G.R. No.
119381 March 11, 1996 and other contracts with the Philippine government, through
MARCOPPER MINING CORPORATION, petitioner,
vs.
HON. ACTING SECRETARY OF LABOR JOSE
BRILLANTES, NATIONAL MINES & ALLIED WORKERS
UNION (NAMAWU), MARCOPPER EMPLOYEES LABOR
UNION (MELU), respondents.
RESOLUTION
KAPUNAN, J.:p
This is a petition for certiorari under Rule 65 assailing the
Order dated March 20, 1995 in NCMB-RBIV-NS-12-155-94
(NCMB-RBIV-TPM-01-005-95) of public respondent
Secretary of Labor and Employment, through Acting
Secretary Jose Brillantes, insofar as it orders petitioner
Marcopper Mining Corporation to accept workers it deemed
dismissed.
On April 5, 1994, the Court issued a temporary restraining
order, upon motion of petitioner.
The dispositive portion of the assailed resolution reads as
follows.
WHEREFORE, ABOVE PREMISES
CONSIDERED, this Office hereby
reiterates its directives for the striking
workers to immediately return to work
and for the company to accept back all
returning workers under the same terms
and conditions prevailing prior to the
work stoppage.
The legality of the strike and the
termination handed down to the striking
employees as well as their entitlement to
additional year end profit bonus for 1994
shall be among the issues to be
resolved at the compulsory arbitration
proceedings.
Furthermore, the Philippine National
Police Command, Marinduque is hereby
deputized to assist in the orderly and
peaceful implementation of the Orders
of this Office including the removal of
barricades and other forms of
obstruction to ensure free ingress to and
egress from the company premises.
Let the records of this case and
subsequent pleadings be forwarded to
the NLRC for its immediate and
appropriate action. 1 (Emphasis ours)
Petitioner Marcopper Mining Corporation is a corporation,
49% of which equity is owned by the Philippine government.
Petitioner is engaged in the exploration, development and
extraction of copper and other mineral ores by virtue of lease
the Bureau of Mines and Geosciences and the Department
of Environment and Natural Resources. It employs more
than 1,000 workers.2 One of petitioner's projects is the
operation of the San Antonio Copper Project, an orebody
with an estimated life of at least twenty years.
In December of 1994, petitioner granted its employees a
year-end profit bonus, the amount of which was based on
employment category, i.e., 75% of their monthly salary to
rank-and-file, 800% to security guards, and 90% to staff.
Private respondent National Mines and Allied Workers Union
and its local chapter Marcopper Employees Labor Union
(collectively "union") filed on December 26, 1994 a
preventive mediation case with the Department of Labor and
Employment Regional Office No. IV, alleging the following
unfair labor practices: violation of collective bargaining
agreement concerning job evaluation and discrimination
against rank-and-file in connection with the grant of the profit
bonus.3
The National Conciliation and Mediation Board (NCMB)
conducted conciliation proceedings, but the parties failed to
reach a settlement. Thus, respondents-filed a Notice of
Strike on December 28, 1994.4
In a letter dated January 17, 1995, Conciliator-Mediator
Wilfredo P. Santos informed the union that the issues
involved in the Notice of Strike are non-strikeab!e and are
appropriate subjects of the grievance machinery with
voluntary arbitration as the terminal step. 5
On January 24, 1995, the union filed a second Notice of
Strike, adding union busting through replacement of regular
employees by casuals and contractuals as a third ground
therefor.6
On February 20, 1995, petitioner filed with the Department of
Labor and Employment a petition praying that the Secretary
of Labor and Employment assume jurisdiction over the labor
dispute pursuant to Article 263 of the Labor Code of the
Philippines.7 The petition was endorsed by Labor
Undersecretary Bienvenido E. Laguesma to the NCMB.8
On February 24, 1995, the Secretary of Labor and
Employment issued an order certifying the dispute for
compulsory arbitration under Article 263 (g) of the Labor
Code, enjoining any actual or intended strike or lockout, and
directing the parties to cease and desist from committing
acts which may exacerbate the dispute.9
The order was served on the union on February 24
(NAMAWU) and February 25, 1995 (MELU). Notwithstanding
receipt of the order, on February 27, 1995, the union went on
strike. 10
Also on February 27, 1995, petitioner filed a Manifestation
and Motion praying for an order directing the union and all
striking workers to immediately return to work.11
The following day, February 28, 1995, the Secretary of Labor
and Employment issued an order reiterating his February 24,
1995 order, and directing all striking workers to return to
work within twenty-four hours from receipt of the order and
for Management to accept them under the same terms and We agree that the Secretary, as stated by him in his March
conditions prevailing before the strike.12 20 order, did not make a determination that the termination
of the employment of the workers was legal or illegal. He
exercised his discretion to refer the issue to compulsory
On March 1, 1995, the union filed a motion for
arbitration, and pending resolution thereof, directed that the
reconsideration of the Secretary's February 24 and February
status quo be maintained, with the view of preserving the
28 orders. 13
precarious peace between petitioner and the more than 600
union workers. As explained by the Secretary in his order:
On March 4, 1995, petitioner issued a notice to return to
work. Petitioner required all its rank-and-file employees to
[O]ur earlier [February 24 and February
report for work on their respective regular shift schedule
28, 1995] Orders merely direct
starting at 8:00 a.m. of March 5, 1995. Petitioner further
the status quo without adjudicating on
informed the employees that those who fail to report for work
the merits of the parties' position and
within the specified period shall be considered as terminated
arguments on the issue at hand. The
for just cause, without need of further notice, and with loss of
compulsory arbitration machinery will be
all accrued benefits; management would then be at liberty to
the venue that will once and for all
hire replacement workers.14
determine the respective claims of the
litigants herein.
Only about 40 workers returned to work.15 Those workers
who failed to heed the March 4, 1995 notice were each given
It is the NLRC which is the proper forum for the "full and
final termination letters.16
complete settlement or adjudication of all labor disputes
between the parties, as well as issues that are relevant to or
On March 8, 1995, the NCMB conducted a conciliation incidents of the certified case."20
conference. Petitioner maintained that those workers who
failed to return to work were deemed to have abandoned
We cannot however ignore the factual findings of the
their employment and thus were legally dismissed. On the
Secretary relative to the union's actuations subsequent to
other hand, the union manifested that the dismissal of the
the issuance of the February 24, 1995 certification order.
workers was premature because its motion for
reconsideration of the Secretary's orders was still pending.17
In his February 28, 1995 order, the Secretary noted that
"notwithstanding receipt of the [February 24, 1995] order, the
On March 9, 1995, Acting Secretary Jose Brillantes issued
Union went on strike on 27 February 1995." In the same
an order denying the union's motion for reconsideration for
order, the Secretary acknowledged that "[i]t will not be amiss
lack of merit.18
to point out that the Order certifying the labor dispute to the
NLRC and enjoining any strike or lockout is by its character
On March 10, 1995, the union filed a immediately executory." Yet the Secretary, inter alia,
Manifestation/Compliance where it acknowledged receipt of directed the workers to return to work and management to
the March 9, 1995 order and signified the workers' accept them.
willingness to abide by the same. The union manifested that
petitioner however refused to accept the workers, and thus it
The workers did not return to work.
prayed that the Secretary of Labor and Employment order
petitioner to reinstate said workers. 19
In the assailed March 20, 1995 order, the Secretary
reiterated that "[d]espite the [February 24, 1995] Order the
On March 20, 1995, Acting Secretary Brillantes issued the
Union went on strike on February 27, 1995 which
assailed order subject of this petition for certiorari.
constrained us to issue an Order on February 28, 1995
directing the workers to return to work and for Management
Petitioner asserts that the Secretary of Labor gravely abused to accept them back under the same terms and conditions
his discretion when he ordered it to accept workers who prevailing before the strike." Despite such finding, the
defied the return-to-work order, as embodied in the Secretary ordered petitioner to accept the workers.
certification order of February 24, 1995 he himself issued.
Petitioner prays that the March 20, 1995 order be set aside
We have held that a return-to-work order is a "statutory part
insofar as it orders it to reinstate the dismissed workers, and
and
that the Court declare the employees to have been legally
parcel" 21 of the Secretary's assumption or certification order.
dismissed.
Article 263 (g) succintly provides that:

The union filed its comment arguing in the main that the
. . . Such assumption or certification
issue of whether the workers were legally dismissed must be
shall have the effect of automatically
resolved in the proceedings below, and that this Court is not
enjoining the intended or impending
the proper forum for the resolution of such issue.
strike or lockout as specified in the
assumption or certification order. If one
The Solicitor General, instead of filing his comment, filed a has already taken place at the time of
Manifestation and Motion recommending that the petition be assumption or certification, all striking or
given due course, and in view thereof, that the Secretary of locked out employees shall immediately
Labor and Employment be made to file his own comment. return to work and the employer resume
operations and readmit all workers
under the same terms and conditions
We grant the petition.
 prevailing before the strike or
lockout. . . .
Thus, following an assumption or certification order,
returning to work, on the part of a worker, is "not a matter of
option or voluntariness but of obligation." 22 The sanction for
failure to comply with such obligation, under the law, is loss
of employment status.23 Case law likewise provides that by
staging a strike after the assumption of jurisdiction or
certification for arbitration, workers forfeited their right to be
readmitted to work, having abandoned their employment,
and so could be validly replaced.24
We cannot countenance the Secretary's tolerance of the
union's willful breach of the provisions of Article 263 (g) as
well as its defiance of the February 28, 1995 order. He
cannot gloss over his findings showing prima facie the
illegality of the union's actuations. It would be unfair, indeed
unreasonable and oppressive, to compel petitioner to accept
the workers who refused to return to work, pending
arbitration proceedings.
We stress that it is the NLRC which must resolve the issues
involved in the labor dispute. Our resolution in the instant
case does not pre-empt the NLRC. We make no findings or
ruling on the relative merits of the parties' positions. We rule
simply that pending arbitration proceedings, petitioner
cannot be compelled to accept the workers who failed to
return to work.
We cannot but highlight the national interest involved in the
instant case. Petitioner Marcopper operates the San Antonio
Copper Project in Marinduque. The project is financed
through long term loans granted by the Asian Development
Bank and its co-financers, in the aggregate amount of
US$40,000,000.00. It also supplies electrical power to the
entire province of Marinduque. 25 In the assumption order of
the Secretary, it was emphasized that:
Any disruption in the operations of the
Company will adversely affect its
financial status and consequently its
capacity to pay the loans acquired.
Considering that the Company's project
is basically financed by these loans, the
continued operation of the project is
threatened. Consequently, the means of
livelihood of about 1,500 employees
stands to suffer.
Furthermore, the government will also
be prejudiced by any work stoppage in
the Company since it would mean loss
of taxes and foreign exchange earnings
from one of the major contributors of its
sources of funds.
Any work stoppage will also adversely
affect the whole province of Marinduque
whose supply of electrical energy
depends on the uninterrupted operations
in the Company.26
We note from the records that following petitioner's
manifestation, as concurred in by the union, the NLRC
issued an Order dated May 31, 1995 holding in abeyance
the hearings of the case27 until the instant petition
for certiorari is resolved.28 We thus enjoin the NLRC to
expedite the conciliation proceedings, and direct the NLRC
to immediately set; the case for hearing and terminate the
compulsory arbitration proceedings within sixty (60) days,
and to resolve the dispute within thirty (30) calendar days
from submission for resolution thereof. 29
CONSIDERING THE FOREGOING, the Court Resolved to
GRANT the petition. The order of respondent Acting
Secretary of Labor dated March 20, 1995 is hereby SET
ASIDE insofar as it directs petitioner to accept, pending
resolution of the issues raised in the compulsory arbitration
proceedings before the NLRC, all returning workers under
the same terms and conditions prior to the work stoppage.
The National Labor Relations Commission is directed to
immediately set for hearing NLRC CC No. 0000106-95 and
to terminate the compulsory arbitration proceedings within
sixty (60) days, and to resolve the dispute within thirty (30)
calendar days from submission for resolution thereof.
SO ORDERED.
Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
 
Separate Opinions
 
PADILLA, J., dissenting:
I am constrained to take a view different from the majority's.
We cannot, in my opinion, overlook the fact that petitioner is
engaged in an industry indispensable to the national interest.
It is for this reason that the Secretary of Labor had assumed
jurisdiction over the labor dispute and certified the same to
the NLRC for compulsory arbitration.
The assumption by the Secretary of Labor of jurisdiction over
the labor dispute had for its main purpose the resumption of
petitioner's operations so essential to the national interest.
And the referral by the Secretary of Labor of the labor
dispute to the NLRC for compulsory arbitration was in
recognition of the intense need to settle the nagging dispute
between the parties so that the national interest could be
enhanced by a lasting and enduring industrial peace in the
petitioner's establishment.
It is, I believe, in the light of the foregoing considerations that
we must view and weigh the now assailed 20 March 1995
order of the Secretary of Labor directing the employees to
return to work and the management to accept such
employees in accordance with terms and conditions of
employment existing before the strike of 27 February 1995. It
is true that the union members (employees) had failed to
comply with earlier orders for them not to strike and, later, to
break their strike and return to work. But these earlier non-
compliances by the union with return to work orders should
not, in my view, negate or dilute the authority of the
Secretary of Labor who acts in the public interest, to re-order
and direct anew a return to work by the union and
acceptance by management of said union members, since
the main concern in the premises is the immediate
resumption of petitioner's operations as an industry
indispensable to the national interest.
Besides, the case on the merits is still up for compulsory
arbitration before the NLRC; and the legality of the union's
non-compliance with the Labor Secretary's earlier return to
work order as well as of the strike itself is among the issues
pending and threshable in the compulsory arbitration
proceedings before the NLRC.
Nor can the immediate resumption of operations co-incident
with a return to work of the union members (as well as their
acceptance by petitioner) be considered oppressive on the
petitioner for the reason that the terms and conditions of
employment will be as of the time before the strike (until the
compulsory arbitration proceedings are finished). Moreover,
this "forced" or "interim" resumption of relations between
petitioner and the union members, pending the outcome of
the compulsory arbitration proceedings, is a risk factor which
petitioner must implicitly assume by engaging in an industry
indispensable to the national interest.
FOR THE FOREGOING REASONS, my vote is to DISMISS
the petition and sustain the validity of the 20 March 1995
order of the Secretary of Labor.
Separate Opinions
PADILLA, J., dissenting:
I am constrained to take a view different from the majority's.
We cannot, in my opinion, overlook the fact that petitioner is
engaged in an industry indispensable to the national interest.
It is for this reason that the Secretary of Labor had assumed
jurisdiction over the labor dispute and certified the same to
the NLRC for compulsory arbitration.
The assumption by the Secretary of Labor of jurisdiction over
the labor dispute had for its main purpose the resumption of
petitioner's operations so essential to the national interest.
And the referral by the Secretary of Labor of the labor
dispute to the NLRC for compulsory arbitration was in
recognition of the intense need to settle the nagging dispute
between the parties so that the national interest could be
enhanced by a lasting and enduring industrial peace in the
petitioner's establishment.
It is, I believe, in the light of the foregoing considerations that
we must view and weigh the now assailed 20 March 1995
order of the Secretary of Labor directing the employees to
return to work and the management to accept such
employees in accordance with terms and conditions of
employment existing before the strike of 27 February 1995. It
is true that the union members (employees) had failed to
comply with earlier orders for them not to strike and, later, to
break their strike and return to work. But these earlier non-
compliances by the union with return to work orders should
not, in my view, negate or dilute the authority of the
Secretary of Labor who acts in the public interest, to re-order
and direct anew a return to work by the union and
acceptance by management of said union members, since
the main concern in the premises is the immediate
resumption of petitioner's operations as an industry
indispensable to the national interest.
Besides, the case on the merits is still up for compulsory
arbitration before the NLRC; and the legality of the union's
non-compliance with the Labor Secretary's earlier return to
work order as well as of the strike itself is among the issues
pending and threshable in the compulsory arbitration
proceedings before the NLRC.
Nor can the immediate resumption of operations co-incident
with a return to work of the union members (as well as their
acceptance by petitioner) be considered oppressive on the
petitioner for the reason that the terms and conditions of
employment will be as of the time before the strike (until the
compulsory arbitration proceedings are finished). Moreover,
this "forced" or "interim" resumption of relations between
petitioner and the union members, pending the outcome of
the compulsory arbitration proceedings, is a risk factor which
petitioner must implicitly assume by engaging in an industry
indispensable to the national interest.
FOR THE FOREGOING REASONS, my vote is to DISMISS
the petition and sustain the validity of the 20 March 1995
order of the Secretary of Labor.
G.R. No. 198515               June 15, 2015
DOMINADOR MALABUNGA,* JR., Petitioner,
vs.
CATHAY PACIFIC STEEL CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
An employer may not blame its employees for losses caused
by its own disorganized system and inept personnel.
This Petition for Review on Certiorari1 assails: 1) the March
16, 2011 Decision2 of the Court of Appeals (CA) in CA-G.R.
SP No. 111296 nullifying and setting aside the February 27,
2009 Decision3 of the National Labor Relations Commission
(NLRC) in NLRC CA Case No. 050647-06 and reinstating
the July 31, 2006 Decision4 of the Labor Arbiter, NLRC NCR,
Quezon City in NLRC NCR Case No. 03-02096-05; and 2)
the CA's September 5, 2011 Resolution5 denying petitioner's
Motion for Reconsideration6 of the herein assailed Decision.
Factual Antecedents
Respondent Cathay Pacific Steel Corporation is a duly
registered domestic corporation engaged in the business of
manufacturing steel products. It hired petitioner Dominador
Malabunga, Jr. on April 10, 1996 as one of its machinists.
On July 9, 2004, an inventory of respondent’s tools and
items at the company warehouse was made, and it was
found that one aluminum level7 was issued to respondent’s
Fabrication Unit, and another to petitioner. 8
On July 11, 2004, petitioner returned an aluminum level to
the warehouse.9
On July 24, 2004, respondent served a written Notice10 upon
petitioner, charging the latter with theft of the aluminum level
issued to its Fabrication Unit and requiring him to submit a
written explanation. Respondent claimed that petitioner stole
the aluminum level issued to the Fabrication Unit and
returned the same to cover up the loss of the one issued to
him. In other words, respondent accused petitioner of
stealing the aluminum level issued to the Fabrication Unit
and returning the same on July 11, 2004, passing it off as
the one that was issued to him previously; by doing this,
petitioner would then cover up the loss of or failure to return
the one that was previously issued to him.11
Attached to the July 24, 2004 Notice were handwritten
statements of respondent’s warehouse foreman Salvador
Narvasa (Narvasa) and warehouseman Reymundo Manuel
Baetiong (Baetiong), both executed on July 23, 2004. In his
statement,12 Narvasa claimed that on July 13, 2004, he
discovered an untarnished ("malinis") aluminum level which
petitioner apparently returned on July 11, 2004, but which
was issued to the Fabrication Unit; that upon checking his
records, it was confirmed that it was petitioner who returned
the said tool; that on July 22, 2004, he called petitioner and
Nonito Tercero (Tercero) – one of respondent’s workers
assigned to the Fabrication Unit/Machine Shop who
apparently discovered that what petitioner returned on July
11, 2004 was the missing aluminum level issued to the
Fabrication Unit – to a meeting and told them that what
petitioner returned was the aluminum level issued to the
Fabrication Unit; and that petitioner remarked that if the
aluminum level was lost or he stole it, the Fabrication Unit
crew should be charged for the loss of the tool which was
issued to them because they were negligent in its handling
("x x x ang sagot ni Malabunga wala daw namang problema
doon dahil kung naka issue yon sa Fabrication kahit ninakaw
niya ay [sic] at nawala sa kanila dapat daw ay ipakaltas ko
sa Fabrication crews dahil naging pabaya ang mga ito." 13).
On the other hand, Baetiong claimed in his statement14 that
he was on duty on July 11, 2004 – or when petitioner
returned the aluminum level; that he was then with Rudolfo
Zapanta, another warehouseman; that petitioner returned an
aluminum level; that days after, he learned that what
petitioner returned was the aluminum level issued to the
Fabrication Unit; that it was Tercero who told him that the
level returned by petitioner was the one issued to the
Fabrication Unit; that Tercero came to know of this when he
came to the warehouse to borrow an aluminum level; that
from an inspection of the warehouse records, it was
discovered that there were only two individuals who
borrowed tools from the warehouse – petitioner and one
Carlo Alocino; that of the two, only petitioner was able to
return an aluminum level.
In his written explanation,15 petitioner insisted that the
accusation against him was false, baseless and unfair; that
the aluminum level he borrowed on June 28, 2004 was the
very same tool which he returned on July 11, 2004; that
when he returned the aluminum level he borrowed, the
warehousemen readily accepted the same and they did not
complain about the condition thereof, nor did they notice
anything unusual – for example, that the markings thereon
were erased or defaced, or that there was any defect in the
tool; that respondent’s tools should be permanently marked
or security coded in order to prevent confusion and to
forestall baseless accusations such as those being leveled
against him; and that the Fabrication Unit placed a mark on
the aluminum level which it claims to belong to it only several
days after the occurrence of the unfortunate incident. Thus,
petitioner wrote in part:
July 23, 2004 – inirequest kong pag-usapan na ito sa mataas
na kapulungan dahil hindi kami magkaintindihan. Sinisisi ko
ang bodegero dahil ang alam ko may mga palatandaan yan
bawat isa, kesyo nabubura daw ang inilagay nilang
palatandaan paliwanag ni Ginoong Narvasa na kaharap din
si Sir STU. May paraan yan para lagyan nang palatandaan
na di agad-agad nabubura maliban na lang kung ito ay
sadyang burahin at kung sadyain man itong burahin kapag
hiniram yan na may seguridad na palatandaan. Halimbawa
aluminum level #3 ang hiniram ko, nang isauli ko ito ay
kapansinpansin na ito ay sinadyang burahin. Kuwestiyonabol
yon bakit ito binura, ang ibig kong sabihin hindi basta
makakalusot ang isinoling aluminum level kung ito ay may
seguridad na palatandaan.Nang isauli ko ang aluminum level
kong hiniram, walang alinlangan itong tinanggap ni
Raymond16 at nakita man ni Sir STU ang hitsura nang
aluminum level na may diperensya, pwedeng sabihin ni
Raymond sa akin na bakit ganyan ang hitsura niyan dati na
ba yan noong ipahiram sa yo? Pwede ng sabihin na i-check
mo dyan sa borrower slip kung may nakalagay na
damageang kabilang parte. Sir, kung may naganap na
ganyang pag-uusap kami ni Raymund hindi sana humantong
sa ganito. Kung may sapat na seguridad na palatandaan sa
aluminum level at masigasig nila itong sinisiyasat bago ito
tanggapin at ipahiram sa amin walang magaganap na
ganitong problema.
Papano ko sasang-ayunan na ang isinauli kong aluminum
level ay hindi akin samantalang aminado kayo kaharap si Sir
STU na walang identity o seguridad na palatandaan ang
inisyu ninyong aluminum level sa Fabrication. Nilagyan nila
ito ng pangalan kaya nila nasabi na sa kanila nga ito.
Samantalang kung may identity ito o seguridad na
palatandaan nang inisyu ninyo ito sa kanila kahit lagyan
nilaito ng pangalan walang magaganap na ganitong usapin.
Kulang si Raymund sa pagsisiyasat at walang sapat na
seguridad na palatandaan nang tanggapin niya ang isinauli
kong aluminum level at makalipas ng 3 araw humiram
siTercero nang aluminum level. Nang mapasakamay niya ito
nagtanong siya "Bakit nasa iyo ang aluminum level nilang
nawawala, naang ginamit niyang basehan ay may pangalan
ito na Fabrication. Ako ngayon ang binalingan ninyo dahil
ako lamang ang huling nagsauli nang aluminum level at wala
nang iba o kasunod na nagsauli nito. Sa personal kong
opinion hindi yata ito MAKATARUNGAN.17 During the course
of the investigation, hearings were conducted. The written
statements of several employees were likewise taken, thus:
was engraved the word "FABRICATION" and which had a
dent on the edge thereof; that Tercero discovered the theft
when he borrowed the aluminum level from the warehouse;
that upon investigation, it was learned that petitioner stole
the Fabrication Unit’s aluminum level in order to pass it off as
the one which he borrowed previously; that petitioner’s
written explanation was insufficient to subvert the
circumstantial evidence which points to him as the
perpetrator of the theft; that petitioner is guilty of serious
misconduct under Article 282 of the Labor Code22 and
"Patakaran Bilang 26"23 of the company rules and
regulations relative to theft of company property or
employee/visitor belongings; and that on account of
petitioner’s years of service and the small amount involved,
the company decided to impose the penalty of suspension
and not dismissal.
On January 13, 2005, petitioner – through the company
union (CAPASCO) – filed a Motion for Review24 seeking a
reconsideration of the above Decision, arguing that there is
no convincing evidence to link petitioner to the theft of the
Fabrication Unit’s aluminum level except for Narvasa’s
statement that what petitioner returned was the aluminum
level issued to the Fabrication Unit.

1. Rodolfo Mangahas (Mangahas), of respondent’s Respondent conducted a hearing on the motion for review,
Fabrication Unit/Machine Shop, declared in his and on February 18, 2005, it issued through its Human
sworn statement18 that sometime in June 2004, he Resource Manager LeonardoA. Visorro, Jr. a resolution on
learned that their aluminum level was missing; that petitioner’s motion for review.25 It held:
on July 13, 2004, he was called to the warehouse
to identify an aluminum level; that after examining
At its core, you questioned the findings of guilt declared in
said tool, he concluded that it was the Fabrication
the decision of Mr. Rolando Valerio, Administrative Officer –
Unit’s missing tool; and that he knew this because
WRM. It is your contention that guilt could not be established
the missing aluminum level had a dent at the edge
for lack of witness to the commission of the act of theft. The
thereof, and the tool which he was asked to
event by itself precludes the presence or existence of
identify had the same dent.
witness. But the decision of Mr. Valerio used the sequence
of events and circumstantial evidence in coming up with a
2. In his sworn declaration,19 Tercero said that finding of guilt. The finding was premised on the testimonies
sometime in June 2004, he learned that their of witnesses who shed light on the following sequence of
aluminum level was missing; that on July 13, 2004, events:
he went to the warehouse to borrow an aluminum
level; that he was given one; that what was given
1. June 2004 – discovery of loss of aluminum level
to him turned out to be the Fabrication Unit’s
issued to the "Fabrication Unit". Discovery made
missing aluminum level; and that he knew this
by Antonio Nagales, Welder/Fabricator, but not
because the word "Fabrication" was engraved
reported to Warehouse.
thereon; and that thereafter he informed Dennis
Zapanta, another warehouseman, of his discovery.
2. July 9, 2004 – Warehouse made paper
inventory of aluminum levels and other items.
3. Antonio Nagales (Nagales), welder/fabricator at
Record stood that one (1) aluminum level was
the Fabrication Unit, declared in his sworn
issued to "Fabrication" unit and one (1) to
statement20 that sometime in June 2004, he
Dominador Malabonga[,] Jr.
noticed that the unit’s aluminum level was missing;
that on July 13, 2004, he was called to the
warehouse to identify an aluminum level; and that 3. July 11, 2004 – Malabonga Jr. returned one (1)
he examined the said tool that was shown to him, aluminum level to Warehouse.
and he concluded that it was the Fabrication Unit’s
missing aluminum level as it had a dent at the
4. July 13, 2004 – Jose Tercero,
edge which he knew was caused by its having
Welder/Fabricator, noticed the presence of one (1)
fallen when he used the same in the past.
aluminum level at the Warehouse marked with the
engraving "Fabrication", and a small dent showing
On December 2, 2004, respondent issued its that the said item was hit by a hard object.
Decision21 suspending petitioner for a period of 30 days and
requiring him to return the value of the lost aluminum level,
5. Thereafter – investigation on the issue
or ₱280.00, through salary deductions. The decision stated
proceeded.
that petitioner was charged with theft of the Fabrication
Unit’s aluminum level; that on July 11, 2004, petitioner
returned to the warehouse an aluminum level upon which
Investigation conducted clearly showed that the aluminum
level with marking of "Fabrication" was not returned by
personnel of the Fabrication. There is no record of such
transaction. In the immediate time-frame from its discovery,
only you had physically approached the Warehouse (on July
11, 2004) to return an aluminum level. It appeared that only
you could have done so.
In the argument given by Mr. Jovito Octobre, Union
President, he asked what if the aluminum level in question
was borrowed by Malabonga Jr. after the discovery of its
loss in June 2004 by Nagales. We find the reasoning
argumentative and speculative. Malabonga Jr. made it
appear that he borrowed the aluminum [level] for his
individual use sometime in June 2004.
In response to this Mr. Salvador Narvasa, Warehouse
Section Head showed a document dated March 23, 2004. It
was an inventory of items issued earlier than March 23, 2004
which were due for return to the Warehouse. It instructed
employees concerned to return to the Warehouse items
issued to them within seven (7) days, otherwise deductions
will be made on their wages corresponding to the value of
the items. Dominador Malabonga[,] Jr. was included in the
list and the document alleged that the aluminum level issued
to him was number 11.
At this instance, it is recalled that Malabonga Jr. averred that
he borrowed the aluminum level issued to him in the middle
of June 2004. But this was not so. The one issued to him
was borrowed by him in early March 2004 or earlier, and this
was merely re[-]issued to him after the release of the notice
dated March 23, 2004. Mr. Narvasa vouched for the
authenticity of the document and Malabonga Jr. himself did
not contest it. So then Malabonga Jr. was not forthright in his
testimony in the investigation when he averred that he
borrowed the aluminum level issued to him personally in
June 2004. Was this a lapse of memory or intended to
obscure a fact and mislead the investigating panel in the
proper evaluation of the case? Mr. Narvasa, the Warehouse
Section Head, averred to all present in the investigation that
there is no aluminum level marked 11 (eleven) in the custody
of the Warehouse.
With the above, we find that the decision was based on
established evidence both testimonial and documentary.
Hence, the decision of Mr. Valerio is affirmed as to
suspending Malabonga Jr. for 30 days and requiring him to
pay Php280.00 for the acquisition price of the aluminum level
through payroll deduction. No further appeal will be
entertained by this Office.26
Thus, petitioner was suspended without pay from January
10, 2005 up to February 13, 2005. Thereafter, he returned to
work.
Ruling of the Labor Arbiter
On March 2, 2005, petitioner filed a Complaint for illegal
suspension before the NLRC NCR, Quezon City, docketed
as NLRC NCR Case No. 03-02096-05. In his Position
Paper,27 petitioner argued that he should not be blamed for
the alleged loss of the Fabrication Unit’s aluminum level; that
respondent’s warehousemen were to blame for their failure
to maintain a system that would clearly indicate the identity
of borrowed tools and items from the warehouse; that in
order to conceal their negligence and lack of a system of
checking and verifying tools and items in the warehouse, the
warehousemen instead passed the blame on to petitioner;
that if he was being charged with the alleged theft of the
Fabrication Unit’s aluminum level – which was recovered
anyway – then he should not have been suspended and
made to pay for the value of the recovered item; that the
aluminum level he returned was not the Fabrication Unit’s
issued tool; that when he returned the tool on July 11, 2004,
the tool had no markings or defects which would indicate that
it was the allegedly lost aluminum level issued to the
Fabrication Unit; and that the word "Fabrication" was
engraved on the tool only later on, or after he returned the
same on July 11, 2004. Thus, petitioner prayed that his
suspension without pay from January 10, 2005 up to
February 13, 2005 be declared illegal and that respondent
be made to pay his salary during the period, based on his
daily rate of ₱357.85. He likewise prayed for the recovery of
attorney’s fees equivalent to 10 per cent(10%) of the total
award.
In its Position Paper,28 respondent claimed that petitioner’s
suspension was valid; that based on the written statements
of the employees and other evidence, petitioner was found
guilty of theft of company property, for returning an aluminum
level "which was issued to the Fabrication unit and not the
one issued to him;" that petitioner was the one who returned
the missing aluminum level to the warehouse; and that the
aluminum level returned by petitioner was "positively
identified by three employees as the particular level issued to
the Fabrication unit which was reported missing as of June
2004." Respondent concluded that the evidence against the
petitioner was sufficient to satisfy the requirement of
substantial evidence and warrant his suspension, and thus it
prayed for the dismissal of the complaint for illegal
suspension.
In a Reply29 to respondent’s Position Paper, petitioner
contended that the warehousemen and the Fabrication Unit
workers conspired against him to cover up the loss of the
unit’s aluminum level sometime in June2004, which was not
reported at all to the warehouse; that the warehousemen
were negligent in not adopting a system that would enable
the proper identification of tools and items borrowed; that as
a result of the lack of such a system, he was falsely accused
of theft; that in fact, there was no evidence to prove that he
stole the unit’s aluminum level; and that on the other hand,
there could be no theft of the unit’s aluminum level since, as
far as everyone is concerned, it was never lost at all since it
was never reported missing by the unit.
In a Rejoinder30 to petitioner’s Reply, respondent argued that
evidence existed in the form of inventory reports and the
written statements of witnesses which point to petitioner as
the culprit who took the Fabrication Unit’s aluminum level;
that the aluminum level issued to petitioner had not been
accounted for either; and that since he violated company
policy against the unlawful taking of company property, he
should be punished, except that instead of dismissal as
stated in the company rules, he was merely suspended.
In a Rejoinder,31 petitioner claimed that respondent’s
Position Paper did not comply with the requirement of
certification against forum-shopping and that it did not
contain the required board resolution or certification
authorizing respondent’s counsel to sign for and in behalf of
respondent.
On July 31, 2006, the Labor Arbiter issued his Decision
dismissing petitioner’s complaint for illegal suspension. The
Labor Arbiter held that substantial evidence – in the form of
written statements of respondent’s witnesses positively
identifying petitioner as returning the Fabrication Unit’s
aluminum level and not the one issued to him – warranted
the imposition of the penalty of suspension. Thus, the Labor
Arbiter decreed:
WHEREFORE, premises considered, the complaint is
hereby DISMISSED for lack of merit.
SO ORDERED.32
Ruling of the National Labor Relations Commission
Petitioner appealed to the NLRC, where the case was
docketed as NLRC CA Case No. 050647-06. On February
27, 2009, the NLRC issued its Decision, declaring as follows:
We find merit in the appeal.
Anent the first ground for appeal, complainant claims that the
Labor Arbiter erred in giving probative weight to the affidavits
submitted by respondent supporting the charge of theft
against him. Complainant asserts that the said affidavits are
self-serving evidence having been executed by the
employees who are always submissive to the wishes of the
respondent. We agree. Indeed, aside from the admitted fact
that they are all employees of respondent, a perusal of the
affidavits of Rodolfo Mangahas, NonitoTercero and Antonio
Nagales (Annexes "H", "I" and "J", Respondent’s Position
Paper) disclose[s] that they are seriously inadequate to
support a conclusion that it was the complainant who took
the lost aluminum level. All of them merely reinforce the fact
that an aluminum level had been lost and that the same was
discovered to have been in the warehouse when Nonito
Tercero borrowed an aluminum level and was given by the
warehouseman Dennis Zapanta, by chance, the lost
aluminum level. Nothing therein states that the said
aluminum level was taken by complainant.
Apparently, respondent relied heavily on the statement of the
warehouseman pointing to the complainant as the one who
returned to him the lost aluminum level. But there is nothing
on record, except for such statement, that the item returned
by complainant is the same aluminum level that was lost.
Even assuming that it was the complainant who returned the
aluminum level 24" that was discovered subsequently as the
very aluminum level 24" that had been lost in the fabrication
unit, said fact alone does not create a presumption that it
was also the complainant who had stolen the same. For it is
highly inconceivable if not completely absurd, for
complainant, if he was indeed guilty of the crime of theft, to
return the very object of the crime. Clearly, this theory defies
logic and ordinary human experience.
What is clear from the records is the admitted fact that the
warehouseman, as correctly pointed out by complainant,
failed to immediately call the attention of the latter upon the
receipt of his borrowed item if there was indeed a
discrepancy between the level he borrowed, and [the one] he
returned. It took the warehouseman a few days to declare
the item returned by complainant as different from [the one]
he borrowed. Thus, we quote with approval complainant’s
argumenton this score:
"21. If the Warehouseman was only doing his duty well by
recording the true identity of the item borrowed by the
complainant, it could have been easily determined whether
or not the aluminum level 24" borrowed by the complainant
on June 28, 2004 was the same aluminum level that was
previously missing from the fabrication department.
Unfortunately, someone is passing the blame to the
complainant for [him] to avoid complication arising from [his]
own serious negligence." (Memorandum of Appeal)
Further, We also find equally unacceptable the Labor
Arbiter’s explanation in giving the statements of the
warehouseman credence and weight on the presumption
that he was not impelled with malice or ill-motive in declaring
so. This finding further defies logic. It should be noted that
the lost aluminum level 24" was found in the possession of
the warehouseman three days after complainant returned his
borrowed item. To be sure, the warehouseman, as a matter
of self-preservation, would do anything to pass the blame to
somebody else as pointed out by the complainant.
Otherwise, he would be held answerable by the company for
having been caught in possession of the lost item. To our
mind, this fact invariably renders his statement highly
suspicious.
Thus, the foregoing doubts in the evidence submitted by
respondent should be resolved against [it]. After all, it is a
cardinal rule in labor cases, that in case of doubts in the
evidence presented by the parties, the doubts should be
resolved in favor of labor.
WHEREFORE, judgment is hereby rendered, REVERSING
and SETTING ASIDE the assailed Decision, and a new one
issued finding the penalty of suspension imposed upon the
complainant without factual basis. Hence, respondent
Cathay is hereby ordered to pay complainant his salary
commensurate to his one month suspension.
SO ORDERED.33
Respondent moved for reconsideration,34 but in a July 28,
2009 Resolution,35 the NLRC denied the motion.
Ruling of the Court of Appeals
In a Petition for Certiorari36 filed with the CA and docketed as
CA-G.R. SP No. 111296, respondent sought a reversal of
the NLRC Decision, arguing that the latter committed grave
abuse of discretion and gross error in exonerating petitioner
from the charge of theft and in nullifying his suspension. It
insisted that petitioner "took the aluminum level issued to the
fabrication unit to make it appear that he has already
returned the same aluminum level 11 issued to him in order
to escape liability for the level issued to him."
On March 16, 2011, the CA issued the assailed Decision
containing the following decretal portion:
WHEREFORE, the petition is GRANTED. The February 27,
2009 decision of the public respondent NLRC in NLRC CA
CASE No. 050647-06 is NULLIFIED and SET ASIDE. The
July 31, 2006 decision of the Labor Arbiter in NLRC NCR
CASE No. 03-02096-05 is REINSTATED. SO ORDERED.37
The CA held that there was reasonable ground to believe
that petitioner was responsible for the theft of the aluminum
level assigned to the respondent’s Fabrication Unit. It
sustained the Labor Arbiter’s findings that based on the
statements of Mangahas, Tercero and Nagales – workers at
the Fabrication Unit – and the written explanations of
Narvasa and Baetiong, it was established that what
petitioner returned to the warehouse on July 11, 2004 was
the Fabrication Unit’s aluminum level and not the one issued
to him; that the aluminum level he returned contained the
engraving "Fabrication" and a dent which was familiar to the
Fabrication Unit’s workers; and that the inventory records
would show that at the time, petitioner was the only one who
returned an aluminum level to the warehouse.
The CA added that petitioner’s defense of alibi and denial
could not be given weight, in the face of positive
identification by the other witnesses that what he returned on
July 11, 2004 was the Fabrication Unit’s aluminum level,
since it was engraved with "Fabrication" and had the familiar
dent.
The appellate court further declared:
Evident from the record is the NLRC’s strained attempt at
ratiocination when it concluded that the warehouseman, as a
matter of self-preservation, would do anything to pass the
blame to somebody else or risk being held answerable by
the company for having been caught in possession of the
lost item. Being the custodian of all the tools and equipment
of Cathay, it is the warehouseman’s duty to issue and
receive the tools/equipments requested and returned by the
workers. If a worker returns a tool, it would logically be in
[the] possession of the warehouse section. The NLRC thus
erred in holding the warehouse section liable just because it
was in possession of the aluminum level when it was clearly
its responsibility to have custody and possession thereof.
The NLRC likewise manifestly erred in ruling that "it is highly
inconceivable if not completely absurd for Malabonga, if he
was indeed guilty of the crime of theft, to return the very
object of the crime." In so ruling, it disregarded Cathay’s
finding that the "Fabrication" mark on the aluminum level
was small and the dent thereon was hardly noticeable such
that a person who was unfamiliar with them would not know
that the level was the one issued to the Fabrication Unit. x x
x38
Petitioner filed a motion for reconsideration, but the CA
denied the same in its September 5, 2011 Resolution.
Hence, the present Petition.
Issue
Petitioner submits that –
THE COURT OF APPEALS ERRED IN VACATING THE
DECISION AND RESOLUTION OF THE NATIONAL LABOR
RELATIONS COMMISSION FINDING RESPONDENT
CORPORATION GUILTY OF ILLEGAL SUSPENSION.39
Petitioner’s Arguments
Praying that the assailed CA dispositions be set aside and
that the NLRC’s February 27, 2009 Decision in NLRC CA
Case No. 050647-06 be reinstated instead, petitioner
essentially maintains in the Petition and Reply40 that the
evidence does not support respondent’s claim that he is
guilty of theft and that what he returned was the Fabrication
Unit’s aluminum level; that the witnesses’ statements are
biased, self-serving and intended to exonerate the
declarants from liability for their negligence and failure to
secure the Fabrication Unit’s aluminum level both in the
warehouse and in the Fabrication Unit, thus making him a
mere scapegoat; and that the witnesses’ statements are
doubtful, as they are uniform and were executed on the
same date and notarized by the same notary public.
Respondent’s Arguments
In its Comment,41 respondent maintains that petitioner raises
issues of fact which are beyond the purview of a petition for
review on certiorari; that what petitioner seeks is a review of
the whole evidence and the credibility of the witnesses
against him, which are clearly issues of fact and not law; that
there is no reason to disturb the CA Decision since there is
nothing wrong therewith, and a finding of grave abuse of
discretion against the NLRC was justified; and that
substantial evidence exists to warrant a finding that petitioner
is guilty of theft.
Our Ruling
The Court grants the Petition.
In labor cases, issues of fact are for the labor tribunals to
resolve, as this Court is not a trier of facts. However, in
exceptional cases, this Court may be urged to resolve factual
issues: "[1] where there is insufficient or insubstantial
evidence to support the findings of the tribunal or the court
below; or[2] when too much is concluded, inferred or
deduced from the bare or incomplete facts submitted by the
parties[;] or, [3] where the [Labor Arbiter] and the NLRC
came up with conflicting positions. 42 "When there is a
divergence between the findings of facts of the labor
tribunals and the CA, there is a need to refer to the record."43
The instant Petition presents not only a situation where the
Labor Arbiter, the NLRC and the CA differ in their
assessment of petitioner’s case, but also one where the
evidence miserably fails to support a finding that petitioner
committed theft. The Labor Arbiter and the CA – and the
NLRC as well – ignored one material piece of evidence
which should have exonerated petitioner from the theft
charge.
Respondent claims that what petitioner returned to its
warehouse on July 11, 2004 was the Fabrication Unit’s
aluminum level. This is based on the identical claim of
Fabrication Unit workers – Mangahas, Tercero, and Nagales
– that they discovered their lost aluminum level upon which
was engraved the word "Fabrication" and had the familiar
dent which, based on warehouse records, turned out to be
that which was returned by petitioner.
However, the warehousemen who are in custody of the
respondent’s tools and items tell a different story. Thus, in
his written statement, Narvasa declared among others that –
Nais ko pong ipabatid sa inyongkaalaman ang pangyayari
ukol sa nawawalang aluminum level na naka-issue (sa)
Fabrication. Martes po ng umaga July 13, 2004 tinawag ako
ni Dennis Zapanta para kausapin si N. Tercero. Nakita daw
ni N. Tercero ang nawawala nilang a. level sa bodega. Nang
aking alamin kung alin sa mga level ang kanyang tinutukoy
ay walang duda na sa kanila nga naka-issue. Tinanong ko si
Dennis kung saan nanggaling ang level na iyon dahil yong
araw lang na yon ko nakita sa loob ng bodega. Malinis ang
level at ibang-iba sa mga pinahihiram ng bodega. Ang sagot
niya si Malabonga daw ang nagsauli sa kanila nang araw ng
Linggo July 11, 2004. Tinignan ko ang record kung sino ang
mga posibleng nagsauli nito at napatunayan na si
Malabonga lang ang nagsauli niyon.44 (Emphasis and word
in parentheses supplied)
In other words, Narvasa positively declared that what
petitioner returned, and what he and co-warehouseman
Dennis Zapanta actually received from petitioner, was an
untarnished (malinis) and unique aluminum level. In other
words, it did not contain any engraving nor bear any dent,
damage or scratch. This directly contradicted the claims of
the Fabrication Unit workers.
An examination of the statement of another warehouseman,
Baetiong,45 revealed that he had no personal knowledge at
all that what petitioner returned was the Fabrication Unit’s
aluminum level; he claimed to have learned of this fact only
from Tercero, who came to borrow an aluminum level on
July 13, 2004. Upon being given one, Tercero apparently
noticed that it was the Fabrication Unit’s aluminum level, and
he told the warehousemen of this fact. Based on Tercero’s
unilateral claim, the warehousemen concluded that what
petitioner returned was indeed the Fabrication Unit’s
aluminum level.
If it is true that the Fabrication Unit’s aluminum level was
supposedly lost sometime in June 2004 which loss was
never reported, and subsequently discovered by Tercero to
be in the warehouse all along when he went there to borrow
one on July 13,2004, then it could not be the case that said
aluminum level – which contained an engraving of the word
"Fabrication" and had a dent – was the one petitioner
returned on July 11, 2004. The declaration of warehouseman
Narvasa was categorical; he and his colleague Dennis
Zapanta received from petitioner an untarnished aluminum
level which had no dent or damage whatsoever. This can
only mean that petitioner returned the aluminum level that
was originally issued to him as stated in the warehouse
records, and not the Fabrication Unit’s aluminum level, since
it did not contain an engraving, and had no dent.
With the foregoing finding, the only logical conclusion that
may be arrived at is that petitioner did not commit theft of the
Fabrication Unit’s aluminum level.
Even if it were to be assumed for the sake of argument that
what petitioner returned was indeed the Fabrication Unit’s
aluminum level, still there could be no valid basis to charge
him with theft. As respondent and its witnesses themselves
admitted, there was no official report of loss of the
Fabrication Unit’s aluminum level; the workers at said unit
concealed the loss, and declared it so and admitted it only
when Tercero supposedly discovered that what he had
borrowed on July 13, 2004 was the very same aluminum
level which was purportedly missing since June 2004. In
other words, the aluminum level was declared lost at the
same time it was found, in which case– using common
sense and logic – there could be no loss at all. As far as
respondent is concerned, the Fabrication Unit’s aluminum
level was never lost. More to the point, we cannot rely on the
statements of the Fabrication Unit workers Mangahas,
Tercero, and Nagales; their failure to report the loss of their
unit’s aluminum level makes their statements not only highly
doubtful and self-serving, but unnecessary and uncalled for –
an afterthought not worth considering.
There are many ways to secure company property from
pilferage and theft.1âwphi1 As petitioner himself suggested,
security features could be incorporated in each item or
property of the employer. An effective and efficient system of
property identification, recording and monitoring may be
adopted; more efficient and responsible personnel may be
hired. In respondent’s case, it is quite clear that its
warehousemen do not have an efficient system of monitoring
and recording the items or tools being brought in or out of its
warehouse. No codes or identifying marks were assigned to
the items and tools to facilitate their easy identification;
respondent’s warehousemen cannot identify the tools and
items within the warehouse, and they readily believe the
declarations and statements of the workers – thus giving out
the impression that the warehousemen are not even familiar
with the tools in their custody. These are just a few
observations, but they nonetheless indicate that respondent
adopts a poor system of recording, monitoring and
accountability within its warehouse, and its warehousemen
cannot be relied upon.
Faced with the limitations in respondent’s system, this Court
cannot sustain its view that petitioner is guilty of theft of
company property. It could simply be that due to the
ineffective system within the warehouse and its inefficient
personnel, there was a mix-up of records; worse, it could be
that tools and items within the warehouse were misplaced or
lost due to its irresponsible personnel. If any, respondent is
alone responsible; it cannot conveniently put the blame on its
employees in order to make up for or cover its losses caused
by its own disorganized system and inept personnel.
From the foregoing, there are serious doubts in the evidence
on record as to the factual basis of the charges against
petitioner. These doubts shall be resolved in (his) favor in
line with the policy under the Labor Code to afford protection
to labor and construe doubts in favor of labor. The consistent
rule is 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.46 (Word in parentheses
supplied)
WHEREFORE, the Petition is GRANTED. The assailed
March 16, 2011 Decision and September 5, 2011 Resolution
of the Court of Appeals in CAG.R. SP No. 111296 are
REVERSED and SET ASIDE, and the February 27, 2009
Decision of the National Labor Relations Commission in
NLRC CA Case No. 050647-06 is REINSTATED and
AFFIRMED.
SO ORDERED.
 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
 Besides, the [respondent] did not aver illegal
In her position paper, the [petitioner Ferraris] dismissal as the same was not pleaded in her verified
categorically denied having terminated [respondent]. complaint. She cannot be allowed to prove the same.
The [respondent] after being reprimanded for The rule is clear that the "verified position papers
shortages, she ceased to report for work on February shall cover only those claims and causes of action
5, 2005. This fact is attested to by [petitioners'] raised in the complaint x x x" (Rule V, Section 4, Par.
witness, a co-employee of the [respondent] Ma. Eva 2, Rules of Procedure of the NLRC, as Amended).
Gorospe to the effect that [respondent] and co- Incidentally, there is no prooflinking to the allegation
employee Moonyeen Bura-ay scolded them for of dismissal.13
shortages during a meeting on February 5, 2005.
The witness attested that they were not terminated
The Labor Arbiter also noted that petitioner DJIC, as
but they did not report for work anymore the
a registered Barangay Micro Business Enterprise
following day up to the present. This gives weight to
(BMBE), was exempted from the coverage of the
the fact that in her complaint no illegal dismissal was
Minimum Wage Law.
contemplated by [respondent].
The Labor Arbiter decreed in the end:
The records, on the other hand, is (sic) bereft of any
evidence linking to the allegation of dismissal. In
chanRoblesvirtualLawlibrary
fact, there is no positive or unequivocal act on the
WHEREFORE, premises laid, judgment is hereby
part of [petitioners] that would buttressed (sic) a
rendered dismissing the complaint in the instant case
fact that [respondent] was dismissed. Thus, the High
for lack of.cause of action and for not being
Court said:ChanRoblesVirtualawlibrary
impressed with merit.
"While the general rule in dismissal cases is that the
employer has the burden to prove the dismissal was
However, [petitioners] are hereby ordered, jointly
for just or authorized causes and after due
and severally, to pay [respondent] the amount
process, said burden is necessarily shifted to the
of Five Hundred Pesos (Php500.00) representing
employee ifthe alleged dismissal is denied by the
13th month pay
employer because a dismissal is supposedly a
differential.14chanroblesvirtuallawlibrary
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 At around the same time, Moonyeen lodged before
unsubstantiated allegation on the part of the the NLRC CAU XII a complaint against petitioners for
employee cannot stand as the same offends due unpaid overtime pay, docketed as RAB 12-01-00031-
process. " (De Paul / King Philip Customs Tailor, et al 05. Later on, Moonyeen similarly contended that she
vs. NLRC, G.R. No. 129824, Marc;h 10, 1999) was illegally dismissed by petitioners and demanded
Underscoring Ours. the payment of her salary differential, holiday
premium pay, service incentive leave pay,
13th month pay, and moral damages.15 The Labor
The [respondent] did not controvert the [petitioners']
Arbiter, in a Decision dated February 20, 2006,
categorical denial and more, she failed to
subsequently dismissed Moonyeen's complaint, also
demonstrate the burden. As such, the allegations of
finding that Moonyeen miserably failed to
the [respondent] to the effect that she was
demonstrate the positive or unequivocal act of
dismissed remains (sic) gratuitous. In fact the High
termination of her employment; but petitioners were
Court in the same vein said:
liable for underpayment of Moonyeen's 13th month
pay in the amount of P500.00.
chanRoblesvirtualLawlibrary
"The burden of proof lies upon who asserts it, not
Respondent and Moonyeen timely filed their
upon who denies, since by the nature of things, he
respective appeals before the NLRC, docketed as
who denies a fact cannot produce any proof of it. "
NLRC CA Nos. M-009173-06 and M-009174-06. Their
(Sevillana vs. LT. International Corp., et al., POEA-
appeals were eventually consolidated.
NLRC Case No. L-88-12-1048, 26 March 1991;
Aguilar vs. Maning International Corp., et al., POEA-
The NLRC issued a Resolution dated August 30,
NLRC Case No. L-88-08-728, October 8, 1990).
2006, dismissing the appeals of respondent and
Moonyeen for lack of merit and affirming en toto the
In the case at Bench, the positive act and/or the Labor Arbiter's Decisions dated February 20, 2006
unequivocal act of termination is the Factum and February 21, 2006. The NLRC reasoned:
Probandum which the [respondent] miserably failed
to demonstrate.12 chanRoblesvirtualLawlibrary
We uphold the findings of the Labor Arbiter. The
records do not reveal of any written document to
The Labor Arbiter also pointed out a procedural
show that [respondent and Moonyeen] were indeed
defect in respondent's charge of illegal dismissal
dismissed. On the other hand, [petitioners]
against petitioners:
vehemently denied having dismissed them.
Therefore, under these given facts, to the
chanRoblesvirtualLawlibrary
[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: [respondent and Moonyeen] must be entitled to the
"Where the employee was not notified that he had same.16
been dismissed from employment neither was [he]
prevented from returning to his work, there is no
Respondent filed a Motion for Reconsideration which
illegal dismissal["] (Chong Guan Trading vs. NLRC,
was denied by the NLRC in a Resolution dated
172 SCRA 831). For, indeed, the records do not bare
November 30, 2006.
any positive or unequivocal act of [petitioners]
notifying them of the termination of their services, as
Respondent sought recourse from the Court of
observed by the Labor [Arbiter] a quo. It is our view
Appeals by filing a Petition for Certiorari, imputing
that [respondent and Moonyeen] miserably failed to
grave abuse of discretion on the part of the NLRC in
establish by substantial evidence that they were
its issuance of the Resolutions dated August 30,
dismissed. Their verbal claim supported by self
2006 and November 30, 2006 in NLRC CA No. M-
serving and biased statements of two (2) witnesses,
009173-06. The Petition was docketed as CA-G.R. SP
namely, Mercy Buraay and Mea Tormon, who like
No. 01877-MIN.
them have an ax to grind being complainants
themselves against the same [petitioners], did not
In its Decision d ted April 29, 2009, the Court of
substantially prove their case. [Respondent and
Appeals granted respondent's Petition.
Moonyeen] did not deny [petitioners'] allegation that
they x x x were also the witnesses of Mercy Bura-ay
On the basis that any doubt should be resolved in
and Mea Tormon in a separate case the latter filed
favor of labor, the Court of Appeals held that
against the same [petitioners]. Thus, we find more
respondent was illegally dismissed:
expressive of truth the verbal declaration of
[petitioners], supported by a sworn statement x x x
chanRoblesvirtualLawlibrary
of one witness, Eva Gorospe, that after [respondent
We are constrained to review [NLRC's] exercise of its
and Moonyeen] were reprimanded, made to explain
discretion in affirming the Labor Arbiter's findings on
and produce the Php400:00 shortage of their daily
abandonment because such conclusion does not
collection, they voluntarily ceased to report to work
appear to have been substantially proved and the
anymore. We emphasize, it is not shown in the
same is repugnant to both law and jurisprudence.
records that Gorospe was motivated by ill-will or was
coerced by the [petitioners] into executing her sworn
The Labor Arbiter, relying on the alleged ruling in De
statement. [Respondent and Moonyeen] did not
Paul, contended that the employee has the burden to
dispute that they were investigated by [petitioner
prove the fact of dismissal when such dismissal was
Ferraris] on February 4, 2005 regarding shortages of
denied by the employer, as when the defense of the
their collections. Such investigation cannot by any
employee's abandonment was interposed. Thus, in
stretch of imagination be considered dismissal of the
refusing to consider [respondent's] cause of action
[respondent and Moonyeen]. On the contrary, we
for illegal dismissal, the Labor Arbiter found that
can only surmise that the investigation generated a
[respondent] miserably failed to demonstrate any
force compelling enough for [respondent and
such positive or unequivocal act on the part of
Moonyeen] to quit working [for petitioners]. Their
Ferraris m terminating [respondent].
failure to report for work is an act they alone must
bear the consequences of. By their own act, they
Reliance on De Paul seemed imprudent and
bargained away their security of tenure under the
misplaced, if not, devious because De Paul was
law.
indefensibly misquoted in the Labor Arbiter's
Decision, in that the alleged ruling as quoted therein
[Respondent and Moonyeen's] money claims of
does not appear in the original printed text of the
overtime pay, holiday pay and service incentive
case in Volume 3[0]4 of the Supreme Court Reports
leave pay must likewise fail. Overtime pay and
Annotated (SCRA), pages 448-459.
holiday pay are some of the extraordinary claims the
burden of proof of which is shifted to the worker who
Furthermore, the Labor Arbiter's contention on the
must prove he rendered overtime work or that he
shifting of the burden of proof is incongruous with
worked during holidays (Julio Cagampan, et al. vs.
prevailing jurisprudence which requires the
NLRC, et al., 195 SCRA 533). No proof is placed on
concurrence of two (2) elements before an employee
record by [respondent and Moonyeen] to prove their
may be guilty of abandonment. The first is the failure
claimed overtime and holiday work. [Respondent and
to report for work or absence without valid or
Moonyeen] cannot also avail of entitlement of service
justifiable reason. The second is a clear intention to
incentive pay under Article 95 of the Labor Code who
sever the employer-employee relationship. The
regularly employs more than ten (10) workers.
second element is the more determinative factor and
Section 1, Rule of Book III of the Implementing
must be evinced by overt acts. Likewise, the burden
Rules of the Labor Code explicitly exempts
of proof is on the employer to show the
establishments regularly employing less than ten
employee's clear and deliberate intent to
(10) workers from the coverage of the said
discontinue his employment without any
provision. Employing less than ten (10) workers,
intention of returning; mere absence is not
[petitioners are] thus exempted under the law.
sufficient.
However, we see no reason to disturb the award of
We agree with the observation that the joint
13th month pay. This is an admitted claim and the
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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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.:
chanRoblesvirtualLawlibrary
1. 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.
2. 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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
[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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
"[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:
chanRoblesvirtualLawlibrary
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:
chanRoblesvirtualLawlibrary
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 Finally, failure to send notices to Lumahan to report
employment. It is a form of neglect of duty that back to work should not be taken against Nightowl
constitutes just cause for the employer to despite the fact that it would have been prudent,
dismiss the employee. given the circumstance, had it done so. Report-to-
work notices are required, as an aspect of procedural
Under this construct, abandonment is a defense due process, only in situations involving the
available against the employee who alleges a dismissal, or the possibility of dismissal, of the
dismissal. Thus, for the employer "to successfully employee. Verily, report-to-work notices could not be
invoke abandonment, whether as a ground for required when dismissal, or the possibility of
dismissing an employee or as a defense, the dismissal, of the employee does not exist.
employer bears the burden of proving the (Emphases supplied, citations omitted.)
employee's unjustified refusal to resume his
employment." This burden, of course, proceeds from
In a case where the employee was neither found to
the general rule that places the burden on the
have been dismissed nor to have abandoned his/her
employer to prove the validity of the dismissal.
work, the general course of action is for the Court to
dismiss the complaint, direct the employee to return
The CA, agreeing with LA Demaisip, concluded that
to work, and order the employer to accept the
Lumahan was illegally dismissed because Nightowl
employee.31 However, the Court recognized
failed to prove the existence of an overt act showing
in Nightowl that when a considerable length of time
Lumahan's intention to sever his employment. To the
had already passed rendering it impossible for the
CA, the fact that Nightowl failed to send Lumahan
employee to return to work, the award of separation
notices for him to report back to work all the more
pay is proper. Considering that more than ten (10)
showed no abandonment took place.
years had passed since respondent stopped reporting
for work on February 5, 2005, up "to the date of this
The critical point the CA missed, however,. was
judgment, it is no longer possible and reasonable for
the fact that Nightowl never raised
the Court to direct respondent to return to work and
abandonment as a defense. · What Nightowl
order petitioners to accept her. Under the
persistently argued was that Lumahan stopped
circumstances, it is just and equitable for the Court
reporting for work beginning April 22,
instead to award respondent separation pay in an
1999; and that it had been waiting for Lumahan to
amount equivalent to one (1) month salary for every
show up so that it could impose on him the
year of service, computed up to the time she
necessary disciplinary action for abandoning his post
stopped working, or until February 4, 2005.
at Steelwork, only to learn that Lumahan had filed an
illegal dismissal complaint. Nightowl did not at all
WHEREFORE, premises considered, the Petition
argue that Lumahan had abandoned his work,
is GRANTED. The Decision dated April 29, 2009 and
thereby warranting the termination of his
Resolution dated February 8, 2010 of the Court of
employment.
Appeals in CA-G.R. SP No. 01877-MIN
is REVERSED and SET ASIDE. The Resolution dated
Significantly, the CA construed these arguments
August 30, 2006 of the National Labor Relations
as abandonment of work under the labor law
Commission in NLRC CA No. M-009173-06,
construct. We find it clear, however, that
affirming en toto the Decision dated February 21,
Nightowl did not dismiss Lumahan; hence, it
2006 of the Labor Arbiter in RAB 12-01-00026-05,
never raised the defense of abandonment.
is REINSTATED with MODIFICATION that
petitioners Dee Jay's Inn and Café and Melinda
Besides, Nightowl did not say that Lumahan
Ferraris, for just and equitable reasons extant in this
"abandoned his work"; rather, Nightowl stated that
case, are additionally ORDERED to jointly and
Lumahan "abandoned his post" at Steelwork. When
severally pay respondent Ma. Lorina P. Rañeses
read together with its arguments, what this phrase
separation pay equivalent to one (1) month salary
simply means is that Lumahan abandoned his
for every year of service, computed up to the time
assignment at Steelwork; nonetheless, Nightowl still
she stopped working, or until February 4, 2005.
considered him as its employee whose return they
had been waiting for.
SO ORDERED.chanRoblesvirtualLawlibrary
G.R. No. 110861 November 14, 1994
ORO ENTERPRISES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
LORETO L. CECILIO, respondents.
Reyes, Navarro & Associates for petitioner.
Jose C. Espinas for private respondent.
VITUG, J.:
In this petition for certiorari, Oro Enterprises, Inc., seeks a
reversal of the 22nd March 1993 decision and 29th May
1993 order of respondent National Labor Relations
Commission (NLRC) directing petitioner to pay private
respondent Loreto Cecilio retirement pay in the amount of
P61,500.00.
Private respondent was first employed by petitioner in
August of 1949. After working continuously with the company
for forty one (41) years, private respondent manifested, on
03 September 1990, her intention to retire from work by filing
with petitioner a "Claim for Retirement Pay."
In her claim, private respondent pleaded that "the retirement
pay she (was) receiving from the Social Security System in
the total sum of five
hundred pesos (P500.00) a month could hardly (suffice to)
meet her daily subsistence . . . ."1
On 15 September 1990, petitioner wrote private respondent,
informing her that it was in no financial position to give her
any retirement benefit apart from the retirement pay she was
already receiving from the Social Security System ("SSS").
Nonetheless, she was offered a house and lot located in San
Jose, del Monte, Bulacan, in accordance with a "plan"2 which
was then still being conceived by the company president for
retiring employees. The offer did not materialize, nor did the
proposed company plan come into being, for one reason or
another.
On 26 September 1990, private respondent filed her
complaint with the Office of the Labor Arbiter (docketed as
NLRC Case No. 00-09-05167-90). In her position paper, she
reiterated —
. . . that she has been employed and
faithfully worked for petitioner
continuously for forty-one (41) years
until she reached the age of 65 on 19
August 1990; that when she requested
petitioner for her "retirement or
termination pay," the President of the
company refused to comply; and that
the lot being offered to her which is
located in Bulacan would not meet her
basic needs for subsistence in the
remaining years of her life."3
On 04 October 1990, petitioner filed its own position paper,
stating
that —
. . . private respondent was not
dismissed from the service but
voluntarily stopped working on
September 15, 1990; that it has no
collective bargaining agreement or any
other agreement or established policy
concerning payment of retirement
benefits to employees who reach a
certain age except that which is required
by the Social Security Law; that it has
not agreed, whether expressly or
impliedly, to pay any retirement benefit
to private respondent or any of its
employees; and that in Llora Motors,
Inc., and/or Constantino Carlota,
Jr. vs. Honorable Franklin Drilon, et al.,
(G.R. No. 82895, Nov. 7, 1989), this
Honorable Court . . . ruled that payment
of retirement benefits cannot be required
in the absence of a collective bargaining
agreement or other contractual basis or
any established employer policy
providing the grant of such retirement
benefits.4
On 11 February 1991, Labor Arbiter Edilberto J. Pangan, to
whom the case was assigned, rendered a decision, the
dispositive portions of which read:
DAHIL DITO, inuutusan ang Oro
Enterprises, Inc. na bayaran and
nagsusumbong na si Bb. Loreto L.
Cecilio ng kanyang bayad sa
pamamahinga (Retirement Benefits),
batay sa kalahating buwan sahod sa
bawat isang taong paglilingkod (half
month pay for every year of service),
nagkakahalaga ng ANIMNAPU AT
TATLONG LIBONG PISO (P63,000.00).
Gayon din, ipinag-uutos na bayaran ng
sampung bahagi (10%) nang nasabing
halaga o ANIM NA LIBO AT TATLONG
DAANG PISO (P6,300.00) bilang bayad
sa manananggol, sa paghahain ng
usaping ito.
At ang kabuuang dapat ibayad ng
isinusumbong ay ANIMNAPU AT SIYAM
NA LIBO AT TATLONG DAANG PISO
(P69,300.00).
Sapagkat salat sa sapat na batayan,
ang kahilingan sa bayad pinsala, ay
IPINAG-KAKAIT (DENIED).
IPINAG-UUTOS.5
Petitioner appealed to the NLRC. Private respondent
likewise interposed her own appeal insofar as the decision
denied her claim for damages.
During the pendency of the appeal, or on 07 January 1993,
Republic Act ("R.A.") No. 76416 took effect, providing among
other things, thusly:
Art. 287. Retirement. — Any employee
may be retired upon reaching the
retirement age established in the
collective bargaining agreement or other
applicable employment contract.
xxx xxx xxx
In the absence of a retirement plan or
agreement providing for retirement
benefits of employees in the
establishment, an employee upon
reaching the age of sixty (60) years or
more, but not beyond sixty five (65)
years which is hereby declared the
compulsory retirement age, who has
served at least five (5) years in the said
establishment, may retire and shall be
entitled to retirement pay equivalent to
at least one half (1/2) month salary for
every year of service, a fraction of at
least six (6) months being considered as
one whole year.
Unless the parties provide for broader
inclusions, the term "one half (1/2)
month salary" shall mean fifteen (15)
days plus one twelfth (1/12) of the 13th
month pay and the cash equivalent of
not more than five (5) days of service
incentive leaves.
xxx xxx xxx
Violation of this provision is hereby
declared unlawful and subject to the
penal provisions under Article 288 of this
Code.7
On 22 March 1993, the NLRC rendered its decision
awarding to private respondent a retirement pay on the basis
of Republic Act 7641; hence —
WHEREFORE, the respondent is
hereby directed to pay complainant a
retirement pay of P61,500.00. Since
complainant's cause of action became
meritorious only out of the curative effect
of R.A. 7641, her award of 10%
attorney's fee must fail.8
Petitioner filed a motion for reconsideration. In an Order,
dated 19 May 1993, the NLRC denied the motion for lack of
merit.
In the instant petition, Oro Enterprises ascribes grave abuse
of discretion on the part of the NLRC in applying R.A. No.
7641. Petitioner argues that the law, which became effective
only on 07 January 1993, cannot be given any such
retroactive effect as to cover private respondent who, at the
age of 65 years, retired from employment with petitioner on
03 September 1990.
At the time private respondent supposedly ceased to work
with petitioner, Article 287 of the Labor Code, then in force,
provided:
Art. 287. Retirement. — Any employee
maybe retired upon reaching the
retirement age established in the
collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall
be entitled to receive such retirement
benefits as he may have earned under
existing laws and any collective
bargaining or other agreement.
Rule 1, Book VI, of the Implementing Rules of the
Labor Code, in turn, expressed:
Sec. 13. Retirement. — In the absence
of any collective bargaining agreement
or other applicable agreement
concerning terms and conditions of
employment which provides for
retirement at an older age, an employee
maybe retired upon reaching the age of
sixty (60) years.
Sec. 14. Retirement benefits. — (a) An
employee who is retired pursuant to
a bonafide retirement plan or in
accordance with the applicable
individual or collective agreement or
established employer policy shall be
entitled to all the retirement benefits
provided therein or to termination pay
equivalent at least to one-half month
salary for every year of service,
whichever is higher, a fraction of at least
six (6) months being considered as one
whole year.
Private respondent, sustained by the Labor Arbiter, posits
that there being no collective bargaining agreement ("CBA")
that granted retirement benefits, conformably with Section 14
of the Implementing Rules aforequoted, she should be
entitled to a "termination pay equivalent at least to one-half
month salary for every year of service . . . .
This particular issue has long been put to rest. In Llora
Motors, Inc., vs. Drilon, 179 SCRA 175, Mr. Justice
Florentino P. Feliciano, speaking for the Court in an eruditely
written ponencia, explained:
Section 14 (a) refers to "termination pay
equivalent to at least one-half (1/2)
month for every year of service" while
 Section 14 (b) mentions "termination pay
to which the employee would have been
entitled had there been no such
retirement fund" as well as "termination
pay the employee is entitled to receive."
It should be recalled that Sections 13
and 14 are found in Implementing Rule I
which deals with both "termination of
employment" and "retirement." It is
important to keep the two (2) concepts
of "termination pay" and "retirement
benefits" separate and distinct from
each other. Termination pay or
separation pay is required to be paid by
an employer in particular situations
identified by the Labor Code itself or by
Implementing Rule I.9 Termination pay
where properly due and payable under
some applicable provision of the Labor
Code or under Section 4 (b) of
Implementing Rule I, must be paid
whether or not an additional retirement
plan has been set up under an
agreement with the employer or under
an "established employer policy."
What needs to be stressed, however, is
that Section 14 of Implementing Rule I,
like Article 287 of the Labor Code, does
not purport to require "termination pay"
to be paid to an employee who may
want to retire but for whom no additional
retirement plan had been set up prior
agreement with the employer. Thus,
Section 14 itself speaks of an employee
"who is retired pursuant to a bona-
fide retirement plan or in accordance
with the applicable individual or
collective agreement or established
employer policy." What Section 14 of
Implementing Rule I may be seen to be
saying is that where termination pay is
otherwise payable to an employee under
an applicable provision of the Labor
Code, and an additional or consensual
retirement plan exists, then payments
under such retirement plan may be
credited against the termination pay that
is due, subject, however, to certain
conditions. These conditions are: (a)
that payments under the additional
retirement plan cannot have the effect of
reducing the amount of termination pay
due and payable to less than one-half
(1/2) month's salary for every year of
service and (b) the employee cannot be
made to contribute to the termination
pay that he is entitled to receive under
some provision of the Labor Code; in
other words, the employee is entitled to
the full amount of his termination pay
plus at least the return of his own
contributions to the additional retirement
plan. 10
While there apparently was some kind of a retirement plan
then being devised by the company president for its retiring
employees, it was, however, never formalized or
implemented. The Labor Arbiter found thusly:
Sa usaping pinag-uusapan ay mayroong
plano sa pamamahinga (retirement plan)
at ito nga, ay ang sinasabing lote na
ipagkakaloob sa mga manggagawang
may mahigit na sampung (10) taong
paglilingkod, ngunit hanggang ngayon
ay ito ay isang panaginip lamang. Wala
pa, ni isang naisa-katuparan. At isa pa,
napakalayo ang nasabing pook (San
Jose del Monte, Bulacan) para sa isang
katulad ng nagsusumbong upang doon
siya tuluyan pumanaw, sa kabila ng
kanyang pag-iisa. Kaya't ang sinasabing
lote ay pansamantalang pang-palubag-
loob lamang, at hindi seryosong biyaya
o tunay na alay-biyaya.11
It then goes without saying, applying Llora Motors, that the
beneficial provisions of Section 14 of Implementative Rules
cannot properly be invoked by private respondent.
Instead, the pivotal issue, in our view, is whether or not R.A.
7641 can favorably apply to private respondent's case.
RA 7641 is undoubtedly a social legislation. The law has
been enacted as a labor protection measure and as a
curative statute that — absent a retirement plan devised by,
an agreement with, or a voluntary grant from, an employer —
can respond, in part at least, to the financial well-being of
workers during their twilight years soon following their life of
labor. There should be little doubt about the fact that the law
can apply to labor contracts still existing at the time the
statute has taken effect, and that its benefits can be
reckoned not only from the date of the law's enactment but
retroactively to the time said employment contracts have
started. On this score, the case of Allied Investigation
Bureau, Inc., vs. Ople, 91 SCRA 265, finds strong relevance:
1. There is no question that petitioner
had agreed to grant retirement benefits
to private respondent. It would, however,
limit such retirement benefits only from
the date of the effectivity of the Labor
Code. That is its contention. The
refutation given in the Comment of
Solicitor General Estelito P. Mendoza is
persuasive. As was pointed out, "in the
computation thereof, public respondents
acted judiciously in reckoning the
retirement pay from the time private
respondent started working with
petitioner since respondent employee's
application for retirement benefits and
the company's approval of the same
make express mention of Sections 13
and 14, Rule 1, Book VI of the
Implementing Rules and Regulations of
the Labor Code as the basis for
retirement pay. Section 14 (a) of said
rule provides that an employee who is
retired pursuant to a bona-
fide retirement plan or in accordance
with the applicable individual or
collective agreement or established
employer policy shall be entitled to all
the retirement benefits provided therein
or to termination pay equivalent to at
least one-half month salary for every
year of service, whichever is higher, a
fraction of at least six (6) months being
considered as one whole year.'' Further
it was stated: "This position taken by
public respondents squares with the
principle that social legislation should be
interpreted in favor of workers in the
light of the Constitutional mandate that
the State shall afford protection to
labor."
2. Petitioner's insistence that the
retirement benefits should date only
from the time that the present Labor
Code came into force could be based on
the assumption that it should not be
given a retroactive effect. That would be
to ignore the well-settled principle that
police power legislation intended to
promote public welfare applies to
existing contracts. It was held
in Ongsiako v. Gamboa, decided in
1950, that a police power measure
being remedial in character covers
existing situations; otherwise, it would
be self-defeating. Abe v. Foster
Wheeler Corporation, this Court,
speaking through Justice Barrera, is
even more in point. In that case, the
contracts of employment were entered
into at a time when there was no law
granting the workers said right. Such
being the case, it was then contended
that the application as to them of the
subsequent enactment would amount to
an impairment of contractual obligations.
In refuting such a view, it was made
clear in the opinion that "constitutional
guaranty of non-impairment . . . is
limited by the exercise of the police
power of the State, in the interest of
public health, safety, morals and general
welfare." The latest reiteration of such a
doctrine came in Gutierrez v. Cantada,
decided barely a month ago.
3. Nor is it accurate to assert that the
right to retirement benefits started from
the enactment of the present Labor
Code. That would be to ignore the social
justice and protection to labor provisions
of the 1935 Constitution. In the leading
case of Antamok Goldfields Mining
Company v. Court of Industrial
Relations, decided in 1940, a concurring
opinion of Justice Laurel to this effect
was cited: "By and large, these
provisions in our Constitution all evince
and express the need of shifting
emphasis to community interest with a
view to affirmative enhancement of
human values." He had occasion to
repeat it in his well-known definition of
social justice in Calalang v. Williams,
decided the same year. Thus: "Social
justice is "neither communism, nor
despositism, nor atomism, nor anarchy,"
but the humanization of laws and the
equalization of social and economic
forces by the State so that justice in its
rational and objectively secular
conception may at least be
approximated. Social justice means the
promotion of the welfare of all the
people, the adoption by the Government
of measures calculated to insure
economic stability of all the component
elements of society, through the
maintenance of a proper economic and
social equilibrium in the interrelations of
the members of the community,
constitutionally, through the adoption of
measures legally justifiable, or extra-
constitutionally, through the exercise of
powers underlying the existence of all
governments on the time-honored
principle of salus populi est suprema
lex." The present Civil Code, which took
effect on August 13, 1950, has a chapter
on labor contracts, the first article of
which recognizes that the relations
between capital and labor "are not
merely contractual. They are so
impressed with public interest that labor
contracts must yield to the common
good."
Republic Act 7641 took effect on 07 January 1993, while the
appeal of private respondent was still pending consideration
by the NLRC. Still for determination at the time was, among
other things, the issue of whether or not private respondent
has, in fact, been effectively retired.
Petitioner asserts that private respondent has never reported
for work after the rejection of her application for retirement
benefits. This claim is denied by private respondent, who
avers that she did report for work again but that petitioner
has refused to accept her on the ground of abandonment of
duty. The Labor Arbiter has made these findings:
Sa sinasabi ng isinusumbong na ang
nagsusumbong daw ay kusang-loob na
tinalikuran ang paglilingkod
(abandonment of work) ay mahirap
paniwalaan. Ang isang manggagawa na
iningatan ang matapat niyang
paglilingkod sa loob ng mahabang
panahon, ay hindi basta na lamang
lilisan at ipahahamak ito. Ang isang
manggagawa na sa kanyang huling taon
nang paglilingkod, ay walang dahilan na
karaka-raka na lilisan ito upang ang
biyayang tatanggapin ay masalalay sa
alinlangan. Ang sinasabing pag-lisan ay
hindi na-aayon sa katutuhanan ng
pangyayari (natural course of events),
kaya't hindi namin ito masasang-
ayunan.
Ang katotohanan nito, ay noong
malaman ni Gng. Marietta G. Holmgren,
Pangulo ng isinusumbong (Oro
Enterprises, Inc.) na ang nagsusumbong
ay naglilingkod pa, ay nagalit ito at ang
sabi, "pag nalaman ng SSS na
nag(papa)trabaho pa ako na retired na,
ay malilintikan kami (referring to Oro
 Enterprises, Inc.) sa SSS. . . ." Kaya't
noong siya (naglilingkod) ay pumasok
noong Setyembre 15, 1990, ay
sinabihan siya na ito na ang
kahulihulihan niyang araw ng
paglilingkod. At simula noon ay hindi na
siya pumasok. At ang sinasabing ulat ng
pagputol ng paglilingkod (letter of
termination) na may petsang Oktubre
12, 1990, ay walang sapat na
batayan. 12
The NLRC, in turn, has said:
After all, the least that could be said
here is that the complainant filed her
claim for retirement pay only on January
7, 1993 the date R.A.
No. 7641 took effect and that against the
backdrop that she retired only on
September 15, 1990, her monetary
claim could be treated as well filed
within the three (3) years prescriptive
period set by law . . . . 13
Given the above findings, which must be accorded due
respect, we cannot see our way clear to attributing to NLRC
grave abuse of discretion in concluding thereby that private
respondent's claim for retirement benefits should accordingly
be held to fall within the ambit of Republic Act No. 7641.
Grave abuse of discretion, albeit an elastic phrase, 14 has
always been understood as a capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction,
such as, to exemplify, "where the power is exercised in an
arbitrary or despotic manner." 15
WHEREFORE, the petition for certiorari is DISMISSED, and
the decision of the NLRC is AFFIRMED.
G.R. No. L-12582             January 28, 1961
LVN PICTURES, INC., petitioner-appellant,
vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF
INDUSTRIAL RELATIONS, respondents-appellees.
x---------------------------------------------------------x
G.R. No. L-12598             January 28, 1961
SAMPAGUITA PICTURES, INC., petitioner-appellant,
vs.
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF
INDUSTRIAL RELATIONS, respondents-appellees.
Nicanor S. Sison for petitioner-appellant.
Jaime E. Ilagan for respondent-appellee Court of Agrarian
Relations.
Gerardo P. Cabo Chan for respondent-appellee Philippine
Musicians Guild.
CONCEPCION, J.:
Petitioners herein, LVN Pictures, Inc. and Sampaguita
Pictures, Inc. seek a review by certiorari of an order of the
Court of Industrial Relations in Case No. 306-MC thereof,
certifying the Philippine Musicians Guild (FFW), petitioner
therein and respondent herein, as the sole and exclusive
bargaining agency of all musicians working with said
companies, as well as with the Premiere Productions, Inc.,
which has not appealed. The appeal of LVN Pictures, Inc.,
has been docketed as G.R. No. L-12582, whereas G.R. No.
L-12598 is the appeal of Sampaguita Pictures, Inc. Involving
as they do the same order, the two cases have been jointly
heard in this Court, and will similarly be disposed of.
In its petition in the lower court, the Philippine Musicians
Guild (FFW), hereafter referred to as the Guild, averred that
it is a duly registered legitimate labor organization; that LVN
Pictures, Inc., Sampaguita Pictures, Inc., and Premiere
Productions, Inc. are corporations, duly organized under the
Philippine laws, engaged in the making of motion pictures
and in the processing and distribution thereof; that said
companies employ musicians for the purpose of making
music recordings for title music, background music, musical
numbers, finale music and other incidental music, without
which a motion picture is incomplete; that ninety-five (95%)
percent of all the musicians playing for the musical
recordings of said companies are members of the Guild; and
that the same has no knowledge of the existence of any
other legitimate labor organization representing musicians in
said companies. Premised upon these allegations, the Guild
prayed that it be certified as the sole and exclusive
bargaining agency for all musicians working in the
aforementioned companies. In their respective answers, the
latter denied that they have any musicians as employees,
and alleged that the musical numbers in the filing of the
companies are furnished by independent contractors. The
lower court, however, rejected this pretense and sustained
the theory of the Guild, with the result already adverted to. A
reconsideration of the order complained of having been
denied by the Court en banc, LVN Pictures, inc., and
Sampaguita Pictures, Inc., filed these petitions for review
for certiorari.
Apart from impugning the conclusion of the lower court on
the status of the Guild members as alleged employees of the
film companies, the LVN Pictures, Inc., maintains that a
petition for certification cannot be entertained when the
existence of employer-employee relationship between the
parties is contested. However, this claim is neither borne out
by any legal provision nor supported by any authority. So
long as, after due hearing, the parties are found to bear said
relationship, as in the case at bar, it is proper to pass upon
the merits of the petition for certification.
It is next urged that a certification is improper in the present
case, because, "(a) the petition does not allege and no
evidence was presented that the alleged musicians-
employees of the respondents constitute a proper bargaining
unit, and (b) said alleged musicians-employees represent a
majority of the other numerous employees of the film
companies constituting a proper bargaining unit under
section 12 (a) of Republic Act No. 875."
The absence of an express allegation that the members of
the Guild constitute a proper bargaining unit is fatal
proceeding, for the same is not a "litigation" in the sense in
which this term is commonly understood, but a mere
investigation of a non-adversary, fact finding character, in
which the investigating agency plays the part of a
disinterested investigator seeking merely to ascertain the
desires of employees as to the matter of their representation.
In connection therewith, the court enjoys a wide discretion in
determining the procedure necessary to insure the fair and
free choice of bargaining representatives by
employees.1 Moreover, it is alleged in the petition that the
Guild it a duly registered legitimate labor organization and
that ninety-five (95%) percent of the musicians playing for all
the musical recordings of the film companies involved in
these cases are members of the Guild. Although, in its
answer, the LVN Pictures, Inc. denied both allegations, it
appears that, at the hearing in the lower court it was merely
the status of the musicians as its employees that the film
companies really contested. Besides, the substantial
difference between the work performed by said musicians
and that of other persons who participate in the production of
a film, and the peculiar circumstances under which the
services of that former are engaged and rendered, suffice to
show that they constitute a proper bargaining unit. At this
juncture, it should be noted that the action of the lower court
in deciding upon an appropriate unit for collective bargaining
purposes is discretionary (N.L.R.B. v. May Dept. Store Co.,
66 Sup. Ct. 468. 90 L. ed. 145) and that its judgment in this
respect is entitled to almost complete finality, unless its
action is arbitrary or capricious (Marshall Field & Co. v.
N.L.R.B. [C.C.A. 19431, 135 F. 2d. 891), which is far from
being so in the cases at bar.
Again, the Guild seeks to be, and was, certified as the sole
and exclusive bargaining agency for the musicians working
in the aforesaid film companies. It does not intend to
represent the other employees therein. Hence, it was not
necessary for the Guild to allege that its members constitute
a majority of all the employees of said film companies,
including those who are not musicians. The real issue in
these cases, is whether or not the musicians in question are
employees of the film companies. In this connection the
lower court had the following to say:
As a normal and usual course of procedure
employed by the companies when a picture is to
be made, the producer invariably chooses, from
the musical directors, one who will furnish the
musical background for a film. A price is agreed
upon verbally between the producer and musical
director for the cost of furnishing such musical
background. Thus, the musical director may
compose his own music specially written for or
adapted to the picture. He engages his own men
and pays the corresponding compensation of the
musicians under him.
When the music is ready for recording, the
musicians are summoned through 'call slips' in the
name of the film company (Exh 'D'), which show
the name of the musician, his musical instrument,
and the date, time and place where he will be
picked up by the truck of the film company. The
film company provides the studio for the use of the
musicians for that particular recording. The
musicians are also provided transportation to and
from the studio by the company. Similarly, the
company furnishes them meals at dinner time.
During the recording sessions, the motion picture
director, who is an employee of the company,
supervises the recording of the musicians and tells
what to do in every detail. He solely directs the
performance of the musicians before the camera
as director, he supervises the performance of all
the action, including the musicians who appear in
the scenes so that in the actual performance to be
shown on the screen, the musical director's
intervention has stopped.
And even in the recording sessions and during the
actual shooting of a scene, the technicians,
soundmen and other employees of the company
assist in the operation. Hence, the work of the
musicians is an integral part of the entire motion
picture since they not only furnish the music but
are also called upon to appear in the finished
picture.
The question to be determined next is what legal
relationship exits between the musicians and the
company in the light of the foregoing facts.
We are thus called upon to apply R.A. Act 875.
which is substantially the same as and patterned
after the Wagner Act substantially the same as a
Act and the Taft-Hartley Law of the United States.
Hence, reference to decisions of American Courts
on these laws on the point-at-issue is called for.
Statutes are to be construed in the light of
purposes achieved and the evils sought to be
remedied. (U.S. vs. American Tracking
Association, 310 U.S. 534, 84 L. ed. 1345.) .
In the case of National Labor Relations Board vs.
Hearts Publication, 322 U.S. 111, the United
States Supreme Court said the Wagner Act was
designed to avert the 'substantial obstruction to
the free flow of commerce which results from
strikes and other forms of industrial unrest by
eliminating the causes of the unrest. Strikes and
industrial unrest result from the refusal of
employers' to bargain collectively and the inability
of workers to bargain successfully for improvement
in their working conditions. Hence, the purposes of
the Act are to encourage collective bargaining and
to remedy the workers' inability to bargaining
power, by protecting the exercise of full freedom of
association and designation of representatives of
their own choosing, for the purpose of negotiating
the terms and conditions of their employment.'
The mischief at which the Act is aimed and the
remedies it offers are not confined exclusively to
'employees' within the traditional legal distinctions,
separating them from 'independent contractor'.
Myriad forms of service relationship, with infinite
and subtle variations in the term of employment,
blanket the nation's economy. Some are within this
Act, others beyond its coverage. Large numbers
will fall clearly on one side or on the other, by
whatever test may be applied. Inequality of
bargaining power in controversies of their wages,
hours and working conditions may characterize the
status of one group as of the other. The former,
when acting alone may be as helpless in dealing
with the employer as dependent on his daily wage
and as unable to resist arbitrary and unfair
treatment as the latter.'
To eliminate the causes of labor dispute and
industrial strike, Congress thought it necessary to
create a balance of forces in certain types of
economic relationship. Congress recognized those
economic relationships cannot be fitted neatly into
the containers designated as 'employee' and
'employer'. Employers and employees not in
proximate relationship may be drawn into common
controversies by economic forces and that the
very dispute sought to be avoided might involve
'employees' who are at times brought into an
economic relationship with 'employers', who are
not their 'employers'. In this light, the language of
the Act's definition of 'employee' or 'employer'
should be determined broadly in doubtful
situations, by underlying economic facts rather
than technically and exclusively established legal
classifications. (NLRB vs. Blount, 131 F [2d] 585.)
In other words, the scope of the term 'employee'
must be understood with reference to the
purposes of the Act and the facts involved in the
economic relationship. Where all the conditions of
relation require protection, protection ought to be
given .
By declaring a worker an employee of the person
for whom he works and by recognizing and
protecting his rights as such, we eliminate the
cause of industrial unrest and consequently we
promote industrial peace, because we enable him
to negotiate an agreement which will settle
disputes regarding conditions of employment,
through the process of collective bargaining.
The statutory definition of the word 'employee' is of
wide scope. As used in the Act, the term embraces
'any employee' that is all employees in the
conventional as well in the legal sense expect
those excluded by express provision. (Connor
Lumber Co., 11 NLRB 776.).
It is the purpose of the policy of Republic Act 875;
(a) To eliminate the causes of industrial unrest by
protecting the exercise of their right to self-
organization for the purpose of collective
bargaining. (b) To promote sound stable industrial
peace and the advancement of the general
welfare, and the best interests of employers and
employees by the settlement of issues respecting
terms and conditions of employment through the
process of collective bargaining between
employers and representatives of their employees.
The primary consideration is whether the declared
policy and purpose of the Act can be effectuated
by securing for the individual worker the rights and
protection guaranteed by the Act. The matter is not
conclusively determined by a contract which
purports to establish the status of the worker, not
as an employee.
The work of the musical director and musicians is
a functional and integral part of the enterprise
performed at the same studio substantially under
the direction and control of the company.
In other words, to determine whether a person
who performs work for another is the latter's
employee or an independent contractor, the
National Labor Relations relies on 'the right to
control' test. Under this test an employer-
employee relationship exist where the person for
whom the services are performed reserves the
right to control not only the end to be achieved, but
also the manner and means to be used in reaching
the end. (United Insurance Company, 108, NLRB
No. 115.).
Thus, in said similar case of Connor Lumber
Company, the Supreme Court said:.
'We find that the independent
contractors and persons working under
them are employees' within the meaning
of Section 2 (3) of its Act. However, we
are of the opinion that the independent
contractors have sufficient authority over
the persons working under their
immediate supervision to warrant their
exclusion from the unit. We shall include
in the unit the employees working under
the supervision of the independent
contractors, but exclude the contractors.'
'Notwithstanding that the employees are called
independent contractors', the Board will hold them
to be employees under the Act where the extent of
the employer's control over them indicates that the
relationship is in reality one of employment. (John
Hancock Insurance Co., 2375-D, 1940, Teller,
Labor Dispute Collective Bargaining, Vol.).
The right of control of the film company over the
musicians is shown (1) by calling the musicians
through 'call slips' in 'the name of the company; (2)
by arranging schedules in its studio for recording
sessions; (3) by furnishing transportation and
meals to musicians; and (4) by supervising and
directing in detail, through the motion picture
director, the performance of the musicians before
the camera, in order to suit the music they are
playing to the picture which is being flashed on the
screen.
Thus, in the application of Philippine statutes and
pertinent decisions of the United States Courts on
the matter to the facts established in this case, we
cannot but conclude that to effectuate the policies
of the Act and by virtue of the 'right of control' test,
the members of the Philippine Musicians Guild are
employees of the three film companies and,
therefore, entitled to right of collective bargaining
under Republic Act No. 875.
In view of the fact that the three (3) film companies
did not question the union's majority, the Philippine
Musicians Guild is hereby declared as the sole
collective bargaining representative for all the
musicians employed by the film companies."
We are fully in agreement with the foregoing conclusion and
the reasons given in support thereof. Both are substantially
in line with the spirit of our decision
in Maligaya Ship Watchmen Agency vs. Associated
Watchmen and Security Union, L-12214-17 (May 28, 1958).
In fact, the contention of the employers in
the Maligaya cases, to the effect that they had dealt with
independent contractors, was stronger than that of the film
companies in these cases. The third parties with whom the
management and the workers contracted in
the Maligaya cases were agencies registered with the
Bureau of Commerce and duly licensed by the City of Manila
to engage in the business of supplying watchmen to
steamship companies, with permits to engage in said
business issued by the City Mayor and the Collector of
Customs. In the cases at bar, the musical directors with
whom the film companies claim to have dealt with
had nothing comparable to the business standing of said
watchmen agencies. In this respect, the status of said
musical directors is analogous to that of the alleged
independent contractor in Caro vs. Rilloraza, L-9569
(September 30, 1957), with the particularity that
the Caro case involved the enforcement of the liability of an
employer under the Workmen's Compensation Act, whereas
the cases before us are merely concerned with the right of
the Guild to represent the musicians as a collective
bargaining unit. Hence, there is less reason to be legalistic
and technical in these cases, than in the Caro case.
Herein, petitioners-appellants cite, in support of their appeal,
the cases of Sunripe Coconut Product Co., Inc vs. CIR (46
Off. Gaz., 5506, 5509), Philippine Manufacturing Co. vs.
Santos Vda. de Geronimo, L-6968 (November 29,
1954), Viana vs. Al-Lagadan, L-8967 (May 31, 1956),
and Josefa Vda. de Cruz vs. The Manila Hotel Co. (53 Off.
Gaz., 8540). Instead of favoring the theory of said
petitioners-appellants, the case of the Sunripe Coconut
Product Co., Inc. is authority for herein respondents-
appellees. It was held that, although engaged as piece-
workers, under the "pakiao" system, the "parers" and
"shellers" in the case were, not independent contractor,
but employees of said company, because "the requirement
imposed on the 'parers' to the effect that 'the nuts are pared
whole or that there is not much meat wasted,' in effect limits
or controls the means or details by which said workers are to
accomplish their services" — as in the cases before us.
The nature of the relation between the parties was not
settled in the Viana case, the same having been remanded
to the Workmen's Compensation Commission for further
evidence.
The case of the Philippine Manufacturing Co. involved a
contract between said company and Eliano Garcia, who
undertook to paint a tank of the former. Garcia, in turn
engaged the services of Arcadio Geronimo, a laborer, who
fell while painting the tank and died in consequence of the
injuries thus sustained by him. Inasmuch as the company
was engaged in the manufacture of soap, vegetable lard,
cooking oil and margarine, it was held that the connection
between its business and the painting aforementioned was
purely casual; that Eliano Garcia was an independent
contractor; that Geronimo was not an employee of the
company; and that the latter was not bound, therefore, to pay
the compensation provided in the Workmen's Compensation
Act. Unlike the Philippine Manufacturing case, the relation
between the business of herein petitioners-appellants and
the work of the musicians is not casual. As held in the order
appealed from which, in this respect, is not contested by
herein petitioners-appellants — "the work of the musicians
is an integral part of the entire motion picture." Indeed, one
can hardly find modern films without music therein. Hence, in
the Caro case (supra), the owner and operator of buildings
for rent was held bound to pay the indemnity prescribed in
the Workmen's Compensation Act for the injury suffered by a
carpenter while working as such in one of said buildings
even though his services had been allegedly engaged by a
third party who had directly contracted with said owner. In
other words, the repair work had not merely a casual
connection with the business of said owner. It was a
necessary incident thereof, just as music is in the production
of motion pictures.
The case of Josefa Vda. de Cruz vs. The Manila Hotel Co.,
L-9110 (April 30, 1957) differs materially from the present
cases. It involved the interpretation of Republic Act No. 660,
which amends the law creating and establishing the
Government Service Insurance System. No labor law was
sought to be construed in that case. In act, the same was
originally heard in the Court of First Instance of Manila, the
decision of which was, on appeal, affirmed by the Supreme
Court. The meaning or scope if the term "employee," as
used in the Industrial Peace Act (Republic Act No. 875), was
not touched therein. Moreover, the subject matter of said
case was a contract between the management of the Manila
Hotel, on the one hand, and Tirso Cruz, on the other,
whereby the latter greed to furnish the former the services of
his orchestra, consisting of 15 musicians, including Tirso
Cruz, "from 7:30 p.m. to closing time daily." In the language
of this court in that case, "what pieces the orchestra shall
play, and how the music shall be arranged or directed, the
intervals and other details — such are left to
the leader's discretion."
This is not situation obtaining in the case at bar. The musical
directors above referred to have no such control over the
musicians involved in the present case. Said musical
directors control neither the music to be played, nor the
musicians playing it. The film companies summon the
musicians to work, through the musical directors. The film
companies, through the musical directors, fix the date, the
time and the place of work. The film companies, not the
musical directors, provide the transportation to and from the
studio. The film companies furnish meal at dinner time.
What is more — in the language of the order appealed from
— "during the recording sessions, the motion picture director
who is an employee of the company" — not the musical
director — "supervises the recording of the musicians and
tells them what to do in every detail". The motion picture
director — not the musical director — "solely directs and
performance of the musicians before the camera". The
motion picture director "supervises the performance of all the
actors, including the musicians who appear in the scenes,
so that in the actual performance to be shown in the
screen, the musical director's intervention has stopped." Or,
as testified to in the lower court, "the movie director tells the
musical director what to do; tells the music to be cut or tells
additional music in this part or he eliminates the entire music
he does not (want) or he may want more drums or move
violin or piano, as the case may be". The movie director
"directly controls the activities of the musicians." He "says he
wants more drums and the drummer plays more" or "if he
wants more violin or he does not like that.".
It is well settled that "an employer-employee relationship
exists . . .where the person for whom the services are
performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such
end . . . ." (Alabama Highway Express Co., Express Co., v.
Local 612, 108S. 2d. 350.) The decisive nature of said
control over the "means to be used", is illustrated in the case
of Gilchrist Timber Co., et al., Local No. 2530 (73 NLRB No.
210, pp. 1197, 1199-1201), in which, by reason of said
control, the employer-employee relationship was held to
exist between the management and the workers,
notwithstanding the intervention of an alleged independent
contractor, who had, and exercise, the power to hire and fire
said workers. The aforementioned control over the means to
be used" in reading the desired end is possessed and
exercised by the film companies over the musicians in the
cases before us.
WHEREFORE, the order appealed from is hereby affirmed,
with costs against petitioners herein. It is so ordered.
G.R. No. 138051             June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on
certiorari1 assailing the 26 March 1999 Decision2 of the Court
of Appeals in CA-G.R. SP No. 49190 dismissing the petition
filed by Jose Y. Sonza ("SONZA"). The Court of Appeals
affirmed the findings of the National Labor Relations
Commission ("NLRC"), which affirmed the Labor Arbiter’s
dismissal of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting
Corporation ("ABS-CBN") signed an Agreement
("Agreement") with the Mel and Jay Management and
Development Corporation ("MJMDC"). ABS-CBN was
represented by its corporate officers while MJMDC was
represented by SONZA, as President and General Manager,
and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer.
Referred to in the Agreement as "AGENT," MJMDC agreed
to provide SONZA’s services exclusively to ABS-CBN as
talent for radio and television. The Agreement listed the
services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to
10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30
to 7:00 p.m., Sundays.3
ABS-CBN agreed to pay for SONZA’s services a monthly
talent fee of ₱310,000 for the first year and ₱317,000 for the
second and third year of the Agreement. ABS-CBN would
pay the talent fees on the 10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s
President, Eugenio Lopez III, which reads:
Dear Mr. Lopez,
We would like to call your attention to
the Agreement dated May 1994 entered
into by your goodself on behalf of ABS-
CBN with our company relative to our
talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza
irrevocably resigned in view of recent
events concerning his programs and
career. We consider these acts of the
station violative of the Agreement and
the station as in breach thereof. In this
connection, we hereby serve notice of
rescission of said Agreement at our
instance effective as of date.
Mr. Sonza informed us that he is waiving
and renouncing recovery of the
remaining amount stipulated in
paragraph 7 of the Agreement but
reserves the right to seek recovery of
the other benefits under said
Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y.
SONZA
President
and Gen.
Manager4
On 30 April 1996, SONZA filed a complaint against ABS-
CBN before the Department of Labor and Employment,
National Capital Region in Quezon City. SONZA complained
that ABS-CBN did not pay his salaries, separation pay,
service incentive leave pay, 13th month pay, signing bonus,
travel allowance and amounts due under the Employees
Stock Option Plan ("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the
ground that no employer-employee relationship existed
between the parties. SONZA filed an Opposition to the
motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZA’s monthly
talent fees through his account at PCIBank, Quezon Avenue
Branch, Quezon City. In July 1996, ABS-CBN opened a new
account with the same bank where ABS-CBN deposited
SONZA’s talent fees and other payments due him under the
Agreement.
In his Order dated 2 December 1996, the Labor
Arbiter5 denied the motion to dismiss and directed the parties
to file their respective position papers. The Labor Arbiter
ruled:
In this instant case, complainant for having
invoked a claim that he was an employee of
respondent company until April 15, 1996 and that
he was not paid certain claims, it is sufficient
enough as to confer jurisdiction over the instant
case in this Office. And as to whether or not such
 claim would entitle complainant to recover upon
the causes of action asserted is a matter to be
resolved only after and as a result of a hearing.
Thus, the respondent’s plea of lack of employer-
employee relationship may be pleaded only as a
matter of defense. It behooves upon it the duty to
prove that there really is no employer-employee
relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for
resolution. The parties submitted their position papers on 24
February 1997.
On 11 March 1997, SONZA filed a Reply to Respondent’s
Position Paper with Motion to Expunge Respondent’s Annex
4 and Annex 5 from the Records. Annexes 4 and 5 are
affidavits of ABS-CBN’s witnesses Soccoro Vidanes and
Rolando V. Cruz. These witnesses stated in their affidavits
that the prevailing practice in the television and broadcast
industry is to treat talents like SONZA as independent
contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997
dismissing the complaint for lack of jurisdiction.6 The
pertinent parts of the decision read as follows:
xxx
While Philippine jurisprudence has not yet, with
certainty, touched on the "true nature of the
contract of a talent," it stands to reason that a
"talent" as above-described cannot be considered
as an employee by reason of the peculiar
circumstances surrounding the engagement of his
services.
It must be noted that complainant was engaged
by respondent by reason of his peculiar skills
and talent as a TV host and a radio
broadcaster. Unlike an ordinary employee, he
was free to perform the services he undertook
to render in accordance with his own style. The
benefits conferred to complainant under the May
1994 Agreement are certainly very much higher
than those generally given to employees. For one,
complainant Sonza’s monthly talent fees amount
to a staggering ₱317,000. Moreover, his
engagement as a talent was covered by a specific
contract. Likewise, he was not bound to render
eight (8) hours of work per day as he worked only
for such number of hours as may be necessary.
The fact that per the May 1994 Agreement
complainant was accorded some benefits normally
given to an employee is
inconsequential. Whatever benefits complainant
enjoyed arose from specific agreement by the
parties and not by reason of employer-
employee relationship. As correctly put by the
respondent, "All these benefits are merely talent
fees and other contractual benefits and should not
be deemed as ‘salaries, wages and/or other
remuneration’ accorded to an employee,
notwithstanding the nomenclature appended to
these benefits. Apropos to this is the rule that the
term or nomenclature given to a stipulated benefit
is not controlling, but the intent of the parties to the
Agreement conferring such benefit."
The fact that complainant was made subject to
respondent’s Rules and Regulations, likewise,
does not detract from the absence of
employer-employee relationship. As held by the
Supreme Court, "The line should be drawn
between rules that merely serve as guidelines
towards the achievement of the mutually desired
result without dictating the means or methods to
be employed in attaining it, and those that control
or fix the methodology and bind or restrict the
party hired to the use of such means. The first,
which aim only to promote the result, create no
employer-employee relationship unlike the second,
which address both the result and the means to
achieve it." (Insular Life Assurance Co., Ltd. vs.
NLRC, et al., G.R. No. 84484, November 15,
1989).
x x x (Emphasis supplied)7
SONZA appealed to the NLRC. On 24 February 1998, the
NLRC rendered a Decision affirming the Labor Arbiter’s
decision. SONZA filed a motion for reconsideration, which
the NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for
certiorari before the Court of Appeals assailing the decision
and resolution of the NLRC. On 26 March 1999, the Court of
Appeals rendered a Decision dismissing the case.8
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRC’s finding that no
employer-employee relationship existed between SONZA
and ABS-CBN. Adopting the NLRC’s decision, the appellate
court quoted the following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal
that MJMDC entered into the contract merely as
an agent of complainant Sonza, the principal. By
all indication and as the law puts it, the act of the
agent is the act of the principal itself. This fact is
made particularly true in this case, as admittedly
MJMDC ‘is a management company devoted
exclusively to managing the careers of Mr. Sonza
and his broadcast partner, Mrs. Carmela C.
Tiangco.’ (Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only
accrues between complainant Sonza and MJMDC,
and not between ABS-CBN and MJMDC. This is
clear from the provisions of the May 1994
Agreement which specifically referred to MJMDC
as the ‘AGENT’. As a matter of fact, when
complainant herein unilaterally rescinded said May
1994 Agreement, it was MJMDC which issued the
notice of rescission in behalf of Mr. Sonza, who
himself signed the same in his capacity as
President.
Moreover, previous contracts between Mr. Sonza
and ABS-CBN reveal the fact that historically, the
parties to the said agreements are ABS-CBN and
Mr. Sonza. And it is only in the May 1994
Agreement, which is the latest Agreement
executed between ABS-CBN and Mr. Sonza, that
MJMDC figured in the said Agreement as the
agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a
mere ‘labor-only’ contractor of ABS-CBN such that
there exist[s] employer-employee relationship
between the latter and Mr. Sonza. On the contrary,
We find it indubitable, that MJMDC is an agent, not
of ABS-CBN, but of the talent/contractor Mr.
Sonza, as expressly admitted by the latter and
MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over
the instant controversy indeed belongs to the
regular courts, the same being in the nature of an
action for alleged breach of contractual obligation
on the part of respondent-appellee. As squarely
apparent from complainant-appellant’s Position
Paper, his claims for compensation for services,
‘13th month pay’, signing bonus and travel
allowance against respondent-appellee are not
based on the Labor Code but rather on the
provisions of the May 1994 Agreement, while his
claims for proceeds under Stock Purchase
Agreement are based on the latter. A portion of the
Position Paper of complainant-appellant bears
perusal:
‘Under [the May 1994 Agreement] with
respondent ABS-CBN, the latter
contractually bound itself to pay
complainant a signing bonus consisting
of shares of stocks…with FIVE
HUNDRED THOUSAND PESOS
(₱500,000.00).
Similarly, complainant is also entitled to
be paid 13th month pay based on an
amount not lower than the amount he
was receiving prior to effectivity of (the)
Agreement’.
Under paragraph 9 of (the May 1994
Agreement), complainant is entitled to a
commutable travel benefit amounting to
at least One Hundred Fifty Thousand
Pesos (₱150,000.00) per year.’
Thus, it is precisely because of complainant-
appellant’s own recognition of the fact that his
contractual relations with ABS-CBN are founded
on the New Civil Code, rather than the Labor
Code, that instead of merely resigning from ABS-
CBN, complainant-appellant served upon the latter
a ‘notice of rescission’ of Agreement with the
station, per his letter dated April 1, 1996, which
asserted that instead of referring to unpaid
employee benefits, ‘he is waiving and renouncing
recovery of the remaining amount stipulated in
paragraph 7 of the Agreement but reserves the
right to such recovery of the other benefits under
said Agreement.’ (Annex 3 of the respondent ABS-
CBN’s Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged
violation of the May 1994 Agreement and/or the
Stock Purchase Agreement by respondent-
appellee that complainant-appellant filed his
complaint. Complainant-appellant’s claims being
anchored on the alleged breach of contract on the
part of respondent-appellee, the same can be
resolved by reference to civil law and not to labor
law. Consequently, they are within the realm of
civil law and, thus, lie with the regular courts. As
held in the case of Dai-Chi Electronics
Manufacturing vs. Villarama, 238 SCRA 267, 21
November 1994, an action for breach of
contractual obligation is intrinsically a civil
dispute.9 (Emphasis supplied)
The Court of Appeals ruled that the existence of an
employer-employee relationship between SONZA and ABS-
CBN is a factual question that is within the jurisdiction of the
NLRC to resolve.10 A special civil action for certiorari extends
only to issues of want or excess of jurisdiction of the
NLRC.11 Such action cannot cover an inquiry into the
correctness of the evaluation of the evidence which served
as basis of the NLRC’s conclusion. 12 The Court of Appeals
added that it could not re-examine the parties’ evidence and
substitute the factual findings of the NLRC with its own.13
The Issue
In assailing the decision of the Court of Appeals, SONZA
contends that:
THE COURT OF APPEALS GRAVELY ERRED IN
AFFIRMING THE NLRC’S DECISION AND
REFUSING TO FIND THAT AN EMPLOYER-
EMPLOYEE RELATIONSHIP EXISTED
BETWEEN SONZA AND ABS-CBN, DESPITE
THE WEIGHT OF CONTROLLING LAW,
JURISPRUDENCE AND EVIDENCE TO
SUPPORT SUCH A FINDING.14
The Court’s Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the
decision of the Court of Appeals affirming the NLRC ruling
which upheld the Labor Arbiter’s dismissal of the case for
lack of jurisdiction.
The present controversy is one of first impression. Although
Philippine labor laws and jurisprudence define clearly the
elements of an employer-employee relationship, this is the
first time that the Court will resolve the nature of the
relationship between a television and radio station and one
of its "talents." There is no case law stating that a radio and
television program host is an employee of the broadcast
station.
The instant case involves big names in the broadcast
industry, namely Jose "Jay" Sonza, a known television and
radio personality, and ABS-CBN, one of the biggest ABS-CBN. SONZA also points out that ABS-CBN granted
television and radio networks in the country. him benefits and privileges "which he would not have
enjoyed if he were truly the subject of a valid job contract."
SONZA contends that the Labor Arbiter has jurisdiction over
the case because he was an employee of ABS-CBN. On the All the talent fees and benefits paid to SONZA were the
other hand, ABS-CBN insists that the Labor Arbiter has no result of negotiations that led to the Agreement. If SONZA
jurisdiction because SONZA was an independent contractor. were ABS-CBN’s employee, there would be no need for the
parties to stipulate on benefits such as "SSS, Medicare, x x x
and 13th month pay"20 which the law automatically
Employee or Independent Contractor?
incorporates into every employer-employee
contract.21 Whatever benefits SONZA enjoyed arose from
The existence of an employer-employee relationship is a contract and not because of an employer-employee
question of fact. Appellate courts accord the factual findings relationship.22
of the Labor Arbiter and the NLRC not only respect but also
finality when supported by substantial
SONZA’s talent fees, amounting to ₱317,000 monthly in the
evidence.15 Substantial evidence means such relevant
second and third year, are so huge and out of the ordinary
evidence as a reasonable mind might accept as adequate to
that they indicate more an independent contractual
support a conclusion.16 A party cannot prove the absence of
relationship rather than an employer-employee relationship.
substantial evidence by simply pointing out that there is
ABS-CBN agreed to pay SONZA such huge talent fees
contrary evidence on record, direct or circumstantial. The
precisely because of SONZA’s unique skills, talent and
Court does not substitute its own judgment for that of the
celebrity status not possessed by ordinary employees.
tribunal in determining where the weight of evidence lies or
Obviously, SONZA acting alone possessed enough
what evidence is credible.17
bargaining power to demand and receive such huge talent
fees for his services. The power to bargain talent fees way
SONZA maintains that all essential elements of an employer- above the salary scales of ordinary employees is a
employee relationship are present in this case. Case law has circumstance indicative, but not conclusive, of an
consistently held that the elements of an employer-employee independent contractual relationship.
relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of
The payment of talent fees directly to SONZA and not to
dismissal; and (d) the employer’s power to control the
MJMDC does not negate the status of SONZA as an
employee on the means and methods by which the work is
independent contractor. The parties expressly agreed on
accomplished.18 The last element, the so-called "control
such mode of payment. Under the Agreement, MJMDC is
test", is the most important element. 19
the AGENT of SONZA, to whom MJMDC would have to turn
over any talent fee accruing under the Agreement.
A. Selection and Engagement of Employee
C. Power of Dismissal
ABS-CBN engaged SONZA’s services to co-host its
television and radio programs because of SONZA’s peculiar
For violation of any provision of the Agreement, either party
skills, talent and celebrity status. SONZA contends that the
may terminate their relationship. SONZA failed to show that
"discretion used by respondent in specifically selecting and
ABS-CBN could terminate his services on grounds other
hiring complainant over other broadcasters of possibly
than breach of contract, such as retrenchment to prevent
similar experience and qualification as complainant belies
losses as provided under labor laws.23
respondent’s claim of independent contractorship."

During the life of the Agreement, ABS-CBN agreed to pay

Independent contractors often present themselves to
SONZA’s talent fees as long as "AGENT and Jay Sonza
possess unique skills, expertise or talent to distinguish them
shall faithfully and completely perform each condition of this
from ordinary employees. The specific selection and hiring of
Agreement."24 Even if it suffered severe business losses,
SONZA, because of his unique skills, talent and
ABS-CBN could not retrench SONZA because ABS-CBN
celebrity status not possessed by ordinary
remained obligated to pay SONZA’s talent fees during the
employees, is a circumstance indicative, but not conclusive,
life of the Agreement. This circumstance indicates an
of an independent contractual relationship. If SONZA did not
independent contractual relationship between SONZA and
possess such unique skills, talent and celebrity status, ABS-
ABS-CBN.
CBN would not have entered into the Agreement with
SONZA but would have hired him through its personnel
department just like any other employee. SONZA admits that even after ABS-CBN ceased
broadcasting his programs, ABS-CBN still paid him his talent
fees. Plainly, ABS-CBN adhered to its undertaking in the
In any event, the method of selecting and engaging SONZA
Agreement to continue paying SONZA’s talent fees during
does not conclusively determine his status. We must
the remaining life of the Agreement even if ABS-CBN
consider all the circumstances of the relationship, with the
cancelled SONZA’s programs through no fault of SONZA.25
control test being the most important element.

SONZA assails the Labor Arbiter’s interpretation of his

B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with
no part of his fees going to MJMDC. SONZA asserts that this
mode of fee payment shows that he was an employee of
rescission of the Agreement as an admission that he is not
an employee of ABS-CBN. The Labor Arbiter stated that "if it
were true that complainant was really an employee, he
would merely resign, instead." SONZA did actually resign
from ABS-CBN but he also, as president of MJMDC,
rescinded the Agreement. SONZA’s letter clearly bears this
out.26 However, the manner by which SONZA terminated his
relationship with ABS-CBN is immaterial. Whether SONZA
rescinded the Agreement or resigned from work does not
determine his status as employee or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and
television program host is an employee or an independent
contractor, we refer to foreign case law in analyzing the
present case. The United States Court of Appeals, First
Circuit, recently held in Alberty-Vélez v. Corporación De
Puerto Rico Para La Difusión Pública ("WIPR")27 that a
television program host is an independent contractor. We
quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an
independent contractor. First, a television
actress is a skilled position requiring talent
and training not available on-the-job. x x x In
this regard, Alberty possesses a master’s degree
in public communications and journalism; is
trained in dance, singing, and modeling; taught
with the drama department at the University of
Puerto Rico; and acted in several theater and
television productions prior to her affiliation with
"Desde Mi Pueblo." Second, Alberty provided
the "tools and instrumentalities" necessary for
her to perform. Specifically, she provided, or
obtained sponsors to provide, the costumes,
jewelry, and other image-related supplies and
services necessary for her appearance. Alberty
disputes that this factor favors independent
contractor status because WIPR provided the
"equipment necessary to tape the show." Alberty’s
argument is misplaced. The equipment necessary
for Alberty to conduct her job as host of "Desde Mi
Pueblo" related to her appearance on the show.
Others provided equipment for filming and
producing the show, but these were not the
primary tools that Alberty used to perform her
particular function. If we accepted this argument,
independent contractors could never work on
collaborative projects because other individuals
often provide the equipment required for different
aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in
addition to filming "Desde Mi Pueblo." Alberty’s
contracts with WIPR specifically provided that
WIPR hired her "professional services as Hostess
for the Program Desde Mi Pueblo." There is no
evidence that WIPR assigned Alberty tasks in
addition to work related to these tapings. x x
x28 (Emphasis supplied)
Applying the control test to the present case, we find that
SONZA is not an employee but an independent contractor.
The control test is the most important test our courts apply
in distinguishing an employee from an independent
contractor.29 This test is based on the extent of control the
hirer exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well – the
less control the hirer exercises, the more likely the worker is
considered an independent contractor.30
First, SONZA contends that ABS-CBN exercised control over
the means and methods of his work.
SONZA’s argument is misplaced. ABS-CBN engaged
SONZA’s services specifically to co-host the "Mel & Jay"
programs. ABS-CBN did not assign any other work to
SONZA. To perform his work, SONZA only needed his skills
and talent. How SONZA delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBN’s
control. SONZA did not have to render eight hours of work
per day. The Agreement required SONZA to attend only
rehearsals and tapings of the shows, as well as pre- and
post-production staff meetings.31 ABS-CBN could not dictate
the contents of SONZA’s script. However, the Agreement
prohibited SONZA from criticizing in his shows ABS-CBN or
its interests.32 The clear implication is that SONZA had a free
hand on what to say or discuss in his shows provided he did
not attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual
performance that produced the finished product of SONZA’s
work.33 ABS-CBN did not instruct SONZA how to perform his
job. ABS-CBN merely reserved the right to modify the
program format and airtime schedule "for more effective
programming."34 ABS-CBN’s sole concern was the quality of
the shows and their standing in the ratings. Clearly, ABS-
CBN did not exercise control over the means and methods of
performance of SONZA’s work.
SONZA claims that ABS-CBN’s power not to broadcast his
shows proves ABS-CBN’s power over the means and
methods of the performance of his work. Although ABS-CBN
did have the option not to broadcast SONZA’s show, ABS-
CBN was still obligated to pay SONZA’s talent fees... Thus,
even if ABS-CBN was completely dissatisfied with the means
and methods of SONZA’s performance of his work, or even
with the quality or product of his work, ABS-CBN could not
dismiss or even discipline SONZA. All that ABS-CBN could
do is not to broadcast SONZA’s show but ABS-CBN must
still pay his talent fees in full.35
Clearly, ABS-CBN’s right not to broadcast SONZA’s show,
burdened as it was by the obligation to continue paying in full
SONZA’s talent fees, did not amount to control over the
means and methods of the performance of SONZA’s work.
ABS-CBN could not terminate or discipline SONZA even if
the means and methods of performance of his work - how he
delivered his lines and appeared on television - did not meet
ABS-CBN’s approval. This proves that ABS-CBN’s control
was limited only to the result of SONZA’s work, whether to
broadcast the final product or not. In either case, ABS-CBN
must still pay SONZA’s talent fees in full until the expiry of
the Agreement.
In Vaughan, et al. v. Warner, et al.,36 the United States
Circuit Court of Appeals ruled that vaudeville performers
were independent contractors although the management
reserved the right to delete objectionable features in their
shows. Since the management did not have control over the
manner of performance of the skills of the artists, it could
only control the result of the work by deleting objectionable
features.37
SONZA further contends that ABS-CBN exercised control
over his work by supplying all equipment and crew. No
doubt, ABS-CBN supplied the equipment, crew and airtime
needed to broadcast the "Mel & Jay" programs. However,
the equipment, crew and airtime are not the "tools and
instrumentalities" SONZA needed to perform his job. What
SONZA principally needed were his talent or skills and the
costumes necessary for his appearance.38 Even though
ABS-CBN provided SONZA with the place of work and the
necessary equipment, SONZA was still an independent
contractor since ABS-CBN did not supervise and control his
work. ABS-CBN’s sole concern was for SONZA to display
his talent during the airing of the programs. 39
A radio broadcast specialist who works under minimal
supervision is an independent contractor.40 SONZA’s work
as television and radio program host required special skills
and talent, which SONZA admittedly possesses. The records
do not show that ABS-CBN exercised any supervision and
control over how SONZA utilized his skills and talent in his
shows.
Second, SONZA urges us to rule that he was ABS-CBN’s
employee because ABS-CBN subjected him to its rules and
standards of performance. SONZA claims that this indicates
ABS-CBN’s control "not only [over] his manner of work but
also the quality of his work."
The Agreement stipulates that SONZA shall abide with the
rules and standards of performance "covering talents"41 of
ABS-CBN. The Agreement does not require SONZA to
comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of conduct
imposed on SONZA under the Agreement refers to the
"Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by
the COMPANY (ABS-CBN) as its Code of Ethics." 42 The
KBP code applies to broadcasters, not to employees of radio
and television stations. Broadcasters are not necessarily
employees of radio and television stations. Clearly, the rules
and standards of performance referred to in the Agreement
are those applicable to talents and not to employees of ABS-
CBN.
In any event, not all rules imposed by the hiring party on the
hired party indicate that the latter is an employee of the
former.43 In this case, SONZA failed to show that these rules
controlled his performance. We find that these general rules
are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and
radio programs that comply with standards of the industry.
We have ruled that:
Further, not every form of control that a party reserves to
himself over the conduct of the other party in relation to the
services being rendered may be accorded the effect of
establishing an employer-employee relationship. The facts of
this case fall squarely with the case of Insular Life Assurance
Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules
that merely serve as guidelines towards the
achievement of the mutually desired result without
dictating the means or methods to be employed in
attaining it, and those that control or fix the
methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to
promote the result, create no employer-employee
relationship unlike the second, which address both
the result and the means used to achieve it.44
The Vaughan case also held that one could still be an
independent contractor although the hirer reserved certain
supervision to insure the attainment of the desired result.
The hirer, however, must not deprive the one hired from
performing his services according to his own initiative.45
Lastly, SONZA insists that the "exclusivity clause" in the
Agreement is the most extreme form of control which ABS-
CBN exercised over him.
This argument is futile. Being an exclusive talent does not by
itself mean that SONZA is an employee of ABS-CBN. Even
an independent contractor can validly provide his services
exclusively to the hiring party. In the broadcast industry,
exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted
practice in the entertainment industry. 46 This practice is not
designed to control the means and methods of work of the
talent, but simply to protect the investment of the broadcast
station. The broadcast station normally spends substantial
amounts of money, time and effort "in building up its talents
as well as the programs they appear in and thus expects that
said talents remain exclusive with the station for a
commensurate period of time."47 Normally, a much higher fee
is paid to talents who agree to work exclusively for a
particular radio or television station. In short, the huge talent
fees partially compensates for exclusivity, as in the present
case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiter’s finding that he is a talent
of MJMDC, which contracted out his services to ABS-CBN.
The Labor Arbiter ruled that as a talent of MJMDC, SONZA
is not an employee of ABS-CBN. SONZA insists that
MJMDC is a "labor-only" contractor and ABS-CBN is his
employer.
In a labor-only contract, there are three parties involved: (1)
the "labor-only" contractor; (2) the employee who is
ostensibly under the employ of the "labor-only" contractor;
and (3) the principal who is deemed the real employer.
Under this scheme, the "labor-only" contractor is the
agent of the principal. The law makes the principal
responsible to the employees of the "labor-only contractor"
as if the principal itself directly hired or employed the
employees.48 These circumstances are not present in this
case.
There are essentially only two parties involved under the
Agreement, namely, SONZA and ABS-CBN. MJMDC merely
acted as SONZA’s agent. The Agreement expressly states
that MJMDC acted as the "AGENT" of SONZA. The records
do not show that MJMDC acted as ABS-CBN’s agent.
MJMDC, which stands for Mel and Jay Management and
Development Corporation, is a corporation organized and
owned by SONZA and TIANGCO. The President and
General Manager of MJMDC is SONZA himself. It is absurd
to hold that MJMDC, which is owned, controlled, headed and
managed by SONZA, acted as agent of ABS-CBN in
entering into the Agreement with SONZA, who himself is
represented by MJMDC. That would make MJMDC the
agent of both ABS-CBN and SONZA.
As SONZA admits, MJMDC is a management company
devoted exclusively to managing the careers of SONZA and
his broadcast partner, TIANGCO. MJMDC is not engaged in
any other business, not even job contracting. MJMDC does
not have any other function apart from acting as agent of
SONZA or TIANGCO to promote their careers in the
broadcast and television industry. 49
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then
Minister of Labor Blas Ople on 8 January 1979 finally settled
the status of workers in the broadcast industry. Under this
policy, the types of employees in the broadcast industry are
the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which
does not have the force and effect of law. There is no legal
presumption that Policy Instruction No. 40 determines
SONZA’s status. A mere executive issuance cannot exclude
independent contractors from the class of service providers
to the broadcast industry. The classification of workers in the
broadcast industry into only two groups under Policy
Instruction No. 40 is not binding on this Court, especially
when the classification has no basis either in law or in fact.
Affidavits of ABS-CBN’s Witnesses
SONZA also faults the Labor Arbiter for admitting the
affidavits of Socorro Vidanes and Rolando Cruz without
giving his counsel the
opportunity to cross-examine these witnesses. SONZA
brands these witnesses as incompetent to attest on the
prevailing practice in the radio and television industry.
SONZA views the affidavits of these witnesses as misleading
and irrelevant.
While SONZA failed to cross-examine ABS-CBN’s
witnesses, he was never prevented from denying or refuting
the allegations in the affidavits. The Labor Arbiter has the
discretion whether to conduct a formal (trial-type) hearing
after the submission of the position papers of the parties,
thus:
Section 3. Submission of Position
Papers/Memorandum
xxx
These verified position papers 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. x x x
Section 4. Determination of Necessity of Hearing.
– Immediately after the submission of the parties
of their position papers/memorandum, the Labor
Arbiter shall motu propio determine whether there
is need for a formal trial or hearing. At this stage,
he may, at his discretion and for the purpose of
making such determination, ask clarificatory
questions to further elicit facts or information,
including but not limited to the subpoena of
relevant documentary evidence, if any from any
party or witness.50
The Labor Arbiter can decide a case based solely on the
position papers and the supporting documents without a
formal trial.51 The holding of a formal hearing or trial is
something that the parties cannot demand as a matter of
right.52 If the Labor Arbiter is confident that he can rely on the
documents before him, he cannot be faulted for not
conducting a formal trial, unless under the particular
circumstances of the case, the documents alone are
insufficient. The proceedings before a Labor Arbiter are non-
litigious in nature. Subject to the requirements of due
process, the technicalities of law and the rules obtaining in
the courts of law do not strictly apply in proceedings before a
Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the
broadcast and entertainment industries to treat talents like
SONZA as independent contractors. SONZA argues that if
such practice exists, it is void for violating the right of labor to
security of tenure.
The right of labor to security of tenure as guaranteed in the
Constitution53 arises only if there is an employer-employee
relationship under labor laws. Not every performance of
services for a fee creates an employer-employee
relationship. To hold that every person who renders services
to another for a fee is an employee - to give meaning to the
security of tenure clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the
freedom to offer their services as independent contractors.
The right to life and livelihood guarantees this freedom to
contract as independent contractors. The right of labor to
security of tenure cannot operate to deprive an individual,
possessed with special skills, expertise and talent, of his
right to contract as an independent contractor. An individual
like an artist or talent has a right to render his services
without any one controlling the means and methods by which
he performs his art or craft. This Court will not interpret the
right of labor to security of tenure to compel artists and
talents to render their services only as employees. If radio
and television program hosts can render their services only
as employees, the station owners and managers can dictate
to the radio and television hosts what they say in their
shows. This is not conducive to freedom of the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code ("NIRC")54 in relation to
Republic Act No. 7716,55 as amended by Republic Act No.
8241,56 treats talents, television and radio broadcasters
differently. Under the NIRC, these professionals are subject
to the 10% value-added tax ("VAT") on services they render.
Exempted from the VAT are those under an employer-
employee relationship.57 This different tax treatment
accorded to talents and broadcasters bolters our conclusion
that they are independent contractors, provided all the basic
elements of a contractual relationship are present as in this
case.
Nature of SONZA’s Claims
SONZA seeks the recovery of allegedly unpaid talent fees,
13th month pay, separation pay, service incentive leave,
signing bonus, travel allowance, and amounts due under the
Employee Stock Option Plan. We agree with the findings of
the Labor Arbiter and the Court of Appeals that SONZA’s
claims are all based on the May 1994 Agreement and
stock option plan, and not on the Labor Code. Clearly,
the present case does not call for an application of the Labor
Code provisions but an interpretation and implementation of
the May 1994 Agreement. In effect, SONZA’s cause of
action is for breach of contract which is intrinsically a civil
dispute cognizable by the regular courts.58
WHEREFORE, we DENY the petition. The assailed Decision
of the Court of Appeals dated 26 March 1999 in CA-G.R. SP
No. 49190 is AFFIRMED. Costs against petitioner.
SO

ORDERED.
ALLAN JOHN UY REYES v. GLOBAL BEER BELOW
ZERO, GR No. 222816, 2017-10-04
Facts:
Petitioner Reyes was an employee of respondent Global as
Operations Manager from January 2009 until January 2012.
On January 18, 2012, petitioner Reyes, in accordance with
his duties, reported to the main office of respondent Global in
Makati instead of going to the Pasig warehouse in order to
request for budget because there was a scheduled delivery
the following day. The following day, January 19, 2012,
petitioner Reyes ran late because according to him, his
three-year-old son was sick. Around 10:30 a.m. of the same
day, respondent Global's Vice-President for Operations,
Vinson Co Say (Co Say), petitioner Reyes' immediate and
direct superior at that time, called petitioner Reyes and
asked him why he was not yet at the office. Petitioner Reyes
apologized and said that he was on his way. According to
petitioner Reyes, he tried to explain why he was late, but Co
Say did not listen and the latter shouted at the other end of
the line and told petitioner Reyes not to report for work
anymore. Petitioner Reyes further claimed that Co Say
angrily retorted that he will talk to him the following week
before Co Say hung up the phone. As instructed, petitioner
did not report for work on the following days and waited for
further instructions from Co Say. On January 24, 2012,
petitioner Reyes received a text message from Co Say
stating the following, "Allan, let's meet thu, puno ako today,
bukas." Around 1:28 p.m. of January 26, 2012, petitioner
Reyes received a text message from Co Say which says,
"Allan, let's meet in Starbucks Waltermart around 3:00."
During the said meeting, Co Say told petitioner Reyes to no
longer report for work and insisted that he file a resignation
letter which petitioner Reyes refused to do because he
believed that he had not done anything that would warrant
his dismissal from the company. Thus, petitioner Reyes
instituted a complaint for constructive dismissal on February
22, 2012 and amended the same complaint on March 29,
2012, changing his cause of action to illegal dismissal.
Respondent Global, on the other hand, claimed that
petitioner Reyes was not dismissed from service, but the
latter stopped reporting for work on his own volition after
repeatedly violating company rules and regulations.
The Labor Arbiter, on November 28, 2012, ruled in favor of
petitioner Reyes.
According to the Labor Arbiter, petitioner Reyes had no
intention of quitting his job as seen from his filing of
applications of leaves of absences days before he
supposedly abandoned his job and his texting Co Say about
his work on the day he supposedly abandoned his job. It also
found that the accusation that petitioner Reyes committed
serious misconduct and was negligent in the performance of
his duty is more consistent with a finding that there was
dismissal than with a finding that there was an abandonment
of employment. The Labor Arbiter further ruled that the word
"turnover" in Co Say's last text message to petitioner Reyes
indicates that on the date that it was sent, the latter was
already expected to turnover his duties to his replacement
and belies the claim of Co Say that he asked petitioner
Reyes to return to work in order to possibly explain his
numerous absences, negligence in performing his duties and
serious misconduct.
On appeal, the NLRC affirmed the decision of the Labor
Arbiter
The NLRC ruled that petitioner Reyes sufficiently alleged the
surrounding circumstances of his dismissal and was able to
state, with the required particularities how he was terminated
from his employment; thus, respondent Global should have
proven that the dismissal was legally done. According to the
NLRC, respondent Global failed to disprove petitioner Reyes'
allegation that he was verbally dismissed twice by Co Say,
hence, there is no evidence showing that petitioner Reyes
was dismissed from his job for cause and that he was
afforded procedural due process.
Respondent filed with the CA a petition for certiorari under
Rule 65 and the latter reversed the decision of the NLRC
In finding merit to respondent Global's petition, the CA ruled
that the "text" messages allegedly sent by Co Say and Tet
Manares to petitioner could hardly meet the standard of
clear, positive and convincing evidence to prove petitioner's
dismissal from employment. It also held that aside from
petitioner Reyes' bare assertion that he was verbally
terminated from employment by Co Say, no corroborative
and competent evidence was adduced by petitioner Reyes to
substantiate his claim that he was illegally dismissed. The
CA, instead, found that there was no overt or positive act on
the part of respondent Global proving that it had dismissed
petitioner.
Issues:
WHETHER OR NOT RESPONDENT ILLEGALLY
DISMISSED PETITIONER.(B)THE COURT OF APPEALS
GRIEVOUSLY ERRED IN ANNULLING AND SETTING
ASIDE THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION WHICH AFFIRMED THE
LABOR ARBITER IN FINDING THAT ILLEGAL DISMISSAL
EXISTS(C)THE COURT OF APPEALS GRIEVOUSLY
ERRED IN DECIDING THE PETITION FOR CERTIORARI
UNDER RULE 65, A SPECIAL CIVIL ACTION, BASED ON
QUESTIONS OF FACT AND NOT OF LAW.(D)THE COURT
OF APPEALS GRIEVOUSLY ERRED IN FINDING THAT
THERE WAS GRAVE ABUSE OF DISCRETION ON THE
PART OF THE NATIONAL LABOR RELATIONS
COMMISSION IN AFFIRMING THE DECISION OF THE
LABOR ARBITER THAT ILLEGAL DISMISSAL WAS
APPARENT ON THE PART OF HEREIN RESPONDENT.
(E)THE COURT OF APPEALS ERRED WHEN IT FOUND
THAT THE NATIONAL LABOR RELATIONS COMMISSION
COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT ACCEPTED SPECULATIONS AND
POSTULATIONS BASED ON FACT AND NOT OF LAW TO
IRREGULARLY RESOLVE THAT THERE WAS NO
ILLEGAL TERMINATION BY HEREIN RESPONDENT.
(F)THE COURT OF APPEALS [GRIEVOUSLY] ERRED IN
FINDING THAT THE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION BY ALLOWING HEREIN RESPONDENT
TO RAISE THE ISSUE ABOUT THE WORD "TURNOVER"
A FINDING OF FACT AND OUTSIDE RESPONDENT'S
PETITION FOR CERTIORARI AND BEYOND THE NATURE
OF RULE 65(G)THE COURT OF APPEALS GRIEVOUSLY
ERRED IN FINDING THAT THE NATIONAL LABOR
RELATIONS COMMISSION COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR IN EXCESS
OF JURISDICTION WHEN IT BELIED THE FACTUAL
FINDING OF THE ADMINISTRATIVE AGENCIES A QUO
AND INSTEAD MADE ITS OWN FACTUAL FINDING IN A
PETITION FOR CERTIORARI UNDER RULE 65.(H)THE
COURT OF APPEALS [GRIEVOUSLY] ERRED IN MAKING
ITS OWN FINDING OF FACT AND IN FINDING THAT THE
NATIONAL LABOR RELATIONS COMMISSION
COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN THE LATTER CORRECTLY AFFIRMED IN TOTO,
BASED IN FACT AND IN LAW, THE DECISION OF THE
LABOR ARBITER IN AWARDING BACKWAGES,
SEPARATION PAY, AND ATTORNEYS FEES.(I)THE
COURT OF APPEALS GRIEVOUSLY ERRED IN FINDING
THAT THE NATIONAL LABOR RELATIONS COMMISSION
[COMMITTED] GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT INCLUDED HEREIN RESPONDENT'S OFFICER
CO SAY AS LIABLE TO PETITIONER.
Ruling:
The petition is meritorious.
As a general rule, only questions of law raised via a petition
for review under Rule 45 of the Rules of Court[10] are
reviewable by this Court.[11] Factual findings of
administrative or quasi-judicial bodies, including labor
tribunals, are accorded much respect by this Court as they
are specialized to rule on matters falling within their
jurisdiction especially when these are supported by
substantial evidence.[12] However, a relaxation of this rule is
made permissible by this Court whenever any of the
following circumstances is present:[W]hen the findings are
grounded entirely on speculations, surmises or
conjectures;when the inference made is manifestly mistaken,
absurd or impossible;when there is grave abuse of
discretion;when the judgment is based on a
misapprehension of facts;when the findings of fact are
conflicting;when in making its findings[,] the Court of Appeals
went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the
appellee;when the findings are contrary to that of the trial
court;when the findings are conclusions without citation of
specific evidence on which they are based;when the facts
set forth in the petition[,] as well as in the petitioner's main
and reply briefs[,] are not disputed by the respondent;'when
the findings of fact are premised on the supposed absence
of evidence and contradicted by the evidence on record;
[and]when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.
Before the employer must bear the burden of proving that
the dismissal was legal, the employee must first establish by
substantial evidence the fact of his dismissal from service.
[14] The CA ruled that petitioner Reyes was not able to
prove by substantial evidence the fact that he was illegally
dismissed. After a review of the records, this Court finds
otherwise. It must be remembered that the degree of proof in
labor cases is less than that of criminal cases as in the
former; it is enough that substantial evidence is proven. As
aptly found by the Labor Arbiter and the NLRC, petitioner
was able to prove his dismissal from service. As held by the
NLRC:In this case, the complainant sufficiently alleged the
surrounding circumstances of his dismissal. He was able to
state, with the required particularities how he was terminated
from his employment. He stated in detail that on January 19,
2012, he was not able to report for work early due to his
son's illness. He also alleged that respondent Co Say called
him and angrily told him not to report for work anymore and
that they will have to talk in a week's time. During their
meeting held at Starbucks Waltermart, the complainant was
detailed enough when he recounted how respondent Co Say
reiterated that he can no longer return to his job and even
sought his resignation which he refused. While the
allegations of the complainant may not be taken as gospel
truths at this point, the complainant was able to establish that
he was dismissed from his employment contrary to the
denials of the respondents. Thus, it is now incumbent upon
the respondents to prove that the complainant was validly
dismissed from his job in the light of the detailed and
straightforward narration of the complainant.[15]
The respondents' assertion that the purported text messages
submitted by the complainant should not be given credence
as the complainant failed to authenticate the same in
accordance with the Rules of Court, deserves scant
consideration. It must be emphasized that in labor cases, the
strict adherence to the rules of evidence may be relaxed
consistent with the higher interest of substantial justice. In
labor cases, rules of procedure should not be applied in a
very rigid and technical sense. They are merely tools
designed to facilitate the attainment of justice, and where
their strict application would result in the frustration rather
than promotion of substantial justice, technicalities must be
avoided. Technicalities should not be permitted to stand in
the way of equitably and completely resolving the rights and
obligations of the parties. Where the ends of substantial
justice shall be better served, the application of technical
rules of procedure may be relaxed. (Tres Reyes v. Maxim's
Tea House, G.R. No. 140853, February 27, 2003, 398 SCRA
288)[18]
In illegal dismissal cases, the burden of proof is upon the
employer to show by substantial evidence that the
employee's termination from service is for a just and valid
cause.[21] In this case, respondent Global asserts that there
was no dismissal; instead, there was an abandonment on
the part of petitioner Reyes of his employment. The Labor
Arbiter, however, found that on the days that petitioner
Reyes supposedly abandoned his employment according to
respondent Global, no such indication was found as
petitioner filed applications for leave and even sent "text"
messages to his immediate or direct superior regarding his
work,... The complainant's actuations - filing applications for
leaves of absence days before he supposedly abandoned
his job and texting respondent Co Say about his work on the
day he supposedly abandoned his job - are more consistent
with the theory that his services were terminated by
respondent Co Say than with the theory that he abandoned
his job. Evidently, he had no intention of quitting his job.
WHEREFORE, the Petition for Review on Certiorari under
Rule 45 of the Rules of Court, dated March 22, 2016, of
petitioner Allan John Uy Reyes is GRANTED. Consequently,
the Decision dated August 27, 2015 of the Court of Appeals
is REVERSED and SET ASIDE, and the Decision dated July
31, 2013 of the National Labor Relations Commission in
NLRC LAC No. 01-000289-13 is AFFIRMED and
REINSTATED.
Principles:
Verbal notice of termination can hardly be considered as
valid or legal. To constitute valid dismissal from employment,
two requisites must concur: (1) the dismissal must be for a
just or authorized cause; and (2) the employee must be
afforded an opportunity to be heard and to defend himself.
[16] In justifying that such verbal command not to report for
work from respondent Global's Vice-President for Operations
Co Say as not enough to be construed as overt acts of
dismissal, the CA cited the case of Noblejas v. Italian
Maritime Academy Phils., Inc.[17] In the said case, an
employee filed an illegal dismissal case after the secretary of
the company's Managing Director told him, "No, you better
pack up all your things now and go, you are now dismissed
and you are no longer part of this office — clearly, you are
terminated from this day on." This Court then ruled in that
case that there was no dismissal to speak of because the
secretary's words were not enough to be construed as overt
acts of dismissal. Be that as it may, the factual antecedents
of that case is different in this case. In the present case, the
one who verbally directed petitioner to no longer report for
work was his immediate or direct supervisor, the Vice-
President for Operations, who has the capacity and authority
to terminate petitioner's services, while in Noblejas, the one
who gave the instruction was merely the secretary of the
company's Managing Director. Hence, in Noblejas, this Court
found it necessary that the employee should have clarified
the statement of the secretary from his superiors before the
same employee instituted an illegal dismissal case. In the
present case, Co Say's verbal instruction, being petitioner
Reyes' immediate supervisor, was authoritative, therefore,
petitioner Reyes was not amiss in thinking that his
employment has indeed already been terminated.
Furthermore, the "text" messages petitioner Reyes
presented in evidence were corroborative. The CA, however,
held that those "text" messages could hardly meet the
standard of clear, positive and convincing evidence to prove
petitioner Reyes' dismissal from employment. It added that
those conversations transpired more than ten (10) days after
petitioner Reyes stopped reporting for work and that the
Labor Arbiter and the NLRC took those messages out of
context, the same having been lumped together for the
purpose of supporting petitioner Reyes' claim of dismissal
from employment. Such observation of the CA is more
conjectural rather than factual. As rightly concluded by the
NLRC, those "text" messages, viewed in connection with the
factual antecedents and the narration of the petitioner, prove
that there was indeed a dismissal from employment.
It is well settled that the application of technical rules of
procedure may be relaxed to serve the demands of
substantial justice, particularly in labor cases.[19] Thus, the
"text" messages may be given credence especially if they
corroborate the other pieces of evidence presented. Again,
while as a rule, the Court strictly adheres to the rules of
procedure, it may take exception to such general rule when a
strict implementation of the rules would cause substantial
injustice to the parties.[20]
Abandonment requires the deliberate, unjustified refusal of
the employee to resume his employment, without any
intention of returning.[23] For abandonment to exist, two
factors must be present: (1) the failure to report for work or
absence without valid or justifiable reason; and (2) a clear
intention to sever employer-employee relationship, with the
second element as the more determinative factor being
manifested by some overt acts.[24] In this case, no such
abandonment was proven by respondent Global. In fact,
petitioner Reyes would not have filed a case for illegal
dismissal if he really intended to abandon his work.
Employees who take steps to protest their dismissal cannot
logically be said to have abandoned their work
 G.R. No. 194001, November 22, 2017
MARIA VILMA G. DOCTOR AND JAIME LAO,
JR., Petitioners, v. NII ENTERPRISES AND/OR
MRS. NILDA C. IGNACIO, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before this Court is a Petition for Review
on Certiorari filed by petitioners Maria Vilma G.
Doctor (Doctor) and Jaime Lao, Jr. (Lao) assailing
the (a) Decision1 dated April 23, 2010 of the Court of
Appeals in CA-G.R. SP No. 107497, which reversed
and set aside the Decision2 dated February 1, 2008
of the National Labor Relations Commission (NLRC)
in NLRC NCR CA No. 045354-05 and dismissed
petitioners' complaint for illegal dismissal against
respondents NII Enterprises and/or Mrs. Nilda C.
Ignacio (Ignacio); and (b) Resolution3 dated
September 28, 2010 of the appellate court in the
same case, which denied petitioners' Motion for
Reconsideration. The NLRC had previously affirmed
with modification the Labor Arbiter's Decision4dated
March 5, 2005 in NLRC-NCR Case No. 00-02-02670-
04, finding that petitioners were illegally dismissed
and ordering respondents to pay petitioners
backwages and separation pay.
The following events gave rise to the instant Petition:
Respondent NII Enterprises is a sole proprietorship
engaged in the business of providing car air-
conditioning (aircon) services, which is owned by
respondent Ignacio. Petitioners had been employed
by respondents, particularly, petitioner Doctor as a
clerk since April 3, 1995 and petitioner Lao as an
aircon technician since December 5, 1995.
On February 10, 2004, respondent Ignacio and
petitioner Doctor had a serious argument, which
prompted petitioner Doctor to file a complaint for
slander and threat against respondent Ignacio
at Barangay San Antonio, Makati City. Per the
minutes of the barangay proceedings, petitioner
Doctor complained of respondent Ignacio committing
the following acts:
"Dinuduro niya ako at minura nya ako ng leche at
inambahan niya ako na ipupukpok sa akin ang
telepono at dinerty finger nya ako. Inakusahan niya
ako ng mga bagay na hindi ko ginawa at sinabi pa
niya na kung ano ang gusto niya siya ang
masusunod." In her prayer, [petitioner] Vilma Doctor
prayed: "Ang gusto ko lang naman ay makapag-usap
kami ng malaya. Sana ay maging maayos ang lahat
at matapos na."5
Since efforts to amicably resolve the dispute between
respondent Ignacio and petitioner Doctor failed,
the barangay issued a Certification to File
Action6 dated February 20, 2004. On February 24,
2004, petitioner Doctor filed a complaint for illegal
dismissal against respondents before the NLRC,
docketed as NLRC-NCR Case No. 00-02-02670-04.
Petitioner Lao, who accompanied petitioner Doctor at
the barangay proceedings, also joined the complaint
for illegal dismissal before the NLRC as a party-
complainant. In their Position Paper,7 petitioners
alleged that:
[Petitioners] MA. VILMA G. DOCTOR and MR. JAIME
S. LAO, JR. were arbitrarily and illegally dismissed on
February l 0, 2004 by the above-said company. They
were barred from reporting to their former positions
or employment respectively without any valid reason
under the law despite their willingness to report and
continue their works. Surprisingly, the company
continued to refuse and give the two [petitioners]
the opportunity to be heard and to explain their side.
This arbitrary decision of summary termination of
services is tantamount to denial of due process of
law and failure to respect their substantive rights
under the Labor Code. Moreover, granting et
arguendo that they have violated any policy of the
company yet there was no formal accusation made
against them nor were they informed beforehand of
any valid reasons invoked by the company in support
of their illegal dismissal. Hence, it is very clear and
conclusive that as they belonged to the category of
regular employees they cannot just be summarily
and capriciously dismissed from their employment
without any valid reasons under the law.8
Petitioners prayed that respondents be ordered to
pay them backwages, holiday pay, bonus pay,
13th/14th month pay,. moral and exemplary damages,
and attorney's fees. Respondents countered that
after respondent Ignacio and petitioner Doctor had a
heated altercation sometime in February 2004,
petitioner Doctor no longer reported for work.
Petitioner Lao similarly absented himself from work
without prior leave. To respondent Ignacio's surprise,
petitioner Doctor instituted a complaint for slander
and threat against her before the barangay, but the
parties did not reach an amicable settlement.
Respondents intimated that petitioner Doctor, who
was then engaged to be married to petitioner Lao,
filed the complaint for illegal dismissal against
respondents in an attempt to mulct them for money
to finance petitioners' forthcoming wedding.
Respondents denied that petitioners were ever told
not to report for work and averred that it was
petitioners who abandoned their jobs. Thus,
respondents sought that petitioners' complaint for
illegal dismissal against them be dismissed.9 The
Labor Arbiter, in his Decision dated March 5, 2005,
found that respondents failed to prove just and valid
cause and observance of due process in petitioners'
dismissaL As to respondents' allegation that
petitioners abandoned their jobs, the Labor Arbiter
held the same to be bereft of merit as respondents
also failed to prove the requisites for a valid defense
of abandonment. The Labor Arbiter, moreover,
pointed out that the petitioners' timely filing of the
complaint for illegal dismissal negated respondents'
defense of abandonment. The Labor Arbiter
reminded that extreme caution should be exercised
in terminating the services of a worker for his/her
job might be the only lifeline on which his/her family
depended for survival in difficult times. Although
petitioners were entitled to reinstatement as a
consequence of their illegal dismissal, the Labor
Arbiter ordered paym nt of separation pay in lieu of
reinstatement due to the strained relationship
between the parties. The Labor Arbiter did not grant
petitioners' money claims given the tack of
substantiation. The Labor Arbiter, ultimately,
adjudged:
WHEREFORE, premises all considered, judgment is
hereby issued finding the dismissal illegal and
ordering respondents to pay [petitioners] backwages
and separation pay as follows:
VILMA DOCTOR:  
   
Backwages- P80,000.00
(P7,500.00 x 12 mos = (P80,000.00)
 
Separation Pay -
(P7,500.00 x 9 = P67,500.00) P67,500.00
JAIME LAO, JR.:
 
Backwages- P80,000.00
(P7,500.00 x 12 mos = (P80,000.00)
 
Separation Pay - P67,500.00
(P7,500.00 x 9 = P67,500.00)
All other claims are dismissed for lack ofmerit.10
Respondents filed before the NLRC an appeal of the
foregoing judgment of the Labor Arbiter, which was
docketed as NLRC NCR CA No. 045354-05.
Respondents asserted that there had been no illegal
dismissal as petitioners were never issued notices of
termination. Respondents reiterated that petitioner
Doctor did not report for work after her altercation
with respondent Ignacio, and instead filed a
complaint for threat and slander against respondent
Ignacio before the barangay. Only when no amicable
settlement was reached before the barangay did
petitioner Doctor proceed to file her complaint for
illegal dismissal against respondents before the
NLRC. Respondents further argued that they had no
reason to terminate petitioner Lao's services and that
the latter simply joined the complaint for illegal
dismissal before the NLRC even though he was not
involved in the dispute between respondent Ignacio
and petitioner Doctor. Respondents contended that
petitioners were not entitled to separation pay since
they were not terminated from employment.
Nevertheless, assuming that petitioners were illegally
dismissed, respondents maintained that the Labor
Arbiter's award of separation pay in petitioners' favor
was excessive because such pay should be computed
at only one-half (1/2)-month pay, not one (1)-month
pay, for every year of service and petitioner Lao
worked for respondents for eight (8) years, not nine
(9) years. In its Decision dated February 1, 2008,
the NLRC ruled:
WHEREFORE, premtses considered, respondents'
appeal is partially granted. Accordingly, the appealed
Decision is hereby MODIFIED to the extent that the
award of separation pay to Jaime Lao shall cover
only a total of eight (8) years. All other dispositions
are hereby AFFIRMED.11
Respondents filed a Motion for
Reconsideration,12 which the NLRC denied in a
Resolution13 dated November 27, 2008. Respondents
filed before the Court of Appeals a Petition
for Certiorari under Rule 65 of the Rules of Court,
which was docketed as CAG.R. SP No. 107497,
averring grave abuse of discretion, tantamount to
lack or excess of jurisdiction, on the part of the NLRC
in issuing its Decision dated February 1, 2008 and
Resolution dated November 27, 2008. The Court of
Appeals rendered its Decision on April 23, 2010
finding respondents' Petition meritorious. The
appellate court stressed that while the employer has
the burden in illegal dismissal cases of proving that
the termination was for valid or authorized cause,
the employee must first establish by substantial
evidence the fact of dismissal from service, and this,
petitioners failed to do. Pertinent findings of the
Court of Appeals are quoted below:
It should be noted that [petitioner Doctor] brought a
case for threat and slander against [respondent
Ignacio] before the Barangay but amicable
settlement failed as further bitter arguments
between the parties ensued. Thus, a Certification to
File Action was issued on February 20, 2004. On
February 24, 2004, the complaint for illegal dismissal
was filed by [petitioners] against [respondents]. In
[petitioners'] position paper filed below, not even a
passing mention was made of the previous heated
argument between [petitioner Doctor] and
[respondent Ignacio], but simply stating that both
[petitioners] were barred from the work premises,
despite their willingness to do so. [Petitioners] were
not candid, not mentioning the incident in order not
to highlight the fact that they absented themselves
from work after the altercation. This is as much as
[petitioners] admitted in their Comment to the
petition that "both [petitioners] went on absence
right after the argument", and arguing that their
absence should not justifY the employer in
dismissing them. They even justified their absence
by explaining in their comment, "If Doctor truly
failed to report for work on days following their
argument, it was only because she felt that it was no
longer conducive for her [to] continue her
employment as the emotional strain created thereby
entailed an unbearable and stressful work
environment for her. The same holds true with
respect to [petitioner] Lao. Being the significant
other of Doctor, he was also aware of the possible
retaliation that the [respondents] may have against
him. As it became impossible for [petitioners] to
return for work, it was, therefore, correct for them to
claim for separation pay instead." With that
admission, coupled with the immediate filing of the
complaint for illegal dismissal on February 24, 2004
after the barangay conciliation on February 20, 2004
failed, We are convinced that no actual dismissal
ever happened. [Petitioners] simply stopped working
and thereafter immediately filed the illegal dismissal
case. There is no constructive dismissal either, which
contemplates an unbearable situation created by the
employer or any act done manifesting a case of
discrimination, disdain, or resulting in employee's
demotion in rank, diminutio'n in pay, or subjecting
him to unbearable working conditions, leaving no
option to the employee but to forego his continued
employment. None was shown in this case. The
situation in the present case is clear that both the
employer and employee were involved in the
incident. The employer did not alone create the
situation, which [petitioner Doctor] considers as an
unpleasant and hostile working environment, her
apprehension prompting her to quit from her work.
The immediate filing of the case for illegal dismissal
did not give the employer the opportunity to even
send show cause notices to [petitioners'] absences.
Rather than undergo the normal process of
disciplining [petitioners] for repeated absences,
[respondent Ignacio] had no other option but to
defend her case. Hence, there is no violation of due
process to speak of. As far as [petitioner Lao] is
concerned, [respondent Ignacio] has no cause to
terminate him. It is more likely that since his
sweetheart [petitioner Doctor] opted to quit, he
joined her, fearing the possible retaliation against
him as admitted in his Comment. Further, it would
be too foolhardy for [respondent Ignacio] to
terminate him for no reason at all and be held liable
for illegal dismissal without even a semblance of
good defense. All in all, the circumstances
surrounding this case do not permit Us to apply the
principle that filing an illegal dismissal case is not
consistent with abandonment. This is not an ironclad
rule. What we see here is [petitioners'] decision to
quit from their employment because of the
unnerving thought of working in a hostile
environment, resulting from the heated argument
between [petitioner Doctor] and [respondent
Ignacio].14
The Court of Appeals explicitly declared that in
finding that petitioners were illegally dismissed, the
NLRC committed grave abuse of discretion and
clearly misappreciated the facts of the case resulting
in a wrong conclusion. The dispositive portion of the
Court of Appeals Decision reads:
WHEREFORE, the instant petition is GRANTED. The
February 01, 2008 Decision of the National Labor
Relations Commission which affirmed with slight
modification the Decision dated March 5, 2005 of the
Labor Arbiter declaring [petitioners] illegally
dismissed and ordering [respondents] to pay
[petitioners] their backwages and separation pay,
and the NLRC Resolution dated November 27, 2008
denying the motion for reconsideration,
are NULLIFIED and SET ASIDE. The complaint for
illegal dismissal is DISMISSED for lack of merit.15
Petitioners filed a Motion for Reconsideration but the
appellate court denied the same in a Resolution
dated September 28, 2010. Hence, petitioners come
before this Court via the instant Petition for Review
on Certiorari, raising the sole issue of:
WHETHER THE HONORABLE COURT OF APPEALS
ERRED IN REVERSING THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION
FINDING THAT THE PETITIONERS WERE NOT
ILLEGALLY DISMISSED.16
Petitioners question the scant consideration given by
the Court of Appeals to their version of events just
because of their failure to mention in their Position
Paper before the NLRC the altercation between
respondent Ignacio and petitioner Doctor. Petitioners
explain that "their alleged failure to include in their
pleadings filed before the NLRC the altercation
incident cannot in anyway be construed as a strategy
to deter this Honorable Court's attention from the
main issue. For whether the incident was alleged or
not is of no consequence."17 Petitioners also call
attention to the fact that both the Labor Arbiter and
the NLRC found that petitioners were actually
dismissed when they were expressly told not to
report for work on February 10, 2004 and prohibited
from entering the premises of respondent NII
Enterprises. It was respondents who first mentioned
and argued in their Petition for Certiorari filed before
the Court of Appeals that there was no constructive
dismissal of petitioners, hence, petitioners were
constrained to refute respondents' argument.
Petitioners, without admitting that they were
constructively dismissed, acknowledged that their
case could also constitute constructive dismissal as
petitioner Doctor filed the complaint for illegal
dismissal before the NLRC bec.ause she felt that it
was already difficult, if not impossible, to continue
working for respondent Ignacio; and petitioner Lao
joined Doctor in filing said complaint because he
feared that respondent Ignacio might also vent her
ire on him. The appellate court, unfortunately, took
petitioners' statements on constructive dismissal out
of context and dismissed their complaint for illegal
dismissal based thereon. Petitioners maintain that
they did not abandon their work. According to
petitioners, it is highly unbelievable that after
working for respondents for a long time, they would
simply stop working for no apparent reason. As proof
that petitioner Doctor had no intention of severing
her employment with respondents, petitioner Doctor
even attempted to settle her dispute with respondent
Ignacio at the barangay. Moreover, petitioners allege
that from February 10, 2004 (when they were
prevented from returning to work) to March 11, 2004
(when respondent Ignacio received the summons
regarding the scheduled mandatory conference
before the Labor Arbiter), respondents did not issue
any notice nor impose any disciplinary measure
against petitioners for their continued absences.
Petitioners aver that respondents' aforedescribed
apathy was an indication that the latter were bent on
terminating petitioners' employment without due
process of law. Since they were illegally terminated
from employment, petitioners claim that they are
entitled to backwages and separation pay, in lieu of
reinstatement, as awarded by the Labor Arbiter and
the NLRC. At the outset, the Court reiterates that in
a petition for review on certiorari under Rule 45 of
the Rules of Court, its jurisdiction is generally limited
to reviewing errors of law. The Court is not a trier of
facts, and this applies with greater force in labor
cases. Findings of fact of administrative agencies and
quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific
matters, are generally accorded not only great
respect but even finality. They are binding upon this
Court unless there is a showing of grave abuse of
discretion or where it is clearly shown that they were
arrived at arbitrarily or in utter disregard of the
evidence on record. However, it is equally settled
that one of the exceptions to this rule is when the
factual findings of the quasi-judicial agencies
concerned are conflicting or contrary with those of
the Court of Appeals,18 as in the present case. Thus,
the Court proceeds with its own factual
determination herein based on the evidence of the
parties. Article 29419 of Presidential Decree No. 442,
also known as the Labor Code of the Philippines, as
amended and renumbered, protects the employee's
security of tenure by mandating that "[i]n cases of
regular employment, the employer shall not
terminate the services of an employee except for a
just cause or when authorized by this Title." A lawful
dismissal must meet both substantive and procedural
requirements; in fine, the dismissal must be for a
just or authorized cause and must comply with the
rudimentary due process of notice and hearing.20 In
labor cases, as in other administrative and quasi-
judicial proceedings, the quantum of proof required
is substantial evidence, defined as "that amount of
relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion."21 The
burden of proof rests upon the party who asserts the
affirmative of an issue.22 The Court recognizes the
rule that in illegal dismissal cases, the employer
bears the burden of proving that the termination was
for a valid or authorized cause. However, there are
cases wherein the facts and the evidence do not
establish prima facie that the employee was
dismissed from employment. Before the employer
must bear the burden of proving that the dismissal
was legal, the employee must first establish by
substantial evidence the fact of his dismissal from
service. If there is no dismissal, then there can be no
question as to the legality or illegality thereof.23 In
this case, petitioners, on one hand, allege that on
February 10, 2004, they were suddenly prohibited
from entering the premises of respondent NII
Enterprises and expressly told not to report for work
anymore; and their efforts to continue their
employment with respondents remained unheeded.
Respondents, on the other hand, deny that
petitioners were dismissed at all and aver that
petitioners simply stopped reporting for work after a
heated altercation between respondent Ignacio and
petitioner Doctor on February 10, 2004. Petitioners'
bare allegation that they were dismissed from
employment by respondents, unsubstantiated by
impartial and independent evidence, is insufficient to
establish such fact of dismissal. Petitioners' general
claims that they were barred by respondents from
entering the work premises and that respondents did
not heed petitioners' efforts to continue their
employment lacked substantial details to be credible.
The Court reiterates the basic rule of evidence that
each party must prove his affirmative allegation, that
mere allegation is not evidence.24 The Court also
stresses that the evidence to prove the fact of the
employee's termination from employment must be
clear, positive, and convincing.25 Absent any showing
of an overt or positive act proving that respondents
had dismissed petitioners, the latter's claim of illegal
dismissal cannot be sustained as the same would be
self-serving, conjectural, and of no probative
value.26 Petitioners did not provide any explanation
for completely failing to mention in their pleadings
before the Labor Arbiter the heated argument
between respondent Ignacio and petitioner Doctor on
February 10, 2004, except only to say that whether
they alleged said incident or not is of no
consequence. It is readily apparent that said
altercation between respondent Ignacio and
petitioner Doctor sparked this entire controversy, so
it escapes the Court how petitioners could view the
same as inconsequential. Consideration by the Court
of the said incident will not deter the attention of the
Court from the main issue of the case. In fact, said
incident sheds light on the parties' actuations on and
after February 10, 2004. The Court of Appeals very
aptly observed that "[petitioners] were not candid,
not mentioning the incident in order not to highlight
the fact that they absented themselves from work
after the altercation."27 Petitioners initially made it
appear that respondents just arbitrarily barred them
from reporting for work. The fact that a serious
argument took place between respondent Ignacio
and petitioner Doctor on February 10, 2004 would
have given more credence to respondents' averment
that petitioners, after immediately filing a complaint
for slander and threat against respondent Ignacio at
the barangay, already willfully absented themselves
from work. Respondents' failure to take any
disciplinary action against petitioners between
February 10, 2004 (the day of the argument
between respondent Ignacio and petitioner Doctor)
and March 11, 2004 (the day respondents received
the Labor Arbiter's summons as regards the illegal
dismissal case filed against them by petitioners) does
not constitute clear, positive, and convincing
evidence that respondents had already dismissed
petitioners from employment. Respondents have
satisfactorily explained that they had no opportunity
to commence any disciplinary proceedings against
petitioners under the circumstances. It should be
noted that during said one-month period, petitioners
had instituted two successive complaints against
respondents, one for slander and threat before
the barangay, and one for illegal dismissal before the
NLRC. During the several conferences held before
the barangay, the parties were still trying to reach
an amicable settlement of the dispute between
them; and when the parties' efforts on amicable
settlement failed, petitioners, shortly thereafter,
already filed the illegal dismissal case against
respondents before the NLRC. As the Court of
Appeals opined, "[t]he immediate filing of the case
for illegal dismissal did not give the employer the
opportunity to even send show cause notices to
[petitioners'] absences. Rather than undergo the
normal process of disciplining [petitioners] for
repeated absences, [respondent Ignacio] had no
other option but to defend her case."28 Nevertheless,
respondents' arguments on constructive 4ismissal
are misplaced and superfluous given the
circumstances in this case. Petitioners have always
maintained that they were actually dismissed from
employment when they were barred by respondents
from entering the work premises and from reporting
for work; and respondents have persistently denied
that they dismissed petitioners from employment,
claiming that petitioners simply stopped reporting for
work after the altercation between respondent
Ignacio and petitioner Doctor on February 10, 2004.
Constructive dismissal is defined as follows:
Constructive dismissal has often been defined as a
"dismissal in disguise" or "an act amounting to
dismissal but made to appear as if it were not." 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. In some
cases, while no demotion in rank or diminution in
pay may be attendant, constructive dismissal may
still exist when continued employment has become
so unbearable because of acts of clear
discrimination, insensibility or disdain by the
employer, that the employee has no choice but to
resign. Under these two definitions, what is
essentially lacking is the voluntariness in the
employee's separation from employment.29
Without petitioners alleging their demotion in rank,
diminution in pay, or involuntary resignation due to
unbearable working conditions caused by the
respondents as employers, there is no need to
belabor the issue of constructive dismissal herein.
Any discussion on constructive dismissal will be
merely speculative and/or academic. Also contrary to
respondents' contention, petitioners cannot be
deemed to have abandoned their work simply
because they had been absent the days following
February 10, 2004. Settled is the rule that mere
absence or failure to report for work is not
tantamount to abandonment ofwork.30 For
abandonment to exist, the following requisites must
be present: (1) that the employee must have failed
to report for work or must have been absent without
valid or justifiable reason; and (2) that there must
have been a clear intention to sever the employer-
employee relationship manifested by some overt
acts. Absence must be accompanied by overt acts
unerringly pointing to the fact that the employee
simply does not want to work anymore. And the
burden of proof to show that there was unjustified
refusal to go back to work rests on the employer.
Respondents herein failed to present any proof of
petitioners' overt acts which manifest the latter's
clear intention to terminate their employment. In
addition, petitioners' filing of a complaint for illegal
dismissal is inconsistent with the charge of
abandonment, for employees who take steps to
protest their dismissal cannot, by logic, be said to
have abandoned their work.31 In sum, petitioners
failed to discharge the burden of proving with
substantial evidence that they were actually
dismissed from work by respondents. Since the fact
of dismissal had not been satisfactorily established
by petitioners, then the burden of proving that the
dismissal was legal, i.e., that it was for just and
authorized cause/sand in accordance with due
process, did not shift to the respondents. Also,
petitioners could not be deemed to have abandoned
their work by merely being absent and without clear
intention of severing the employer-employee
relationship. There being no dismissal and no
abandonment, the appropriate course of action is to
reinstate the employee/s but without the payment of
backwages.32 Yet, in Dee Jay's Inn and Cafe v.
Rañeses,33 the Court ordered therein employers to
pay the employee separation pay instead when
reinstatement was no longer possible and
reasonable. The Court pronounced in Dee Jay's
Inn that:
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. 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. (Citation
omitted.)
In the instant case, petitioners' reinstatement is
similarly rendered impossible and unreasonable
given the length of time that had .passed since the
controversy started on February 10, 2004, as well as
respondents' own allegations that they already
reduced their workforce and that petitioners "[have]
no more place in the business" of
respondents.34 Therefore, respondents are ordered to
pay petitioners separation pay, equivalent to one (I)
month salary for every year of service, in lieu of
reinstatement. Accordingly, petitioners Doctor and
Lao are entitled to the following amounts of
separation pay:
 One (1) No. of Years Total dismissal of petitioners Maria Vilma G. Doctor and
Petitioner Jaime Lao, Jr. against respondents NII Enterprises
Month Salary Employed Separation Pay
and/or Mrs. Nilda C. Ignacio is DISMISSED for lack
Doctor P7,500.00 Nine (9) Years P67,500.00 of merit. Although petitioners are entitled to
Lao P7,500.00 Eight (8) Years P60,000.00 reinstatement to their former positions without
payment of backwages, petitioners' reinstatement is
WHEREFORE, premises considered, the instant already impossible and unreasonable under the
Petition for Review on Certiorari is PARTIALLY particular circumstances of this case. Respondents
GRANTED. The Decision dated April 23, 2010 and are, therefore, ORDERED to pay petitioners Doctor
Resolution dated September 28, 20I 0 of the Court of and Lao separation pay in lieu of reinstatement in
Appeals in CA-G.R. SP No. 107497 is AFFIRMED the amounts of P67,500.00 and P60,000.00,
with MODIFICATION. The complaint for illegal respectively. SO ORDERED.
G.R. No. 173489 : February 25, 2013
ALILEM CREDIT COOPERATIVE, INC., now known
as ALILEM MULTIPURPOSE COOPERATIVE, INC.,
Petitioner, v .SALVADOR M. BANDIOLA, JR.,
Respondent.
PERALTA, J.:
FACTS:
Respondent was employed by petitioner as bookkeeper.
Petitioner's Board of Directors (the Board) received a letter
from a certain Napoleon Gao-ay (Napoleon) reporting the
alleged immoral conduct and unbecoming behavior of
respondent by having an illicit relationship with Napoleon
sister, Thelma G. Palma (Thelma). This prompted the Board
to conduct a preliminary investigation. During the
preliminary investigation, the Board received evidence of
respondent alleged extramarital affair.
Respondent, on the other hand, denied the accusation
against him. He, instead, claimed that the accusation was a
result of the insecurity felt by some members of the
cooperative and of the Board because of his growing
popularity owing to his exemplary record as an
employee.Thelma executed an affidavit likewise denying the
allegations of extra-marital affair.
Meanwhile, on June 7, 1997, the Board received a petition
from about fifty members of the cooperative asking the relief
of respondent due to his illicit affair with Thelma.
In its Summary Investigation Report, the Ad Hoc Committee
of petitioner concluded that respondent was involved in an
extra-marital affair with Thelma. On July 10, 1997, the
Chairman of the Board sent a letterto respondent informing
him of the existence of a prima facie case against him for
"illicit marital affair, an act that brings discredit to the
cooperative organization and a cause for termination per
AMPC (Alilem Multi-Purpose Cooperative) Personnel Policy.
Respondent was directed to appear and be present at the
AMPC office for a hearing. He was likewise advised of his
right to be assisted by counsel.
On the day of the hearing, respondent requested for
postponement on the ground that his lawyer was not
available. The request was, however, denied and the hearing
proceeded as scheduled.
In a Memorandum dated July 16, 1997, respondent was
informed of Board Resolution No. 05, series of 1997
embodying the Board decision to terminate his services as
bookkeeper of petitioner, effective July 31, 1997, without any
compensation or benefit except the unpaid balance of his
regular salary for services actually rendered.
Aggrieved, respondent filed a Complaint for Illegal Dismissal
against petitioner before the Regional Arbitration Branch of
the NLRC.
On April 30, 1998, the Labor Arbiter (LA) dismissed
respondent complaint for lack of merit. The LA concluded
that respondent had been or might still be carrying on an
affair with a married woman. The LA found it unforgiving in
the case of a married employee who sleeps with or has illicit
relations with another married person for in such case, the
employee sullies not only the reputation of his spouse and
his family but the reputation as well of the spouse of his
paramour and the latter family. As opposed to respondent
claim that the accusation is a mere fabrication of some of the
directors or cooperative members who were allegedly
envious of his growing popularity, the LA gave more
credence to the testimonies of petitioner witnesses who were
relatives of Thelma and who had no motive to falsely testify
because their family reputation was likewise at a risk of being
tarnished. The LA, thus, found respondent to have been
validly dismissed from employment for violation of the
cooperative Personnel Policy. The LA also found no violation
of respondent right to due process as he was given ample
opportunity to defend himself from the accusation against
him.
On appeal, the NLRC set aside the LA decision. The NLRC
found petitioner Personnel Policy to be of questionable
existence and validity because it was unnumbered. It held
that even assuming that respondent had an extra-marital
affair with a married woman, the latter is not his fellow
worker in petitioner business establishment.It, thus,
concluded that respondent dismissal was not founded on any
of the just causes for termination of employment under
Article 282 of the Labor Code, as amended.
Petitioner elevated the matter to the CA, but it failed to
obtain a favorable decision. Petitioner now comes before the
Court in this petition for review on certiorari insisting on the
validity of respondent dismissal from employment.
ISSUE: Whether or not petitioner illegally dismissed
respondent.
HELD: The Court of Appeals decision is reversed
and set aside.
It is undisputed that respondent was dismissed from
employment for engaging in extramarital affairs, a ground
for termination of employment stated in petitioner Personnel
Policy. This basis of termination was made known to
respondent as early as the first communication made by
petitioner. In its June 20, 1997 letter, petitioner directed
respondent to explain in writing or personal confrontation
why he should not be terminated for violation of Section
4.1.4 of the Personnel Policy. Respondent merely denied the
accusation against him and did not question the basis of such
termination. When the LA was called upon to decide the
illegal dismissal case, it ruled in favor of petitioner and
upheld the basis of such dismissal which is the cited
Personnel Policy. The NLRC, however, refused to recognize
the existence and validity of petitioner Personnel Policy on
which the ground for termination was embodied.
The existence of the Personnel Policy containing provisions
on the grounds for termination of employees was not
questioned by respondent. In his position paper, respondent
only assailed the effectivity of the policy, as for him as it was
amended on the same date as the letter-complaints against
him. In other words, he claimed that the policy was amended
in order to include therein the ground for his termination to
make sure that he is removed from his position.
Contrary to respondent claim, with the amendment of the
Personnel Policy, petitioner did not create a new ground for
the termination of employment to make sure that respondent
is removed from his position. The ground under the old
policy is similar to that provided for in the new policy. The
enumeration containing the specific act of "illicit marital
affairs" is not an additional ground, but an example of an act
that brings discredit to the cooperative. It is merely an
interpretation of what petitioner considers as such. It is,
thus, clear from the foregoing that engaging in extra-marital
affairs is a ground for termination of employment not only
under the new but even under the old Personnel Policy of
petitioner. The effectivity of the policy as to respondent
cannot, therefore, be questioned.
To be sure, an employer is free to regulate all aspects of
employment.It may make reasonable rules and regulations
for the government of its employees which become part of
the contract of employment provided they are made known
to the employee.In the event of a violation, an employee may
be validly terminated from employment on the ground that
an employer cannot rationally be expected to retain the
employment of a person whose lack of morals, respect and
loyalty to his employer, regard for his employer rules and
application of the dignity and responsibility, has so plainly
and completely been bared.
Applying now the above-discussed ground for termination,
we now determine whether respondent was properly
dismissed from employment. In other words, did petitioner
adequately prove that respondent indeed engaged in extra-
marital affairs, an act which petitioner considers as would
bring discredit to the cooperative?
We answer in the affirmative.
The employer evidence consists of sworn statements of either
relatives or friends of Thelma and respondent. They either
had direct personal knowledge of the illicit relationship or
revealed circumstances indicating the existence of such
relationship.
There is also no reason to doubt the statement of Melanie
Gao-ay, the wife of Napoleon, who witnessed the
embarrassing "encounter", to borrow the term she used,
between [respondent] and Thelma in her own boarding
house.
While respondent act of engaging in extra--marital affairs
may be considered personal to him and does not directly
affect the performance of his assigned task as bookkeeper,
aside from the fact that the act was specifically provided for
by petitioner Personnel Policy as one of the grounds for
termination of employment, said act raised concerns to
petitioner as the Board received numerous complaints and
petitions from the cooperative members themselves asking
for the removal of respondent because of his immoral
conduct.
The next question is whether procedural due process was
observed in the termination of respondent services. "Before
the services of an employee can be validly terminated, the
employer must furnish him two written notices: (a) a written
notice served on the employee specifying the ground or
grounds for termination, and giving the employee reasonable
opportunity to explain his side; and (b) 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."The employer must
inform the employee of the charges against him and to hear
his defenses. A full adversarial proceeding is not necessary as
the parties may be heard through pleadings, written
explanations, position papers, memorandum or oral
argument.
In this case, respondent was adequately afforded the
opportunity to defend himself and explain the accusation
against him. Upon receipt of the complaint, petitioner
conducted a preliminary investigation and even created an
Ad Hoc Committee to investigate the matter. Respondent
was directed to explain either in writing or by a personal
confrontation with the Board why he should not be
terminated for engaging in illicit affair. Not only did
petitioner give him the opportunity but respondent in fact
informed petitioner that he opted to present his side orally
and did so as promised when he specifically denied such
allegations. Moreover, respondent was also allowed to peruse
the investigation report prepared by the Ad Hoc Committee
and was advised that he was entitled to assistance of
counsel.Afterwhich, hearing was conducted. It was only after
thorough investigation and proper notice and hearing to
respondent that petitioner decided whether to dismiss the
former or not. The decision to terminate respondent from
employment was embodied in Board Resolution No. 05,
series of 1997 a copy of which was furnished respondent.
With this resolution, respondent was adequately notified of
petitioner decision to remove him from his position.
Respondent cannot now claim that his right to due process
was infringed upon.
GRANTED

G.R. No. 198534, July 03, 2013
JENNY F. PECKSON, Petitioner, v. ROBINSONS
SUPERMARKET CORPORATION, JODY GADIA,
ROENA SARTE, AND RUBY ALEX, Respondents.
DECISION
REYES, J.:
 
For resolution is the Petition for Review
on Certiorari1 of the Decision2 dated June 8, 2011 of
the Court of Appeals (CA) in CA-G.R. SP No. 
109604  affirming  the  Decision3  dated  February  As culled from the assailed appellate court
25,  2009  of  the National Labor  Relations  decision,12 the petitioner argued before the LA that
Commission  (NLRC)  in  NLRC  NCR  Case  No. 00-
11-09316-06/NLRC LAC No. 002020-07, which
upheld the dismissal4 by the Labor Arbiter (LA) on
May 30, 2007 of Jenny F. Peckson’s (petitioner)
complaint for constructive dismissal.
Antecedent Facts and Proceedings
The petitioner first joined the Robinsons
Supermarket Corporation (RSC) as a Sales Clerk on
November 3, 1987.  On October 26, 2006, she was
holding the position of Category Buyer when
respondent Roena Sarte (Sarte), RSC’s Assistant
Vice-President for Merchandising, reassigned her to
the position of Provincial Coordinator, effective
November 1, 2006.5  Claiming  that  her  new  The respondents in their position paper denied the
assignment  was  a  demotion  because  it  was  non-
supervisory and clerical in nature, the petitioner
refused to turn over her responsibilities to the new
Category Buyer, or to accept her new responsibilities
as Provincial Coordinator.  Jody Gadia (Gadia) and
Ruby Alex (Alex) were impleaded because they were
corporate officers of the RSC.
In a memorandum to the petitioner dated November
13, 2006,6 the RSC, through Sarte, demanded an
explanation from her within 48 hours for her refusal
to accept her new assignment despite written and
verbal demands.  Sarte cited a company rule,
Offenses Subject to Disciplinary Action No. 4.07,
which provided that “[d]isobedience, refusal or
failure to do assigned task or to obey
superior’s/official’s orders/instructions, or to follow
established procedures or practices without valid
reason” would be meted the penalty of suspension.
The petitioner ignored the 48-hour deadline to
explain imposed by Sarte.  On November 23, 2006,
Sarte issued her another memorandum,7 reiterating
her demand to explain in writing within 48 hours why
she persistently refused to assume her new position,
and warning her that this could be her final chance
to present her side or be deemed to have waived her
right to be heard.
In her one-paragraph reply submitted on November
27, 2006,8 the petitioner stated that she could not
accept the position of Provincial Coordinator since
she saw it as a demotion.  As it turned out, however,
on November 9, 2006, the petitioner had already
filed a complaint for constructive dismissal9 against
RSC, Sarte, Gadia and Alex (respondents).
On November 30, 2006, Sarte issued an instruction
to the petitioner to report to RSC’s Metroeast Depot
to help prepare all shipping manifests for Cagayan de
Oro and Bacolod, but as witnessed by RSC
employees Raquel Torrechua and Alex, she did not
obey as instructed.10  Again on December 8, 2006,
Sarte issued a similar instruction, citing the need for
certain tasks from the petitioner in preparation for
the coming Christmas holidays, but the petitioner
again refused to heed.11
the true organizational chart of the RSC showed that
the position of Category Buyer was one level above
that of the Provincial Coordinator, and that
moreover, the job description of a Provincial
Coordinator was largely clerical and did not require
her to analyze stock levels and order points, or
source new local and international suppliers, or
monitor stock level per store and recommend items
for replenishment, or negotiate better items and
discounts from suppliers, duties which only a
Category Buyer could perform.  She also claimed
that she was instructed to file a courtesy resignation
in exchange for a separation pay of one-half salary
per year of service.
correctness of the organizational chart presented by
the petitioner.  They maintained that her transfer
was not a demotion since the Provincial Coordinator
occupied a “Level 5” position like the Category
Buyer, with the same work conditions, salary and
benefits.  But while both positions had no significant
disparity in the required skill, experience and
aptitude, the position of Category Buyer demanded
the traits of punctuality, diligence and attentiveness
because it is a frontline position in the day-to-day
business operations of RSC which the petitioner,
unfortunately, did not possess.
The respondents also raised the petitioner’s record of
habitual tardiness as far back as 1999, as well as
poor performance rating in 2005.  In addition to her
performance rating of “2.8” out of “4.0” in 2005
equivalent to “below expectation,” the petitioner was
found to be tardy in June and July 2005, 13 times,
and for the entire 2005, 57 times; that she was
suspended twice in 2006 for 20 instances of
tardiness and absences from July to September 2006
alone.13  We also note that the petitioner was
suspended for seven (7) days in September and
October 2005 for deliberately violating a company
policy after she was seen having lunch with a
company supplier.14
In her affidavit,15 respondent Sarte denied that the
reassignment of the petitioner as Provincial
Coordinator was motivated by a desire to besmirch
the name of the latter.  She asserted that it was
made in the exercise of management prerogative
and sound discretion, in view of the sensitive position
occupied by the Category Buyer in RSC’s daily
operations, vis-à-vis the petitioner’s “below
expectation” performance rating and habitual
tardiness.
In dismissing the petitioner’s complaint, the LA in its
Decision16 dated May 30, 2007 ruled that job
reassignment or classification is a strict prerogative
of the employer, and that the petitioner cannot
refuse her transfer from Category Buyer to Provincial
Coordinator since both positions commanded the
same salary structure, high degree of responsibility
and impeccable honesty and integrity.  Upholding the
employer’s right not to retain an employee in a
particular position to prevent losses or to promote
profitability, the LA found no showing of any illegal
motive on the part of the respondents in reassigning
the petitioner.  The transfer was dictated by the need
for punctuality, diligence and attentiveness in the
position of Category Buyer, which the petitioner
clearly lacked.  Moreover, the LA ruled that her
persistent refusal to accept her new position
amounted to insubordination, entitling the RSC to
dismiss her from employment.
A month after the above ruling, or on June 22, 2007,
the petitioner tendered her written “forced”
resignation,17 wherein she complained that she was
being subjected to ridicule by clients and co-
employees alike on account of her floating status
since the time she refused to accept her transfer.  because her reassignment was not a valid exercise of
She likewise claimed that she was being compelled
to accept the position of Provincial Coordinator
without due process.
On appeal, the NLRC in its Decision18 dated February
25, 2009 sustained the findings of the LA.  It agreed
that the lateral transfer of the petitioner from
Category Buyer to Provincial Coordinator was not a
demotion amounting to constructive dismissal, since
both positions belonged to Job Level 5 and between
them there is no significant disparity in terms of the
requirements of skill, experience and aptitude.  memoranda to her clients that she was no longer a
Contrary to the petitioner’s assertion, the NLRC
found that the position of Provincial Coordinator is
not a rank-and-file position but in fact requires the
exercise of discretion and independent judgment, as
well as appropriate recommendations to
management to ensure the faithful implementation
of its policies and programs; that it even exercises
influence over the Category Buyer in that it includes
performing a recommendatory function to guide the
Category Buyer in making decisions on the right
assortment, price and quantity of the items, articles
or merchandise to be sold by the store.
The NLRC then reiterated the settled rule that
management may transfer an employee from one
office to another within the business establishment,
provided there is no demotion in rank or diminution
of salary, benefits, and other privileges, and the
action is not motivated by discrimination or bad faith
or effected as a form of punishment without
sufficient cause.  It ruled that the respondents were
able to show that the petitioner’s transfer was not
unreasonable, inconvenient or prejudicial, but was
prompted by her failure to meet the demands of
punctuality, diligence, and personal attention of the
position of Category Buyer; that management
wanted to give the petitioner a chance to improve
her work ethic, but her obstinate refusal to assume
her new position has prejudiced respondent RSC,
even while she continued to receive her salaries and
benefits as Provincial Coordinator.
On petition for certiorari to the CA, the petitioner
insisted that her transfer from Category Buyer to
Provincial Coordinator was a form of demotion
without due process, and that the respondents
unjustifiably depicted her as remiss in her duties,
flawed in her character, and unduly obstinate in her
refusal to accept her new post.
In its Decision19 dated June 8, 2011, the CA found no
basis to deviate from the oft-repeated tenet that the
findings of fact and conclusions of the NLRC when
supported by substantial evidence are generally
accorded not only great weight and respect but even
finality, and are thus deemed binding.20
Petition for Review in the Supreme Court
Now on petition for review to this Court, the
petitioner maintains that her lateral transfer from
Category Buyer to Provincial Coordinator was a
demotion amounting to constructive dismissal
management prerogative, but was done in bad faith
and without due process.  She claims that the
respondents manipulated the facts to show that she
was tardy; that they even surreptitiously drew up a
new organizational chart of the Merchandising
Department of RSC, soon after she filed her
complaint for illegal dismissal, to show that the
position of Provincial Coordinator belonged to Job
Level 5 as the Category Buyer, and not one level
below; that the company deliberately embarrassed
her when it cut off her email access; that they sent
Category Buyer, and to the various Robinsons
branches that she was now a Provincial Coordinator,
while Milo Padilla (Padilla) was taking over her
former position as Category Buyer; that for seven
(7) months, they placed her on floating status and
subjected her to mockery and ridicule by the
suppliers and her co-employees; that not only was
there no justification for her transfer, but the
respondents clearly acted in bad faith and with 
discrimination, insensibility and disdain to make her
stay with the company intolerable for her.
 Our Ruling
We find no merit in the petition.
This Court has consistently refused to
interfere with the exercise by management
of its prerogative to regulate the employees’
work assignments, the working methods and
the place and manner of work.
As we all know, there are various laws imposing all
kinds of burdens and obligations upon the employer
in relation to his employees, and yet as a rule this
Court has always upheld the employer’s prerogative
to regulate all aspects of employment relating to the
employees’ work assignment, the working methods
and the place and manner of work.  Indeed, labor
laws discourage interference with an employer’s
judgment in the conduct of his business.21
In Rural Bank of Cantilan, Inc. v. Julve,22 the Court
had occasion to summarize the general
jurisprudential guidelines affecting the right of the
employer to regulate employment, including the
transfer of its employees:cralavvonlinelawlibrary
Under the doctrine of management prerogative,
every employer has the inherent right to regulate,
according to his own discretion and judgment, all
aspects of employment, including hiring, work
assignments, working methods, the time, place and
manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline,
dismissal, and recall of employees.  The only
limitations to the exercise of this prerogative are
those imposed by labor laws and the principles of
equity and substantial justice.
While the law imposes many obligations upon the
employer, nonetheless, it also protects the
employer’s right to expect from its employees not
only good performance, adequate work, and
diligence, but also good conduct and loyalty.  In fact,
the Labor Code does not excuse employees from
complying with valid company policies and
reasonable regulations for their governance and
guidance.
Concerning the transfer of employees, these are the
following jurisprudential guidelines: (a) a transfer is
a movement from one position to another of
equivalent rank, level or salary without break in the
service or a lateral movement from one position to
another of equivalent rank or salary; (b) the
employer has the inherent right to transfer or
reassign an employee for legitimate business
purposes; (c) a transfer becomes unlawful where it is
motivated by discrimination or bad faith or is
effected as a form of punishment or is a demotion
without sufficient cause;  (d) the employer must be
able to show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee.23  The managerial prerogative to transfer personnel
(Citations omitted)
In Philippine Japan Active Carbon Corporation v.
NLRC,24 it was held that the exercise of
management’s prerogative concerning the
employees’ work assignments is based on its
assessment of the qualifications, aptitudes and
competence of its employees, and by moving them
around in the various areas of its business operations
it can ascertain where they will function with
maximum benefit to the company.
It is the employer’s prerogative, based on its
assessment and perception of its employees’
qualifications, aptitudes, and competence, to move
them around in the various areas of its business
operations in order to ascertain where they will
function with maximum benefit to the company.  An
employee’s right to security of tenure does not give
him such a vested right in his position as would
deprive the company of its prerogative to change his
assignment or transfer him where he will be most
useful.  When his transfer is not unreasonable, nor
inconvenient, nor prejudicial to him, and it does not
involve a demotion in rank or a diminution of his
salaries, benefits, and other privileges, the employee
may not complain that it amounts to a constructive
dismissal.25
As a privilege inherent in the employer’s right to
control and manage its enterprise effectively, its
freedom to conduct its business operations to
achieve its purpose cannot be denied.26  We agree
with the appellate court that the respondents are
justified in moving the petitioner to another
equivalent position, which presumably would be less
affected by her habitual tardiness or inconsistent
attendance than if she continued as a Category
Buyer, a “frontline position” in the day-to-day
business operations of a supermarket such as
Robinsons.
If the transfer of an employee is not
unreasonable,
or inconvenient, or prejudicial to him, and it
does
not involve a demotion in rank or a diminution
of his
salaries, benefits and other privileges, the
employee
may not complain that it amounts to a
constructive
dismissal.
As we have already noted, the respondents had the
burden of proof that the transfer of the petitioner
was not tantamount to constructive dismissal, which
as defined in Blue Dairy Corporation v. NLRC,27 is a
quitting because continued employment is rendered
impossible, unreasonable or unlikely, or an offer
involving a demotion in rank and diminution of
pay:cralavvonlinelawlibrary
must be exercised without grave abuse of discretion,
bearing in mind the basic elements of justice and fair
play.  Having the right should not be confused with
the manner in which that right is exercised.  Thus, it
cannot be used as a subterfuge by the employer to
rid himself of an undesirable worker.  In particular,
the employer must be able to show that the transfer
is not unreasonable, inconvenient or prejudicial to
the employee; nor does it involve a demotion in rank
or a diminution of his salaries, privileges and other
benefits.  Should the employer fail to overcome this
burden of proof, the employee’s transfer shall be
tantamount to constructive dismissal, which has
been defined as a quitting because continued
employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and
diminution in pay.  Likewise, constructive dismissal
exists when an act of clear discrimination,
insensibility or disdain by an employer has become
so unbearable to the employee leaving him with no
option but to forego with his continued employment.
Thus, as further held in Philippine Japan Active
Carbon Corporation,28 when the transfer of an
employee is not unreasonable, or inconvenient, or
prejudicial to him, and it does not involve a demotion
in rank or a diminution of his salaries, benefits and
other privileges, the employee may not complain
that it amounts to a constructive dismissal.29
But like all other rights, there are limits to the
exercise of managerial prerogative to transfer
personnel, and on the employer is laid the burden to
show that the same is without grave abuse of
discretion, bearing in mind the basic elements of
justice and fair play.30  Indeed, management
prerogative may not be used as a subterfuge by the
employer to rid himself of an undesirable worker.31
Interestingly, although the petitioner claims that she
was constructively dismissed, yet until the
unfavorable decision of the LA on May 30, 2007, for
seven (7) months she continued to collect her salary
while also adamantly refusing to heed the order of
Sarte to report to the Metroeast Depot.  It was only
on June 22, 2007, after the LA’s decision, that she
filed her “forced” resignation.  Her deliberate and
unjustified refusal to assume her new assignment is
a form of neglect of duty, and according to the LA,
an act of insubordination.  We saw how the company
sought every chance to hear her out on her
grievances and how she ignored the memoranda of
Sarte asking her to explain her refusal to accept her
transfer.  All that the petitioner could say was that it
was a demotion and that her floating status
embarrassed her before the suppliers and her co-
employees.
The respondents have discharged the burden of
proof that the transfer of the petitioner was not
tantamount to constructive dismissal.
In Jarcia Machine Shop and Auto Supply, Inc. v.
NLRC,32 a machinist who had been employed with the
petitioner company for 16 years was reduced to the
service job of transporting filling materials after he
failed to report for work for one (1) day on account
of an urgent family matter.  This is one instance
where the employee’s demotion was rightly held to
be an unlawful constructive dismissal because the
employer failed to show substantial proof that the
employee’s demotion was for a valid and just
cause:cralavvonlinelawlibrary
In case of a constructive dismissal, the employer has
the burden of proving that the transfer and demotion
of an employee are for valid and legitimate grounds
such as genuine business necessity.  Particularly, for
a transfer not to be considered a constructive
dismissal, the employer must be able to show that
such transfer is not unreasonable, inconvenient, or
prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries,
privileges and other benefits.  Failure of the
employer to overcome this burden of proof, the
employee’s demotion shall no doubt be tantamount
to unlawful constructive dismissal. x x x.33  (Citation
omitted)
In the case at bar, we agree with the appellate court
that there is substantial showing that the transfer of
the petitioner from Category Buyer to Provincial
Coordinator was not unreasonable, inconvenient, or
prejudicial to her.  The petitioner failed to dispute
that the job classifications of Category Buyer and
Provincial Coordinator are similar, or that they
command a similar salary structure and
responsibilities.  We agree with the NLRC that the
Provincial Coordinator’s position does not involve
mere clerical functions but requires the exercise of
discretion from time to time, as well as independent
judgment, since the Provincial Coordinator gives
appropriate recommendations to management and
ensures the faithful implementation of policies and
programs of the company.  It even has influence
over a Category Buyer because of its
recommendatory function that enables the Category
Buyer to make right decisions on assortment, price
and quantity of the items to be sold by the store.34
We also cannot sustain the petitioner’s claim that she
was not accorded due process and that the
respondents acted toward her with discrimination,
insensibility, or disdain as to force her to forego her
continued employment.  In addition to verbal
reminders from Sarte, the petitioner was asked in
writing twice to explain within 48 hours her refusal to
accept her transfer.  In the first, she completely
remained silent, and in the second, she took four (4)
days to file a mere one-paragraph reply, wherein she
simply said that she saw the Provincial Coordinator
position as a demotion, hence she could not accept
it.  Worse, she may even be said to have committed
insubordination when she refused to turn over her
responsibilities to the new Category Buyer, Padilla,
and to assume her new responsibilities as Provincial
Coordinator and report to the Metroeast Depot as
directed.  This was precisely the reason why the
petitioner was kept on floating status.  To her
discredit, her defiance constituted a neglect of duty,
or an act of insubordination, per the LA.
Neither can we consider tenable the petitioner’s
contention that the respondents deliberately held her
up to mockery and ridicule when they cut off her
email access, sent memoranda to her clients that she SO ORDERED.
was no longer a Category Buyer, and to the various
Robinsons branches that she was now a Provincial
Coordinator on floating status and that Padilla was
taking over her position as the new Category Buyer. 
It suffices to state that these measures are the
logical steps to take for the petitioner’s unjustified
resistance to her transfer, and were not intended to
subject her to public embarrassment.

Judicial review of labor cases does not go

beyond
the evaluation of the sufficiency of the evidence
upon
which labor officials’ findings rest.

Finally, as reiterated in Acebedo Optical,35 this Court

is not a trier of facts, and only errors of law are
generally reviewed in petitions for review
on certiorari criticizing decisions of the CA. 
Questions of fact are not entertained, and in labor
cases, this doctrine applies with greater force. 
Factual questions are for labor tribunals to resolve.36 
Thus:cralavvonlinelawlibrary

Judicial Review of labor cases does not go beyond

the evaluation of the sufficiency of the evidence upon
which its labor officials’ findings rest.  As such, the
findings of facts and conclusion of the NLRC are
generally accorded not only great weight and respect
but even clothed with finality and deemed binding on
this Court as long as they are supported by
substantial evidence.  This Court finds no basis for
deviating from said doctrine without any clear
showing that the findings of the Labor Arbiter, as
affirmed by the NLRC, are bereft of substantiation.
Particularly when passed upon and upheld by the
Court of Appeals, they are binding and conclusive
upon the Supreme Court and will not normally be
disturbed.

xxxx

As earlier stated, we find no basis for deviating from

the oft espoused legal tenet that findings of facts and
conclusion of the labor arbiter are generally accorded
not only great weight and respect but even clothed
with finality and deemed binding on this Court as
long as they are supported by substantial evidence,
without any clear showing that such findings of fact,
as affirmed by the NLRC, are bereft of
substantiation. More so, when passed upon and
upheld by the Court of Appeals, they are binding 
and  conclusive  upon  us  and  will  not  normally 
be  disturbed; x x x.37  (Citations omitted)

It is our ruling, that the findings of fact and

conclusion of the LA, as affirmed by the NLRC, are
supported by substantial evidence, as found by the
CA.

WHEREFORE, the premises considered, the Decision

of the Court of Appeals dated June 8, 2011 in CA-
G.R. SP No. 109604 is AFFIRMED.
G.R. No. 202308
PHILIPPINE NATIONAL BANK, Petitioner
vs.
JUMELITO T. DALMACIO, Respondent
x-----------------------x
G.R. No. 202357
JUMELITO T. DALMACIO, Petitioner,
vs.
PHILIPPINE NATIONAL BANK and/or MS. CYNTHIA
JAVIER, Respondents.
DECISION
TIJAM, J.:
Assailed in these consolidated Petitions for Review
on Certiorari is the Decision1 dated September 21, 2011 of
the Court of Appeals (CA), in CA-G.R. SP. No. 115493. The
CA Decision affirmed in part the National Labor Relations
Commission's (NLRC) March 30, 2010 Resolution,2 which in
turn affirmed the Labor Arbiter's (LA) June 30, 2009
Decision3 finding that the Philippine National Bank (PNB)
effected a valid redundancy program.
The case stemmed from a complaint for illegal dismissal,
underpayment of separation pay and retirement benefits,
illegal deduction, nonpayment of provident fund with prayer
for damages and attorney's fees filed by Jumelito T.
Dalmacio (Dalmacio) and Emma R. Martinez (Martinez)4 as
a result of their separation from PNB way back September
15, 2005 due to PNB's implemention of its redundancy
program. Dalmacio and · Martinez were hired as utility
worker and communication equipment operator, respectively,
by the National Service Corporation, a subsidiary of PNB.
Years later, Dalmacio became an Information Technology
(IT) officer of PNB, while Martinez became a Junior IT Field
Analyst.
In her June 30, 2009 Decision,5 LA Romelita N. Rioflorido
ruled that PNB complied with the law and jurisprudence in
terminating the services of the complainants on the ground
of redundancy.
On appeal, the NLRC, in its March 30, 2010
Resolution,6 affirmed the LA's Decision, and ruled that there
is no showing of bad faith on PNB's part in undertaking the
redundancy program.
Dalmacio and Martinez's Motion for Reconsideration having
been denied by the NLRC, Dalmacio filed a Petition
for Certiorari with the CA.
In its September 21, 2011 Decision,7 the CA affirmed in part
the · March 30, 2010 Resolution of the NLRC, and ruled,
among others, that, "principles of justice and fair play call for
the modification of the separation package already received
by herein petitioner. x x x the subtraction of the GSIS
Gratuity Pay is inappropriate, therefore the same should be
returned to the petitioner."
Aggrieved, both parties appealed the Decision of the CA.
In his appeal,8 Dalmacio argues that: the CA erred in (1)
upholding the validity of PNB's redundancy program; (2)
failing to rule that PNB's computation of his separation pay is
erroneous; and, (3) ruling that the Deed of Quitclaim and
Release which he signed militates against his reinstatement.
For its part, PNB argues that:9 (1) The CA. erred in the
exercise of its equity jurisdiction despite the clear and limited
scope of its jurisdiction in a special civil action
of certiorari; and, (2) it was baseless for the CA to order the
return to Dalmacio of his GSIS Gratuity Pay.
Both Petitions are denied.
Essentially, the issues to be resolved in this case are: (1)
Whether or not PNB validly implemented its redundancy
program; and, (2) Whether or not the CA correctly ordered
PNB to return Dalmacio's GSIS Gratuity Pay.
This Court resolves only questions of law; it does not try
facts or examine testimonial or documentary evidence on
record.10 We may have at times opted for the relaxation of
the application of procedural rules, but we have resorted to
this option only under exceptional circumstances.11 This
Court, however, finds no justification to warrant the
application of any exception to the general rule in this case.
It bears stressing that the LA, the NLRC, and the CA, all
ruled that PNB validly effected its redundancy program. The
CA held that:
[A]s aptly found by the labor tribunals, the redundancy
program was an exercise of a sound business judgment
which We ought to respect and is beyond the ambit of Our
review powers absent any showing that it is violative of the
Labor Code provisions or the general principles of fair play
andjustice.12
Such being the case, factual findings of quasi-judicial bodies
like the NLRC, particularly when they coincide with those of
the LA and, if supported by substantial evidence, are
accorded respect and even finality by this Court.13 Thus,
absent a showing of an error of law committed by the court
or tribunal below, or of a whimsical or capricious exercise of
judgment, or a demonstrable lack of basis for its conclusions,
this Court may not disturb its factual findings.
However, at the risk of being repetitive, We make short shrift
of Dalmacio's insistence that PNB's redundancy program
was not valid. We cannot subscribe to his claim that PNB did
not apply fair and reasonable criteria in concluding that
Dalmacio's position had become redundant.
One of the authorized causes14 for the dismissal of an
employee is redundancy.15 It exists when the service
capability of the workforce is in excess of what is reasonably
needed to meet the demands of the business
enterprise.16 A position is redundant when it is superfluous,
and superfluity of a position or positions could be the result
of a number of factors, such as the overhiring of workers, a
decrease in the volume of business or the dropping of a
particular line or service previously manufactured or
undertaken by the enterprise.17 Time and again, it has been
ruled that an employer has no legal obligation to keep more
employees than are necessary for the operation of its
business.18 For the implementation of a redundancy
program to be valid, however, the employer must comply
with the following requisites: (1) written notice served on both
the employees and the Department of Labor and
Employment (DOLE) at least one month prior to the intended
date of termination of employment; (2) payment of
separation pay equivalent to at least one month pay for
every year of service; (3) good faith in abolishing the
redundant positions; and (4) fair and reasonable criteria
in ascertaining what positions are to be declared
redundant and accordingly abolished,19 taking into
consideration such factors as (a) preferred status; (b)
efficiency; and (c) seniority, among others.20
In the case at bar, PNB was upfront with its employees about
its plan to implement its redundancy program. The LA
correctly observed that:
[I]t is undisputed that the outsourcing of the service and
maintenance of the Bank's computer hardware and
equipment to Technopaq, Inc. was devised and/or
implemented after consultation with the affected employees
in the presence of their union officers between July 29 and
August 5, 2005.21
This was echoed by the NLRC, thus:
Respondents were able to show substantial proof that it
underwent redundancy program and that complainants
herein voluntarily accepted the Special Redundancy
Package offered by respondent bank to its employees. In
fact, they were officially notified of the management's
decision to terminate their employment as early as August
15, 2005 x x x; and Complainants and their union officers
were even consulted of the respondent's decision to
terminate its employees on [the] ground of redundancy
between July 29 and August 5, 2005. Complainants agreed
and accepted the decision. x x x.22
Even the CA intoned that:
Even after he ceased working with private respondent PNB,
petitioner was not left jobless as he readily accepted a job
offer with Technopaq who employed him for three years.
Only after he ceased working with Technopaq that he
conveniently filed a case for illegal dismissal against PNB
claiming other monetary benefits allegedly due him and after
receiving substantial amount of separation pay. Hence this
Court suspects the timing and intention of petitioner in filing
the complaint for illegal dismissal.23
Likewise, PNB's redundancy program was neither unfair nor
unreasonable considering that it was within the ambit of its
management prerogative. As the CA observed:
PNB's action is within the ambit of "management
prerogative" to upgrade and enhance the computer system
of the bank. Petitioner, being an IT officer whose job is to
maintain the computer system of PNB, his position has
become patently redundant upon PNB's engagement of the
contract service with Technopaq. x x x he was appositely
informed of PNB's move to contract the services of
Technopaq and as a result thereof, there were positions that
were declared redundant including that of herein petitioner. x
x x PNB conducted series of meetings with herein petitioner
and other affected employees to purposely look for
placement of the displaced employees to other positions
suited for them. Finding no other alternative, PNB was
constrained to terminate herein petitioner who thereafter
posed no objection thereto, consented to and willingly
received the hefty separation pay given to him. Moreover,
records have it that PNB faithfully complied with the legal
procedures provided under Article 283 of the Labor Code as
evidenced by the individual notices of termination served and
received by the petitioner as well as the Establishment
Termination Report filed by PNB with the Department of
Labor.x x x.24
These factual findings evidently rule out Dalmacio's claim
that PNB's redundancy program was unfair and
unreasonable and that PNB acted in bad faith in the
implementation of the same.
Likewise, records show that PNB complied with the
procedural requirements. PNB served Dalmacio and
Martinez Notices of Termination dated August 15, 2005,
informing them that their termination due to redundancy shall
be effective September 15, 2005. PNB also filed an
Establishment Termination Report dated August 16, 2005
with the Regional Office of the DOLE, in order to report
complainants' termination.
Contrary to Dalmacio's claim, the CA did not err in ruling that
the Deed of Quitclaim and Release he signed militates
against his reinstatement.1âwphi1
Generally, deeds of release, waiver or· quitclaims cannot bar
employees from demanding benefits to which they are
legally entitled or from contesting the legality of their
dismissal since quitclaims are looked upon with disfavor and
are frowned upon as contrary to public policy.25 Where,
however, the person making the waiver has done so
voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as being a valid and
binding undertaking.26
The requisites for a valid quitclaim are: (1) that there was no
fraud or deceit on the part of any of the parties; (2) that the
consideration for the quitclaim is credible and reasonable;
and (3) that the contract is not contrary to law, public order,
public policy, morals or good customs or prejudicial to a third
person with a right recognized by law.27
Not having sufficiently proved that he was forced to sign said
Deed of Quitclaim and Release, Dalmacio cannot
expediently argue that quitclaims are looked upon with
disfavor and considered ineffective to bar claims for the full
measure of a worker's legal rights. Indeed, it cannot even be
said that Dalmacio did not fully understand the
consequences of signing the Deed of Quitclaim and
Release. He is not an illiterate person who needs special
protection. He held a responsible position at PNB as an IT
officer. It is thus safe to say that he understood the contents
of the Deed of Quitclaim and Release. There is also no
showing that the execution thereof was tainted with deceit or
coercion. Although he claims that he was "forced to
sign"28 the quitclaim, he nonetheless signed it. In doing so,
Dalmacio was compelled by his own personal
circumstances, not by an act attributable to PNB.

Having settled the foregoing, this Court shall now address

the issue on Dalmacio's GSIS Gratuity Pay.

A cursory reading of PNB's computation as regards

Dalmacio's separation package appearing in its Petition
would clearly show that, indeed, his GSIS Gratuity Pay has
been deducted from· his separation pay. This should not be
countenanced.

As correctly pointed out by the CA:

[U]nder the GSIS law, a government employee is required to

take off a small part of his income and remit the same to the
GSIS as his monthly contributions. Considering such
mandatory deductions, it is but fitting that such gratuity pay is
deemed separate and distinct from his separation package
and should not be deducted therefrom. x x x.29

Clearly, Dalmacio is entitled to his GSIS ·Gratuity Pay.

Contrary to PNB's assertion, giving Dalmacio what is due
him under the law is not unjust enrichment.30

The inflexible rule in our jurisdiction is that social legislation

must be liberally construed in favor of the
beneficiaries.31 Retirement laws, in particular, are liberally
construed in favor of the retiree because their objective is to
provide for the retiree's sustenance and, hopefully, even
comfort, when he no longer has the capability to earn a
livelihood.32 The liberal approach aims to achieve the
humanitarian purposes of the law in order that efficiency,
security, and well-being of government employees may be
enhanced.33 Indeed, retirement laws are liberally construed
and administered in favor of the persons intended to be
benefited, and all doubts are resolved in favor of the retiree
to achieve their humanitarian purpose.34

WHEREFORE, the petitions are DENIED. The September

21, 2011 Decision of the Court of Appeals in CA-G.R. SP.
No. 115493, is AFFIRMED in toto.

SO ORDERED.
 G.R. No. 215314, March 14, 2018
CENTRAL AZUCARERA DE BAIS AND ANTONIO
STEVEN L. CHAN, Petitioners, v. HEIRS OF ZUELO
APOSTOL, Respondents.
DECISION
REYES, JR., J.:
Time and again, the Court has put emphasis on the
right of an employer to exercise its management
prerogative in dealing with its company Is affairs,
including the right to dismiss erring employees. It is
a general principle of labor law to discourage
interference with an employer's judgment in the
conduct of his business. Even as the law is solicitous
of the welfare of the employees, it also recognizes
employers exercise of management prerogatives. As
long as the company's exercise of judgment is in
good faith to advance its interest and not for the
purpose of defeating or circumventing the rights of
employees under the laws or valid agreements, such
exercise will be upheld.1
The Case
Challenged before the Court via this Petition for
Review on Certiorari under Rule 45 of the Rules of
Court is the Decision2 of the Court of Appeals (CA) in
CA G.R. SP No. 06906, promulgated on May 22,
2013, which affirmed the Decision3 and
Resolution4 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-000451-
2002, dated October 28, 2011 and February 27,
2012, respectively. Likewise challenged is the
subsequent Resolution5 of the CA promulgated on
October 29, 2014, which upheld the earlier decision.
The Antecedent Facts
The respondent Zuelo Apostol, now deceased and
represented herein by his heirs, commenced his 20
years of employment with petitioner Central
Azucarera de Bais (CAB) on March 1, 1982 when he
was hired as the latter's Motor Pool Over-All Repairs
Supervisor.6 According to the petitioners, the
respondent, as a supervisor, was in charge of
repairing company vehicles, which necessarily
included the responsibilities of (a) assigning the
personnel and equipment for each and every repair
job, and (b) taking custody of all repair equipment
and materials owned by CAB.7 Likewise, as a
supervisor, one of the pre-requisites accorded to the
respondent was the enjoyment of a company house
where the respondent could live so long as he
remains as a CAB employee.
On February 2, 2002, the parties' harmonious
working relationship was disturbed when, during the
inspection of Tomasito A. Rosel (Rosel), one of CAB's
security guards, it was discovered that the
respondent "was using his company house, as well
as other company equipment to repair privately
owned vehicles."8 As reported by Rosel, he saw:
That the right side of the house was brightly lighted
(sic) and the light came from an electrical line
(trouble light with a 100W bulb) extension coming
from the house. The lighting connection was hanging
some distance from the house to the left side of the
LANCER car, color white, which was parked after a
pick-up vehicle, color black. The LANCER CAR was
undergoing repairs on its left side. That Mr. Francisco
Sabanal whom 1 personally know to be one of the
regular workers of C.A.B. MOTOR POOL
DEPARTMENT, hired as automotive mechanic, was
the one actually doing the repair work on the
LANCER CAR mentioned above. During the twenty
minutes that I stayed in the premises of the house
assigned to Mr. Apostol, I saw Mr. Sabanal cutting
with scissors metal sheets from the sheets that were
there at the place, to repair the LANCER CAR. He had
with him on site, flattening tools and there was also
an oxygen-acetylene outfit, which he also used.9
This then triggered the CAB management, through
its resident manager, Roberty Y. Dela Rosa, to issue
a memorandum addressed to the respondent for
violating Rule 9 of CAB's Rules of Discipline, viz:
You will submit to this Office within 24 hours from
receipt hereof your explanation in writing (to be
placed on the space indicated at the bottom of the
enclosed duplicate hereof) why you should not be
subjected to our Rules of Discipline for the following
acts:
For violating Rule 9 of the Rules of Discipline — for
Utilizing material or equipment of the Company,
including power for doing private work without
permission. Inspection by Security has disclosed that
you were having repairs done in CAB housing unit
area assigned to you in Paper Village one car and
one pick-up for body repairs using oxygen and
acetylene tanks with cutting accessories as well as
steel plates for the repairs, all of which are assumed
to be company property there being no clearance or
permit obtained form the Company to bring in
personal equipment to undertake repairs in CAB
village.
Bais Central, February 4, 2002
Note: While giving you a chance to explain your side,
within 24 hours from receipt hereof, you are put on
preventive suspension effective immediately.

(Sgd.)
ROBERTO Y. DELA ROSA
Resident Manager10
In response, the respondent submitted a handwritten
explanation in the local dialect, which when
translated reads:
Dear Nonoy Steven,
First of all, I am asking for a thousand apologies
because I undertook the repair of my personal
vehicle without securing your permission.
Noy, I did not use electric welding, compressor and
grinder. What I used was a trouble light and my
personal acetylene and oxygen.
Noy, I am reiterating my asking for apology and
excuse from you and I am really sorry that I have
violated your rules.
Sincerely yours,
Sgd. Zuelo Apostol11
On February 9, 2002, the respondent received a
copy of the termination letter dated February 8,
2002, which was signed by CAB's president, herein
petitioner Antonio Steven L. Tan.
Thereafter, the respondent vacated the company
house assigned to him, and on February 12, 2002,
filed a Complaint before the Sub-Regional Arbitration
Branch No. VII of Dumaguete City against the
petitioners for constructive dismissal, illegal
suspension, unfair labor practice, underpayment of
overtime pay, premium pay for holiday, separation
pay, holiday pay, service incentive leave,
vacation/sick leave, recovery of actual, moral, and
exemplary damages, and attorney's fees.
The Ruling of the Labor Arbiter
On May 30, 2002, the Labor Arbiter dismissed the
respondent's submissions on the following
ratiocinations: (1) the allegations of unfair labor
practice was not discussed in the respondent's
position paper, let alone substantiated; (2) CAB was
well within its rights to impose preventive suspension
upon the respondent; (3) on the substantive aspect,
CAB has reasonably shown that the complainant
violated company rules for utilizing company-owned
materials and equipment; and (4) on the procedural
aspect, CAB complied with the twin requirements of
notice.12 Thus, the fallo of the decision states:
WHEREFORE, the complaint dated February 12,
2002 is dismissed for lack of merit.
SO ORDERED.13
The Ruling of the National Labor Relations
Commission
Aggrieved, the respondent appealed the Labor
Arbiter decision to the NLRC, which, after proper
consideration, reversed the same. The NLRC ruled
that: (1) the respondent should have been given the
opportunity to be heard and to defend himself
through a hearing;14 (2) the respondent did not
commit serious misconduct because his "contrite and
remorseful explanation belies any willfulness and
wrongful intent to violate the rules;"15 and (3) while
the respondent did indeed violate the company rules,
the ultimate penalty of dismissal should not have
been meted out to him.16
The dispositive portion of the NLRC decision reads:
WHEREFORE, PREMISES CONSIDERED, the
decision of the Labor Arbiter is, hereby, SET
ASIDE and VACATED and a new one entered
finding [herein respondent] to have been illegally
dismissed. [Herein petitioner] Central Azucarera de
Bais is, hereby, ordered to pay complainant the
following:
Backwages P323,784.95  
Separation Pay P230,345.00  
TOTAL P554,129.00  
SO ORDERED.17
The Ruling of the Court of Appeals
From the NLRC's reversal of the Labor Arbiter's
decision, the petitioners elevated the case to the CA,
which later on denied the petition and affirmed the
NLRC decision. The CA averred that, while CAB was
compliant with the twin notice requirement, the
respondent's violation "cannot be considered as so
grave as to be characterized either as serious
misconduct or could lead to a loss of trust and
confidence."18 Thus, the CA concluded:
WHEREFORE, in view of the foregoing premises, the
Petition for Certiorari is DENIED. The NLRC's
Decision dated October 28. 2011 and its Resolution
dated February 27, 2012, respectively, are
hereby AFFIRMED. Costs on petitioners.
SO ORDERED.19
The Issues
After the CA's denial of the petitioners' motion for
reconsideration, the latter now comes before the
Court seeking the reversal of the assailed CA
decision and resolution on the following grounds:
I. CONTRARY TO LAW AND
JURISPRUDENCE, THE [CA]
SERIOUSLY ERRED IN FINDING
CAB GUILTY OF ILLEGAL
DISMISSAL BECAUSE
SUBSTANTIVE AND PROCEDURAL
DUE PROCESS REQUIREMENTS
WERE DULY COMPLIED WHEN MR.
APOSTOL WAS TERMINATED.
II. CONTRARY TO LAW AND
JURISPRUDENCE, THE [CA]
USURPED PETITIONERS'
MANAGEMENT PREROGATIVE TO
 DETERMINE THE PENALTY
COMMENSURATE TO THE OFFENSE
COMMITTED, WHICH HAD BEEN
THE SUBJECT OF PRIOR NOTICE
TO MR. APOSTOL, WHO KNEW THE
CONSEQUENCES OF HIS
VIOLATION.
III. SINCE MR. APOSTOL WAS
DISMISSED FOR JUST CAUSE AND
IN COMPLIANCE WITH THE
REQUIREMENTS OF PROCEDURAL
DUE PROCESS HE IS NOT
ENTITLED TO BACKWAGES AND
SEPARATION PAY. IN ANY CASE,
JURISPRUDENCE PROVIDES THAT
IN A WRONGFUL TERMINATION,
GOOD FAITH MAY MITIGATE OR
ABSOLVE THE PAYMENT OF
BACKWAGES.20
In sum, the petitioners put forth the following issues
for the resolution of the Court: (1) whether or not
procedural and substantive due process was
observed in the termination of the respondent's
employment with CAB; (2) whether or not the
penalty meted out was commensurate to the
violation; and consequently, (3) whether or not the
respondent is entitled to the payment of backwages
and separation pay.
The Court's Ruling
After a careful perusal of the arguments presented
and the evidence submitted, the Court finds merit in
the petition.
The general rule is that only questions of law are
revievvable by the Court. This is because it is not a
trier of facts;21 it is not duty-bound to analyze,
review, and weigh the evidence all over again in the
absence of any showing of any arbitrariness,
capriciousness, or palpable error.22 Thus, factual
findings of administrative or quasi-judicial bodies,
including labor tribunals, are accorded much respect
by the Court as they are specialized to rule on
matters falling within their jurisdiction especially
when these are supported by substantial
evidence.23 In labor cases, this doctrine applies with
greater force as questions of fact presented therein
are for the labor tribunals to resolve.24
The Court, however, permitted a relaxation of this
rule whenever any of the following circumstances is
present:
(1) [W]hen the findings are grounded entirely on
speculations, surmises or conjectures;
(2) when the inference made is manifestly mistaken,
absurd or impossible;
(3) when there is grave abuse of discretion;
(4) when the judgment is based on a
misapprehension of facts;
(5) when the findings of fact are conflicting;
(6) when in making its findings, the Court of Appeals
went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant
and the appellee;
(7) when the findings are contrary to that of the trial
court;
(8) when the findings are conclusions without
citation of specific evidence on which they are based;
(9) when the facts set forth in the petition, as well as
in the petitioner's main and reply briefs, are not
disputed by the respondent;
(10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by
the evidence on record; or
(11) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a
different conclusion.25
Thus, in instances when the Labor Arbiter, the NLRC,
and the CA made conflicting findings of fact, the
Court is justified—nay, the Court is compelled—to
issue its own determination.
The case at hand calls for the resolution of several
issues concerning the factual determination of the
court a quo.
First, on the matter of procedural due process, the
Labor Arbiter and the CA were one in asseverating
that CAB complied with the procedure required of it
by the Labor Code, its implementing rules and
regulations, and relevant jurisprudence. According to
the Labor Arbiter,
[T]he documents which are admitted by both parties
clearly show that CAB complied with the twin
requirements of due process by furnishing the
[respondent] two written notices: first, a notice
apprising the complainant of the particular acts for
which his dismissal is sought xxx and second, a
subsequent notice informing the complainant of the
decision to dismiss him.26 (Emphasis and
underscoring supplied)
Likewise, the CA was categorical when it asserted
that CAB complied with the twin notice requirement.
It said:
Here, the twin notice requirement was
substantially complied with by the
petitioners. It is undisputed that Apostol received
two notices. The first notice informed him of his
violation and required him to submit his written
explanation on the matter. Thereafter, he received
another notice communicating to him that his
employment with CAB was being severed by the
company due to his violation of its company's Rules
of Discipline.27 (Emphasis and underscoring supplied)
On the other hand, and contrary to the findings of him and to submit evidence in support
both the Labor Arbiter and the CA, the NLRC found thereof.30 (Emphasis and underscoring supplied)
that procedural due process was not properly
Thus, in Perez, the Court formulated the following
observed when CAB terminated the respondent. In
guiding principles in connection with the hearing
ruling thus, the NLRC emphasized that, while there
requirement in dismissal cases:
were actually two notices sent to the respondent, the
(a) "ample opportunity to be heard" means any
lack of actual hearing on the violations of the latter
meaningful opportunity (verbal or written)
prior to his termination constituted a ground by
given to the employee to answer the charges
which the dismissal should be reversed. Thus,
against him and submit evidence in support of his
[W]hile as a general rule a hearing is not required to
defense, whether in a hearing, conference or some
satisfy the demands of procedural due process, we
other fair, just and reasonable way.
feel that the circumstances of this case
required that a hearing should have been
(b) a formal hearing or conference becomes
conducted to determine the ownership of the
mandatory only when requested by the employee in
materials and equipment used. That to us is vital
writing or substantial evidentiary disputes exist or a
in determining the gravity of [respondent's]
company rule or practice requires it, or when similar
violation. That would have been more in accord with
circumstances justify it.
the employer's duty "to afford the worker ample
opportunity to be heard and defend himself with the
(c) the "ample opportunity to be heard" standard in
assistance of his representative if he so desires, in
the Labor Code prevails over the "hearing or
accordance with company rules and regulations
conference" requirement in the implementing rules
promulgated pursuant to guidelines set by the
and regulations.31 (Emphasis and underscoring
Department of Labor and Employment."28 (Emphasis
supplied)
and underscoring supplied)
In the present case, the petitioners furnished the
In the backdrop of this contradiction among the
respondent with two notices: one, the memorandum
decisions, the Court is of the opinion that the Labor
dated February 4, 2002 issued by CAB's resident
Arbiter and the CA's findings are more in accord with
manager32 which informed the respondent of the
established jurisprudence. The rights of the
charges against him; and two, the letter of
respondent to procedural due process was observed
termination which, this time, notified the respondent
by CAB.
of CAB's decision to dismiss him.33 In the interim,
CAB, through the memorandum issued by its
As early as 2009, in the case of Perez vs. Philippine
resident manager, sought the respondent's
Telegraph and Telephone Company,29 the Court has
explanation on the incident.
already laid down the guidelines in complying with
the proper procedure in instances when termination
The confluence of these facts, in the Court's opinion,
of employees is called for. In reconciling the Labor
sufficiently complies with the respondent's right to be
Code and its Implementing Rules and Regulations,
accorded ample opportunity to be heard.
and in concluding that actual or formal hearing is not
an absolute requirement, the Court interpreted and
Second, on the matter of substantive due process,
directed that:
the Court accedes to the uniform findings of the
The test for the fair procedure guaranteed under
Labor Arbiter, NLRC, and CA that the respondent did
Article 277(b) [now, Article 292(b)] cannot be
indeed violate company rules and regulations when
whether there has been a formal pretermination
he used company equipment and materials for his
confrontation between the employer and the
personal vehicles. According to the records of this
employee. The "ample opportunity to be heard"
case, this much is undisputed.
standard is neither synonymous nor similar to a
formal hearing. To confine the employee's right to be
In ruling this way, the Labor Arbiter averred that
heard to a solitary form narrows down that right. It
"'the [respondent] violated CAB's company rules for
deprives him of other equally effective forms of
utilizing material or equipment of the company as
adducing evidence in his defense. Certainly, such an
well as the housing unit assigned to him in an
exclusivist and absolutist interpretation is overly
improper manner, i.e., for the repair of privately
restrictive. The "very nature of due process negates
owned vehicles to the expense and damage of the
any concept of inflexible procedures universally
company."34 The NLRC itself affirmed this finding by
applicable to every imaginable situation."
categorically saying that "it is not disputed that the
complainant did violate the company rules."35 More,
xxxx
interspersed in the CA decision are statements
revealing this violation by the respondent. Hence,
An employee's right to be heard in termination cases
the certainty by which the Labor Arbiter, NLRC, and
under Article 277(b) [now, Article 292(b)] as
CA pronounced this fact requires no further
implemented by Section 2(d), Rule I of the
disturbance—not even by the Court.
Implementing Rules of Book VI of the Labor Code
should be interpreted in broad strokes. It is
What is disputed, however, which the Court must
satisfied not only by a formal face to face
rule upon, concerns the crux of the current
confrontation but by any meaningful
controversy: whether or not the respondent's act,
opportunity to controvert the charges against
which is violative of CAB's rules and regulations,
warrants the imposition of the ultimate penalty of
dismissal. In this regard, the Court scoured once
again the records of the case, and after a judicious
study thereof, favors the submission of the
petitioners.
Article 297(c) [formerly Article 282(c)] of the Labor
Code provides that an employer may terminate the
services of an employee for fraud or willful breach of
the trust reposed in him.36 According to the case
of Top Form Mfg. Co., Inc. vs. NLRC,37 an employer
has a distinct prerogative to dismiss an employee if
the former has ample reason to distrust the latter or
if there is sufficient evidence to show that the
employee has been guilty of breach of trust. This
authority of the employer to dismiss an employee
cannot be denied whenever acts of violation are
noted by the employer.38
In ruling that employers have a right to impose a
penalty of dismissal on supervisors or personnel
occupying positions of responsibility on the basis of
loss of trust and confidence, the case of Moya vs.
First Solid Rubber Industries, Inc.39 stated thus:
Following the ruling in The Coca-Cola Export
Corporation v. Gacayan, the employers have a right
to impose a penalty of dismissal on employees by
reason of loss of trust and confidence. More so, in
the case of supervisors or personnel occupying
positions of responsibility, loss of trust,
justifies termination of employment. Loss of
confidence as a just cause for termination of
employment is premised on the fact that an
employee concerned holds a position of trust and
confidence. This situation holds where a person
is entrusted with confidence on delicate
matters, such as the custody, handling, or care
and protection of the employer's
property.40 (Emphasis and underscoring supplied,
citations omitted)
This discourse is further clarified in the recent case
of Alaska Milk Corporation, and the Estate of Wilfred
Uytengsu vs. Ernesto L. Ponce41 where the Court
ruled that, in order to invoke this cause, certain
requirements must be complied with, namely: (1)
the employee concerned must be holding a position
of trust and confidence; and (2) there must be an
act that would justify the loss of trust and
confidence.42 In addition to these, the case of Juliet
B. Sta. Ana vs. Manila Jockey Club, Inc.43 included,
as a requirement, that such loss of trust relates to
the employee's performance of duties.
In the case at hand, a perusal of the entirety of the
records would reveal that all the requirements for
the valid dismissal of the respondent exist.
To begin with, there is no doubt that the respondent,
as CAB's motor pool over-all repairs supervisor, is in
a position of trust and confidence. He was in charge
of repairing company vehicles, and was designated
with the responsibility of (a) assigning the personnel
and equipment for each and every repair job, and
(b) taking custody of all repair equipment and
materials owned by CAB.44 In the language of Moya,
the respondent herein occupies a position of
responsibility, where he is entrusted with confidence
on delicate matters, such as the custody, handling,
or care and protection of CAB's properties.
Secondly, the respondent's violation of CAB's rules
and regulations relating to the use of company
property for personal purposes was consistently held
and upheld not only by the Labor Arbiter and the
NLRC, respectively, but also by the CA itself. That
the respondent committed this act could not be
denied. What's more is that the respondent himself
admitted to it.45
Finally, the respondent's action was successfully
conducted precisely because of his position in the
company. As CAB's motor pool over-all repairs
supervisor, he was in the position to effect the
repairs of his personal property in the company
house which was assigned to him. It could not be
emphasized further that this violation of company
rules—from a supervisor no less—carries with it an
impact to the operations and management of a
company, and a company's decision to terminate an
employee for these purposes is a decision that
should be respected.
To be sure, the petitioners herein validly dismissed
their erring employee.
Having thus ruled on the validity of the dismissal of
the respondent, then it necessarily follows that he is
not entitled to both backwages and separation pay.
The Court has reiterated that the policy of social
justice is not intended to countenance wrongdoing
simply because it is committed by the
underprivileged. At best it may mitigate the penalty
but it certainly will not condone the offense.
Compassion for the poor is an imperative of every
humane society but only when the recipient is not a
rascal claiming an undeserved privilege. Social
justice cannot be permitted to be refuge of
scoundrels any more than can equity be an
impediment to the punishment of the guilty. Those
who invoke social justice may do so only if their
hands are clean and their motives blameless and not
simply because they happen to be poor. This great
policy of our Constitution is not meant for the
protection of those who have proved they are not
worthy of it, like the workers who have tainted the
cause of labor with the blemishes of their own
character.46
WHEREFORE, premises considered, the Decision of
the Court of Appeals in CA G.R. SP No. 06906, dated
May 22, 2013 and the subsequent Resolution dated
October 29, 2014, as well as the Decision and
Resolution of the National Labor Relations
Commission in NLRC Case No. V-000451-2002,
dated October 28, 2011 and February 27, 2012
respectively, are hereby REVERSED and SET
ASIDE. The Decision of the Labor Arbiter dated May
30, 2002 in SUB-RAB- VII-02-003 9-2002-D is
hereby REINSTATED.

SO ORDERED.
G.R. No. 183934
ERNESTO GALANG and MA. OLGA JASMIN
CHAN, Petitioners,
vs
BOIE TAKEDA CHEMICALS, INC. and/or KAZUHIKO
NOMURA, Respondents.
DECISION
JARDELEZA, J.:
This is a petition for review on certiorari1under Rule 45 of the
Revised Rules of Court filed by Ernesto M. Galang and Ma.
Olga Jasmin Chan (petitioners) from the Court of Appeals'
(CA) Decision2 dated February 26, 2008 (CA Decision) and
the Resolution3 dated July 28, 2008 (collectively, Assailed
Decision) in CA-G.R. SP No. 96861. In the Assailed
Decision, the CA affirmed the National Labor Relations
Commission (NLRC) Decision4 dated March 7, 2006
reversing the Labor Arbiter's ruling that petitioners were
illegally dismissed, viz:
WHEREFORE, premises considered, the instant Petition is
hereby DENIED. Accordingly, the assailed March 7, 2006
Decision of the NLRC as well as the October 25, 2006
Resolution denying Petitioners' Motion for Reconsideration
are AFFIRMED.
SO ORDERED.5(Emphases in the original.)
Statement of Facts
Respondent pharmaceutical company Boie Takeda
Chemicals, Inc. (BTCI) hired petitioners Ernesto Galang and
Ma. Olga Jasmin Chan in August 28, 1975 and July 20,
1983, respectively.6 Through the years, petitioners rose from
the ranks and were promoted to Regional Sales Managers in
2000. Petitioners held these positions until their separation
from BTCI on May 1, 2004.7
As Regional Sales Managers, they belong to the sales
department of BTCI. They primarily managed regional sales
budget and target, and were responsible for market share
and company growth within their respective regions. Within
the organizational hierarchy, they reported to the National
Sales Director.8 In 2002, when the National Sales Director
position became vacant (after the retirement of Melchor
Barretto), petitioners assumed and shared (with the general
manager) the functions and responsibilities of this higher
position, and reported directly to the General Manager. 9
In February 2003, the new General Manager, Kazuhiko
Nomura (Nomura), asked petitioners to apply for the position
of National Sales Director.10 Simultaneously, Nomura also
asked Edwin Villanueva (Villanueva) and Mimi Escarte, both
Group Product Managers in the marketing depatiment, to
apply for the position of Marketing Director. All four
employees submitted themselves to interviews with the
management. In the end, Nomura hired an outsider from
Novartis Company as Marketing Director, while the position
of National Sales Director remained vacant. 11
Later, however, petitioners were informed that BTCI
promoted Villanueva as National Sales Director effective
May 1,2004.12 BTCI explained that the appointment was
pursuant to its management prerogative, and that it arrived
at such decision only "after careful assessment of the
situation, the needs of the position and the qualifications of
the respective candidates."13 The promotion of Villanueva as
the National Sales Director caused ill-feelings on petitioners'
part.14 They believed that Villanueva did not apply for the
position; has only three years of experience in sales; and
was reportedly responsible for losses in the marketing
depmiment.15 Petitioners further resented Villanueva's
appointment because they heard that the appointment was
made only because he threatened to leave the office along
with the company's top cardio-medical doctors.16
After Villanueva's promotion, petitioners claimed that
Nomura threatened to dismiss them from office if they failed
to perform well under the newly appointed National Sales
Director.17 This prompted petitioners to inquire if they could
avail of early retirement package due to health reasons.
Specifically, they requested Nomura if they could avail of the
early retirement package of 150% plus 120% of monthly
salary for every year of service tax free, and full ownership of
service vehicle tax free.18 They claimed that this is the same
retirement package given to previous retirees namely, former
Regional Sales Director Jose Sarmiento, Jr. (Sarmiento),
and former National Sales Director Melchor
Barretto.19 Nomura, however, insisted that such retirement
package does not exist20 and Sarmiento's case was
exceptional since he was just a few years shy from the
normal retirement age.21
On April 28, 2004, petitioners intimated their intention to
retire in a joint written letter of resignation 22 dated April 28,
2002 (sic) to Nomura, effective on April 30, 2004. Thereafter,
petitioners received their retirement package and other
monetary pay from BTCI. Chan received two checks23 in the
total amount of P2, 187,236.6424 computed as follows:
1) Retirement pay (P70,000.00 x 120% x 21years) = P1
2) Salaries from May to December 2004 (P70,000.00 x 8 mos.) = P
3) Allowances (from May to December 2004) =
4) Rice Subsidy (April-December) =
5) Conversion of Leave Credits (138 days) = P
th
6) 13  month pay (pro-rata) =

[Gross Amount]
Less: Accountabilities
Taxes
25
[Net Amount] P2, 187,236.64
Galang received checks26 in the total amount of
P3,754,306.5627 computed as follows:
1) Retirement Pay (P70,000 x 160% x 29 years)=
2) Salaries ffrom] May [to] Dec. 2004 =
3) Allowances (May to December 2004) =
4) Rice Subsidy (April to December)= P6,000.00
5) Conversion of Leave Credits (35 days) =
6) 13th month pay (pro-rata) =
Gross Amount
Less: Accountabilities
Taxes
[Net Amount]
Upon petitioners' retirement, the positions of Regional Sales
Manager were abolished, and a new position of Operations
Manager was created.29
On October 20, 2004, petitioners filed the complaint for
constructive dismissal and money claims before the NLRC
Regional Arbitration Branch. 30
In a Decision dated May 16, 2005 (LA Decision),31 the Labor
Arbiter ruled that petitioners were constructively
dismissed.32 The Labor Arbiter explained that petitioners
were forced to retire because Villanueva's appointment
constituted an abuse of exercise of management
prerogative; and that subsequent events, such as the
abolition of the positions of Regional Sales Managers and
the creation of the position of the Operations Manager show
that petitioners' easing out from service were orchestrated. It
also found that petitioners were discriminated as to their
retirement package. The dispositive pmiion of the decision
stated, thus:
WHEREFORE, premises considered, judgment is hereby
rendered, declaring complainants' dismissal from their
employment to be illegal.1âwphi1 Accordingly, respondents
are jointly and severally liable:
1) To pay complainants the amounts opposite their
respective names:
  Backwagcs Separation Pay/ Salar
Differential Pay
E. Galang P398,854.16 189,000.00 830,0
3045,000.00 680,0
Ma. OJ Chan 398,954.16 189,000.00 830,0
2,205,000.00 680,0
2) To pay complainants, the amount P227, 164.10 for Olga
Chan and the sum of P27,374.85 for Ernesto Galang,
representing the refund of the deducted car loan;
3) To pay complainants the amount of P500,000.00 each,
representing moral damages, and the amount of
P500.000.00 each, as for exemplary damages;
4) To pay complainant the amount equivalent to ten (10%)
percent of the total judgment award, as and for attorney's
fees.
SO ORDERED.33
On June 30, 2005, BTCI appealed the LA Decision with the
NLRC.34
Petitioners allegedly received a Notice of Decision35 dated
March l0, 2006 from the NLRC. The notice informed
petitioners that a decision was promulgated by the NLRC on
February 7, 2006. The attached decision in the notice,
however, was dated March 7, 2006. The decision dated
March 7, 200636 (March Decision) reversed and set
aside the LA Decision, and dismissed the complaint. In said
decision, the NLRC ruled that petitioners failed to prove that
they were constructively dismissed.
Petitioners filed a motion to declare the March Decision null
and void by way of motion for reconsideration37 dated March
22, 2006. Petitioners alleged that prior to the Notice of
Decision, they personally received a decision allegedly
promulgated on February 7, 200638 (February Decision)
which affirmed the LA Decision, but with modification as to
the amount of moral and exemplary damages. Petitioners
pointed out that the March Decision: (1) lacked one signature
in page 19; (2) contained two different specimens signature
for Commissioner Gacutan; (3) had pages which do not
contain the initials of the one preparing it; (4) was printed in
higher quality paper; (4) merely lifted the arguments of BTCI
in contrast to the NLRC's February Decision which directly
reviewed the findings of the Labor Arbiter; and (5) was
attached to a notice signed by merely a Labor Arbiter
Associate, and not by the Executive Clerk of the
Division.39 Petitioners also reiterated that BTCI dismissed
them under the guise of management prerogative, and that
Villanueva's appointment as National Sales Director was an
abuse of exercise of such prerogative. They also claimed
that their departure from the office was not voluntary but was
prompted by the circumstances after the BTCI preferred
Villanueva's application over theirs.40
On October 25, 2006, the NLRC issued a Resolution 41 which
denied petitioners' motion for reconsideration, and therefore
upheld the NLRC's March Decision. The NLRC clarified that
the official decision is the March Decision, and that the
February Decision cannot be considered as the official
decision because it was merely a draft decision.
Petitioners filed a petition for certiorari42under Rule 65 of the
Revised Rules of Court with the CA, which denied the
petition in the Assailed Decision. The CA said that the
"NLRC having thus chosen to uphold its Decision dated
March 7, 2006 as the authentic one, this Court must
therefore, consider the same as the version herein submitted
for review."43 The CA also found that the March Decision was
more in tune with law and jurisprudence.44 It reviewed and
reassessed the facts and evidence on record and made a
finding that the NLRC did not commit grave abuse of
discretion.
Thus, petitioners filed before this Court a petition for review
on certiorari under Rule 45 of the Revised Rules of Court.
They allege that the CA erred in sustaining the decision of
the NLRC.
The Arguments
Petitioners argue that they were constructively dismissed
because of the acts of BTCI 's General Manager Nomura.
They claim that they were forced into resigning because
instead of promoting them to the position of National Sales
Directors, BTCI hired Villanueva who only had three years of
service in the company, who has no background or
experience in sales to speak of and who was allegedly
responsible for almost the bankruptcy of the company. They
allege that Nomura threatened to dismiss them if they do not
perform well under the newly-appointed National Sales
Director.
Petitioners also argue that the retirement package given to
them is lower compared to others who were holding the
similar position at the time of their retirement. By way of
example, petitioners cite the case of one Sarmiento, who
was promoted with them to the same position, and who
opted for early retirement in 2001. Sarmiento allegedly
received a more generous package of 150% of his monthly
salary for every year of service on top of the 120%
retirement package for his 22 years of service. Petitioners
contend that this was the same retirement package given to
other employees such as Anita Ducay, Marcielo Rafael,
Rolando Arada, Sarmiento, and Melchor Barretto.45
For its part, BCTI claims that the complaint is only an attempt
to extort additional benefits from the company.
BTCI denies having constructively dismissed petitioners. It
argues that no constructive dismissal can occur because
there was no movement or transfer of position or diminution
of salaries or benefits. Neither was there any circumstance
that would make petitioners' continued employment
unreasonable or impossible.46 The appointment of Villanueva
was within the sphere of management's prerogatives, and
was arrived at after careful consideration. It did not have any
adverse effect on petitioners' positions as Regional Sales
Managers. According to BTCI, petitioner's decision to retire
was voluntary and of their own volition. 47
As to the payment of retirement benefits, BTCI insists that
petitioners have been paid according to the Collective
Bargaining Agreement (CBA) between BTCI and BTCI
Supervisory Union. Although petitioners are managers (and
are not covered by the CBA), BTCI by practice grants the
same retirement benefits to managers. BTCI admits that it
gave Sarmiento additional financial assistance because of
serious health problems, and because he was merely three
years away from normal retirement. Other employees cited
by petitioners all received retirement benefits computed on
the CBA provisions.48
Issues
Thus, the issues before this Court are the following:
I. Whether petitioners were constructively dismissed from
service; and
II. Whether petitioners are entitled to a higher retirement
package.
Our Ruling
We deny the petition.
In its Resolution dated October 25, 2006, the NLRC denied
petitioners' motion for reconsideration, and declared the
March Decision as the official decision. It ruled that the
February Decision (in petitioners' possession) is merely a
draft decision.49 This Court recognizes that it is common
practice that more than one decision may be drafted
because more often, members of a collegiate body change
their positions during deliberations. 50 This finding of the
NLRC, coupled by the fact that the March Decision is
complete in form and substance pursuant to Section 4(c) and
Section 13 of Rule VII of the 2005 NLRC Rules of
Procedure, cannot be characterized as an exercise of grave
abuse of discretion amounting to lack or excess of
jurisdiction. The issue of which between the two decisions is
the correct one delves into the substantive arguments of the
case, which the CA has already decided after review and
reassessment of the facts and evidence of the entire
records.
I. Petitioners voluntarily
retired from the service, thus
were not constructively
dismissed.
Constructive dismissal has often been defined as a
"dismissal in disguise" or "an act amounting to dismissal but
made to appear as if it were not."51 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. In
some cases, while no demotion in rank or diminution in pay
may be attendant, constructive dismissal may still exist when
continued employment has become so unbearable because
of acts of clear discrimination, insensibility or disdain by the
employer, that the employee has no choice but to
resign.52 Under these two definitions, what is essentially
lacking is the voluntariness in the employee's separation
from employment.
In this case, petitioners were neither demoted nor did they
receive a diminution in pay and benefits. Petitioners also
failed to show that employment is rendered impossible,
unreasonable or unlikely.
Petitioners admitted that they have previously intended to
retire and were actually the ones who requested to avail of
an early retirement.53 More, the circumstances which
petitioners claim to have forced them into early retirement
are not of such character that rendered their continued
employment with BTCI as impossible.
Petitioners allege that Nomura appointed Villanueva in order
to ease them out from the company. Petitioners claim that
Villanueva was unqualified for the position compared to their
experiences; that Villanueva did not apply for the position of
National Sales Director; and that he lacked the experience
for the job. Such arguments only affirm the NLRC and CA's
finding that petitioners' resignation was prompted by their
general disagreement with the appointment of Villanueva,
and not by the acts of discrimination by the management.
Our labor laws respect the employer's inherent right to
control and manage effectively its enterprise and do not
normally allow interference with the employer's judgment in
the conduct of his business.54 Management has exclusive
prerogatives to determine the qualifications and fitness of
workers for hiring and firing, promotion or reassignment. 55 It
is only in instances of unlawful discrimination, limitations
imposed by law and collective bargaining agreement can this
prerogative of management be reviewed. 56
The reluctance to interfere with management's prerogative in
determining who to promote all the more applies when we
consider that the position of National Sales Director is a
managerial position. Managerial positions are offices which
can only be held by persons who have the trust of the
corporation and its officers.57 The promotion of employees to
managerial or executive positions rests upon the discretion
of management.58 Thus, we have repeatedly reminded that
the Labor Arbiters, the different Divisions of the NLRC, and
even courts, are not vested with managerial authority. 59 The
employer's exercise of management prerogatives, with or
without reason, does not per se constitute unjust
discrimination, unless there is a showing of grave abuse of
discretion.60 In this case, there is none.
Petitioners did not present any evidence showing BTCI's
adopted rules and policies laying out the standards of
promotion of an employee to National Sales Director. They
did not present the qualification standards (which BTCl did
not allegedly follow) needed for the position. Petitioners
merely assumed that one of them was better for the job
compared to Villanueva. Mere allegations without proof
cannot sustain petitioners' claim. In any case, a perusal of
Villanueva's resume shows that he has combined
experiences in both sales and marketing. 61 The NLRC also
found that an independent consulting agency, K Search Asia
Consulting, was engaged by BTCI to determine who to
appoint as National Sales Director.62 The consulting agency
recommended Villanueva to the position. 63 In the absence of
any qualification standards that BTCI allegedly gravely
abused to refuse to follow, we cannot substitute our own
judgment on the qualifications of Villanueva.
Petitioners' allegation that Villanueva was appointed only
because of the threats the latter made to management
militates against their claim. If BTCI management was
merely forced to appoint Villanueva, petitioners cannot claim
that BTCI intentionally and maliciously orchestrated their
easement from the company.
Petitioners cannot also argue that BTCI's caution to dismiss
them if they do not perform well under the newly-appointed
National Sales Director constituted a threat to their
employment. This is merely a warning for them to cooperate
with the new National Sales Director. Such warning is
expected of management as part of its supervision and
disciplining power over petitioners given their unwelcoming
reactions to Villanueva's appointment.
The other acts of discrimination complained of by petitioners
refer to post-employment matters, or those that transpired
after their retirement. These include payment of alleged
"lesser" retirement package, and the abolition of the
positions of Regional Sales Manager. These events
transpired only after they voluntary availed of the early
retirement. We stress, however, that the circumstances
contemplated in constructive dismissal cases are clear acts
of discrimination, insensibility or disdain which
necessarily precedes the apparent "voluntary" separation
from work. If they happened after the fact of separation, it
could not be said to have contributed to employee's decision
to involuntary resign, or in this case, retire.
It is true that in constructive dismissal cases, the employer is
charged with the burden of proving that its conduct and
action or the transfer of an employee are for valid and
legitimate grounds such as genuine business
necessity.64 However, it is likewise true that in constructive
dismissal cases, the employee has the burden to prove first
the fact of dismissal by substantial evidence.65 Only then
when the dismissal is established that the burden shifts to
the employer to prove that the dismissal was for just and/or
authorized causc.66 The logic is simple-if there is no
dismissal, there can be no question as to its legality or
illegality.67
In Portuguez v. GSIS Family Bank (Comsavings Bank),68 we
were confronted with the same facts where an employee
who opted for voluntary retirement claimed that he was
constructively dismissed. In that case, we ruled that it is the
employee who has the onus to prove his allegation that his
availment of the early voluntary retirement program was, in
fact, done involuntarily:
Again, we are not persuaded. We are not unaware of the
statutory rule that in illegal dismissal cases, the employer
has the onus prohandi to show that the employee's
separation from employment is not motivated by
discrimination, made in bad faith, or cffocled as a form of
punishment or demotion without sufficient cause. It bears
stressing, however, that this legal principle presupposes that
there is indeed an involuntary separation from employment
and the facts attendant to such forced separation was clearly
established.
This legal principle has no application in the instant
controversy for as we have succinctly pointed above,
petitioner failed to establish that indeed he was discriminated
against and on account of such discrimination, he was forced
to sever his employment from the respondent bank. What is
undisputed is the fact that petitioner availed himself of
respondent bank's early voluntary retirement program and
accordingly received his retirement pay in the amount of
P1.324 Million under such program. Consequently, the
burden of proof will not vest on respondent bank to prove the
legality of petitioner's separation from employment but aptly
remains with the petitioner to prove his allegation that his
availment of the early voluntary retirement program was, in
fact, done involuntarily.
As we have explicitly ruled in Machica v. Roosevelt Service
Center, Inc.:
period of time. It requires an indubitable showing that the
employer agreed to continue giving the benefit knowing
fully well that the employees are not covered by any
provision of the law or agreement requiring payment
thereof. In sum, the benefit must be characterized by
regularity, voluntary and deliberate intent of the employer to
grant the benefit over a considerable period of
time.73 (Citations omitted, emphases supplied.)

We agree with the CA when it ruled that "[t]his concession

"The rule is that one who alleges a fact has the burden of
proving it; thus, petitioners were burdened to prove their
allegation that respondents dismissed them from their
employment. It must be stressed that the evidence to
prove this fact must be clear, positive and
convincing. The rule that the employer bears the burden of
proof in illegal dismissal cases finds no application here
because the respondents deny having dismissed the
petitioners."
Verily, petitioner did not present any clear, positive or
convincing evidence in the present case to support his
claims. Indeed, he never presented any evidence at all other
than his own self-serving declarations. We must bear in mind
the legal dictum that, "he who asserts, not he who denies,
must prove."69 (Citations omitted, emphases in the original.)
Here, records show that petitioners failed to establish the
fact of their dismissal when they failed to prove that their
decision to retire is involuntary. Consequently, no
constructive dismissal can be found.
II. Petitioners were not
discriminated against in
terms of their retirement
package.
The entitlement of employees to retirement benefits must
specifically be granted under existing laws, a collective
bargaining agreement or employment contract, or an
established employer policy.70 Based on both parties'
evidence, petitioners arc not covered by any agreement.
There is also no dispute that petitioners received more than
what is mandated by Article 28771 of the Labor Code.
Petitioners, however, claim that they should have received a
larger pay because BTCI has given more than what they
received to previous retirees. In essence, they claim that
they were discriminated against because BTCI did not give
them the package of 150% of monthly salary for every year
of service on top of the normal retirement package.
In Vergara v. Coca-Cola Bottlers Philippines, Inc.,72we
explained that the burden of proof that the benefit has
ripened into company practice, i.e., giving of the benefit is
done over a long period of time, and that it has been made
consistently and deliberately, rests with the employee:
given to such an employee was not proved (sic) to be
company practice or policy such that petitioners can demand
of it over and above what has been specified in the collective
bargaining agreement."74
To prove that their claim on the additional grant of 150% of
salary, petitioners presented evidence showing that Anita
Ducay,75 Rolando Arada,76 Marcielo Rafael,77 and
Sarmiento,78 received significantly larger retirement benefits.
However, the cases of Ducay, Arada, and Rafael cannot be
used as precedents to prove this specific company practice
because these employees were not shown to be similarly
situated in terms of rank, nor are the applicable retirement
packages corresponding to their ranks alike. Also, these
employees, including Sarmiento, all retired in the same year
of 2001, or only within a one-year period. Definitely, a year
cannot be considered long enough to constitute the grant of
retirement benefits to these employees as company practice.
In fact, the affidavit79 of Anita Ducay affirms BTCI's position
that in practice, the CBA provisions govern the employees'
retirement pay. And while it may also support petitioners'
allegation that in some cases, a more generous package is
given to retiring employees higher than that provided in the
CBA, the affidavit candidly states that the retirement
package given to Sarmiento, Melchor Barreto, Marcielo
Rafael, and Rolando Arada was not in accordance with
standard of merit or company practice.
It cannot therefore be disputed that petitioners already
received the benefits as specified in the CBA between BTCI
and BTCI Supervisory Union.80 Petitioner Chan, for her 21
years of service, received a total of Pl,764,000.00 as
retirement benefits following the formula of P70,000.00 x
120% x 21 years. Petitioner Galang, for his 29 years of
service, received a total of P3,248,000.00 as retirement
benefits following the formula of P70,000.00 x 160% x 29
years.
In sum, we hold that petitioners voluntarily retired from
service and received their complete retirement package and
other monetary claims from BTCI.
WHEREFORE, the petition for review
on certiorari is DENIED. No costs.

SO ORDERED.
To he considered as a regular company practice the
employee must prove by substantial evidence that the
giving of the benefit is done over a long period of time,
and that it has been made consistently and
deliberately. Jurisprudence has not laid down any hard-and-
fast rule as to the length of time that company practice
should have been exercised in order to constitute voluntary
employer practice. The common denominator in previously
decided cases appears to be the regularity and
deliberateness of the grant of benefits over a significant