminated
[respondent]. The [respondent] after being reprimanded for shortages, she ceased to report for
work on February 5, 2005. This fact is attested to by [petitioners'] witness, a co-employee of the
[respondent] Ma. Eva Gorospe to the effect that [respondent] and coemployee Moonyeen Bura-
ay scolded them for shortages during a meeting on February 5, 2005. The witness attested that
they were not terminated but they did not report for work anymore the following day up to the
present. This gives weight to the fact that in her complaint no illegal dismissal was contemplated
by [respondent].
The records, on the other hand, is (sic) bereft of any evidence linking to the allegation of
dismissal. In fact, there is no positive or unequivocal act on the part of [petitioners] that would
buttressed (sic) a fact that [respondent] was dismissed. Thus, the High Court
said:ChanRoblesVirtualawlibrary
"While the general rule in dismissal cases is that the employer has the burden to prove the
dismissal was for just or authorized causes and after due process, said burden is necessarily
shifted to the employee ifthe alleged dismissal is denied by the employer because a dismissal is
supposedly a positive and unequivocal act by the employer. Accordingly, it is the employee that
bears the burden of proving that in tact he was dismissed An unsubstantiated allegation on the
part of the employee cannot stand as the same offends due process. " (De Paul / King Philip
Customs Tailor, et al vs. NLRC, G.R. No. 129824, Marc;h 10, 1999) Underscoring Ours.
The [respondent] did not controvert the [petitioners'] categorical denial and more, she failed to
demonstrate the burden. As such, the allegations of the [respondent] to the effect that she was
dismissed remains (sic) gratuitous. In fact the High Court in the same vein said:
"The burden of proof lies upon who asserts it, not upon who denies, since by the nature of
things, he who denies a fact cannot produce any proof of it. " (Sevillana vs. LT. International
Corp., et al., POEA-NLRC Case No. L-88-12-1048, 26 March 1991; Aguilar vs. Maning
International Corp., et al., POEA-NLRC Case No. L-88-08-728, October 8, 1990).
In the case at Bench, the positive act and/or the unequivocal act of termination is the Factum
Probandum which the [respondent] miserably failed to demonstrate.12
The Labor Arbiter also pointed out a procedural defect in respondent's charge of illegal
dismissal against petitioners:
Besides, the [respondent] did not aver illegal dismissal as the same was not pleaded in her
verified complaint. She cannot be allowed to prove the same. The rule is clear that the "verified
position papers shall cover only those claims and causes of action raised in the complaint x x x"
(Rule V, Section 4, Par. 2, Rules of Procedure of the NLRC, as Amended). Incidentally, there is
no prooflinking to the allegation of dismissal.13
The Labor Arbiter also noted that petitioner DJIC, as a registered Barangay Micro Business
Enterprise (BMBE), was exempted from the coverage of the Minimum Wage Law.
The Labor Arbiter decreed in the end:
WHEREFORE, premises laid, judgment is hereby rendered dismissing the complaint in the
instant case for lack of.cause of action and for not being impressed with merit.
However, [petitioners] are hereby ordered, jointly and severally, to pay [respondent] the amount
of Five Hundred Pesos (Php500.00) representing 13th month pay
differential.14chanroblesvirtuallawlibrary
At around the same time, Moonyeen lodged before the NLRC CAU XII a complaint against
petitioners for unpaid overtime pay, docketed as RAB 12-01-00031-05. Later on, Moonyeen
similarly contended that she was illegally dismissed by petitioners and demanded the payment
of her salary differential, holiday premium pay, service incentive leave pay, 13th month pay, and
moral damages.15 The Labor Arbiter, in a Decision dated February 20, 2006, subsequently
dismissed Moonyeen's complaint, also finding that Moonyeen miserably failed to demonstrate
the positive or unequivocal act of termination of her employment; but petitioners were liable for
underpayment of Moonyeen's 13th month pay in the amount of P500.00.
Respondent and Moonyeen timely filed their respective appeals before the NLRC, docketed as
NLRC CA Nos. M-009173-06 and M-009174-06. Their appeals were eventually consolidated.
The NLRC issued a Resolution dated August 30, 2006, dismissing the appeals of respondent
and Moonyeen for lack of merit and affirming en toto the Labor Arbiter's Decisions dated
February 20, 2006 and February 21, 2006. The NLRC reasoned:
We uphold the findings of the Labor Arbiter. The records do not reveal of any written document
to show that [respondent and Moonyeen] were indeed dismissed. On the other hand,
[petitioners] vehemently denied having dismissed them. Therefore, under these given facts, to
the [respondent and Moonyeen] is shifted the burden to prove that their dismissal had, in fact,
taken place. The rule as exemplified by the Supreme Court is: "Where the employee was not
notified that he had been dismissed from employment neither was [he] prevented from returning
to his work, there is no illegal dismissal["] (Chong Guan Trading vs. NLRC, 172 SCRA 831). For,
indeed, the records do not bare any positive or unequivocal act of [petitioners] notifying them of
the termination of their services, as observed by the Labor [Arbiter] a quo. It is our view that
[respondent and Moonyeen] miserably failed to establish by substantial evidence that they were
dismissed. Their verbal claim supported by self serving and biased statements of two (2)
witnesses, namely, Mercy Buraay and Mea Tormon, who like them have an ax to grind being
complainants themselves against the same [petitioners], did not substantially prove their case.
[Respondent and Moonyeen] did not deny [petitioners'] allegation that they x x x were also the
witnesses of Mercy Bura-ay and Mea Tormon in a separate case the latter filed against the
same [petitioners]. Thus, we find more expressive of truth the verbal declaration of [petitioners],
supported by a sworn statement x x x of one witness, Eva Gorospe, that after [respondent and
Moonyeen] were reprimanded, made to explain and produce the Php400:00 shortage of their
daily collection, they voluntarily ceased to report to work anymore. We emphasize, it is not
shown in the records that Gorospe was motivated by ill-will or was coerced by the [petitioners]
into executing her sworn statement. [Respondent and Moonyeen] did not dispute that they were
investigated by [petitioner Ferraris] on February 4, 2005 regarding shortages of their collections.
Such investigation cannot by any stretch of imagination be considered dismissal of the
[respondent and Moonyeen]. On the contrary, we can only surmise that the investigation
generated a force compelling enough for [respondent and Moonyeen] to quit working [for
petitioners]. Their failure to report for work is an act they alone must bear the consequences of.
By their own act, they bargained away their security of tenure under the law.
[Respondent and Moonyeen's] money claims of overtime pay, holiday pay and service incentive
leave pay must likewise fail. Overtime pay and holiday pay are some of the extraordinary claims
the burden of proof of which is shifted to the worker who must prove he rendered overtime work
or that he worked during holidays (Julio Cagampan, et al. vs. NLRC, et al., 195 SCRA 533). No
proof is placed on record by [respondent and Moonyeen] to prove their claimed overtime and
holiday work. [Respondent and Moonyeen] cannot also avail of entitlement of service incentive
pay under Article 95 of the Labor Code who regularly employs more than ten (10) workers.
Section 1, Rule of Book III of the Implementing Rules of the Labor Code explicitly exempts
establishments regularly employing less than ten (10) workers from the coverage of the said
provision. Employing less than ten (10) workers, [petitioners are] thus exempted under the law.
However, we see no reason to disturb the award of 13th month pay. This is an admitted claim
and the [respondent and Moonyeen] must be entitled to the same.16
Respondent filed a Motion for Reconsideration which was denied by the NLRC in a Resolution
dated November 30, 2006.
Respondent sought recourse from the Court of Appeals by filing a Petition for Certiorari,
imputing grave abuse of discretion on the part of the NLRC in its issuance of the Resolutions
dated August 30, 2006 and November 30, 2006 in NLRC CA No. M-009173-06. The Petition
was docketed as CA-G.R. SP No. 01877-MIN.
In its Decision d ted April 29, 2009, the Court of Appeals granted respondent's Petition.
On the basis that any doubt should be resolved in favor of labor, the Court of Appeals held that
respondent was illegally dismissed:
We are constrained to review [NLRC's] exercise of its discretion in affirming the Labor Arbiter's
findings on abandonment because such conclusion does not appear to have been substantially
proved and the same is repugnant to both law and jurisprudence.
The Labor Arbiter, relying on the alleged ruling in De Paul, contended that the employee has the
burden to prove the fact of dismissal when such dismissal was denied by the employer, as when
the defense of the employee's abandonment was interposed. Thus, in refusing to consider
[respondent's] cause of action for illegal dismissal, the Labor Arbiter found that [respondent]
miserably failed to demonstrate any such positive or unequivocal act on the part of Ferraris m
terminating [respondent].
Reliance on De Paul seemed imprudent and misplaced, if not, devious because De Paul was
indefensibly misquoted in the Labor Arbiter's Decision, in that the alleged ruling as quoted
therein does not appear in the original printed text of the case in Volume 3[0]4 of the Supreme
Court Reports Annotated (SCRA), pages 448-459.
Furthermore, the Labor Arbiter's contention on the shifting of the burden of proof is incongruous
with prevailing jurisprudence which requires the concurrence of two (2) elements before an
employee may be guilty of abandonment. The first is the failure to report for work or absence
without valid or justifiable reason. The second is a clear intention to sever the employer-
employee relationship. The second element is the more determinative factor and must be
evinced by overt acts. Likewise, the burden of proof is on the employer to show the employee's
clear and deliberate intent to discontinue his employment without any intention of returning;
mere absence is not sufficient.
We agree with the observation that the joint testimony of Mercy Bura-ay and Mea Torno in favor
of [respondent], apparently returning a favor to [respondent] who also testified for Bura-ay and
Torno in a separate labor case against Ferraris, is tainted with bias and, thus, cannot credibly
and substantially prove the fact of [respondent's] alleged dismissal. However, neither should the
testimony of Eva Gorospe, Ferraris's lone witness, deserve much probative weight in proving
that [respondent] abandoned her job because mere failure to report back to work on the part of
[respondent], as Gorospe testified, falls short of the substantial evidence required in proving the
existence of abandonment.
Therefore, the Labor Arbiter, as well as [the NLRC], failed to appreciate that doubts shroud the
evidence presented by both parties, and both tribunals appeared oblivious of the dictates of
jurisprudence that such doubts should be resolved in favor of the worker, as was pronounced in
Nicario v. NLRC, et al.:ChanRoblesVirtualawlibrary
"It is a well-settled doctrine, that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. 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 writing should be resolved in the
former's favor. The policy is to extend the doctrine to a greater number of employees who can
avail of the benefits under the law, which is in consonance with the avowed policy of the State to
give maximum aid and protection of labor."
The foregoing doctrine should be applied in this case, especially since Ferraris did not prove by
substantial evidence a clear and deliberate intent on the part of [respondent] to discontinue her
employment without any intention of returning.
Furthermore since there is an equipoise of evidence, as there is doubt as to where the evidence
of the parties tilt, Ferraris, the employer who has the burden of proving not only abandonment
but more importantly just cause for dismissal, is deemed to have failed in discharging such
burden.
Thus, We find no legal impediment in ruling that [respondent] was in fact terminated and such
termination was done illegally or without any valid cause, and in patent violation of the
procedural requirements of due process, anchored upon Ferraris's failure to discharge her
burden of proving abandonment by [respondent], including, as a corollary, the burden of proving
just cause for [respondent's] termination. In view of [respondent's] allegation that she was
dismissed on February 5, 2005, We shall reckon [respondent's] dismissal on said date.17
(Citations omitted.)
The Court of Appeals, citing Rule V, Section 7(b) of the 2005 Rules of Procedure of the NLRC
and Tegimenta Chemical Phils. v. Buensalida,18 also ruled that the filing of the position paper
was the operative act which foreclosed the raising of other matters constitutive of the cause of
action; and respondent, by averring facts constituting her alleged dismissal in her position
paper, had properly pleaded a cause of action for illegal dismissal, which should have been
given cognizance by the Labor Arbiter.
For being illegally dismissed, the Court of Appeals found respondent entitled to the following:
Corollary to our finding that [respondent] was in fact illegally terminated, [petitioners] should be
ordered to reinstate [respondent] without loss of seniority rights and other privileges, or, in case
reinstatement would no longer be feasible, to pay [respondent] separation pay equivalent to one
(1) month salary for every year of service, with payment in either cases of [respondent's] full
backwages, inclusive of allowances, and her other benefits or their monetary equivalent,
computed from February 5, 2005, the date [respondent] was illegally dismissed, up to the time
of her actual reinstatement.
With respect [to] the other monetary claims, We find no cogent reason to disturb the ruling of the
Labor Arbiter in awarding [respondent] only the amount of Php500.00 representing
[respondent's] 13th month pay differential.19
The dispositive portion of the judgment of the Court of Appeals reads:
WHEREFORE, premises considered, the petition is GRANTED. The Resolution promulgated on
August 30, 2006 by [the NLRC], affirming in toto the February 21, 2006 Decision of the Labor
Arbiter dismissing [respondent's] complaint, including the November 30, 2006 Resolution
denying a motion for reconsideration thereof, are SET ASIDE. The case should be remanded to
the Labor Arbiter for the proper computation of the monetary awards due to [respondent] as a
result of her illegal dismissal. The Labor Arbiter's grant of an award in the amount of Php500.00,
representing [respondent's] 13th month pay differential, is maintained.20
Petitioners and respondent filed a Motion for Reconsideration and Motion for Partial
Reconsideration, respectively, which were both denied by the Court of Appeals in a Resolution
dated February 8, 2010.
Petitioners now come before this Court via the instant Petition for Review on Certiorari
assigning a couple of errors on the part of the Court of Appeals, viz.:
THE COURT OF APPEALS ERRED IN CONCLUDING THAT A CAUSE OF ACTION
BELATEDLY INCLUDED IN THE POSITION PAPER AND NOT ORIGINALLY PLEADED IN
THE COMPLAINT CAN STILL BE GIVEN COGNIZANCE.
THE COURT OF APPEALS ERRED IN FINDING THAT THE NLRC ACTED WITH GRAVE
ABUSE OF DISCRETION ON THE BASIS THAT THE DECISION LACKED FACTUAL PROOF
AND ALSO IGNORED ESTABLISHED JURISPRUDENCE.21
Petitioners argue that the present case is governed by the 2005 NLRC Rules of Procedure,
which had already supplanted the 2002 NLRC Rules of Procedure. Under the 2005 NLRC Rules
of Procedure, only the causes of action that were pleaded in a complaint would be entertained.
Petitioners, in addition, assert that respondent was not dismissed from employment; instead,
respondent did not report for work anymore after petitioner Ferraris scolded respondent and
Moonyeen on February 4, 2005 regarding the P400.00 shortage in the earnings of petitioner
DJIC for the day. Petitioners insist that they never used "abandonment" as a defense in the
termination of respondent's employment; and they merely alleged that respondent never
returned to work anymore after the scolding incident.
The Court first addresses the procedural issue raised by petitioners.
The record shows that respondent filed her complaint sometime in January 2005 and position
paper on September 8, 2005. During said period, the 2002 NLRC Rules of Procedure, as
amended by NLRC Resolution No. 01-02, was still in effect. The 2005 Revised Rules of
Procedure of the NLRC only took effect on January 7, 2006.22chanrobleslaw
Section 4, Rule V of the 2002 NLRC Rules of Procedure, as amended, provides:
Section 4. Submission of Position Papers/Memoranda. - Without prejudice to the provisions of
the last paragraph, Section 2, of this Rule, the Labor Arbiter shall direct both parties to submit
simultaneously their position papers with supporting documents and affidavits within an
inextendible period of ten (10) days from notice of termination of the mandatory conference.
These verified position papers to be submitted shall cover only those claims and causes of
action raised in the complaint excluding those that may have been amicably settled, and shall
be accompanied by all supporting documents including the affidavits of their respective
witnesses which shall take the place of the latter's direct testimony. The parties shall thereafter
not be allowed to allege facts, or present evidence to prove facts, not referred to and any cause
or causes of action not included in the complaint or position papers, affidavits and other
documents. (Emphases supplied.)
Stated differently, the parties could allege and present evidence to prove any cause or causes
of action included, not only in the complaint, but in the position papers as well. As the Court
explained in Tegimenta Chemical Phils. v. Buensalida23:
[T]he complaint is not the only document from which the complainant's cause of action is
determined in a labor case. Any cause of action that may not have been included in the
complaint or position paper, can no longer be alleged after the position paper is submitted by
the parties. In other words, the filing of the position paper is the operative act which forecloses
the raising of other matters constitutive of the cause of action. This necessarily implies that the
cause of action is finally ascertained only after both the complaint and position paper are
properly evaluated.
A cause of action is the delict or wrongful act or omission committed by the defendant in
violation of the primary right of the plaintiff. A complaint before the NLRC does not contain
specific allegations of these wrongful acts or omissions which constitute the cause of action. All
that it contains is the term by which such acts or omissions complained of are generally known.
It cannot therefore be considered as the final determinant of the cause of action. (Citation
omitted.)
In the more recent Our Haus Realty Development Corporation v. Parian,24 which cited Samar-
Med Distribution v. National Labor Relations Commission,25cralawred the Court further
expounded:
A claim not raised in the pro forma
complaint may still be raised in the
position paper.
Our Haus questions the respondents' entitlement to SIL pay by pointing out that this claim was
not included in the pro forma complaint filed with the NLRC. However, we agree with the CA
that such omission does not bar the labor tribunals from touching upon this cause of action
since this was raised and discussed in the respondents' position paper. In Samar-Med
Distribution v. National Labor Relations Commission, we held:
Firstly, petitioner's contention that the validity of Gutang's dismissal should not be determined
because it had not been included in his complaint before the NLRC is bereft of merit. The
complaint of Gutang was a mere checklist of possible causes of action that he might have
against Roleda. Such manner of preparing the complaint was obviously designed to facilitate
the filing of complaints by employees and laborers who are thereby enabled to expediently set
forth their grievances in a general manner. But the non inclusion in the complaint of the issue on
the dismissal did not necessarily mean that the validity of the dismissal could not be an issue.
The rules of the NLRC require the submission of verified position papers by the parties should
they fail to agree upon an amicable settlement, and bar the inclusion of any cause of action not
mentioned in the complaint or position paper from the time of their submission by the parties. In
view of this, Gutang's cause of action should be ascertained not from a reading of his complaint
alone but also from a consideration and evaluation of both his complaint and position paper.
(Citations omitted.)
The Court observes herein that respondent could not have included the charge of illegal
dismissal in her complaint because she filed said complaint (which were for various money
claims against petitioners) in January 2005, and petitioners purportedly dismissed her from
employment only on February 5, 2005. However, since respondent subsequently alleged and
argued the matter of her illegal dismissal in her position paper filed on September 8, 2005, then
the Labor Arbiter could still take cognizance of the same.
Nevertheless, on the substantive issue of whether or not respondent was illegally dismissed, the
Court answers in the negative.
The Court of Appeals was correct in its observation that the Labor Arbiter's quote on the shifting
of the burden of proof in dismissal cases, supposedly from De Paul, could not actually be found
in said case. Yet, it does not necessarily mean that the Labor Arbiter's ruling on the matter was
fallacious or entirely baseless.
In Exodus International Construction Corporation v. Biscocho,26 the Court pronounced that "[i]n
illegal dismissal cases, it is incumbent upon the employees to first establish the fact of their
dismissal before the burden is shifted to the employer to prove that the dismissal was legal."
The Court then explained that:
"[T]his Court is not unmindful of the rule that in cases of illegal dismissal, the employer bears the
burden of proof to prove that the termination was for a valid or authorized cause." But "[b]efore
the [petitioners] must bear the burden of proving that the dismissal was legal, [the respondents]
must first establish by substantial evidence" that indeed they were dismissed. "[I]f there is no
dismissal, then there can be no question as to the legality or illegality thereof."27 (Citations
omitted.)
The Court, in Cañedo v. Kampilan Security and Detective Agency, Inc.,28 expressly recognized
the rule that:
In illegal dismissal cases, "[w]hile the employer bears the burden x x x to prove that the
termination was for a valid or authorized cause, the employee must first establish by substantial
evidence the fact of dismissal from service." The burden of proving the allegations rests upon
the party alleging and the proof must be clear, positive and convincing. Thus, in this case, it is
incumbent upon petitioner to prove his claim of dismissal. (Citations omitted.)
The Court reiterated in Brown Madonna Press, Inc. v. Casas29 that "[i]n illegal dismissal cases,
the employer has the burden of proving that the employee's dismissal was legal. However, to
discharge this burden, the employee must first prove, by substantial evidence, that he had been
dismissed from employment."
It bears to point out that in the case at bar, the Labor Arbiter, the NLRC, and even the Court of
Appeals, all consistently found that respondent was not able to present substantial evidence of
her dismissal. They all rejected the joint affidavit of Mercy and Mea, submitted by respondent,
for being partial and biased. It appears that Mercy and Mea executed said affidavits to return a
favor as respondent testified for them in their own cases against petitioners. The Court of
Appeals only deviated from the findings of the Labor Arbiter and the NLRC by also disregarding
Eva's affidavit, submitted by petitioners to corroborate their allegations, for being insufficient to
prove abandonment. The appellate court then applied the equipoise doctrine: with all things
considered equal, all doubts must be resolved in favor of labor, that is, respondent.
Given the jurisprudence cited in the preceding paragraphs, the application by the Court of
Appeals of the equipoise doctrine and the rule that all doubts should be resolved in favor of
labor was misplaced. Without the joint affidavit of Mercy and Mea, there only remained the bare
allegation of respondent that she was dismissed by petitioners on February 5, 2005, which
hardly constitute substantial evidence of her dismissal. As both the Labor Arbiter and the NLRC
held, since respondent was unable to establish with substantial evidence her dismissal from
employment, the burden of proof did not shift to petitioners to prove that her dismissal was for
just or authorized cause.
As pointed out by petitioners, they never raised abandonment as a defense as there was no
dismissal in the first place. Petitioners did not argue that respondent abandoned her work which
justified her dismissal from employment. Petitioners merely alleged the fact that respondent,
after being scolded on February 4, 2005, no longer returned to work beginning February 5,
2005, which was corroborated by one of petitioners' employees, Eva, in her affidavit.
Similar to this case is the factual background in Nightowl Watchman & Security Agency, Inc. v.
Lumahan,30 in which Lumahan, the employee, asserted, but failed to prove, that he was
constructively dismissed; while Nightowl, the employer, alleged that Lumahan did not report for
work anymore by a certain date but did not raise abandonment as a defense. Quoted
extensively below are the relevant portions from the ruling of the Court in Nightowl:
The CA erred in finding grave abuse
of discretion in the NLRC's factual
conclusion that Lumahan was not
dismissed from work.
In every employee dismissal case, the employer bears the burden of proving the validity of the
employee's dismissal, i.e., the existence of just or authorized cause for the dismissal and the
observance of the due process requirements. The employer's burden of proof, however;
presupposes that the employee had in fact been dismissed, with the burden to prove the fact of
dismissal resting on the employee. Without any dismissal action on the par.t of the employer,
valid or otherwise, no burden to prove just or authorized cause arises.
We find that the CA erred in disregarding the NLRC's conclusion that there had been no
dismissal, and in immediately proceeding to tackle Nightowl's defense that Lumahan
abandoned his work.
The CA should have first considered whether there had been a dismissal in the first place. To
our mind, the CA missed this crucial point as it presumed that Lumahan had actually been
dismissed. The CA's failure to properly appreciate this point - which led to its erroneous
conclusion - constitutes reversible error that justifies the Court's exercise of its factual review
power.
We support the NLRC's approach of first evaluating whether the employee had been dismissed,
and find that it committed no grave abuse of discretion in factually concluding that Lumahan had
not been dismissed from work.
It should be remembered that in cases before administrative and quasi-judicial agencies like the
NLRC, the degree of evidence required to be met is substantial evidence, or such amount of
relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. In a
situation where the word of another party is taken against the other, as in this case, we must
rely on substantial evidence because a party alleging a critical fact must duly substantiate and
support its allegation.
We agree with the NLRC that Lumahan stopped reporting for work on April 22, 1999, and never
returned, as Nightowl sufficiently supported this position with documentary evidence.
In contrast, Lumahan failed to refute, with supporting evidence, Nightowl's contention that he did
not report for work on April 22, 1999, and failed as well to prove that he continued working from
such date to May 15, 1999. What we can only gather from his claim was that he did not work
from May 16, 1999 to June 8, 1999; but this was after the substantially proven fact that he had
already stopped working on April 22, 1999.
In addition, we find that Lumahan failed to substantiate his claim that he was constructively
dismissed when Nightowl allegedly refused to accept him back when he allegedly reported for
work from April 22, 1999 to June 9, 1999. In short, Lumahan did not present any evidence to
prove that he had, in fact, reported back to work.
xxxx
In the case before us, the CA clearly ignored certain compelling facts and misread the evidence
on record by relying on LA Demaisip's erroneous appreciation of facts. Under the
circumstances, the NLRC acted well within ·its jurisdiction in finding that Lumahan had not been
dismissed. Otherwise stated, by reversing the ruling that there was no dismissal to speak of, the
CA committed a reversible error in finding grave abuse of discretion on the part of the NLRC.
Grave abuse of discretion implies a capricious and whimsical exercise of judgment equivalent to
lack of jurisdiction, or the exercise of power in an arbitrary or despotic manner by reason of
passion or personal hostility; or in a manner so patent and gross as to amount to an evasion of
positive duty enjoined or to act at all in contemplation of law. It is not sufficient that a tribunal, or
a quasi-judicial agency of the government, in the exercise of its power, abused its discretion;
such abuse must be grave.
All told, we cannot agree with the CA in finding that the NLRC committed grave abuse of
discretion in evaluating the facts based on the records and in concluding therefrom that
Lumahan had not been dismissed.
The CA erred when it considered

"abandonment of work" generally
understood in employee dismissal
situations despite the fact that
Nightowl never raised it as a defense.
As no dismissal was carried out in this case, any consideration of abandonment - as a defense
raised by an employer in dismissal situations - was clearly misplaced. To our mind, the CA
again committed a reversible error in considering that Nightowl raised abandonment as a
defense.
Abandonment, as understood under our labor laws, refers to the deliberate and unjustified
refusal of an employee to resume his employment. It is a form of neglect of duty that constitutes
just cause for the employer to dismiss the employee.
Under this construct, abandonment is a defense available against the employee who alleges a
dismissal. Thus, for the employer "to successfully invoke abandonment, whether as a ground for
dismissing an employee or as a defense, the employer bears the burden of proving the
employee's unjustified refusal to resume his employment." This burden, of course, proceeds
from the general rule that places the burden on the employer to prove the validity of the
dismissal.
The CA, agreeing with LA Demaisip, concluded that Lumahan was illegally dismissed because
Nightowl failed to prove the existence of an overt act showing Lumahan's intention to sever his
employment. To the CA, the fact that Nightowl failed to send Lumahan notices for him to report
back to work all the more showed no abandonment took place.
The critical point the CA missed, however,. was the fact that Nightowl never raised
abandonment as a defense. · What Nightowl persistently argued was that Lumahan stopped
reporting for work beginning April 22, 1999; and that it had been waiting for Lumahan to show
up so that it could impose on him the necessary disciplinary action for abandoning his post at
Steelwork, only to learn that Lumahan had filed an illegal dismissal complaint. Nightowl did not
at all argue that Lumahan had abandoned his work, thereby warranting the termination of his
employment.
Significantly, the CA construed these arguments as abandonment of work under the labor law
construct. We find it clear, however, that Nightowl did not dismiss Lumahan; hence, it never
raised the defense of abandonment.
Besides, Nightowl did not say that Lumahan "abandoned his work"; rather, Nightowl stated that
Lumahan "abandoned his post" at Steelwork. When read together with its arguments, what this
phrase simply means is that Lumahan abandoned his assignment at Steelwork; nonetheless,
Nightowl still considered him as its employee whose return they had been waiting for.
Finally, failure to send notices to Lumahan to report back to work should not be taken against
Nightowl despite the fact that it would have been prudent, given the circumstance, had it done
so. Report-to-work notices are required, as an aspect of procedural due process, only in
situations involving the dismissal, or the possibility of dismissal, of the employee. Verily, report-
to-work notices could not be required when dismissal, or the possibility of dismissal, of the
employee does not exist. (Emphases supplied, citations omitted.)
In a case where the employee was neither found to have been dismissed nor to have
abandoned his/her work, the general course of action is for the Court to dismiss the complaint,
direct the employee to return to work, and order the employer to accept the employee.31
However, the Court recognized in Nightowl that when a considerable length of time had already
passed rendering it impossible for the employee to return to work, the award of separation pay
is proper. Considering that more than ten (10) years had passed since respondent stopped
reporting for work on February 5, 2005, up "to the date of this judgment, it is no longer possible
and reasonable for the Court to direct respondent to return to work and order petitioners to
accept her. Under the circumstances, it is just and equitable for the Court instead to award
respondent separation pay in an amount equivalent to one (1) month salary for every year of
service, computed up to the time she stopped working, or until February 4, 2005.
WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated April 29,
2009 and Resolution dated February 8, 2010 of the Court of Appeals in CA-G.R. SP No. 01877-
MIN is REVERSED and SET ASIDE. The Resolution dated August 30, 2006 of the National
Labor Relations Commission in NLRC CA No. M-009173-06, affirming en toto the Decision
dated February 21, 2006 of the Labor Arbiter in RAB 12-01-00026-05, is REINSTATED with
MODIFICATION that petitioners Dee Jay's Inn and Café and Melinda Ferraris, for just and
equitable reasons extant in this case, are additionally ORDERED to jointly and severally pay
respondent Ma. Lorina P. Rañeses separation pay equivalent to one (1) month salary for every
year of service, computed up to the time she stopped working, or until February 4, 2005.
SO ORDERED.chanRoblesvirtualLawlibrary
Bersamin, Perlas-Bernabe, and Caguioa, JJ., concur.

Sereno, C.J., on official leave.
Leonardo-De Castro,** (Acting Chairperson).
22222
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SECOND DIVISION
G.R. No. 144786 April 15, 2004
PHIL. EMPLOY SERVICES and RESOURCES, INC., petitioner,

vs.
JOSEPH PARAMIO, RONALD NAVARRA, ROMEL SARMIENTO, RECTO GUILLERMO,
FERDINAND BAUTISTA and APOLINARIO CURAMENG, JR., respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. SP No. 54744
and its Resolution denying the petitioner’s motion for reconsideration therefrom.
As culled from the records, the antecedents are as follows:
On different dates from April 1996 to October 1996, respondents Joseph Paramio, Ronald
Navarra, Romel Sarmiento, Recto Guillermo, Ferdinand Bautista and Apolinario Curameng, Jr.
applied for employment in Taiwan2 with petitioner, Phil. Employ Services and Resources, Inc.
(PSRI for brevity), a domestic corporation engaged in the recruitment and deployment of Filipino
Workers Overseas.3 Their applications were processed along with the requisite papers and
documents in support thereof, and they paid P19,000 each as placement fee.4 Thereafter, they
executed in the Philippines separate one-year contracts of employment with their employer in
Taiwan, Kuan Yuan Fiber Co., Ltd. Hsei-Chang. The respondents were deployed in Taiwan as
operators on different dates5 and each of them had a monthly salary of NT$15,360 (New
Taiwan Dollars), with free food and accommodation.6
After the orientation given by their employer, the respondents were told that their schedule of
work was up to 9:00 p.m.,7 except for respondent Navarra who was made to work up to 12:00
midnight.8 The respondents were downhearted when they discovered that, upon their arrival in
their quarters, they had no beddings, pillows and blankets.9 They encountered worse problems
in the course of their employment, viz.:
a). Irregular and deliberate charging of deductions which were not fully accounted such as the
blankets issued, charging of penalties amounting to 400 NT to all employees for a littering
violation attributable only to one employee;
b). Mandatory imposition of overtime work exceeding 10 hours without just overtime
compensation and night shift differentials;
c). Failure to comply with some stipulations stated in the Employment Contract particularly those
relating to the accommodation and lodging of the contracted workers;
d). Lack of observance of safety precautions at work area.10
The respondents brought their problems to the attention of the management. In March of 1997,
Fabian Chua, local manager of the petitioner PSRI, made a surprise visit to Kuan Yuan in
Taiwan and was apprised of the said complaints. However, instead of solving the problems,
Chua cautioned the respondents not to air their complaints and to simply forget about whatever
plans they had in mind.11 Disappointed, the respondents, along with their co-workers,
contacted the Overseas Workers Welfare Administration (OWWA) in Taiwan and sought the
latter’s assistance, only to be frustrated when their requests were not favorably acted upon.12
Sometime in April of 1997, through the intercession of Chih-Hung, the manager of the new
broker Chen Dard Manpower Co. Ltd., Long Island International Trade Co., Ltd, the overtime
rate of the respondents was increased from 55NT$ to 85NT$. The respondents discovered,
however, that work in the factory increased because of the increased volume of orders.13
Moreover, their working conditions did not improve.
On May 10, 1997, respondent Navarra and another employee, Pio Gabito, were summoned by
the management and told that they were to be repatriated, without specifying the ground or
cause therefor. They pleaded that they be informed of the cause or causes for their repatriation,
but their requests were rejected.14 Worse, the manager of their employer summoned the police,
who arrived and escorted them to the airport. They were even given time to pack all their
personal belongings.
Upon respondent Navarra’s arrival in Manila, the petitioner sought to settle his complaints.15
After the negotiations, the petitioner agreed to pay P49,000 to the said respondent but, in
consideration thereof, the latter executed a quitclaim releasing the petitioner from any or all
liabilities for his repatriation.16
Meanwhile, when the other respondents learned that Navarra and Gabito were repatriated, they
were disheartened at their fate. The respondents also decided to go home, but their employer
and their broker told them17 that they would be repatriated two days later, or on May 12, 1997.
They were ready to leave on the aforesaid date, but were informed that they would have to pay
their employer NT$30,000; otherwise, they would not be allowed to go home. As they were
unable to pay the NT$30,000, the respondents failed to return to the Philippines.18
The management and broker gave the respondents two (2) options: (a) imprisonment for their
refusal to pay NT$30,000.00; or (b) sign separate agreements with their employer. The
respondents had no other recourse but to sign agreements19 authorizing their employer to (a)
deduct the amount of NT$30,000 from their salaries; (b) remit their salaries to the Philippines;
and, (c) deduct NT$10,000 from their salaries as "bond."20 However, the respondents were still
not repatriated. The next day, or on May 13, 1997, their employer issued a regulation that
overtime of ten hours or more would be implemented.21 Thus, the conditions in the
respondents’ workplace worsened.
On May 14, 1997, respondent Paramio got ill as a result of the employer’s failure to give
breakfast on the said date and dinner the night before.22 His manager still ordered him to work.
When he pleaded that he be allowed to take some rest, the manager refused. Respondent
Paramio was, instead, made to carry a container weighing around 30 kilograms. Due to his
condition, the container slipped from his hands and he injured his thumb. He was brought to the
hospital where he was operated on and treated for his wound.23 Instead of giving him financial
assistance for his hospital bills, his employer told him a week after his release from the hospital
that it would be better for him to go home to the Philippines to recuperate. An official from the
Taiwanese Labor Department intervened for respondent Paramio and his employer was told
that it had no right to repatriate the respondent because the accident which caused the injury
happened while the latter was at work.24
Although his wound had not yet healed, respondent Paramio was made to report for work. After
eight hours of working, his broker advised him that as per the doctor’s orders, he was still on
sick leave from May 14 to June 30, 1997. Hence, he could not yet be compelled to work. The
respondent then stayed in his quarters to recuperate.
On June 5, 1997, respondent Paramio received his paycheck, but was flabbergasted when he
discovered that his employer had deducted NT$4,300 from his salary, representing his plane
ticket back to the Philippines. Furthermore, his sick leave from May 14 to June 5 were not
included in his check.25 Still, he was not repatriated. On July 1, 1997, he reported back to work,
only to be assigned to do the second hardest job in the company, carrying containers weighing
about 30 kilograms in the dyeing department.26 Although his thumb hurt, respondent Paramio
had to endure the pain to earn more money.27
After a week, respondent Paramio was transferred to the Lupo Department, the hardest job in
the factory, where he was made to carry about 200 meters of maong cloth. He then set it and
carried the same to the dyeing department. When he could no longer bear the pain in his thumb,
he took a break. When the manager saw him resting, he was ordered to return to work.
Respondent Paramio refused and contended that he could not resume work because of his
thumb injury. Incensed, the manager told him that he had to stop working and would just have to
wait for his plane ticket for his repatriation. The respondent did as he was told.
The next day, Fabian Chua, the local representative of the petitioner PSRI, arrived and asked
the respondent why he did not report for work. Respondent Paramio explained that his thumb
injury made it impossible for him to perform his assigned tasks. On September 23, 1997, he was
given his paycheck and a plane ticket to the Philippines. He was told that the amount of
NT$3,700 was deducted from his paycheck because he neglected his duty. At around eight
o’clock that evening, respondent Paramio was repatriated to the Philippines.28
Meanwhile, PSRI representative Fabian Chua renewed his warning to the remaining
respondents/employees not to complain about the working conditions. But respondents
Sarmiento, Guillermo, Bautista and Curameng, Jr. could no longer bear the worsening working
conditions. In October 1997, they decided to go home. Their employer agreed to have them
repatriated and to return their respective bonds, but required them to write letters of resignation.
Respondents Sarmiento and Bautista did as they were told and wrote the said letters.29
Respondent Curameng, Jr., for his part, signed a mimeographed form where he agreed to
return to the Philippines.30 On October 10, 1997, the said respondents were repatriated, but
were required to pay for their own plane tickets.31
On October 22, 1997, respondents Sarmiento, Guillermo, Curameng, Jr. and Bautista, together
with respondents Paramio and Navarra, filed separate complaints before the NLRC Arbitration
Branch against Bayani Fontanilla for illegal dismissal, non-payment of overtime pay, refund of
placement fee, tax refund, refund of plane fares, attorney’s fees and litigation expenses. The
cases were docketed as NLRC-OFW Cases No. (L) 97-10-4332 to 97-10-4335.32
In their position paper, the respondents raised the issue of whether or not the petitioner PSRI
and Bayani Fontanilla were liable for the reimbursement of their respective placement fees,
nightshift differentials, overtime pay and damages, and their salaries for the unexpired portion of
their respective contracts.33
The respondents argued that under Section 10, Republic Act No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, PSRI was solidarily liable with Kuan Yuan
for their claims. Since they were repatriated prior to the expiration of their respective contracts
for no valid reason, PSRI was liable to pay their salaries for the unexpired portion of their
contracts.
The petitioner denied any liability on the respondents’ claims and asserted that the latter were
validly dismissed. It averred that respondent Paramio was dismissed pursuant to Nos. 5 and 6,
Article VIII of his employment contract. According to the petitioner, the said clauses allow the
termination of a contract of employment prior to its expiration when the employee is (a) suffering
from HIV positive antibody or other diseases; (b) heavily wounded or has stool parasite and
cannot be cured within one month; or (c) found to have lost the ability to work. It averred that
since complainant Paramio could no longer do his job because of his thumb injury, the
termination of his contract was valid, and his dismissal proper.34
Anent respondent Navarra’s claim, the petitioner PSRI ratiocinated that the termination of his
services was for a valid cause because of an altercation he had with his supervisor. The
petitioner further averred that respondent Navarra had demanded that he be paid the amount of
P50,000 and after some negotiation, agreed to receive P49,000. Respondent Navarra received
the said amount and executed on May 23, 1997, a deed of release and quitclaim in favor of the
petitioner.35
As for the claims of the other respondents, the petitioner alleged that the respondents
Guillermo, Bautista and Curameng, Jr. voluntarily resigned, as evidenced by their respective
letters and agreement with the petitioner.36 Moreover, the termination of their employment was
legal, and their repatriation based on valid grounds. The petitioner contended that the
respondents were not entitled to a refund of their plane fare.37
With respect to the claims for tax refund for amounts withheld by their employer, the petitioner
averred that the respondents were not entitled thereto, as the law of Taiwan mandated such
withholding of taxes. If, indeed, the respondents were entitled to a refund of the said taxes, the
same should be coursed through the Bureau of Internal Revenue, the appropriate governmental
agency.38
On October 29, 1998, Labor Arbiter Felipe P. Pati rendered a decision declaring that the
dismissal of the respondents was illegal. The dispositive portion states, thus:
WHEREFORE, judgment is hereby rendered declaring complainants’ dismissal to be illegal and

respondents are ordered to pay to complainants as follows:
1. Ronald Navarra – NT$46,080 or its peso equivalent; P75,000.00 refund of placement fee;
and P4,300 refund of plane fare less P49,000.
2. Recto Guillermo – NT$15,360 or its peso equivalent; P75,000.00 refund of placement fee;
and P4,300 refund of air fare.
3. Joseph Paramio – NT$46,080 or its peso equivalent; P75,000.00 refund of placement fee;
and P4,300 refund air fare.
4. Apolinario Curameng, Jr. – NT$23,040 or its peso equivalent; P75,000 refund of placement
fee and P4,300 refund of air fare.
5. Ferdinand Bautista – NT$46,080 or its peso equivalent; P75,000.00 refund of placement fee;
and P4,300 refund of air fare; and
6. Romel Sarmiento – NT$ or its peso equivalent P75,000.00 refund of placement fee; and
P4,300 refund of air fare.
The claim for tax refund is dismissed for not having been substantiated.39
In declaring respondent Navarra’s dismissal illegal, the labor arbiter held that the petitioner
failed to substantiate its claim that the said respondent had an altercation with his supervisor. As
such, respondent Navarra was entitled to the payment of the salaries due him for the unexpired
portion of his contract, subject to the deduction of the amount already advanced to him under
the deed of release and quitclaim he had executed in favor of the petitioner.40
The labor arbiter likewise ruled that the dismissal of complainant Paramio was illegal.
Considering that he had a thumb injury, his employer should have given him a lighter job
instead of repatriating him. The dismissal of the remaining complainants was also adjudged
illegal. According to the labor arbiter, the petitioner’s defense that its employees (respondents)
voluntarily resigned deserved scant consideration.
Considering that the dismissal of the respondents was illegal, the labor arbiter awarded the
salaries due them for the unexpired portion of their contracts, as well as the refund of their plane
fare. Recognizing that the usual placement fee of workers for deployment in Taiwan was
approximately P100,000, more or less, the labor arbiter granted each of them a refund of their
placement fee in the amount of P75,000.41
Aggrieved, the petitioner appealed before the National Labor Relations Commission (NLRC),
docketed as NLRC NCR CA 017927-99. It raised the following grounds:
GRAVE ABUSE OF DISCRETION, AND SERIOUS ERROR IN THE FINDING OF FACTS

WHICH IF NOT CORRECTED WOULD CAUSE GRAVE AND IRREPARABLE DAMAGE TO
THE RESPONDENT42
The petitioner insisted that the dismissal of the complainants was anchored on valid and legal
grounds; as such, the labor arbiter erred in ruling for the respondents and awarding a refund of
their airfares, placement fees and payment of salaries for the unexpired portion of their
respective contracts of employment.
On March 29, 1999, the NLRC issued a resolution43 finding that the respondents were legally
dismissed and set aside the decision of the labor arbiter. The decretal portion of the decision
reads as follows:
WHEREFORE, premises considered, the Decision appealed from is hereby SET ASIDE and the
instant case dismissed for lack of merit.44
In reversing the decision of the labor arbiter, the NLRC made the following findings: (a)
respondent Navarra did not refute the allegation of the petitioner that he had an altercation with
his supervisor; (b) respondent Navarra’s execution of a deed of release and quitclaim released
the petitioner from any or all liability on account of his repatriation; (c) the repatriation of
complainant Paramio was sanctioned by Article VIII, paragraphs 5 and 6 of his employment
contract; and, (d) the written documents executed by the remaining respondents showed that
they voluntarily resigned from their employment.
Dissatisfied, the respondents filed a motion for reconsideration45 of the resolution, but the
NLRC denied the motion in a Resolution dated May 17, 1999.46
The respondents filed a petition for certiorari under Rule 65 of the Rules of Court against the
petitioner before the Court of Appeals, docketed as CA-G.R. SP No. 54744. The respondents
(petitioners therein) raised the following issues:
1. WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY DISMISSED WHEN THEY

WERE REPATRIATED TO THE PHIL. BY THEIR TAIWAN EMPLOYER.
2. WHETHER OR NOT THE THUMB INJURY SUFFERED BY JOSEPH PARAMIO WHILE AT

WORK [SHOULD] BE CONSIDERED A LEGAL GROUND FOR HIS REPATRIATION.
3. WHETHER OR NOT RONALD NAVARRA’S REPATRIATION AND EXECUTION OF

QUITCLAIM AND RECEIPT OF P49,000 BE SUFFICIENT GROUND TO CONCLUDE HIS
WAIVER OF RIGHT AGAINST ILLEGAL DISMISSAL.
4. WHETHER OR NOT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS.47

The petitioners prayed, thus:
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that
this Petition be given due course and after its due consideration, REVERSE and SET ASIDE
the Resolution of the public respondent National Labor Relations Commission dated March 29,
1999 and May 17, 1999 and a new one rendered REINSTATING the Decision of the Labor
Arbiter Felipe P. Pati dated August 29, 1998 with modification for the reward of moral and
exemplary damages.
Petitioners further pray for such other reliefs and remedies deemed just and equitable in the
premises.48
On May 29, 2000, the CA rendered a decision partly granting the petition in that it nullified the
March 29 and May 17, 1999 Resolutions of the NLRC and reinstated the decision of the labor
arbiter with modification. The decretal portion of the decision reads:
WHEREFORE, premises considered, the instant petition is partly granted insofar as the public
respondent’s Resolutions dated March 29, 1999 and May 17, 1999 are set aside and the labor
arbiter’s Decision dated August 29, 1998 is reinstated with modification on the award of refunds
for placement fees. The petitioners’ claims for moral and exemplary damages are denied for
lack of merit.49
The CA held that respondents Curameng, Bautista, Sarmiento and Guillermo were
constructively dismissed, as the petitioner failed to substantiate its claim that the aforesaid
petitioners voluntarily resigned from work.
The CA also ruled that the repatriation of respondent Paramio was in violation of his
employment contract. It declared that paragraph 8.2, Nos. 5 and 6, Article VIII of the said
contract applied only to illnesses already existing and discovered during employment. The "loss
of ability to work" under the contract could not be used as a ground for respondent Paramio’s
termination because his thumb injury was work-related.
As to respondent Navarra, the CA ruled that his alleged confrontation with his supervisor did not
amount to serious misconduct which would justify his dismissal. It stated that the deed of
release executed by respondent Navarra barred him from instituting the said complaint.
However, the CA agreed that the money he was able to collect from the petitioner by reason of
the execution of a deed of release and quitclaim should be considered as an advance on the
amount he was entitled to.
Considering that the dismissal of the respondents was illegal, the petitioner, as the local agent
of Kuan Yuan, was declared solidarily liable with the latter for the payment of the respondents’
salaries for the unexpired portion of their respective contracts and other awards, pursuant to
Section 10, paragraph 2 of Rep. Act No. 8042.
The CA reduced the award of refund of placement fee to the respondents from P75,000 to
P19,000, which was the amount substantiated by the petitioners.
The petitioner PSRI filed a motion for reconsideration but the appellate court denied the said
motion.50 Dissatisfied, the petitioner filed this instant petition against the respondents, alleging
that:
THE FINDINGS OF FACTS BY THE COURT OF APPEALS ARE CONTRARY TO THE

FINDINGS OF FACTS BY THE NATIONAL LABOR RELATIONS COMMISSION.
II
THE APPELLATE COURT DECIDED THE CASE NOT IN ACCORD WITH THE APPLICABLE
DECISION OF THE SUPREME COURT51
The issues for resolution are the following: (a) whether or not the respondents were illegally
dismissed; and (b) whether or not the deed of release and quitclaim executed by respondent
Navarra was valid.
Ordinarily, factual findings of labor officials who are deemed to have acquired expertise in
matters within their respective jurisdictions are generally accorded not only respect but even
finality, and are binding upon this Court.52 However, when the findings of the labor arbiter and
the NLRC are inconsistent, there is a need to review the records to determine which of them
should be preferred as more conformable to the evidentiary facts.53 Considering that the CA’s
findings of fact clash with those of the NLRC, this Court is compelled to go over the records of
the case, as well as the submissions of the parties.54
Anent the first issue, the petitioner insists that the dismissal of the respondents was based on
valid and legal grounds. Consequently, the award of salaries for the unexpired portion of their
respective contracts, and the refund of placement fee and airfare was barren of factual and legal
basis.
We rule that the respondents’ dismissal was not based on just, valid and legal grounds.
Preliminarily, it bears stressing that the respondents who filed complaints for illegal dismissal
against the petitioner were overseas Filipino workers whose employment contracts were
approved by the Philippine and Overseas Employment Administration (POEA) and were entered
into and perfected here in the Philippines. As such, the rule lex loci contractus (the law of the
place where the contract is made) governs. Therefore, the Labor Code, its implementing rules
and regulations, and other laws affecting labor, apply in this case.55
In order to effect a valid dismissal of an employee, the law requires that there be just and valid
cause as provided in Article 28256 and that the employee was afforded an opportunity to be
heard and to defend himself.57 Dismissal may also be based on any of the authorized causes
provided for in Articles 283 and 284 of the Labor Code.58
The petitioner contends that the termination of respondent Paramio’s employment was
sanctioned by paragraph 8.2, Nos. 5 and 6, Article VIII of the employment contract. The
aforesaid provisions are herein reproduced:
8.2 In the event the Employee is found offend (sic) one of the following prohibitions during
his/her employment, Employer may terminate this Employment contract and repatriate him/her
to his/her country of origin. Employee shall comply immediately without objection and assume
the cost of round-trip transportation by air to and from R.O.C. unconditionally. In the event
Employer or any other person pay the airfare for the Employee, Employee shall reimburse the
fare to the person who paid it.
(5) During the period of employment, being found out suffering HIV positive anti-body or other
disease, heavily wounded or stool parasite, which cannot be cured within one month.
(6) Being found losing ability to work.
The foregoing provision is akin to Article 284 of the Labor Code, which provides:
Art. 284. Disease as a ground for termination – An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or prejudicial to his health as well as the health of his co-
employees: …
Furthermore, Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code
provides, thus:
Sec. 8. Disease as a ground for dismissal - Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his co-
employees, the employer shall not terminate his employment unless there is a certification by
competent public authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months with proper medical treatment. If the disease or ailment
can be cured within the period, the employer shall not terminate the employee but shall ask the
employee to take a leave. The employer shall reinstate such employee to his former position
immediately upon the restoration of his normal health.
Applying the law and the rule, the employer is burdened to prove that the employee was
suffering from a disease which prevented his continued employment, or that the employee’s
wound prevented his continued employment. Section 8, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code requires a certification from competent public authority59 that the
employee was heavily wounded and had lost the ability to work.
In the case at bar, the petitioner did not adduce in evidence a certification from a public authority
to the effect that respondent Paramio had been heavily wounded. It also failed to show that by
reason of his thumb injury, he lost the ability to work. Respondent Paramio was not, for a time,
able to perform the backbreaking tasks required by his manager. However, despite his injury, he
managed to perform the other tasks assigned to him, including carrying of 30-kilogram
containers with the exception of the work in the Lupo Department.60 The fact that respondent
Paramio was assigned to perform the second hardest and heaviest task in the company shows
the heartlessness of the company’s manager. Despite his wound, the respondent tried to
accomplish the work assigned to him. The least the manager should have done was to assign
the respondent to a lighter task, until such time that the latter’s wound had completely healed. It
must be stressed where there is no showing of a clear, valid and legal cause for the termination
of employment, the law considers the matter a case of illegal dismissal.61 Consequently,
respondent Paramio is entitled to the full reimbursement of his placement fee with interest at
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment
contract for three months for every year of the unexpired term, whichever is less under
paragraph 5, Section 10 of Rep. Act No. 8042.
Section 10. Money Claims –
In case of termination of overseas employment without just, valid or authorized cause as

defined by law or contract, the worker shall be entitled to the full reimbursement of his
placement fee with interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or three (3) months for every year of the
unexpired term, whichever is less.62
In Skippers Pacific, Inc. v. Mira,63 we ruled that an overseas Filipino worker who is illegally
terminated shall be entitled to his salary equivalent to the unexpired portion of his employment
contract if such contract is less than one year. However, if his contract is for a period of at least
one year, he is entitled to receive his salaries equivalent to the unexpired portion of his contract,
or three months’ salary for every year of the unexpired term, whichever is lower.
In Marsaman Manning Agency, Inc. v. NLRC,64 involving Section 10 of Rep. Act No. 8042, we
held:
… [W]e cannot subscribe to the view that private respondent is entitled to three (3) months
salary loan only. A plain reading of Sec. 10 clearly reveals that the choice of which amount to
award an illegally dismissed overseas contract worker, i.e., whether his salaries for the
unexpired portion of his employment contract or three (3) months salary for every year of the
unexpired term, whichever is less, comes into play only when the employment contract
concerned has a term of at least one (1) year or more. This is evident from the words "for every
year of the unexpired term" which follows the words "salaries x x x for three months." To follow
petitioners’ thinking that private respondent is entitled to three (3) months salary only simply
because it is the lesser amount is to completely disregard and overlook some words used in the
statute while giving effect to some. This is contrary to the well-established rule in legal
hermeneutics that interpreting a statute, care should be taken that every part or word thereof be
given effect since the lawmaking body is presumed to know the meaning of the words employed
in the statute and to have used them advisedly. Ut res magis valeat quam pereat.
Respondent Paramio was deployed on December 6, 1996.65 His contract was for a period of
twelve months or one year.66 He was repatriated on September 23, 1997, approximately two
months from the expiration of his contract.67 Since the termination of his employment was not
based on any valid or legal ground, he is entitled to the payment of his salary equivalent to the
unexpired portion of his contract. He is likewise entitled to full reimbursement of his placement
fee. Based on the record, respondent Paramio paid a placement fee of P19,000.68 Thus, he
should be reimbursed the amount of P19,000 with 12% interest per annum.
Similarly, the petitioner failed to substantiate its claim that respondent Navarra’s repatriation
was based on a valid, legal and just cause. The petitioner merely alleged that it was made clear
to respondent Navarra that his repatriation was due to the fight he had with his supervisor.69
Contrary to the allegation of the petitioner, respondent Navarra denied this in his affidavit, as
well as in his reply to the position paper of the petitioner. Respondent Navarra asserted that he
merely enforced his rights under the employment contract when he requested, time and again,
that the provisions of his contract regarding the accommodation be fulfilled.70 The claim of
petitioner that respondent Navarra shouted invectives against his supervisor71 was, likewise,
unsubstantiated. The petitioner did not even present an affidavit of the superior with whom the
respondent reportedly fought. Indeed, while fighting a supervisor may constitute serious
misconduct72 and may, consequently, be considered a ground for dismissal, in light of the
petitioner’s failure to adduce substantial evidence to prove its claim that respondent Navarra
fought his supervisor, this ground cannot be used to justify the dismissal. Thus, the termination
of respondent Navarra’s employment was without factual and legal basis.
Respondent Navarra was deployed on November 6, 1996.73 He was repatriated on May 10,
1997, approximately five months prior to the expiration of his one-year contract. Considering our
ruling in Marsamman Manning Agency v. NLRC,74 he shall be entitled to an amount equivalent
to three months’ salary, or NT$46,080. Similarly, having admitted that he paid a placement fee
of P19,00075 only, he is entitled to be fully reimbursed therefore, plus 12% interest per annum.
As to the other respondents, the petitioner alleges that they refused to go to work and, in fact,
voluntarily resigned. It appended the daily time records76 of respondents Apolinario, Sarmiento,
Ferdinand (Bautista) and Recto (Guillermo), as well as the resignation letters of Bautista and
Sarmiento,77 and Curameng, Jr.’s written agreement with their employer.
We do not agree. The records reveal that the three respondents agreed to execute the
foregoing because they could no longer bear the working conditions in their place of
employment. Despite protestations to their employer and the attempt to seek help from the
OWWA in Taiwan, they were victims to the following acts/omissions of their employer:
a). Irregular and deliberate charging of deductions which were not fully accounted such as the
blankets issued, charging of penalties amounting to 400 NT to all employees for a littering
violation attributable only to one employee;
b). Mandatory imposition of overtime work exceeding 10 hours without just overtime
compensation and night shift differentials;
c). Failure to comply with some stipulations stated in the Employment Contract particularly those
relating to the accommodation and lodging of the contracted workers;
d). Lack of observance of safety precautions at work area78 .
1. They don’t give us day off.
2. They feed us once a day.
3. They even let us work without rest.
4. Their (sic) were so many deductions in our salaries like payment for our boarding house,
electricity and garbage fee.
5. The money they were sending to the Philippines was also reduced with the amount ranging
from P2000 to P5000.79
The petitioner failed to adduce substantial evidence to overcome the evidence of the
respondents as contained in their respective affidavits. Contrary to the petitioner’s claim, the
said affidavits are not hearsay evidence. The respondents were the victims of the abuses of
their employer; as such, they had personal knowledge of the contents of their affidavits.
Moreover, when there is a doubt between the evidence presented by the employer and the
employee, such doubt should be resolved in favor of labor.80
On the letters of resignation of respondents Sarmiento, Bautista and the agreement of

Curameng, Jr., we agree with the ruminations of the appellate court, viz:
It is not necessary that there be an express termination of one’s services before a case of illegal
dismissal can exist. In the landmark case of Philippine Japan Active Carbon Corporation vs.
National Labor Relations Commission, et al. (171 SCRA 164) the Supreme Court ruled that "a
constructive discharge is defined as: "A quitting because continued employment is rendered
impossible, unreasonable or unlikely." In the case at bar, the petitioners were made to suffer
unbearable conditions in the workplace and the inhuman treatment of their employer until they
were left with no choice but to quit. Thus, it cannot be said that the resignation and repatriation
of complainants Curameng, Bautista, Sarmienta and Guillermo was voluntary.
It was held in the case of Valdez vs. NLRC, 286 SCRA 87:
"It would have been illogical for herein petitioner to resign and then file a complaint for illegal
dismissal. Resignation is inconsistent with the filing of said complaint."
Indeed, unlike the Valdez case where there was no pronouncement of resignation on the part of
the complainant, there were written resignations submitted by the said petitioners in the case at
bar. The more important consideration is whether such written resignations were made
voluntarily. Based on the foregoing circumstances, it cannot be gainsaid that the instant
complaint for illegal dismissal indicates that the resignations and repatriations of the petitioners
were not done freely on their part. It is highly unlikely that these workers, after having invested
so much time, effort and money to secure their employment abroad would just quit even before
the expiration of their contract.
We have more reason to rule that the repatriations of petitioners Paramio and Navarra were not
voluntary.81
We thus rule that the respondents were constructively dismissed from their employment. There
is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it would foreclose any choice by him
except to forego his continued employment.82 It 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."83
We find it incredible that, after all the expenses and the trouble they went through in seeking
greener pastures and financial upliftment, and the concomitant tribulations of being separated
from their families, the respondents would suddenly and without reason decide to resign, return
home and be jobless once again. The respondents had no choice but to agree to their
employer’s demand to sign and execute the respective agreements. They were stranded in a
foreign land, with their remunerations considerably diminished by numerous illegal deductions.
Their plight was all the more made unbearable by the inhumane working conditions.
We note that the agreement signed by respondent Curameng, Jr. was mimeographed and
prepared by his employer. Except for his handwritten name, the words "I’m go (sic) very verry
(sic)" and his signature at the bottom of the document, the rest of the spaces to be filled up were
all blank. Most of the contents of the agreement were even in Chinese characters.
In sum, there can be no other conclusion than that the aforementioned respondents were
illegally dismissed, and their employment contract illegally terminated.
Under Section 10, paragraph 5 of Rep. Act No. 8042, respondents Sarmiento, Bautista,
Curameng and Guillermo are entitled to the full reimbursement of their placement fees. Since
each of the respondents remitted only P19,000 to the petitioner, each of them is entitled to
P19,000, plus 12% interest per annum.
According to Section 10, paragraph 2 of Rep. Act No. 8042,84 the agency which deployed the
employees whose employment contract were adjudged illegally terminated, shall be jointly and
solidarily liable with the principal for the money claims awarded to the aforesaid employees.
Consequently, the petitioner, as the agency of the respondents, is solidarily liable with its
principal Kuan Yuan for the payment of the salaries due to the respondents corresponding to
the unexpired portion of their contract, as well as the reimbursement of their placement fees.
Under Section 15 of the same Act, the repatriation of the worker and the transport of his
personal belongings shall be the primary responsibility of the agency which recruited or
deployed the overseas contract worker. All the costs attendant thereto shall be borne by the
agency concerned and/or its principal.85 Consequently, the petitioner is obliged to refund
P4,300 to each of the respondents, representing their airfare.
Anent the second issue, we rule that the deed of release executed by respondent Navarra did
not completely release the petitioner from its liability on the latter’s claim. As a rule, quitclaims,
waivers or releases are looked upon with disfavor and are commonly frowned upon as contrary
to public policy and ineffective to bar claims for the measure of a worker’s legal rights.86 If (a)
there is clear proof that the waiver was wangled from an unsuspecting or gullible person; or (b)
the terms of the settlement are unconscionable, and on their face invalid,87 such quitclaims
must be struck down as invalid or illegal.
The records reveal that respondent Navarra executed a deed of release and waiver for and in
consideration of only P49,000.88 There is no evidence that he was informed that he was
entitled to much more than the said amount, including a refund for the placement fee he paid to
the petitioner. Respondent Navarra started working on November 7, 1996. His employment
contract was for a period of one year. He was repatriated on May 10, 1997, or after a little over
six months. The unexpired portion of his contract is, thus, five months and 27 days. Per Section
10, paragraph 5 of Rep. Act No. 8042, he is entitled to the payment of three months’ salary or
NT$46,08089 and P19,000 placement fee, plus interest at twelve percent (12%) per annum.
We, thus, agree with the ruling of the appellate court, viz.:
With regard to the deed of quitclaim and acceptance, it is a well-settled principle that the law
does not consider as valid any agreement to receive less compensation than what a worker is
entitled to recover nor prevent him from demanding benefits to which he is entitled. Quitclaims
executed are ineffective to bar recovery for the full measure of the worker’s rights (Medina vs.
Consolidated Broadcasting System (CBS)-DZWX, 222 SCRA 707). The reason why quitclaims
are commonly frowned upon as contrary to public policy and they are ineffective to bar claims
for the full measure of the worker’s legal rights is because the employer and employee do not
stand on the same footing, such that quitclaims usually take the form of contracts of adherence,
not of choice. (Wyeth-Suaco Laboratories, Inc. vs. NLRC, 219 SCRA 356). Assuming arguendo
that the quitclaim was executed voluntarily, still, it cannot diminish petitioner’s entitlement to the
full compensation provided in their contract. At the most, such amount can be considered an
advance on his claim.90
In sum, we rule that the termination of the respondents’ respective contracts of employment was
illegal. Pursuant to Section 10, paragraph 5, Rep. Act No. 8042, each of them is entitled to the
full reimbursement of the placement fee of P19,000, and interest at 12% per annum.
Respondent Navarra is, likewise, entitled to the payment of an amount equivalent to three (3)
months’ salary. All the remaining respondents are entitled to payment of their salaries,
equivalent to three months.
Pursuant to Section 15 of Rep. Act No. 8042, the petitioner should refund the amount of P4,300
to each of the respondents representing the expenses they incurred for their repatriation.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 54744 is AFFIRMED WITH MODIFICATIONS. The petitioner is
ordered to pay the following:
(1) The amount of NT$46,080 or its peso equivalent to respondent Ronald Navarra minus the
amount of P49,000 already advanced to him;
(2) To the respondents Romel Sarmiento, Recto Guillermo, Ferdinand Bautista, Apolinario
Curameng, Jr. and Joseph Paramio, their respective salaries corresponding to the unexpired
portion of their respective contracts;
(3) The amount of the placement fees as indicated in the respective official receipts issued to
each of the respondents, with interest of 12% per annum, in conformity with Section 10,
paragraph 5 of Rep. Act No. 8042;
(4) To each of the respondents, the amount of P4,300 representing the expenses they incurred
for their return to the Philippines.
SO ORDERED.
Puno, (Chairman), Quisumbing, and Tinga, JJ., concur.

Austria-Martinez, J., no part.
Footnotes
1 Penned by Associate Justice Elvi John Asuncion with Associate Justices Ma. Alicia Austria-
Martinez (now an Associate Justice of the Supreme Court) and Portia Aliño-Hormachuelos
concurring.
2 Records, pp. 54-78.
3 Rollo, p. 9.
5 Romel Sarmiento was deployed on December 6, 1996; Records, p. 54.
Ronald A. Navarra was deployed on November 6, 1996; Id. at 8.
Recto A. Guillermo was deployed on October 29, 1996; Id. at 9.
Joseph M. Paramio was deployed on December 6, 1996; Id. at 10.
Apolinario A. Curameng, Jr. was deployed on November 29, 1996; Id. at 11.
Ferdinand A. Bautista was deployed on January 16, 1999; Id. at 12.
7 Id. at 54-78.
8 Id. at 74.
9 Supra at note 7.
10 Id. at 54, 58, 62, 66, 70, 74.
11 Id. at 75.
12 Id. at 76.
13 Id. at 59.
14 Id. at 76.
15 Id. at 77.
16 Id. at 139.
17 Id. at 72.
18 Id.
19 Records, p. 72.
20 Id. at 63.
21 Id. at 64.
22 Id. at 60.
23 Id. at 60.
24 Id.
25 Id.
26 Id.
27 Id.
28 Records, p. 61.
29 Id. at 148-149.
30 Id. at 150.
31 Id. at 141-150.
32 Id. at 2-6.
33 Id. at 44.
34 Id. at 121-122.
35 Id. at 139-140.
36 Id. at 148-150.
37 Id. at 122.
38 Id. at 123.
39 Rollo, pp. 77-78.

40 Id. at 74-77.
41 Id.
42 Records, p. 175.
43 Rollo, pp. 79-93.
44 Id. at 93.
45 CA Rollo, pp. 119-123.
46 Id. at 124.
47 Id. at 14.
48 Id. at 23.
49 Rollo, p. 35.
50 Id. at 38.
51 Id. at 15.
52 Alfaro v. Court of Appeals, 363 SCRA 799 (2001).
53 Cosep v. NLRC, 290 SCRA 704 (1998).
54 Zafra v. Court of Appeals, 389 SCRA 200 (2002).
55 Triple Eight Integrated Services, Inc. v. NLRC, 299 SCRA 608 (1998).
56 Article 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 of the trust reposed in him by the 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.
57 Rosario v. Victory Ricemill, 397 SCRA 760 (2003).
58 Article 283 – Closure of establishment and reduction of personnel as a result of installation of

labor saving device, redundancy, retrenchment to prevent losses; Article 284 – disease as
ground for termination.
59 Triple Eight Integrated Services, Inc. v. NLRC, 299 SCRA 608 (1998).
60 Records, p. 60.
61 Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade,

396 SCRA 518 (2003).
62 Section 10, paragraph 5, R.A. No. 8042.
63 392 SCRA 371 (2002).
64 313 SCRA 88 (1999).
65 Records, p. 132.
66 Id. at 104-109.
67 Id. at 61.
68 Id. at 127.
69 Rollo, p. 17.
70 Records, pp. 169-170.
71 Id. at 120.
72 Article 282(a) of the Labor Code.
73 Records, p. 8.
74 Supra.
75 Id. at 125.
76 Id. at 137-138.
77 Id. at 147-150.
78 Id. at 54, 58, 62, 66, 70, 74.
79 Id. at 56.
80 Asuncion v. NLRC, 362 SCRA 56 (2001).
81 CA Rollo, p. 159.
82 Hyatt Taxi Services, Inc. v. Catinoy, 359 SCRA 686 (2001).
83 Globe Telecom, Inc. v. Florendo-Flores, 390 SCRA 201 (2002).
84 Section 10. Money Claims. –
The liability of the principal/employer and the recruitment agency for any and all claims under
this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance
bond to be filed by the recruitment/placement agency, as provided by law; shall be answerable
for all money claims or damages that may be awarded to the workers. If the recruitment agency
is a juridical being the corporate officers and directors and partners as the case may be, shall
themselves be solidarily liable with the corporation or partnership for the aforesaid claims and
damages….
85 Section 15. Repatriation of Workers; Emergency Repatriation Fund. – The repatriation of the
worker and the transport of his personal belongings shall be the primary responsibility of the
agency which recruited or deployed the worker overseas. All costs attendant to repatriation shall
be borne by or charged to the agency concerned and/or its principal. Likewise, the repatriation
of remains of the deceased worker and all costs attendant thereto shall be borne by the
principal and/or the local agency. However, in cases where the termination of employment is
due solely to the fault of the worker, the principal/employer or agency shall not in any manner be
responsible for the reparation of the former and/or his belongings…
86 Peftok Integrated Services, Inc. v. NLRC, 293 SCRA 507 (1998).
87 Dole Philippines, Inc. v. Court of Appeals, 365 SCRA 124 (2001).

88 Records, p. 140.
89 The exchange rate is pegged at NT$ = P1.7027 (Philippine Daily Inquirer, Business,
Currencies, March 24, 2004, p. B6).
90 Rollo, pp. 34-35.
The Lawphil Project - Arellano Law Foundation
3333
G.R. No. 205300, March 18, 2015 - FONTERRA BRANDS PHILS., INC., Petitioner, v.
LEONARDO1 LARGADO AND TEOTIMO ESTRELLADO, Respondents.
THIRD DIVISION
G.R. No. 205300, March 18, 2015
FONTERRA BRANDS PHILS., INC., Petitioner, v. LEONARDO1 LARGADO AND TEOTIMO

ESTRELLADO, Respondents.
DECISION
VELASCO JR., J.:
The Case
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the
reversal and setting aside of the Decision of the Court of Appeals (CA) dated September 6,
2012, as well as its January 11, 2013 Resolution denying reconsideration thereof, in CA-G.R.
SP No. 114227, entitled Leonardo Largado and Teotimo P. Estrellado v. National Labor
Relations Commission (NLRC), Fonterra Brands Phils., Inc./Carlo Mendoza, Zytron Marketing &
Promotions Corp./Francisco Valencia, A.C. Sicat Marketing & Promotional Services/Arturo
Sicat.
The Facts
Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing
and Promotions Corp. (Zytron) for the marketing and promotion of its milk and dairy products.
Pursuant to the contract, Zytron provided Fonterra with trade merchandising representatives
(TMRs), including respondents Leonardo Largado (Largado) and Teotimo Estrellado
(Estrellado). The engagement of their services began on September 15, 2003 and May 27,
2002, respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions contract, effective June
5, 2006. Fonterra then entered into an agreement for manpower supply with A.C. Sicat
Marketing and Promotional Services (A.C. Sicat). Desirous of continuing their work as TMRs,
respondents submitted their job applications with A.C. Sicat, which hired them for a term of five
(5) months, beginning June 7, 2006 up to November 6, 2006.
When respondents’ 5-month contracts with A.C. Sicat were about to expire, they allegedly
sought renewal thereof, but wereallegedly refused. This prompted respondents to file
complaints for illegal dismissal, regularization, non-payment of service incentive leave and 13th
month pay, and actual and moral damages, against petitioner, Zytron, and A.C. Sicat.
The Labor Arbiter dismissed the complaint and ruled that: (1) respondents were not illegally
dismissed. As a matter of fact, they were the ones who refused to renew their contract and that
they voluntarily complied with the requirements for them to claim their corresponding monetary
benefits in relation thereto; and (2) they were consecutively employed by Zytron and A.C. Sicat,
not by Fonterra. The dispositive portion of the Decision2 reads:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, judgment is hereby rendered DISMISSING the instant
case for utter lack of merit.
SO ORDERED.cralawred
The NLRC affirmed the Labor Arbiter, finding that respondents’ separation from Zytron was
brought about by the execution of the contract between Fonterra and A.C. Sicat where the
parties agreed to absorb Zytron’s personnel, including respondents. Too, respondents failed to
present any evidence that they protested this set-up. Furthermore, respondents failed to refute
the allegation that they voluntarily refused to renew their contract with A.C. Sicat. Also,
respondents did not assert any claim against Zytron and A.C. Sicat. The NLRC disposed of the
case in this wise:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the appeals are hereby ordered DISMISSED and the
Decision of the Labor Arbiter is AFFIRMED [in]toto.
SO ORDERED.3
The NLRC decision was assailed in a petition under Rule 65 before the CA.
Ruling on the petition, the CA, in the questioned Decision,4 found that A.C. Sicat satisfies the
requirements of legitimate job contracting, but Zytron does not. According to the CA: (1) Zytron’s
paid-in capital of P250,000 cannot be considered as substantial capital; (2) its Certificate of
Registration was issued by the DOLE months after respondents’ supposed employment ended;
and (3) its claim that it has the necessary tools and equipment for its business is
unsubstantiated. Therefore, according to the CA, respondents were Fonterra’s employees.
Additionally, the CA held that respondents were illegally dismissed since Fonterra itself failed to
prove that their dismissal is lawful. However, the illegal dismissal should be reckoned from the
termination of their supposed employment with Zytron on June 6, 2006. Furthermore,
respondents’ transfer to A.C. Sicat is tantamount to a completely new engagement by another
employer. Lastly, the termination of their contract with A.C. Sicat arose from the expiration of
their respective contracts with the latter. The CA, thus, ruled that Fonterra is liable to
respondents and ordered the reinstatement of respondents without loss of seniority rights, with
full backwages, and other benefits from the time of their illegal dismissal up to the time of their
actual reinstatement. The fallo of the Decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed Decision
dated 20 November 2009 and Resolution dated 5 March 2010 of the National Labor Relations
Commission (NLRC), Seventh Division, are hereby ANULLED and SET ASIDE. Private
respondent Fonterra Brand, Inc. is hereby ordered to REINSTATE [respondents] without loss of
seniority rights. Private respondents Fonterra Brand, Inc. and Zytron Marketing and Promotional
Corp. are hereby further ORDERED to jointly and severally pay petitioners their full backwages
and other benefits from the time of their illegal dismissal up to the time of their actual
reinstatement; and attorney’s fees.
SO ORDERED.
Zytron and Fonterra moved for reconsideration, but to no avail. Hence, this petition.
The Issues
Petitioner presents the following issues for Our resolution:chanRoblesvirtualLawlibrary

The CA erred in ruling that Zytron was a mere labor-only contractor to petitioner Fonterra, in
that:chanRoblesvirtualLawlibrary
As held by the Court, there is no absolute figure that constitutes “substantial” capital for an
independent contractor, and the same should instead be measured against the type of work it is
obligated to do for the principal. It is most respectfully submitted that, here, the merchandising
work undertaken by Zytron’s paid-in capital of P250,000 was as of 1990, the year it was
incorporated;chanrobleslaw
As shown in its Articles of Incorporation, Zytron had been in business since 1990, or more than
a decade before it signed a merchandising agreement with petitioner Fonterra;chanrobleslaw
Very importantly, petitioner Fonterra never exercised the right to control respondents and other
employees of Zytron. Indeed, respondents neither alleged that petitioner exercised control over
them nor presented proof in support thereof in any of their previous pleadings.
Respondents never claimed nor adduced evidence that they were dismissed from employment
by Zytron. In fact, Zytron denies terminating them from work. The CA, thus, erred in finding that
respondents were “illegally dismissed.”
Succinctly, the issues in the case at bar are: (1) whether or not Zytron and A.C. Sicat are labor-
only contractors, making Fonterra the employer of herein respondents; and (2) whether or not
respondents were illegally dismissed.
Our Ruling
We find merit in the petition.
As regards the CA’s conclusion that Zytron is not a legitimate job contractor, We are of the view
that such is immaterial to the resolution of the illegal dismissal issue for one reason: We find
that respondents voluntarily terminated their employment with Zytron, contrary to their allegation
that their employment with Zytron was illegally terminated.
We do not agree with the CA that respondents’ employment with Zytron was illegally terminated.
As correctly held by the Labor Arbiter and the NLRC, the termination of respondents’
employment with Zytron was brought about by the cessation of their contracts with the latter.
We give credence to the Labor Arbiter’s conclusion that respondents were the ones who
refused to renew their contracts with Zytron, and the NLRC’s finding that they themselves
acquiesced to their transfer to A.C. Sicat.
By refusing to renew their contracts with Zytron, respondents effectively resigned from the latter.
Resignation is the voluntary act of employees who are compelled by personal reasons to
dissociate themselves from their employment, done with the intention of relinquishing an office,
accompanied by the act of abandonment.5chanroblesvirtuallawlibrary
Here, it is obvious that respondents were no longer interested in continuing their employment
with Zytron. Their voluntary refusal to renew their contracts was brought about by their desire to
continue their assignment in Fonterra which could not happen in view of the conclusion of
Zytron’s contract with Fonterra. Hence, to be able to continue with their assignment, they
applied for work with A.C. Sicat with the hope that they will be able to continue rendering
services as TMRs at Fonterra since A.C. Sicat is Fonterra’s new manpower supplier. This fact is
even acknowledged by the CA in the assailed Decision where it recognized the reason why
respondents applied for work at A.C. Sicat. The CA stated that “[t]o continuously work as
merchandisers of Fonterra products, [respondents] submitted their job applications to A.C. Sicat
xxx.”6 This is further bolstered by the fact that respondents voluntarily complied with the
requirements for them to claim their corresponding monetary benefits in relation to the cessation
of their employment contract with Zytron.
In short, respondents voluntarily terminated their employment with Zytron by refusing to renew
their employment contracts with the latter, applying with A.C. Sicat, and working as the latter’s
employees, thereby abandoning their previous employment with Zytron. Too, it is well to
mention that for obvious reasons, resignation is inconsistent with illegal dismissal. This being
the case, Zytron cannot be said to have illegally dismissed respondents, contrary to the findings
of the CA.
As regards respondents’ employment with A.C. Sicat and its termination via non-renewal of their
contracts, considering that in labor-only contracting, the law creates an employer-employee
relationship between the principal and the labor-only contractor’s employee as if such
employees are directly employed by the principal employer, and considers the contractor as
merely the agent of the principal,7 it is proper to dispose of the issue on A.C. Sicat’s status as a
job contractor first before resolving the issue on the legality of the cessation of respondents’
employment.
In this regard, We defer to the findings of the CA anent A.C. Sicat’s status as a legitimate job
contractor, seeing that it is consistent with the rules on job contracting and is sufficiently
supported by the evidence on record.
A person is considered engaged in legitimate job contracting or subcontracting if the following

conditions concur:chanRoblesvirtualLawlibrary
The contractor or subcontractor carries on a distinct and independent business and undertakes
to perform the job, work or service on its own account and under its own responsibility according
to its own manner and method, and free from the control and direction of the principal in all
matters connected with the performance of the work except as to the results
thereof;chanrobleslaw
The contractor or subcontractor has substantial capital or investment; and
The agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise
of the right to self-organization, security of tenure, and social and welfare benefits.8
On the other hand, contracting is prohibited when the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or service for a principal and if any of
the following elements are present, thus:chanRoblesvirtualLawlibrary
The contractor or subcontractor does not have substantial capital or investment which relates to
the job, work or service to be performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which are directly related to the main
business of the principal; or
The contractor does not exercise the right to control over the performance of the work of the
contractual employee.9
The CA correctly found that A.C. Sicat is engaged in legitimate job contracting. It duly noted that
A.C. Sicat was able to prove its status as a legitimate job contractor for having presented the
following evidence, to wit:chanRoblesvirtualLawlibrary
Certificate of Business Registration;chanrobleslaw
Certificate of Registration with the Bureau of Internal Revenue;chanrobleslaw
Mayor’s Permit;chanrobleslaw
Certificate of Membership with the Social Security System;chanrobleslaw
Certificate of Registration with the Department of Labor and Employment;chanrobleslaw
Company Profile; and
Certifications issued by its clients.10

Furthermore, A.C. Sicat has substantial capital, having assets totaling P5,926,155.76 as of
December 31, 2006. Too, its Agreement with Fonterra clearly sets forth that A.C. Sicat shall be
liable for the wages and salaries of its employees or workers, including benefits, premiums, and
protection due them, as well as remittance to the proper government entities of all withholding
taxes, Social Security Service, and Medicare premiums, in accordance with relevant laws.
The appellate court further correctly held that Fonterra’s issuance of Merchandising Guidelines,
stock monitoring and inventory forms, and promo mechanics, for compliance and use of A.C.
Sicat’s employees assigned to them, does not establish that Fonterra exercises control over
A.C. Sicat. We agree with the CA’s conclusion that these were imposed only to ensure the
effectiveness of the promotion services to be rendered by the merchandisers as it would be
risky, if not imprudent, for any company to completely entrust the performance of the operations
it has contracted out.
These sufficiently show that A.C. Sicat carries out its merchandising and promotions business,
independent of Fonterra’s business. Thus, having settled that A.C. Sicat is a legitimate job
contractor, We now determine whether the termination of respondents’ employment with the
former is valid.
We agree with the findings of the CA that the termination of respondents’ employment with the
latter was simply brought about by the expiration of their employment contracts.
Foremost, respondents were fixed-term employees. As previously held by this Court, fixed-term
employment contracts are not limited, as they are under the present Labor Code, to those by
nature seasonal or for specific projects with predetermined dates of completion; they also
include those to which the parties by free choice have assigned a specific date of termination.11
The determining factor of such contracts is not the duty of the employee but the day certain
agreed upon by the parties for the commencement and termination of the employment
relationship.12chanroblesvirtuallawlibrary
In the case at bar, it is clear that respondents were employed by A.C. Sicat as project
employees. In their employment contract with the latter, it is clearly stated that “[A.C. Sicat is]
temporarily employing [respondents] as TMR[s] effective June 6[, 2006] under the following
terms and conditions: The need for your service being only for a specific project, your temporary
employment will be for the duration only of said project of our client, namely to promote
FONTERRA BRANDS products xxx which is expected to be finished on or before Nov. 06,
2006.”13chanroblesvirtuallawlibrary
Respondents, by accepting the conditions of the contract with A.C. Sicat, were well aware of
and even acceded to the condition that their employment thereat will end on said pre-
determined date of termination. They cannot now argue that they were illegally dismissed by the
latter when it refused to renew their contracts after its expiration. This is so since the non-
renewal of their contracts by A.C. Sicat is a management prerogative, and failure of
respondents to prove that such was done in bad faith militates against their contention that they
were illegally dismissed. The expiration of their contract with A.C. Sicat simply caused the
natural cessation of their fixed-term employment there at. We, thus, see no reason to disturb the
ruling of the CA in this respect.
With these, We need not belabor the other assigned errors.
IN VIEW OF THE FOREGOING, the instant Petition for Review is GRANTED. The assailed
Decision of the Court of Appeals dated September 6, 2012 and its January 11, 2013 Resolution
denying reconsideration thereof, in CA-G.R. SP No. 114227, are hereby REVERSED and SET
ASIDE. The Decision of the National Labor Relations Commission dated November 20, 2009
and its Resolution dated March 5, 2010 in NLRC Case No. RAB IV 12-23927-06-Q are hereby
REINSTATED.
SO ORDERED.
Peralta, Villarama, Jr., Reyes, and Jardeleza, JJ., concur.cralawlawlibrary
444

THIRD DIVISION
[G.R. NO. 179507 : October 2, 2009]
EATS-CETERA FOOD SERVICES OUTLET and/or SERAFIN RAMIREZ, Petitioners, v.

MYRNA B. LETRAN and MARY GRACE ESPADERO, Respondents.
DECISION
NACHURA, J.:
Before us is a Petition for Review on Certiorari assailing the December 13, 2006 Decision1 of
the Court of Appeals (CA), as well as its August 30, 2007 Resolution,2 denying the motion for
partial reconsideration filed by petitioners in CA-G.R. SP No. 92551. The appellate court, in its
assailed decision and resolution, affirmed the July 18, 2005 Resolution3 of the National Labor
Relations Commission (NLRC) with respect to Myrna B. Letran's complaint but modified it with
respect to Mary Grace Espadero's (Espadero) complaint declaring petitioners liable for her
illegal dismissal. Petitioners are now assailing the CA's decision only with respect to its ruling on
Espadero's case.
The factual antecedents follow.
Espadero had been employed by Eats-cetera Food Services Outlet since June 30, 2001 as
cashier. On November 20, 2002, when she reported for duty, Espadero discovered that her time
card was already punched in. After asking around, she found out that a certain Joselito
Cahayagan was the one who punched in her time card. Espadero, however, failed to report the
incident to her supervisor, Clarissa Reduca (Reduca). This prompted Reduca to report the
incident to the personnel manager, Greta dela Hostria. Espadero contended that she was
dismissed outright without being given ample opportunity to explain her side. She claimed that
on November 21, 2002, petitioners called her and asked her to make a letter of admission as a
condition for her reemployment. Espadero, thus, wrote:
Dear Sir/Madam,
Ako po ay humihingi ng paumanhin sa aking nagawang pagkakamali. Hindi ko po alam na pina

in po ng aking kasama sa trabaho ang aking time card. Di ko agad nasabi sa supervisor.
Nagpapasalamat din po ako kay Januarylyn Paq (some text missing) at Nida Tendenilla sa
kanilang ginawa dahil dito maituwid po ang aking pagkakamali. Sana po ako ay inyong
maunawaan.
Gumagalang,
Mary Grace Espadero4
After writing the letter, Espadero was told to wait for an assignment. The following day, on
November 22, 2002, the company issued a Memorandum5 terminating her for violation of Rule
24 of the company rules and regulations.6 Because of this, Espadero decided to file a complaint
for illegal dismissal before the NLRC.
Petitioners, however, maintained that the company rules and regulations, as well as the
corresponding penalties in case of violation thereof, were made known to Espadero before and
upon her actual employment as cashier. They also argued that contrary to her claim, petitioners
gave Espadero ample opportunity to explain her side. To prove their contention, petitioners
presented the affidavit of supervisor Reduca stating thus:
On November 20, 2002, someone else punched in the respective time cards of the said Mary
Grace Espadero and Fritzie Eviota, but the said employees deliberately failed to inform her (sic)
about it, [which is] a gross violation of Rule # 24 of the company's Rules and Regulations. The
matter was immediately reported to our Personnel Manager, Ms. GRETA V. DELA HOSTRIA.
She then issued separate memorandum each for Mary Grace Espadero and Fritzie Eviota "to
explain in writing, within 72 hours, why no disciplinary action should be taken["] against them.
She personally handed over to Mary Grace Espadero and Fritzie Eviota their individual
memoranda for their acknowledgement, but they requested a little time more before returning
the duly acknowledged cop[ies] as, allegedly, they would be going over the same first. While
they were able to submit their respective written explanations anent the aforesaid incident, they
never returned the duly acknowledged cop[ies] of my (sic) memoranda to me.7
Petitioners also claimed that they conducted an impartial investigation of the incident and found
substantial evidence that Espadero was in cahoots with a co-worker in punching in her time
card.8 For this reason, petitioners decided to terminate her.
On January 31, 2005, Labor Arbiter Luis D. Flores rendered a Decision9 declaring petitioners
liable for illegally terminating Espadero. The Labor Arbiter faulted petitioners for their failure to
prove that Espadero deliberately caused another person to punch in her time card on her
behalf, and said that no hearing or investigation was conducted to prove that Espadero was in
cahoots with somebody in the alleged dishonest act prior to her dismissal.10 Petitioners were
ordered to reinstate Espadero and to pay her full backwages from the date of dismissal up to
actual reinstatement.
Upon appeal, the NLRC reversed the Labor Arbiter's findings. It ratiocinated that Espadero was
duly afforded her right to due process as can be gleaned from Reduca's affidavit, the contents
of which were never denied nor rebutted by Espadero.11
Aggrieved, respondents filed a petition for certiorari before the CA. On December 13, 2006, the
CA rendered a ruling affirming the Labor Arbiter's pronouncement that Espadero was not
afforded due process. The appellate court also observed that the punishment of dismissal was
too harsh and unjustified.12
Petitioners now come before this Court via this Rule 45 petition. It is their contention that
Espadero's infraction constitutes serious misconduct, considering that Espadero's job requires a
higher degree of honesty.
There are essentially two issues to be resolved: first, whether Espadero was afforded her right
to due process prior to being dismissed from her job; and second, whether Espadero's infraction
was serious enough to warrant the penalty of dismissal.
The petition is impressed with merit.
Article 282 of the Labor Code includes serious misconduct, fraud and willful breach of trust
among the just causes for termination.13 But prior to termination on such grounds, the employer
must satisfy both substantive and procedural due process. Not only must the employee be
afforded a reasonable opportunity to be heard and to submit any evidence he may have in
support of his defense, but the dismissal must be for a just or authorized cause as provided by
law.14
The procedural requirements are set forth in Section 2(d), Rule I of the Implementing Rules of
Book VI of the Labor Code, to wit:
SEC. 2. Security of Tenure. x x x.
xxx
(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor
Code:
(i) A written notice served on the employee specifying the ground or grounds for termination,
and giving said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of
counsel if he so desires is given opportunity to respond to the charge, present his evidence, or
rebut the evidence presented against him.
(iii) 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.
Reduca's affidavit avers that Espadero was notified by the personnel manager and was asked
to explain her side within 72 hours. As there was no duplicate copy, the only copy of the notice
to explain remained with Espadero. While it may be highly suspicious for a personnel manager
not to keep a copy of such an important document, Reduca's averment that the only copy of the
notice to explain was handed to Espadero herself was never denied nor controverted by the
latter. Wittingly or not, the averment is deemed to have been admitted by Espadero. This being
so, petitioners may be said to have sufficiently complied with the first notice requirement, i.e.,
that the employee must first be given a notice to explain her side.
Petitioners likewise complied with the second notice requirement. On November 22, 2002,
Greta dela Hostria, as personnel manager, issued a Memorandum stating with clarity the reason
for Espadero's dismissal. It reads:
MEMORANDUM
TO : Mary Grace Espadero - CB Manila
FROM : Personnel Department
RE : As stated
DATE : November 22, 2002
We received your explanation regarding [you] not reporting to your immediate supervisor that
somebody have (sic) punched in your Time Card last November 20, 2002. After a thorough
investigation of the incident, we found that you violated Rule # 24 which states:
"Punching/Signing of timecards for other employees or requesting another employee to

punch/sign his Time Card Record, which is punishable by DISMISSAL."
Because of this we regret that we are terminating your services effective November 22, 2002 as
provided by [the] company['s] Rules and Regulations.
(Sgd.) GRETA V. DELA HOSTRIA

Personnel Manager
NOTED:
(Sgd.) SERAFIN T. RAMIREZ
Vice-President15
Substantively, we also sustain petitioners' reasoning that Espadero's position as a cashier is

one that requires a high degree of trust and confidence, and that her infraction reasonably taints
such trust and confidence reposed upon her by her employer.
A position of trust and confidence has been defined as one where a person is entrusted with
confidence on delicate matters, or with the custody, handling, or care and protection of the
employer's property16 and/or funds.17 One such position is that of a cashier. A cashier is a
highly sensitive position which requires absolute trust and honesty on the part of the
employee.18 It is for this reason that the Court has sustained the dismissal of cashiers who
have been found to have breached the trust and confidence of their employers. In one case, the
Court upheld the validity of the dismissal of a school cashier despite her 19 years of service
after evidence showed that there was a discrepancy in the amount she was entrusted to deposit
with a bank.19
In Metro Drug Corporation v. National Labor Relations Commission,20 we explained:
Loss of confidence as a ground for dismissal does not entail proof beyond reasonable doubt of
the employee's misconduct. It is enough that there be "some basis" for such loss of confidence
or that "the employer has reasonable grounds to believe, if not to entertain the moral
conviction[,] that the employee concerned is responsible for the misconduct and that the nature
of his participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position.21
The rule, therefore, is that if there is sufficient evidence to show that the employee occupying a
position of trust and confidence is guilty of a breach of trust, or that his employer has ample
reason to distrust him, the labor tribunal cannot justly deny the employer the authority to dismiss
such employee.22
In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an
employee occupying a job which requires utmost fidelity to her employers, she failed to report to
her immediate supervisor the tampering of her time card. Whether her failure was deliberate or
due to sheer negligence, and whether Espadero was or was not in cahoots with a co-worker,
the fact remains that the tampering was not promptly reported and could, very likely, not have
been known by petitioners, or, at least, could have been discovered at a much later period, if it
had not been reported by Espadero's supervisor to the personnel manager. Petitioners,
therefore, cannot be blamed for losing their trust in Espadero.
Moreover, the peculiar nature of Espadero's position aggravates her misconduct. Misconduct
has been defined as improper or wrong conduct; the transgression of some established or
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. The misconduct, to be serious, must be of such
a grave character and not merely trivial or unimportant. To constitute just cause for termination,
it must be in connection with the employee's work.23 With the degree of trust expected of
Espadero, such infraction can hardly be classified as one that is trivial or unimportant. Her
failure to promptly report the incident reflects a cavalier regard for the responsibility required of
her in the discharge of the duties of her position.
WHEREFORE, premises considered, the petition is GRANTED. The December 13, 2006
Decision of the Court of Appeals, as well as its August 30, 2007 Resolution with respect to Mary
Grace Espadero's case, is REVERSED and SET ASIDE. Accordingly, the National Labor
Relations Commission's Resolution dated July 18, 2005 is REINSTATED.
SO ORDERED.
Endnotes:
1 Penned by Associate Justice Monina Arevalo-Zenarosa, with Associate Justices Martin S.

Villarama, Jr. and Lucas P. Bersamin (now a member of this Court), concurring; rollo, pp. 52-66.
2 Id. at 67-69.
3 Rollo, pp. 128-143.
4 Id. at 56.
5 CA rollo, p. 46.
6 Rule 24 of the company rules and regulations provides:
Punching, signing of time cards for other employees, or requesting another employee to punch
in or sign his time card records, which is punishable by DISMISSAL. (Rollo, p. 98.)
7 CA rollo, p. 88. (Emphasis removed.)
8 Rollo, p. 86.
9 Id. at 95-104.
10 Id. at 101-102.
11 Id. at 138-140.
12 Id. at 62.
13 Article 282 of the Labor Code provides in full:

ART. 282. TERMINATION BY EMPLOYER
An employer may terminate an employment for any of the following causes:
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
any immediate member of his family or his duly authorized representative; and
14 Gonzales v. National Labor Relations Commission, G.R. No. 131653, March 26, 2001, 355
SCRA 195, 204.
15 Supra note 5.
16 Panday v. National Labor Relations Commission, G.R. No. 67664, May 20, 1992, 209 SCRA
122, 125.
17 Gonzales v. National Labor Relations Commission, supra note 14, at 208.
18 Garcia v. NLRC, 327 Phil. 648, 651 (1996).
19 Id. at 650.
20 227 Phil. 121 (1986).
21 Id. at 126, citing Dole Philippines, Inc. v. National Labor Relations Commission, 123 SCRA
673. (Emphasis supplied.)
22 Id. at 127.
23 Philippine Long Distance Company v. The Late Romeo F. Bolso, G.R. No. 159701, August
17, 2007, 530 SCRA 550, 560.
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SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 175283 March 28, 2008
JACKQUI R. MORENO, Petitioner,

vs.
SAN SEBASTIAN COLLEGE-RECOLETOS, MANILA, Respondent.
DECISION
CHICO-NAZARIO, J.:
Assailed in this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court is the
Decision2 of the Court of Appeals dated 7 November 2006 in CA-G.R. SP No. 90083. The
appellate court’s Decision granted the Special Civil Action for Certiorari filed by respondent San
Sebastian College-Recoletos, Manila (SSC-R), and annulled the Decision3 dated 23 November
2004 and the Resolution4 dated 31 March 2005 of the National Labor Relations Commission
(NLRC) in NLRC-NCR-CA No. 037175-03.
The undisputed facts of the case are as follows:
Respondent SSC-R is a domestic corporation and an educational institution duly registered

under the laws of the Philippines, located in C. M. Recto Avenue, Quiapo, Manila.
On 16 January 1999, SSC-R employed petitioner Jackqui R. Moreno (Moreno) as a teaching

fellow. On 23 October 2000, Moreno was appointed as a full-time college faculty member.5
Then, on 22 October 2001, Moreno became a member of the permanent college faculty.6 She
was also offered the chairmanship7 of the Business Finance and Accountancy Department of
her college on 13 September 2002.
Subsequently, reports and rumors of Moreno’s unauthorized external teaching engagements

allegedly circulated and reached SSC-R. The Human Resource Department of the school
thereafter conducted a formal investigation on the said activities. On 24 October 2002, the
Department submitted its report,8 which stated that Moreno indeed had unauthorized teaching
assignments at the Centro Escolar University during the first semester of the School Year 2002-
2003, and at the College of the Holy Spirit, Manila, during the School Years 2000-2001, 2001-
2002 and the first semester of School Year 2002-2003.
On 27 October 2002, Moreno received a memorandum9 from the Dean of her college, requiring
her to explain the reports regarding her unauthorized teaching engagements. The said activities
allegedly violated Section 2.2 of Article II of SSC-R’s Faculty Manual,10 which reads:
Administrative permission is required for all full-time faculty members to teach part-time
elsewhere. If ever teaching permission is granted, the total teaching load should not exceed the
maximum allowed by CHED rules and regulations. Faculty members are required to report all
other teaching assignments elsewhere within two (2) weeks from start of the classes every
semester.
On 28 October 2002, Moreno sent a written explanation11 in which she admitted her failure to
secure any written permission before she taught in other schools. Moreno explained that the
said teaching engagements were merely transitory in nature as the aforesaid schools urgently
needed lecturers and that she was no longer connected with them. Moreno further stated that it
was never her intention to jeopardize her work in SSC-R and that she merely wanted to improve
her family’s poor financial conditions.
A Special Grievance Committee was then formed in order to investigate and make
recommendations regarding Moreno’s case. The said committee was composed of Dean
Abraham Espejo of the College of Law, as chairman, and Messrs. Dindo Bunag and Ramon
Montierro, as members.
In a letter12 dated 11 November 2002, the grievance committee required Moreno to answer the
following series of questions concerning her case, to wit:
1. Did you teach in other schools without first obtaining the consent of your superiors in SSC-R?
2. Did you ever go beyond the maximum limit for an outside load?
3. Did you ever truthfully disclose completely to your superiors at SSC-R any outside Load?
4. Do you deny teaching in CEU?
5. Do you deny teaching at Holy Spirit?
Moreno answered the above queries in a letter13 dated 12 November 2002. Moreno admitted
she did not formally disclose her teaching loads at the College of the Holy Spirit and at the
Centro Escolar University for fear that the priest administrators may no longer grant her
permission, as prior similar requests had already been declined; that the Dean of her college
was aware of her external teaching loads; that she went beyond the maximum limit for an
outside load in the School Years 2000 until 2002, because she needed to support her mother
and sister, her masteral studies, and her sister’s canteen business, all of which coincided with
the payment of the emergency loan from the SSC-R administrators that paid for her mother’s
illness; that she did not deny teaching part-time in the aforementioned schools; and that she did
not wish to resign because she felt she deserved a second chance.
On the same day that Moreno sent her letter, the grievance committee issued its resolution,14
which unanimously found that she violated the prohibition against a full-time faculty having an
unauthorized external teaching load. The majority of the grievance committee members
recommended Moreno’s dismissal from employment in accordance with the school manual, but
Dean Espejo dissented and called only for a suspension for one semester.
Thereafter, SSC-R sent a letter15 to Moreno that was signed by the College President,
informing her that they had approved and adopted the findings and recommendations of the
grievance committee and, in accordance therewith, her employment was to be terminated
effective 16 November 2002.
Moreno thus instituted with the NLRC a complaint for illegal termination against SSC-R,
docketed as NLRC-NCR Case No. 11-10077-02, seeking reinstatement, money claims,
backwages, separation pay if reinstatement is not viable, and attorney’s fees.
In the Decision16 dated 30 April 2003, Labor Arbiter Veneranda C. Guerrero dismissed
Moreno’s complaint for lack of merit, thus:
WHEREFORE, premises considered, judgment is hereby rendered dismissing the complaint for
illegal dismissal for lack of merit. Respondent San Sebastian College-Recoletos is hereby
ordered to pay complainant Jackqui R. Moreno the amount of NINE THOUSAND ONE
HUNDRED FORTY THREE AND 75/100 PESOS (₱9,143.75) representing her unpaid salaries.
All other claims are DISMISSED for lack of merit.
The Labor Arbiter ruled that Moreno’s due acceptance of the appointment as a member of the
Permanent Faculty meant that she was bound to the condition therein not to accept any outside
teaching assignments without permission. Moreno’s admission of her violation was likewise said
to have rendered her liable for the penalty of dismissal as provided for in the SSC-R Faculty
Manual. The Labor Arbiter held that SSC-R had adequately discharged the burden of proof
imposed by law in dismissing Moreno. Except for her unpaid salary for fifteen (15) days, which
was not controverted, the rest of Moreno’s money claims were denied for being
unsubstantiated.
On appeal by Moreno, the NLRC reversed the rulings of the Labor Arbiter in a Decision dated
23 November 2004, the relevant portion of which reads:
The four (4) applications for leave of absence adduced in evidence by the respondent [SSC-R]
are all undated. If the absences indicated in the said documents were the only absences
incurred by the complainant [Moreno] in her four-year tenure, it cannot be said that she had a
poor attendance. In fact, the contrary would be true. On the other hand, it is conceded that in
the yearly evaluation of the performance of teachers, she consistently landed among the five
best teachers. Thus, neither can it be said that her moonlighting activities adversely affected her
work performance. Likewise, the undisputed fact that she was asked to be the chairman of
Business Finance and Accountancy for SY 2002-2003 should be considered. This last
circumstance could only mean that she was very good at her job.
There are other extenuating circumstances that should have been taken into consideration in
determining the propriety of the penalty of dismissal meted upon the complainant. These
circumstances are the fact that it was her first offense in four years of unblemished employment,
and the fact that she candidly admitted her fault. x x x
Moreover, it is settled that the existence of some rules agreed upon between the employer and
employee on the subject of dismissal cannot preclude the State from inquiring whether its rigid
application would work too harshly on the employee. (Gelmart Industries Phils. Inc. vs. NLRC,
176 SCRA 295 cited in Caltex Refinery Employees Association vs. NLRC, 246 SCRA 271).
Thus, in the instant case, it must be concluded that the penalty of dismissal meted upon the
complainant [Moreno] was too harsh and unreasonable under the circumstances. At most, a
one-year suspension with a warning against the repetition of the same offense would have been
more in keeping with the generally accepted principles of law.
WHEREFORE, the decision appealed from is hereby REVERSED. The respondent [SSC-R] is
hereby ordered to REINSTATE the complainant [Moreno] to her former position, and to pay her
full backwages counted from November 16, 2003 up to the date of her actual reinstatement.17
SSC-R filed a Motion for Reconsideration18 of the NLRC Decision, which was denied for lack of
merit in a Resolution19 dated 31 March 2005.1avvphi1
Thus, SSC-R instituted with the Court of Appeals a Petition for Certiorari under Rule 65 of the
Rules of Court, with a prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction,20 docketed as CA-G.R. SP No. 90083, alleging grave abuse of discretion
on the part of the NLRC.
In a Decision21 dated 7 November 2006, the appellate court granted the petition and annulled
the Decision dated 23 November 2004, and Resolution dated 31 March 2005 of the NLRC. In
reinstating the Decision of the Labor Arbiter dated 30 April 2003, the Court of Appeals ruled in
this wise:
In the case at bar, there is clearly grave abuse of discretion on the part of the NLRC when it
reversed the Decision of the Labor Arbiter. Its conclusions are highly prejudicial to the interests
of herein petitioner [SSC-R], considering the glaring infractions committed by private respondent
[Moreno], which she even expressly admitted.
xxxx
"Willful disobedience of the employer’s lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two (2) requisites: the employee’s assailed
conduct must have been willful or intentional, the willfulness being characterized by a wrongful
or perverse attitude; and 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.
The foregoing requisites are all present in this case. The prohibition against unauthorized
outside teaching engagements found in the Faculty Manual and in private respondent’s
[Moreno] appointment letter are deemed reasonable under the circumstances. In fact, the
petitioner’s [SSC-R] policy is actually permissive since it allows other teaching engagements so
long as its president approves of the same.
Concededly, this policy was made known to private respondent [Moreno] for as mentioned
earlier, it is found not only in the Faculty Manual, but more importantly, it is explicitly stated in
her appointment letter. By her own admission, it cannot be clearer that, in spite of her
knowledge thereof, private respondent [Moreno] willfully disobeyed the said prohibition. When
she accepted the teaching opportunities offered to her by other schools and altogether
concealed the same from the petitioner [SSC-R], she risked being administratively held liable
therefor. Thus, the excuses she raised upon the petitioner’s [SSC-R] discovery of such
concealment deserve scant consideration.
The policy is obviously in connection with the private respondent’s [Moreno] duties as a faculty
member. It is designed to ensure that the petitioner’s [SSC-R] teaching staff is well fit to function
accordingly, not only for its benefit, but chiefly, for the students who are under their care and
instruction. Private respondent [Moreno] argues that notwithstanding her violations, her
commitments with petitioner [SSC-R] were never compromised. Be that as it may, this fact
cannot absolve her. She may be fit at the time when her infractions were revealed, but there is
no assurance that her health would not deteriorate in time if she persists in carrying on a heavy
workload.
xxxx
WHEREFORE, the instant petition is GRANTED. The 23 November 2004 Decision and the 31
March 2005 Resolution of the National Labor Relations Commission (Second Division) are
hereby ANNULLED and SET ASIDE. The National Labor Relations Commission is permanently
enjoined from executing its 31 March 2005 Resolution. The Decision of the Labor Arbiter dated
30 April 2003 is hereby REINSTATED and AFFIRMED.
Accordingly, Moreno now impugns before this Court the Court of Appeals Decision dated 07
November 2006 raising the following issues:
I.
WHETHER OR NOT THE DISMISSAL OF PETITIONER WAS PROPER AND LAWFUL.
II.
WHETHER OR NOT PETITIONER IS ENTITLED TO THE RELIEF SHE SEEKS AGAINST
RESPONDENT.
Moreno insists that her right to security of tenure is a more significant consideration in this case
than the strict application of a school policy. She laments that her dismissal from employment
for failing to secure the necessary permission is too harsh and undeserved a penalty.
The most basic of tenets in employee termination cases is that no worker shall be dismissed
from employment without the observance of substantive and procedural due process.
Substantive due process means that the ground upon which the dismissal is based is one of the
just or authorized causes enumerated in the Labor Code. Procedural due process, on the other
hand, requires that an employee be apprised of the charge against him, given reasonable time
to answer the same, allowed ample opportunity to be heard and defend himself, and assisted by
a representative if the employee so desires.22 The employee must be furnished two written
notices: the first notice apprises the employee of the particular acts or omissions for which his
dismissal is sought, and the second is a subsequent notice which informs the employee of the
employer's decision to dismiss him.23
Article 282 of the Labor Code provides for the just causes for the termination of employment, to
wit:
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
any immediate member of his family or his duly authorized representatives; and
In termination cases, the burden of proof rests on the employer to show that the dismissal is for
just cause. When there is no showing of a clear, valid and legal cause for the termination of
employment, the law considers the matter a case of illegal dismissal and the burden is on the
employer to prove that the termination was for a valid or authorized cause.24
Respondent SSC-R contends that Moreno’s dismissal from employment was valid because she
knowingly violated the prohibition embodied in the aforementioned Section 2.2 of Art. II of the
SSC-R Faculty Manual, in accordance with Section 4525 of the Manual of Regulations for
Private Schools, and which prohibition was likewise contained in Moreno’s employment
contract.26 In so doing, Moreno allegedly committed serious misconduct and willful
disobedience against the school, and thereby submitted herself to the corresponding penalty
provided for in both the Faculty Manual and the employment contract, which is termination for
cause.
On the basis of the evidence on record, the Court finds that Moreno has indeed committed
misconduct against respondent SSC-R. Her admitted failure to obtain the required permission
from the school before she engaged in external teaching engagements is a clear transgression
of SSC-R’s policy. However, said misconduct falls below the required level of gravity that would
warrant dismissal as a penalty.
Under Art. 282(a) of the Labor Code, willful disobedience of the employer’s lawful orders as a
just cause for termination of employment envisages the concurrence of at least two requisites:
(1) the employee’s assailed conduct must have been willful or intentional, the willfulness being
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 has
been engaged to discharge.27
Similarly, with respect to serious misconduct, the Court has already ruled in National Labor
Relations Commission v. Salgarino28 that:
Misconduct is defined as improper or wrong conduct. It is the transgression of some established

and definite rule of action, a forbidden act, a dereliction of duty, willful in character and implies
wrongful intent and not mere error of judgment. The misconduct to be serious within the
meaning of the act must be of such a grave and aggravated character and not merely trivial or
unimportant. Such misconduct, however serious, must nevertheless be in connection with the
work of the employee to constitute just cause from his separation.
In order to constitute serious misconduct which will warrant the dismissal of an employee under
paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct
complained of has violated some established rules or policies. It is equally important and
required that the act or conduct must have been performed with wrongful intent. (Emphasis
ours.)
After examining the records of the case, the Court finds that SSC-R miserably failed to prove
that Moreno’s misconduct was induced by a perverse and wrongful intent as required in Art.
282(a) of the Labor Code. SSC-R merely anchored Moreno’s alleged bad faith on the fact that
she had full knowledge of the policy that was violated and that it was relatively easy for her to
secure the required permission before she taught in other schools. This posture is utterly
lacking.
It bears repeating that it is the employer that has the burden of proving the lawful cause
sustaining the dismissal of the employee. Even equipoise is not enough; the employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.29
In the present case, SSC-R failed to adduce any concrete evidence to prove that Moreno
indeed harbored perverse or corrupt motivations in violating the aforesaid school policy. In her
letter of explanation to the grievance committee dated 12 November 2002, Moreno explained in
detail her role as the breadwinner and the grave financial conditions of her family. As previous
requests for permission had already been denied, Moreno was thus prompted to engage in illicit
teaching activities in other schools, as she desperately needed them to augment her income.
Instead of submitting controverting evidence, SSC-R simply dismissed the above statements as
nothing more than a "lame excuse"30 and are "clearly an afterthought,"31 considering that no
evidence was offered to support them and that Moreno’s salary was allegedly one of the highest
among the universities in the country.
In addition, even if dismissal for cause is the prescribed penalty for the misconduct herein
committed, in accordance with the SSC-R Faculty Manual and Moreno’s employment contract,
the Court finds the same to be disproportionate to the offense.
Time and again, we have ruled that while an employer enjoys a wide latitude of discretion in the
promulgation of policies, rules and regulations on work-related activities of the employees, those
directives, however, 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.32
Special circumstances were present in the case at bar which should have been properly taken
into account in the imposition of the appropriate penalty. Moreno, in this case, had readily
admitted her misconduct, which was undisputedly the first she has ever committed against the
school. Her teaching abilities and administrative skills remained apparently unaffected by her
external teaching engagements, as she was found by the grievance committee to be one of the
better professors in the Accounting Department33 and she was even offered the Chairmanship
of her college.34 Also, the fact that Moreno merely wanted to alleviate her family’s poor financial
conditions is a justification that SSC-R failed to refute. SSC-R likewise failed to prove any
resulting material damage or prejudice on its part as a consequence of Moreno’s misconduct.
The claim by SSC-R that the imposition of a lesser penalty would set a bad precedent35 for the
other faculty members who comply with the school policies is too speculative for this Court to
even consider.
Finally, the Court notes that in Moreno’s contract of employment,36 one of the provisions
therein categorically stated that should a violation of any of the terms and conditions thereof be
committed, the penalty that will be imposed would either be suspension or dismissal from
employment. Thus, contrary to its position from the beginning, SSC-R clearly had the discretion
to impose a lighter penalty of suspension and was not at all compelled to dismiss Moreno under
the circumstances, just because the Faculty Manual said so.
With regard to the observance of procedural due process, neither of the parties has put the
same into issue. Indeed, based on the evidence on record, Moreno was served with the
required twin notices and was afforded the opportunity to be heard. The first notice was
embodied in the memorandum37 dated 27 October 2002 sent by her College Dean, which
required her to explain her unauthorized teaching assignments. The letter38 by SSC-R that
informed Moreno that her services were being terminated effective 16 November 2002
constituted the second required notice. Moreno was also given the opportunity to explain her
side when the special grievance committee asked her a series of questions pertaining to their
investigation in a letter39 dated 11 November 2002 and to which she replied likewise through a
letter40 dated 12 November 2002.
In light of the foregoing, the Court holds that the dismissal of petitioner Moreno failed to comply
with the substantive aspect of due process. Despite SSC-R’s observance of procedural due
process, it nonetheless failed to discharge its burden of proving the legality of Moreno’s
termination from employment. Thus, the imposed penalty of dismissal is hereby declared as
invalid.
In so ruling, this Court does not depreciate the misconduct committed by Moreno. Indeed, SSC-
R has adequate reasons to impose sanctions on her. However, this should not be dismissal
from employment. Because of the serious implications of this penalty, "our Labor Code decrees
that an employee cannot be dismissed, except for the most serious causes."41
Considering the presence of extenuating circumstances in the instant case, the Court deems it
appropriate to impose the penalty of suspension of one (1) year on Moreno, to be counted from
16 November 2002, the effective date of her illegal dismissal. However, given the period of time
in which Moreno was actually prevented from working in the respondent school, the said
suspension should already be deemed served.
Furthermore, the Court holds that Moreno should be reinstated to her former position, without
loss of seniority rights and other privileges, but without payment of backwages.
As a general rule, the normal consequences of a finding that an employee has been illegally
dismissed are, firstly, that the employee becomes entitled to reinstatement without loss of
seniority rights; and secondly, the payment of backwages corresponding to the period from his
illegal dismissal up to his actual reinstatement. The two forms of relief are, however, distinct and
separate from each other. Though the grant of reinstatement commonly carries with it an award
of backwages, the appropriateness or non-availability of one does not carry with it the
inappropriateness or non-availability of the other.42
In accordance with Durabuilt Recapping Plant & Co. v. National Labor Relations Commission,43
the Court may not only mitigate, but also absolve entirely, the liability of the employer to pay
backwages where good faith is evident. Likewise, backwages may be withheld from a dismissed
employee where exceptional circumstances are availing.44
In the present case, the good faith of SSC-R is apparent. The termination of Moreno from her
employment cannot be said to have been carried out in a malevolent, arbitrary or oppressive
manner. Indeed, the only mistake that the respondent school has committed was to strictly
apply the provisions of its Faculty Manual and its contract with Moreno without regard for the
aforementioned special circumstances that were attendant in this case. Even then, Moreno’s
right to procedural due process was fully respected, as she was given the required twin notices
and an ample opportunity to be heard. This fact was not even disputed by Moreno herself.
With respect to Moreno’s claim for moral and exemplary damages, the same were never
satisfactorily pleaded and substantiated.45 Thus, they are hereby denied. Neither is Moreno
entitled to the award of the monetary claims46 in her petition, as no basis and proof for the grant
thereof were ever adduced.
The Court cannot likewise award attorney’s fees to Moreno in view of the above-mentioned
finding of good faith on the part of SSC-R47. It is a well-settled principle that even if a claimant
is compelled to litigate with third persons or to incur expenses to protect the claimant’s rights,
attorney’s fees may still not be awarded where no sufficient showing of bad faith could be
reflected in a party’s persistence in a case other than an erroneous conviction of the
righteousness of his cause.48
WHEREFORE, the Petition for Review is GRANTED. The Decision of the Court of Appeals in
CA-G.R. SP No 90083 dated 7 November 2006 is hereby REVERSED. Respondent San
Sebastian College-Recoletos, Manila, is hereby ordered to reinstate Petitioner Jackqui R.
Moreno without loss of seniority rights and other privileges. No pronouncement as to cost.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
Acting Chairperson
DANTE O. TINGA*
Associate Justice ANTONIO EDUARDO B. NACHURA
Associate Justice
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
Acting Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
* Per Special Order No. 497, dated 14 March 2008, signed by Chief Justice Reynato S. Puno
designating Associate Justice Dante O. Tinga to replace Associate Justice Consuelo Ynares-
Santiago, who is on official leave under the Court’s Wellness Program and assigning Associate
Justice Alicia Austria-Martinez as Acting Chairperson.
1 Rollo, pp. 9-22; dated 28 December 2006.
2 Penned by Associate Justice Monina Arevalo-Zenarosa with Associate Justices Martin S.

Villarama, Jr. and Lucas P. Bersamin, concurring; rollo, pp. 23-38.
3 Rollo, pp. 55-60.
4 CA rollo, pp. 37-39.
5 Id. at 83-84.
6 Id. at 85.
7 Id. at 102.
8 Id. at 113-116.
9 Id. at 86.
10 Id. at 86.
11 Id. at 87-88.
12 Id. at 90.
13 Id. at 91-93.
14 Id. at 94-100.
15 Id. at 101.
16 CA rollo, p. 24.
17 Id. at 29-31.
18 CA rollo, pp. 32-35.
19 Id. at 37-39.
20 Id. at 49-63.
21 Rollo, pp. 31-38.
22 Waterous Drug Corp. v. National Labor Relations Commission, 345 Phil. 983, 994 (1997).
23 Concorde Hotel v. Court of Appeals, 414 Phil. 897, 908 (2001).
24 Cosep v. National Labor Relations Commission, 353 Phil. 148, 157-158 (1998).
25 Section 45. Full-time and Part-time Faculty. As a general rule, all private schools shall
employ full-time academic personnel consistent with the levels of instruction.
Full-time academic personnel are those meeting all the following requirements:
xxxx
d) Who have no other remunerative occupation elsewhere requiring regular hours of work that
will conflict with the working hours in the school; and
e) Who are not teaching full-time in any other educational institution.
All teaching personnel who do not meet the foregoing qualifications are considered part-time.
(Emphasis ours.)
26 The pertinent portion of the employment contract provides:
San Sebastian College-Recoletos, Manila agrees to give due compensation for services
satisfactorily rendered in this position subject to the following terms and conditions:
xxxx
5. You shall not accept any teaching assignment or remunerative occupation in other
educational institutions or agencies without prior written permission from the President; x x x
(CA rollo, p. 85.)
27 Rosario v. Victory Ricemill, 445 Phil. 830, 839 (2003).
28 G.R. No. 164376, 31 July 2006, 497 SCRA 361, 375-376.
29 Dizon v. National Labor Relations Commission, G.R. No. L-79554, 14 December 1989, 180
SCRA 52, 57-58.
30 Rollo, p. 94.
31 Id. at 102.
32 VH Manufacturing Inc. v. National Labor Relations Commission, 379 Phil. 444, 451 (2000).
33 CA rollo, p. 99.
34 Id. at 102.
35 Rollo, p. 102.
36 CA rollo, p. 85.
37 Id. at 86.
38 Id. at 101.
39 Id. at 90.
40 Id. at 91-93.
41 Cebu Filveneer Corporation v. National Labor Relations Commission, 350 Phil. 197, 204
(1998).
42 Velasco v. National Labor Relations Commission, G.R. No. 16194, 26 June 2006, 492 SCRA
686, 700.
43 G.R. No. L-76746, 27 July 1987, 152 SCRA 328.

44 Bank of the Philippine Islands Employees Union v. Bank of the Philippine Islands, G.R. No.
137863, 31 March 2005, 454 SCRA 357, 368.
45 Moral and exemplary damages are recoverable only where the dismissal of an employee
was attended by bad faith or fraud, or constituted an act oppressive to labor, or were 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. (Acuna v. Court of Appeals, G.R. No. 159832, 5 May 2006, 489 SCRA
658, 668.)
46 The monetary claims enumerated were: (1) ₱9,103.50 more or less, by way of her unpaid
salary; (2) ₱1,000.00 more or less by way of her unpaid tutorial fees; (3) ₱2,5000.00 by way of
her unpaid adviser’s fees; and (4) ₱15,750.00 more or less by way of her unpaid 13th month
pay. (Rollo, p. 125).
47 Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
xxxx
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s
plainly valid, just and demandable claim.
48 Smith Kline Beckman Corporation v. Court of Appeals, G. R. No. 126627, 14 August 2003,
409 SCRA 33, 42.
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G.R. No.

G.R. No. 191823, October 05, 2016

LEONARDO-DE CASTRO, J.:

The factual antecedents are as follows:

chanRoblesvirtualLawlibraryPetitioner DJIC started its operation on December 8, 2002. It was

The Labor Arbiter decreed in the end:

The Court first addresses the procedural issue raised by petitioners.

The CA erred when it considered

Bersamin, Perlas-Bernabe, and Caguioa, JJ., concur.

Today is Sunday, April 05, 2020 home

Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence

G.R. No. 144786 April 15, 2004

PHIL. EMPLOY SERVICES and RESOURCES, INC., petitioner,

As culled from the records, the antecedents are as follows:

d). Lack of observance of safety precautions at work area.10

WHEREFORE, judgment is hereby rendered declaring complainants’ dismissal to be illegal and

GRAVE ABUSE OF DISCRETION, AND SERIOUS ERROR IN THE FINDING OF FACTS

1. WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY DISMISSED WHEN THEY

2. WHETHER OR NOT THE THUMB INJURY SUFFERED BY JOSEPH PARAMIO WHILE AT

3. WHETHER OR NOT RONALD NAVARRA’S REPATRIATION AND EXECUTION OF

4. WHETHER OR NOT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS.47

THE FINDINGS OF FACTS BY THE COURT OF APPEALS ARE CONTRARY TO THE

(6) Being found losing ability to work.

Section 10. Money Claims –

In case of termination of overseas employment without just, valid or authorized cause as

d). Lack of observance of safety precautions at work area78 .

1. They don’t give us day off.

2. They feed us once a day.

3. They even let us work without rest.

On the letters of resignation of respondents Sarmiento, Bautista and the agreement of

Puno, (Chairman), Quisumbing, and Tinga, JJ., concur.

2 Records, pp. 54-78.

4 Records, pp. 48-53.

5 Romel Sarmiento was deployed on December 6, 1996; Records, p. 54.

Ronald A. Navarra was deployed on November 6, 1996; Id. at 8.

Recto A. Guillermo was deployed on October 29, 1996; Id. at 9.

Joseph M. Paramio was deployed on December 6, 1996; Id. at 10.

Ferdinand A. Bautista was deployed on January 16, 1999; Id. at 12.

6 Records, pp. 79-115.

10 Id. at 54, 58, 62, 66, 70, 74.

39 Rollo, pp. 77-78.

43 Rollo, pp. 79-93.

45 CA Rollo, pp. 119-123.

52 Alfaro v. Court of Appeals, 363 SCRA 799 (2001).

53 Cosep v. NLRC, 290 SCRA 704 (1998).

54 Zafra v. Court of Appeals, 389 SCRA 200 (2002).

(b) Gross and habitual neglect by the employee of his duties;

(e) Other causes analogous to the foregoing.

57 Rosario v. Victory Ricemill, 397 SCRA 760 (2003).

58 Article 283 – Closure of establishment and reduction of personnel as a result of installation of

61 Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade,

62 Section 10, paragraph 5, R.A. No. 8042.

63 392 SCRA 371 (2002).

64 313 SCRA 88 (1999).

70 Records, pp. 169-170.

72 Article 282(a) of the Labor Code.

78 Id. at 54, 58, 62, 66, 70, 74.

80 Asuncion v. NLRC, 362 SCRA 56 (2001).

82 Hyatt Taxi Services, Inc. v. Catinoy, 359 SCRA 686 (2001).

83 Globe Telecom, Inc. v. Florendo-Flores, 390 SCRA 201 (2002).

84 Section 10. Money Claims. –

86 Peftok Integrated Services, Inc. v. NLRC, 293 SCRA 507 (1998).

87 Dole Philippines, Inc. v. Court of Appeals, 365 SCRA 124 (2001).