SEPARATION PAY AS A MEASURE OF SOCIAL JUSTICE

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY vs. THE NATIONAL LABOR RELATIONS COMMISSION
and MARILYN ABUCAY
G.R. No. 80609 August 23, 1988
CRUZ, J.:

DOCTRINE:

1. Separation pay shall be allowed as a measure of social justice only in those instances where the employee
is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.
Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give
the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the
ground of social justice.
2. Separation pay, if found due under the circumstances of each case, should be computed at the rate of one
month salary for every year of service, assuming the length of such service is deemed material. This is
without prejudice to the application of special agreements between the employer and the employee
stipulating a higher rate of computation and providing for more benefits to the discharged employee.

FACTS:
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two
complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her
promise to facilitate approval of their applications for telephone installation. Investigated and heard, she was found
guilty as charged and accordingly separated from the service. She went to the Ministry of Labor and Employment
claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the
company was sustained and the complaint was dismissed for lack of merit.

Labor Arbiter: The instant complaint is dismissed for lack of merit. However, considering that Dr. Helen Bangayan
and Mrs. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outside the
premises of respondent company and that their act of giving P3,800.00 without any receipt is tantamount to
corruption of public officers, complainant must be given one month pay for every year of service as financial
assistance. 

Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said
decision in toto and dismissed the appeals. The private respondent took no further action, thereby impliedly
accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the
above- quoted award as having been made with grave abuse of discretion.

NLRC: Anent the award of separation pay as financial assistance in complainant's favor, We find the same to be
equitable, taking into consideration her long years of service to the company whereby she had undoubtedly
contributed to the success of respondent. While we do not in any way approve of complainants (private respondent)
mal feasance, for which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion that we
resolve to uphold the award of financial assistance in her favor. 

Petitioner: It is conceded that an employee illegally dismissed is entitled to reinstatement and backwages as required
by the labor laws. However, an employee dismissed for cause is entitled to neither reinstatement nor backwages and
is not allowed any relief at all because his dismissal is in accordance with law. In the case of the private respondent,
she has been awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the
company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for her dishonesty,
and without any legal authorization or justification. The award is made on the ground of equity and compassion,
which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and encourages instead
of deterring corruption.

Public Respondent: The employee is sufficiently punished with her dismissal. The grant of financial assistance is not
intended as a reward for her offense but merely to help her for the loss of her employment after working faithfully with
the company for ten years. In support of this position, the Solicitor General cites the cases of Firestone Tire and
Rubber Company of the Philippines v. Lariosa and Soco v. Mercantile Corporation of Davao,  where the employees
were dismissed for cause but were nevertheless allowed separation pay on grounds of social and compassionate
justice:
Firestone Tire and Rubber Company of the Philippines v. Lariosa 
The employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay
for his 11 years of service with the company.

Soco v. Mercantile Corporation of Davao

The employee was also legally separated for unauthorized use of a company vehicle and refusal to attend
the grievance proceedings but he was just the same granted one-half month separation pay for every year
of his 18-year service.

ISSUE:
Is the award of financial assistance to an employee who had been dismissed for cause as found by the public
respondent, legal?

RULING:

No, the award of financial assistance to an employee who had been dismissed for cause as found by the public
respondent is not legal.

The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to
separation pay. The cases cited by the Solicitor General constitute the exception, based upon considerations of
equity. Equity has been defined as justice outside law,  being ethical rather than jural and belonging to the sphere of
morals than of law.  It is grounded on the precepts of conscience and not on any sanction of positive law.  Hence, it
cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and
without any provision for separation pay.

Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay
to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is
replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the
workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of
confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State
Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights
with a separate sub- topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with
management, in the advancement of the national economy and the welfare of the people in general. The categorical
mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the
award of separation pay in proper cases even if the dismissal be for cause.

However, that where the exception has been applied, the decisions have not been consistent as to the justification for
the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft in the
Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded
separation pay notwithstanding that the first cause was certainly more serious than the second. No less curiously, the
employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service, but in
Filipro the award was two months separation pay for 2 years service. In Firestone, the employee was allowed full
separation pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month
separation pay for every year of her 15year service. It would seem then that length of service is not necessarily a
criterion for the grant of separation pay and neither apparently is the reason for the dismissal.

Distinctions are in order. The Court noted that heretofore the separation pay, when it was considered warranted, was
required regardless of the nature or degree of the ground proved, be it mere inefficiency or something graver like
immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were, and to
justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should
be re-examined. It is time we rationalized the exception, to make it fair to both labor and management, especially to
labor.

There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with
work standards, the grant of separation pay to the dismissed employee may be both just and compassionate,
particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable
policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which
is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her
child may also be removed because of her poor attendance, this being another authorized ground. It is not the
employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot
be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly
replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be
sustainable under the social justice policy even if the separation is for cause.

But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more
discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his
inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the
receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on
the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not
depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the
company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of
separation pay would be entirely unjustified.

The Court held that henceforth separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the
dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of
social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring
employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay
has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar
offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by
those who do not deserve the protection and concern of the Constitution.
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.

Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The
private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and
as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to
be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have
strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification
for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social
justice and undermining the efforts of labor to cleanse its ranks of all undesirables.

The Court also rules that the separation pay, if found due under the circumstances of each case, should be
computed at the rate of one month salary for every year of service, assuming the length of such service is deemed
material. This is without prejudice to the application of special agreements between the employer and the employee
stipulating a higher rate of computation and providing for more benefits to the discharged employee.

Toyota Motor Phils. Corporation Workers Association vs. NLRC

G.R. Nos. 158786 & 158789, October 19, 2007
VELASCO, JR., J.:

DOCTRINE:

In addition to serious misconduct, in dismissals based on other grounds under Art. 282 like willful disobedience,
gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or
his family, separation pay should not be conceded to the dismissed employee.

FACTS:

On February 14, 1999, the Union filed a petition for certification election among the Toyota rank and file employees
with the National Conciliation and Mediation Board (NCMB). Med-Arbiter Ma. Zosima C. Lameyra denied the petition,
but, on appeal, the DOLE Secretary granted the Union’s prayer, and, through the June 25, 1999 Order, directed the
immediate holding of the certification election.

After Toyota’s plea for reconsideration was denied, the certification election was conducted. Med-Arbiter Lameyra’s
May 12, 2000 Order certified the Union as the sole and exclusive bargaining agent of all the Toyota rank and file
employees. Toyota challenged said Order via an appeal to the DOLE Secretary.

In the meantime, the Union submitted its Collective Bargaining Agreement (CBA) proposals to Toyota, but the latter
refused to negotiate in view of its pending appeal. Consequently, the Union filed a notice of strike on January 16,
2001 with the NCMB based on Toyota’s refusal to bargain. On February 5, 2001, the NCMB-NCR converted the
notice of strike into a preventive mediation case on the ground that the issue of whether or not the Union is the
exclusive bargaining agent of all Toyota rank and file employees was still unresolved by the DOLE Secretary.
In connection with Toyota’s appeal, Toyota and the Union were required to attend a hearing on February 21, 2001
before the Bureau of Labor Relations (BLR) in relation to the exclusion of the votes of alleged supervisory employees
from the votes cast during the certification election. The February 21, 2001 hearing was cancelled and reset to
February 22, 2001. On February 21, 2001, 135 Union officers and members failed to render the required overtime
work, and instead marched to and staged a picket in front of the BLR office in Intramuros, Manila. The Union, in a
letter of the same date, also requested that its members be allowed to be absent on February 22, 2001 to attend the
hearing and instead work on their next scheduled rest day. This request however was denied by Toyota.

Despite denial of the Union’s request, more than 200 employees staged mass actions on February 22 and 23, 2001
in front of the BLR and the DOLE offices, to protest the partisan and anti-union stance of Toyota. Due to the
deliberate absence of a considerable number of employees on February 22 to 23, 2001, Toyota experienced acute
lack of manpower in its manufacturing and production lines, and was unable to meet its production goals resulting in
huge losses of PhP 53,849,991.

Soon thereafter, on February 27, 2001, Toyota sent individual letters to some 360 employees requiring them to
explain within 24 hours why they should not be dismissed for their obstinate defiance of the company’s directive to
render overtime work on February 21, 2001, for their failure to report for work on February 22 and 23, 2001, and for
their participation in the concerted actions which severely disrupted and paralyzed the plant’s operations. These
letters specifically cited Section D, paragraph 6 of the Company’s Code of Conduct, to wit:

Inciting or participating in riots, disorders, alleged strikes, or concerted actions detrimental to [Toyota’s]
interest.

1st offense – dismissal.

Meanwhile, a February 27, 2001 Manifesto was circulated by the Union which urged its members to participate in a
strike/picket and to abandon their posts.

On the next day, the Union filed with the NCMB another notice of strike docketed as NCMB-NCR-NS-02-061-01 for
union busting amounting to unfair labor practice.

On March 1, 2001, the Union nonetheless submitted an explanation in compliance with the February 27, 2001
notices sent by Toyota to the erring employees. The Union members explained that their refusal to work on their
scheduled work time for two consecutive days was simply an exercise of their constitutional right to peaceably
assemble and to petition the government for redress of grievances. It further argued that the demonstrations staged
by the employees on February 22 and 23, 2001 could not be classified as an illegal strike or picket, and that Toyota
had already condoned the alleged acts when it accepted back the subject employees.

Consequently, on March 2 and 5, 2001, Toyota issued two (2) memoranda to the concerned employees to clarify
whether they are adopting the March 1, 2001 Union’s explanation as their own. The employees were also required to
attend an investigative interview, but they refused to do so.

On March 16, 2001, Toyota terminated the employment of 227 employees for participation in concerted actions in
violation of its Code of Conduct and for misconduct under Article 282 of the Labor Code. The notice of termination
reads:

After a careful evaluation of the evidence on hand, and a thorough assessment of your explanation, TMP
has concluded that there are overwhelming reasons to terminate your services based on Article 282 of the
Labor Code and TMP’s Code of Conduct.
 Your repeated absences without permission on February 22 to 23, 2001 to participate in a concerted action
against TMP constitute abandonment of work and/or very serious misconduct under Article 282 of the Labor
Code.

On March 29, 2001, Toyota filed a petition for injunction with a prayer for the issuance of a temporary restraining
order (TRO) with the NLRC, which was docketed as NLRC NCR Case No. INJ-0001054-01. It sought free ingress to
and egress from its Bicutan and Sta. Rosa manufacturing plants. Acting on said petition, the NLRC, on April 5, 2001,
issued a TRO against the Union, ordering its leaders and members as well as its sympathizers to remove their
barricades and all forms of obstruction to ensure free ingress to and egress from the company’s premises. In
addition, the NLRC rejected the Union’s motion to dismiss based on lack of jurisdiction.

Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC arbitration branch, and prayed that the
erring Union officers, directors, and members be dismissed.

On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and issued an Order certifying the
labor dispute to the NLRC. In said Order, the DOLE Secretary directed all striking workers to return to work at their
regular shifts by April 16, 2001. On the other hand, it ordered Toyota to accept the returning employees under the
same terms and conditions obtaining prior to the strike or at its option, put them under payroll reinstatement. The
parties were also enjoined from committing acts that may worsen the situation.

The Union ended the strike on April 12, 2001. The union members and officers tried to return to work on April 16,
2001 but were told that Toyota opted for payroll-reinstatement authorized by the Order of the DOLE Secretary.

In the meantime, the Union filed a motion for reconsideration of the DOLE Secretary’s April 10, 2001 certification
Order, which, however, was denied by the DOLE Secretary in her May 25, 2001 Resolution. Consequently, a petition
for certiorari was filed before the CA.

In the intervening time, the NLRC, in compliance with the April 10, 2001 Order of the DOLE Secretary, docketed the
case as Certified Case No. 000203-01.

Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance of the DOLE Secretary’s certification Order,
several payroll-reinstated members of the Union staged a protest rally in front of Toyota’s Bicutan Plant bearing
placards and streamers in defiance of the April 10, 2001 Order.

Then, on May 28, 2001, around forty-four (44) Union members staged another protest action in front of the Bicutan
Plant. At the same time, some twenty-nine (29) payroll-reinstated employees picketed in front of the Santa Rosa
Plant’s main entrance, and were later joined by other Union members.

On June 5, 2001, notwithstanding the certification Order, the Union filed another notice of strike. On June 18, 2001,
the DOLE Secretary directed the second notice of strike to be subsumed in the April 10, 2001 certification Order.

In the meantime, the NLRC ordered both parties to submit their respective position papers on June 8, 2001. The
union, however, requested for abeyance of the proceedings considering that there is a pending petition for certiorari
with the CA assailing the validity of the DOLE Secretary’s Assumption of Jurisdiction Order.

Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its previous order for both parties to submit their
respective position papers on or before June 2, 2001. The same Order also denied the Union’s verbal motion to defer
hearing on the certified cases.
On June 27, 2001, the Union filed a Motion for Reconsideration of the NLRC’s June 19, 2001 Order, praying for the
deferment of the submission of position papers until its petition for certiorari is resolved by the CA.

On June 29, 2001, only Toyota submitted its position paper. On July 11, 2001, the NLRC again ordered the Union to
submit its position paper by July 19, 2001, with a warning that upon failure for it to do so, the case shall be
considered submitted for decision.

Meanwhile, on July 17, 2001, the CA dismissed the Union’s petition for certiorari in CA-G.R. SP No. 64998, assailing
the DOLE Secretary’s April 10, 2001 Order.

Notwithstanding repeated orders to file its position paper, the Union still failed to submit its position paper on July 19,
2001. Consequently, the NLRC issued an Order directing the Union to submit its position paper on the scheduled
August 3, 2001 hearing; otherwise, the case shall be deemed submitted for resolution based on the evidence on
record.

During the August 3, 2001 hearing, the Union, despite several accommodations, still failed to submit its position
paper. Later that day, the Union claimed it filed its position paper by registered mail.

Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes staged by the Union on February 21 to
23, 2001 and May 23 and 28, 2001 as illegal.

The NLRC considered the mass actions staged on February 21 to 23, 2001 illegal as the Union failed to comply with
the procedural requirements of a valid strike under Art. 263 of the Labor Code.

After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10, 2001, the Union again staged
strikes on May 23 and 28, 2001. The NLRC found the strikes illegal as they violated Art. 264 of the Labor Code which
proscribes any strike or lockout after jurisdiction is assumed over the dispute by the President or the DOLE
Secretary.

The NLRC held that both parties must have maintained the status quo after the DOLE Secretary issued the
assumption/certification Order, and ruled that the Union did not respect the DOLE Secretary’s directive.

Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the NLRC denied in its September
14, 2001 Resolution. Consequently, both parties questioned the August 9, 2001 Decision and September 14, 2001
Resolution of the NLRC in separate petitions for certiorari filed with the CA, which were docketed as CA-G.R. SP
Nos. 67100 and 67561, respectively. The CA then consolidated the petitions.

In its February 27, 2003 Decision, the CA ruled that the Union’s petition is defective in form for its failure to append a
proper verification and certificate of non-forum shopping, given that, out of the 227 petitioners, only 159 signed the
verification and certificate of non-forum shopping. Despite the flaw, the CA proceeded to resolve the petitions on the
merits and affirmed the assailed NLRC Decision and Resolution with a modification, however, of deleting the award
of severance compensation to the dismissed Union members.

In justifying the recall of the severance compensation, the CA considered the participation in illegal strikes as serious
misconduct. It defined serious misconduct as a transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. It
cited Panay Electric Company, Inc. v. NLRC,26 where we revoked the grant of separation benefits to employees who
lawfully participated in an illegal strike based on Art. 264 of the Labor Code, which states that "any union officer who
knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status."
However, in its June 20, 2003 Resolution, the CA modified its February 27, 2003 Decision by reinstating severance
compensation to the dismissed employees based on social justice.

ISSUE:

Should separation pay be awarded to the Union members who participated in the illegal strikes?

RULING:

No, separation pay should not be awarded to the Union members who participated in the illegal strikes

The general rule is that when just causes for terminating the services of an employee under Art. 282 of the Labor
Code exist, the employee is not entitled to separation pay. The apparent reason behind the forfeiture of the right to
termination pay is that lawbreakers should not benefit from their illegal acts. The dismissed employee, however, is
entitled to "whatever rights, benefits and privileges [s/he] may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy or practice" or under the Labor Code and other
existing laws. This means that the employee, despite the dismissal for a valid cause, retains the right to receive from
the employer benefits provided by law, like accrued service incentive leaves. With respect to benefits granted by the
CBA provisions and voluntary management policy or practice, the entitlement of the dismissed employees to the
benefits depends on the stipulations of the CBA or the company rules and policies.

As in any rule, there are exceptions. One exception where separation pay is given even though an employee is
validly dismissed is when the court finds justification in applying the principle of social justice well entrenched in the
1987 Constitution. In Phil. Long Distance Telephone Co. (PLDT) v. NLRC, the Court elucidated why social justice can
validate the grant of separation pay, thus:

The reason is that our Constitution is replete with positive commands for the promotion of social justice, and
particularly the protection of the rights of the workers. The enhancement of their welfare is one of the
primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the
cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a
separate article devoted to the promotion of social justice and human rights with a separate sub-topic for
labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the
advancement of the national economy and the welfare of the people in general. The categorical mandates in
the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the
award of separation pay in proper cases even if the dismissal be for cause.

In the same case, the Court laid down the rule that severance compensation shall be allowed only when the cause of
the dismissal is other than serious misconduct or that which reflects adversely on the employee’s moral character.

Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based on social
justice (1) serious misconduct (which is the first ground for dismissal under Art. 282) or (2) acts that reflect on the
moral character of the employee. What is unclear is whether the ruling likewise precludes the grant of separation pay
when the employee is validly terminated from work on grounds laid down in Art. 282 of the Labor Code other than
serious misconduct.

A recall of recent cases decided bearing on the issue reveals that when the termination is legally justified on any of
the grounds under Art. 282, separation pay was not allowed. In Ha Yuan Restaurant v. NLRC, we deleted the award
of separation pay to an employee who, while unprovoked, hit her co-worker’s face, causing injuries, which then
resulted in a series of fights and scuffles between them. We viewed her act as serious misconduct which did not
warrant the award of separation pay. In House of Sara Lee v. Rey, this Court deleted the award of separation pay to
a branch supervisor who regularly, without authorization, extended the payment deadlines of the company’s sales
agents. Since the cause for the supervisor’s dismissal involved her integrity (which can be considered as breach of
trust), she was not worthy of compassion as to deserve separation pay based on her length of service. In Gustilo v.
Wyeth Phils., Inc., this Court found no exceptional circumstance to warrant the grant of financial assistance to an
employee who repeatedly violated the company’s disciplinary rules and regulations and whose employment was thus
terminated for gross and habitual neglect of his duties. In the doctrinal case of San Miguel v. Lao, this Court reversed
and set aside the ruling of the CA granting retirement benefits or separation pay to an employee who was dismissed
for willful breach of trust and confidence by causing the delivery of raw materials, which are needed for its glass
production plant, to its competitor. While a review of the case reports does not reveal a case involving a termination
by reason of the commission of a crime against the employer or his/her family which dealt with the issue of
separation pay, it would be adding insult to injury if the employer would still be compelled to shell out money to the
offender after the harm done.

In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal
recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or wrongful
intent or they reflected adversely on the moral character of the employees. We therefore find that in addition to
serious misconduct, in dismissals based on other grounds under Art. 282 like willful disobedience, gross and habitual
neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family,
separation pay should not be conceded to the dismissed employee.

In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may opt to grant
separation pay anchored on social justice in consideration of the length of service of the employee, the amount
involved, whether the act is the first offense, the performance of the employee and the like, using the guideposts
enunciated in PLDT on the propriety of the award of separation pay.

In the case at bench, are the 227 striking employees entitled to separation pay?

In the instant case, the CA concluded that the illegal strikes committed by the Union members constituted serious
misconduct.

The CA ratiocinated in this manner:

Neither can social justice justify the award to them of severance compensation or any other form of financial
assistance. x x x

xxxx

Considering that the dismissal of the employees was due to their participation in the illegal strikes as well as
violation of the Code of Conduct of the company, the same constitutes serious misconduct. A serious
misconduct is a transgression of some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error in judgment. In fact, in Panay
Electric Company, Inc. v. NLRC, the Supreme Court nullified the grant of separation benefits to employees
who unlawfully participated in an illegal strike in light of Article 264, Title VIII, Book V of the Labor Code,
that, "any union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost his
employment status."

The constitutional guarantee on social justice is not intended only for the poor but for the rich as well. It is a
policy of fairness to both labor and management.73 (Emphasis supplied.)
In disposing of the Union’s plea for reconsideration of its February 27, 2003 Decision, the CA however performed a
volte-face by reinstating the award of separation pay.

The CA’s grant of separation pay is an erroneous departure from our ruling in Phil. Long Distance Telephone Co. v.
NLRC that serious misconduct forecloses the award of separation pay. Secondly, the advertence to the alleged
honest belief on the part of the 227 employees that Toyota committed a breach of the duty to bargain collectively and
an abuse of valid exercise of management prerogative has not been substantiated by the evidence extant on record.
There can be no good faith in intentionally incurring absences in a collective fashion from work on February 22 and
23, 2001 just to attend the DOLE hearings. The Union’s strategy was plainly to cripple the operations and bring
Toyota to its knees by inflicting substantial financial damage to the latter to compel union recognition. The Union
officials and members are supposed to know through common sense that huge losses would befall the company by
the abandonment of their regular work. It was not disputed that Toyota lost more than PhP 50 million because of the
willful desertion of company operations in February 2001 by the dismissed union members. In addition, further
damage was experienced by Toyota when the Union again resorted to illegal strikes from March 28 to April 12, 2001,
when the gates of Toyota were blocked and barricaded, and the company officials, employees, and customers were
intimidated and harassed. Moreover, they were fully aware of the company rule on prohibition against concerted
action inimical to the interests of the company and hence, their resort to mass actions on several occasions in clear
violation of the company regulation cannot be excused nor justified. Lastly, they blatantly violated the
assumption/certification Order of the DOLE Secretary, exhibiting their lack of obeisance to the rule of law. These acts
indeed constituted serious misconduct.

A painstaking review of case law renders obtuse the Union’s claim for separation pay. In a slew of cases, this Court
refrained from awarding separation pay or financial assistance to union officers and members who were separated
from service due to their participation in or commission of illegal acts during strikes. In the recent case of Pilipino
Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA), this Court upheld the dismissal of
union officers who participated and openly defied the return-to-work order issued by the DOLE Secretary. No
separation pay or financial assistance was granted. In Sukhothai Cuisine and Restaurant v. Court of Appeals, this
Court declared that the union officers who participated in and the union members who committed illegal acts during
the illegal strike have lost their employment status. In this case, the strike was held illegal because it violated
agreements providing for arbitration. Again, there was no award of separation pay nor financial assistance.
In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union , the strike was declared
illegal because the means employed was illegal. We upheld the validity of dismissing union members who committed
illegal acts during the strike, but again, without awarding separation pay or financial assistance to the erring
employees. In Samahang Manggagawa sa Sulpicio Lines, Inc. v. Sulpicio Lines, this Court upheld the dismissal of
union officers who participated in an illegal strike sans any award of separation pay. Earlier, in Grand Boulevard
Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied Industries , we affirmed the dismissal
of the Union’s officers who participated in an illegal strike without awarding separation pay, despite the NLRC’s
declaration urging the company to give financial assistance to the dismissed employees. In Interphil Laboratories
Union-FFW, et al. v. Interphil Laboratories, Inc., this Court affirmed the dismissal of the union officers who led the
concerted action in refusing to render overtime work and causing "work slowdowns." However, no separation pay or
financial assistance was allowed. In CCBPI Postmix Workers Union v. NLRC, this Court affirmed the dismissal of
union officers who participated in the strike and the union members who committed illegal acts while on strike,
without awarding them separation pay or financial assistance. In 1996, in Allied Banking Corporation v. NLRC, this
Court affirmed the dismissal of Union officers and members, who staged a strike despite the DOLE Secretary’s
issuance of a return to work order but did not award separation pay. In the earlier but more relevant case of  Chua v.
NLRC, this Court deleted the NLRC’s award of separation benefits to an employee who participated in an unlawful
and violent strike, which strike resulted in multiple deaths and extensive property damage. In Chua, we viewed the
infractions committed by the union officers and members as a serious misconduct which resulted in the deletion of
the award of separation pay in conformance to the ruling in PLDT. Based on existing jurisprudence, the award of
separation pay to the Union officials and members in the instant petitions cannot be sustained.
Del Monte Fresh Produce v. Betonio
G.R. No. 223485, December 04, 2019
INTING, J.:

DOCTRINE:

FACTS:
Action: Appeal by Certiorari  under Rule 45 of the 1997 Rules of Civil Procedure seeking to nullify and set aside the
Decision dated May 13, 2015 and Resolution [3] dated February 16, 2016 of the Court of Appeals (CA) in CA-G.R. SP
No. 05508-MIN. The CA dismissed for lack of merit the Petition for Certiorari with prayer or Preliminary Injunction and
Temporary Restraining Order  filed by Del Monte Fresh Produce (PHIL.), Inc. (DMFPPI), praying for the following
reliefs: (1) the issuance of a Writ of Certiorari to annul the Resolutions dated November 20, 2012 and February 27,
2013 of the National Labor Relations Commission (NLRC); and 2) the reinstatement of the Decision dated December
29, 2011 of the NLRC, which dismissed the complaint filed by Reynaldc, P. Betonio (Betonio).

DMFPPI is a corporation engaged in the business of providing technical assistance, inspection, and coordination
services to Del Monte Fresh International, Inc. (DMFII).

On September 1, 2008, Betonio was employed by DMFPPI as its Manager for Port Operations at Tadeco Wharf, San
Vicente, Panabo, Davao del Norte. On April 1, 2009, he was promoted as Senior Manager whose duty is to ensure.
prompt, efficient, and accurate loading and shipment of fruits to the market of DMFII. Further, he must ascertain that
the bananas delivered to the port will be promptly loaded to their assigned vessels, or immediately placed in cold
storage to avoid deterioration.

Beginning April 201 0, the Human Resource (HR) Department of DMFPPI received reports/complaints about
Betonio’s inefficiencies in the operation of the port. The reports/complaints came from the managers and directors of
different departments of DMFPPI, the market of Del Monte International in Japan, and the local growers of DMFPPI.

On account of the problems, reports, and complaints received by the HR Department of DMFPPI, HR Manager Ma.
Cirila Canseco (Canseco) informed Betonio of the management’s plan to commence disciplinary action against him.
Canseco told Betonio that the charge against him would be gross and/or habitual neglect of duties, punishable with
dismissal. To allegedly save Betonio from the embarrassment of going through an administrative investigation of his
case, and for him to maintain an unblemished record of employment, Canseco gave Betonio the choice of having a
graceful exit by tendering his voluntary resignation. However, Betonio decided to go through a formal investigation of
his case.

Through a Show Cause Memo dated June 21, 2010, Betonio was charged with gross and habitual neglect of duties,
and breach of trust and confidence. Betonio was required to explain the 12 infractions he allegedly committed, as
follows:
1. Banana Shipment Monitoring: Non-compliance to the procedures you proposed, agreed with
Anflo/Tadeco, and confirmed by internal audit which is doing count/tally using the tag and to stop the
old system in arriving at the breakdown of bananas loaded to the vessel per grower, which is the total
load less other growers equals Tadeco;
2. Alarming boxes balance on the ground;
3. Reduction of the vessel’s loading capacity of Orion Reefer by almost 10,000 less without coordinating
and allegedly upon the instruction of the ship captain;
4. Huge discrepancy between the shipping advice and actual DMG loaded to Alcantara-68 bound for
Kobe;
5. Failure to follow loading instructions and erroneous cold storage monitoring report;
6. Failure to follow loading instructions;
 7. Erroneous Actual Loading Report;
8. Boxes with 7 days at the cold storage;
9. Failure to maximize loading efficiency of the vessel;
10. Excessive loading hours of Fruits to Vessel Alcantara 71;
11. Inaccuracy in fruit loading to specified destination based on Banana Order;
12. Fruit overstay at the cold storage.

In his response to the Show Cause Memo, Betonio explained point by point the infractions leveled against him, and
denied having failed to execute his duties with utmost diligence.

On July 1, 2010, a meeting was conducted by the Administrative Committee wherein Betonio was made to explain
the charges against him. In the Minutes of the meeting, it was stated that the Administrative Committee will come up
with a recommendatory report-that if the top management disagrees with the Administrative Committee’s
recommendation, they will reconvene to discuss the decision to be adopted.

While the Administrative Committee found Betonio inefficient in the management and operation of the port, it opined
that his lapses were not enough for his dismissal. As such, the committee recommended that the charges against
Betonio be dismissed. Despite the Administrative Committee’s recommendation, a Notice of Disciplinary Action dated
July 21, 2010 was issued by the top management, terminating Betonio’s employment on the ground of gross and
habitual neglect of duties and breach of trust and confidence.

On August 11, 2010, Betonio filed before the Labor Arbiter (LA) a Complaint for illegal dismissal with money claims.

LA: The Executive LA Elbert C. Restauro ruled in favor of Betonio, holding DMFPPI liable for illegally dismissing him.
The LA ordered DMFPPI to pay Betonio the total sum of P2,201,109.19 representing his separation pay, full
backwages, and attorney’s fees. According to the LA, while it is true that Betonio had committed errors and lapses in
the performance of his duties and responsibilities, those lapses or errors did not amount to gross and habitual neglect
of duty as contemplated by law.

Aggrieved, DMFPPI elevated the case before the NLRC.

NLRC: The NLRC reversed the LA’s Decision, and ruled in favor of DMFPPI. The NLRC held that while Betonio
cannot be dismissed on the ground of gross and habitual neglect of duty, he may be dismissed on the ground of loss
of trust and confidence as he was a Senior Manager of DMFPPI. According to the NLRC, Betonio’s breach of
DMFPPI’s trust and confidence was amply proven by substantial evidence.

Betonio filed a Motion for Reconsideration of the NLRC’s Decision. Pending resolution of his motion, the case was re-
raffled to Commissioner Sarmen, as the new ponente of the case.

In a Resolution dated November 20, 2012, the NLRC reversed itself and reinstated the ruling of the LA in favor of
Betonio.

DMFPPI moved for a reconsideration of the November 20, 2012 Resolution of the NLRC, but it was denied on
February 27, 2013.  Aggrieved, DMFPPI filed a Petition for Certiorari with prayer for Preliminary Injunction and
Temporary Restraining Order[  before the CA.

CA: The CA rendered a Decision affirming the November 20, 2012 and February 27, 2013, Resolutions of the NLRC
in favor of Betonio. The CA ruled that Betonio should only be liable for ordinary breach, not for breach of trust and
confidence; as such, dismissal from employment was too harsh and incommensurate to his infractions. According to
the CA, admonition, warning, reprimand or suspension would have been sufficient punishment for Betonio. The CA
likewise opined that DMFPPI should have taken into account the recommendation of the Administrative Committee to
dismiss the charges against Betonio.

Lastly, the CA found that Betonio’s termination was made without due process of law. According to the CA, Betonio
was informed of his termination from employment as early as June 1, 2010. Having been notified of his dismissal on
June 1, 2010, the issuance of his Show Cause Memo dated June 22, 2010; the subsequent creation of
Administrative Committee; and the hearing conducted on July 1, 2010 were empty ceremonies to show compliance
with due process of law. All told, the CA held DMFPPI liable for illegally dismissing Betonio.

DMFPPI moved for a reconsideration of the CA’s Decision, but it was denied on February 16, 2016. Hence, the
instant petition.

DMFPPI imputes error on the part of the CA in affirming the November 20, 2012 and February 27, 2013 Resolutions
of the NLRC in favor of Betonio. It argues that even if Betonio cannot be dismissed on the ground of gross and
habitual neglect of duty, he may be terminated on the ground of loss of trust and confidence as he was a senior
manager of DMFPPI.

DMFPPI contends that Betonio’s breach of trust and confidence was amply proven by substantial evidence, which
consisted of the Affidavits of its General Manager, its HR Manager, and the Senior Director for Banana Production.
Likewise, DMFPPI maintains that the emails, reports, and complaints of some of its employees and clients
established Betonio’s incompetence–a ground for it to lose trust and confidence in Betonio.

ISSUE:
Can Betonio be granted separation pay?

RULING:
Yes, Betonio can be granted separation pay.

While We uphold the dismissal of Betonio, the Court, as a measure of social justice and equitable concession, grants
financial assistance to him. As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 297[282] of the Labor Code is not entitled to separation pay. However, by way of
exception, separation pay or financial assistance may be granted to an employee who was dismissed for a just cause
as a measure of social justice or on grounds of equity. The Court thoroughly discussed this concept in Solid Bank
Corp. v. NLRC, et al.

Applying in this case the concept of equity or the principle of social and compassionate justice to the cause of labor,
the Court agrees with the NLRC, in the Decision dated December 29, 2011, that Betonio is entitled to separation pay
as a measure of financial assistance-equivalent to one month salary for every year of service, a fraction of at least six
months being considered as one whole year. This is in consideration of the fact that Betonio’s dismissal was not due
to any act attributable to his moral character.

CONSTRUCTION AND APPLICATION OF LAWS

Richard N. Rivera vs. Genesis Transport Service, Inc.

G.R. No. 215568, August 03, 2015
LEONEN, J.:

DOCTRINE:

FACTS:
Action: This resolves a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure praying
that the July 8, 2014 Decision and the November 20, 2014 Resolution of the Court of Appeals Fifth Division in CA-
G.R. SP No. 130801 be reversed and set aside, and that new judgment be entered finding petitioner Richard N.
Rivera to have been illegally dismissed and awarding to him his monetary claims.

Rivera was employed by respondent Genesis Transport Service, Inc. (Genesis) beginning June 2002 as a bus
conductor, assigned to the Cubao-Baler, Aurora route. As part of the requisites for his employment, he was required
to post a cash bond of P6,000.00. Respondent Riza A. Moises is Genesis' President and General Manager.

In his Position Paper before the Labor Arbiter, Rivera acknowledged that he was dismissed by Genesis on account of
a discrepancy in the amount he declared on bus ticket receipts. He alleged that on June 10, 2010, he received a
Memorandum giving him twenty-four (24) hours to explain why he should not be sanctioned for reporting and
remitting the amount of P198.00 instead of the admittedly correct amount of P394.00 worth of bus ticket receipts. He
responded that it was an honest mistake, which he was unable to correct "because the bus encountered mechanical
problems."

The discrepancy between the reported and remitted amount as against the correct amount was detailed in the
"Irregularity Report" prepared by Genesis' Inspector, Arnel Villaseran (Villaseran).

According to Villaseran, on May 25, 2010, he conducted a "man to man" inspection on the tickets held by the
passengers on board Bus No. 8286 who had transferred from Bus No. 1820 in San Fernando, Pampanga. (Bus No.
1820 broke down.) In the course of his inspection, he noticed that Ticket No. 723374 VA had a written corrected
amount of P394.00. However, the amount marked by perforations made on the ticket, which was the amount
originally indicated by the bus conductor, was only P198.00. Upon inquiring with the passenger holding the ticket,
Villaseran found out that the passenger paid P500.00 to Rivera, who gave her change in the amount of P106.00.

Subsequently, Villaseran conducted verification works with the Ticket Section of Genesis' Cubao Main Office. Per his
inquiries, the duplicate ticket surrendered by Rivera to Genesis indicated only the unconnected amount of P198.00. It
was also found that Rivera remitted only P198.00.

On July 20, 2010, Genesis served on Rivera a written notice informing him that a hearing of his case was set on July
23, 2010. Despite his explanations, Rivera's services were terminated through a written notice dated July 30,
2010. Contending that this termination was arbitrary and not based on just causes for terminating employment, he
filed the Complaint for illegal dismissal, which is subject of this Petition.

For their defense, Genesis and Riza A. Moises claimed that Rivera's misdeclaration of the amount in the bus ticket
receipts and failure to remit the correct amount clearly violated Genesis' policies and amounted to serious
misconduct, fraud, and willful breach of trust; thereby justifying his dismissal.

LA:
Labor Arbiter Gaudencio P. Demaisip gave credence to respondents' appreciation of the gravity of Rivera's acts of
misdeclaring the amount of bus ticket receipts and failing to remit the correct amount. Thus, he dismissed Rivera's
Complaint.

NLRC (Second Division): Affirmed the Decision of Labor Arbiter Demaisip. In a Resolution dated April 30, 2013, the
National Labor Relations Commission denied Rivera's Motion for Reconsideration.

Thereafter, Rivera filed a Rule 65 Petition before the Court of Appeals. In the assailed July 8, 2014 Decision, the
Court of Appeals Fifth Division sustained the rulings of Labor Arbiter Demaisip and the National Labor Relations
Commission. In the assailed November 20, 2014 Resolution,22 the Court of Appeals denied Rivera's Motion for
Reconsideration.

Hence, this Petition was filed.

ISSUE:

Was petitioner Richard N. Rivera's employment terminated for just cause by respondent Genesis Transport, Inc.?

RULING:

1. Our laws on labor, foremost of which is the Labor Code, are pieces of social legislation. They have been adopted
pursuant to the constitutional recognition of "labor as a primary social economic force" and to the constitutional
mandates for the state to "protect the rights of workers and promote their welfare" and for Congress to "give
highest priority to the enactment of measures that protect and enhance the right of all the people to human
dignity, [and] reduce social, economic, and political inequalities."

They are means for effecting social justice, i.e., the "humanization of laws and the equalization of social and
economic forces by the State so that justice in the rational and objectively secular conception may at least be
approximated."

Article XIII, Section 3 of the 1987 Constitution guarantees the right of workers to security of tenure. "One's
employment, profession, trade or calling is a 'property right,'" of which a worker may be deprived only upon
compliance with due process requirements:

It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of the New
Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social justice. When a
person has no property, his job may possibly be his only possession or means of livelihood. Therefore, he
should be protected against any arbitrary deprivation of his job. Article 280 of the Labor Code has construed
security of tenure as meaning that "the employer shall not terminate the services of an employee except for
a just cause or when authorized by" the code. Dismissal is not justified for being arbitrary where the workers
were denied due process and a clear denial of due process, or constitutional right must be safeguarded
against at all times. (Citations omitted)

Conformably, liberal construction of Labor Code provisions in favor of workers is stipulated by Article 4 of the
Labor Code:

Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of
this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

This case is quintessentially paradigmatic of the need for the law to be applied in order to ensure social justice.
The resolution of this case should be guided by the constitutional command for courts to take a preferential view
in favor of labor in ambitious cases.

This case revolves around an alleged discrepancy between the amounts indicated on a single ticket. For the
paltry sum of P196.00 that petitioner failed to remit in his sole documented instance of apparent misconduct,
petitioner's employment was terminated. He was deprived of his means of subsistence.

2. Misconduct and breach of trust are just causes for terminating employment only when attended by such gravity
as would leave the employer no other viable recourse but to cut off an employee's livelihood.
 The Labor Code recognizes serious misconduct, willful breach of trust or loss of confidence, and other
analogous causes as just causes for termination of employment:

Article 282. Termination by employer. An employer may terminate an employment for any of the following
just causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.

Serious misconduct as a just cause for termination was discussed in Yabut v. Manila Electric Co.:

Misconduct is defined as the "transgression of some established and definite rule of action, a forbidden act,
a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment." For
serious misconduct to justify dismissal, the following requisites must be present: (a) it must be serious; (b) it
must relate to the performance of the employee's duties; and (c) it must show that the employee has
become unfit to continue working for the employer.30 (Emphasis supplied, citation omitted)

Thus, it is not enough for an employee to be found to have engaged in improper or wrongful conduct. To justify
termination of employment, misconduct must be so severe as to make it evident that no other penalty but the
termination of the employee's livelihood is viable.

In Philippine Plaza Holdings v. Episcope, we discussed the requisites for valid dismissal on account of willful breach
of trust:
Among the just causes for termination is the employer's loss of trust and confidence in its employee. Article
296 (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. But in order for the said cause to be
properly invoked, 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.ChanRoblesVirtualawlibrary
Relating to the first requisite, Philippine Plaza Holdings clarified that two (2) classes of employees are considered to
hold positions of trust:

It is noteworthy to mention that there are two classes of positions of trust: on the one hand, there are
managerial employees whose primary duty consists of the management of the establishment in which they
are employed or of a department or a subdivision thereof, and to other officers or members of the
managerial staff; on the other hand, there are fiduciary rank-and-file employees, such as cashiers, auditors,
property custodians, or those who, in the normal exercise of their functions, regularly handle significant
amounts of money or property. These employees, though rank-and-file, are routinely charged with the care
and custody of the employer's money or property, and are thus classified as occupying positions of trust and
confidence. (Emphasis supplied)
The position an employee holds is not the sole criterion. More important than this formalistic requirement is that loss
of trust and confidence must be justified. As with misconduct as basis for terminating employment, breach of trust
demands that a degree of severity attend the employee's breach of trust. In China City Restaurant Corporation v.
National Labor Relations Commission, this court emphasized the need for caution:

For loss of trust and confidence to be a valid ground for the dismissal of employees, it must be
substantial and not arbitrary, whimsical, capricious or concocted.

Irregularities or malpractices should not be allowed to escape the scrutiny of this Court. Solicitude for the
protection of the rights of the working class [is] of prime importance. Although this is not [al license to
disregard the rights of management, still the Court must be wary of the ploys of management to get rid of
employees it considers as undesirable.35 (Emphasis supplied)

3. The social justice suppositions underlying labor laws require that the statutory grounds justifying termination of
employment should not be read to justify the view that bus conductors should, in all cases, be free from any kind
of error. Not every improper act should be taken to justify the termination of employment.

Concededly, bus conductors handle money. To this extent, their work may be analogous to that of tellers,
cashiers, and other similarly situated rank-and-file employees who occupy positions of trust and confidence.
However, even granting that the first requisite for termination of employment on account of willful breach of trust
has been satisfied, we find it improper to sustain the validity of the termination of petitioner's employment.

We take judicial notice of bus conductors' everyday work. Bus conductors receive, exchange, and keep money
paid by passengers by way of transportation fare. They keep track of payments and make computations down to
the last centavo, literally on their feet while a bus is in transit.

Regardless of whether a bus is driving through awkward spaces—through steep inclines, rugged roads, or sharp
turns—or of whether a bus is packed with standing passengers, the lonesome task of keeping track of the
passengers' payments falls upon a bus conductor.

Thus, while they do handle money, their circumstances are not at all the same as those of regular cashiers. They
have to think quickly, literally on their feet. Regular cashiers, on the other hand, have the time and comfort to
deliberately and carefully examine the transactions of their employer.

However, handling passengers' fare payments is not their sole function. Bus conductors assist drivers as they
maneuver buses through tight spaces while they are in transit, depart, or park. They often act as dispatchers in
bus stops and other such places, assist passengers as they embark and alight, and sometimes even help
passengers load and unload goods and cargo. They manage the available space in a bus and ensure that no
space is wasted as the bus accommodates more passengers. Along with drivers, bus conductors commit to
memory the destination of each passenger so that they can anticipate their stops.

There are several ways to manifest the severity that suffices to qualify petitioner's alleged misconduct or breach
of trust as so grave that terminating his employment is warranted. It may be through the nature of the act itself:
spanning an entire spectrum between, on one end, an overlooked error, made entirely in good faith; and, on
another end, outright larceny. It may be through the sheer amount mishandled. It may be through frequency of
acts. It may be through other attendant circumstances, such as attempts to destroy or conceal records and other
evidence, or evidence of a motive to undermine the business of an employer.

We fail to appreciate any of these in this case.

To reiterate, what is involved is a paltry amount of P196.00. All that has been proven is the existence of a
 discrepancy. No proof has been adduced of ill-motive or even of gross negligence. From all indications,
petitioner stood charged with a lone, isolated instance of apparent wrongdoing.

The records are bereft of evidence showing a pattern of discrepancies chargeable against petitioner. Seen in the
context of his many years of service to his employer and in the absence of clear proof showing otherwise, the
presumption should be that he has performed his functions faithfully and regularly. It can be assumed that he
has issued the correct tickets and given accurate amounts of change to the hundreds or even thousands of
passengers that he encountered throughout his tenure. It is more reasonable to assume that—except for a
single error costing a loss of only P196.00—the company would have earned the correct expected margins per
passenger, per trip, and per bus that it allowed to travel.

Absent any other supporting evidence, the error in a single ticket issued by petitioner can hardly be used to
justify the inference that he has committed serious misconduct or has acted in a manner that runs afoul of his
employer's trust. More so, petitioner cannot be taken to have engaged in a series of acts evincing a pattern or a
design to defraud his employer. Terminating his employment on these unfounded reasons is manifestly unjust.

To infer from a single error that petitioner committed serious misconduct or besmirched his employer's trust is
grave abuse of discretion. It is an inference that is arbitrary and capricious. It is contrary to the high regard for
labor and social justice enshrined in our Constitution and our labor laws.

The Court of Appeals committed an error of law correctible by a petition for review under Rule 45. It erred when
it held that the National Labor Relations did not commit grave abuse of discretion when the latter did not engage
in the requisite scrutiny to review the inference and its bases.

As his employment was illegally and unjustly terminated, petitioner is entitled to full backwages and benefits from the
time of his termination until the finality of this Decision. He is likewise entitled to separation pay in the amount of one
(1) month's salary for every year of service until the finality of this Decision, with a fraction of a year of at least six (6)
months being counted as one (1) whole year.

As he was compelled to litigate in order to seek relief for the illegal and unjust termination of his employment,
petitioner is likewise entitled to attorney's fees in the amount of 10% of the total monetary award.

"Moral damages are awarded in termination cases where the employee's dismissal was attended by bad faith, malice
or fraud, or where it constitutes an act oppressive to labor, or where it was done in a manner contrary to morals, good
customs or public policy."37 Also, to provide an "example or correction for the public good," exemplary damages may
be awarded.

However, we find no need to award these damages in favor of petitioner. While the termination of his employment
was invalid, we nevertheless do not find respondent Genesis to have acted with such a degree of malice as to act out
of a design to oppress petitioner. It remains that a discrepancy and shortage chargeable to petitioner was uncovered,
although this discrepancy and shortage does not justify a penalty as grave as termination of employment.

JULIETA T. VERZONILLA v. EMPLOYEES' COMPENSATION COMMISSION

G.R. No. 232888, August 14, 2019
CAGUIOA, J.:*

DOCTRINE:

Presidential Decree No. 626, as amended, is said to have abandoned the presumption of compensability and the
theory of aggravation prevalent under the Workmens Compensation Act. Despite such abandonment, however, the
present law has not ceased to be an employees' compensation law or a social legislation; hence, the liberality of the
law in favor of the working man and woman still prevails

FACTS:

Action: Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court assailing the
Decision2 dated October 28, 2016 (Assailed Decision) and Resolution dated July 6, 2017 (Assailed Resolution) of the
Court of Appeals (CA) Special Tenth Division and Former Special Tenth Division, respectively, in CA-G.R. SP No.
134846.

Reynaldo I. Verzonilla (Reynaldo) was employed as a Special Operations Officer (SOO) III in the Quezon City
Department of Public Order and Safety since June 1, 1999 until his death on July 5, 2012.

Pursuant to a Memorandum dated June 29, 2012, Reynaldo attended the training "on the use of the Rapid
Earthquake Damage Assessment System (REDAS) software" on July 1-6, 2012 in Tagaytay City. Prior to this, he
attended several other seminars.

On July 5, 2012, Reynaldo died due to "cardio pulmonary arrest, etiology undetermined" at UniHealth-Tagaytay
Hospital and Medical Center, Inc. (UTHMCI). His Discharge Summary/Clinical Abstract shows that he complained of
abdominal pain and chest pain. Records show that Reynaldo was previously diagnosed with hypertension in 2002.

Thereafter, petitioner Julieta Verzonilla (Julieta), the surviving spouse of Reynaldo, filed a claim for compensation
benefits before the Government Service Insurance System (GSIS) under Presidential Decree (PD) 626. In a letter
dated April 26, 2013, the GSIS denied the claim of Julieta, stating that based on the documents submitted, the
ailment of Reynaldo was not connected to his work and that no evidence was found that his duties as SOO III
increased the risk of contracting said ailment. Julieta moved for a reconsideration of the denial but the same was
denied in the GSIS decision dated May 24, 2013.

Julieta elevated her claims to the Employees' Compensation Commission (ECC). In a decision dated August 7,
2013, the ECC affirmed the decision of the GSIS, noting that while cardiovascular disease is listed as an
occupational disease under Annex "A" of the Amended Rules on Employees Compensation (EC), it is still subject to
the conditions therein set. According to the ECC, Julieta failed to satisfy these conditions. Further, the ECC held that
Julieta failed to provide substantial evidence to show reasonable connection between the cause of death of Reynaldo
and his work and working conditions.

Hence, Julieta filed a Petition for Review with the CA. In the Assailed Decision, the CA agreed with the ECC that
Julieta failed to prove, by substantial evidence, that the conditions for compensability of cardiovascular diseases
were met or that Reynaldo's risk of contracting the disease was increased by his working conditions. The CA noted
that while Reynaldo was diagnosed to be hypertensive, no evidence was submitted to show that this hypertension
was controlled or that his heart disease worsened by the nature of his work. The CA held as well that there was no
showing that Reynaldo was performing strenuous activities prior to his death.

Julieta filed a motion for reconsideration but the same was denied in the Assailed Resolution. Hence, the present
recourse.

In assailing the findings of the CA, Julieta avers that: 1) there is a reasonable work connection between Reynaldo's
hypertension, cardiac arrest and abdominal pain, on the one hand, and the pressures of his work, on the other; 2) PD
626 is a social legislation, the purpose of which is to provide meaningful protection to the working class, hence,
doubts on compensability must be resolved in favor of labor; and 3) Annex "A" of the Amended Rules on EC requires
the concurrence of only one of the conditions set forth and that paragraphs (a) and (b) of said conditions were
satisfied in the present case.

ISSUE:
Did the CA err in affirming the ECC's denial of Julieta's claim for EC benefits in connection with the death of her late
husband Reynaldo?

RULING:
Yes, the CA erred in affirming the ECC's denial of Julieta's claim for EC benefits in connection with the death of her
late husband Reynaldo.

Article 165 (1) of Title II, Book IV on Employees' Compensation and State Insurance Fund of the Labor Code, as
amended by Section 1, PD 626, as amended, defines "sickness" as "any illness definitely accepted as an
occupational disease listed by the Commission, or any illness caused by employment, subject to proof that the risk of
contracting the same is increased by working conditions."

This is reiterated in the Amended Rules on EC, which implements PD 626 and which requires that, "for the sickness
and the resulting disability or death to be compensable, the sickness must be the result of an occupational disease
listed under Annex "A" of [the] Rules with the conditions set therein satisfied, otherwise, proof must be shown that the
risk of contracting the disease is increased by the working conditions."

In plainer terms, to be entitled to compensation, a claimant must show that the sickness is either: (1) a result of an
occupational disease listed under Annex "A" of the Amended Rules on EC under the conditions Annex A sets forth;
or (2) if not so listed, that the risk of contracting the disease is increased by the working conditions.

Annex "A" of the Amended Rules on EC lists cardiovascular disease as an "Occupational and Work-Related
Disease" subject to certain conditions, thus:
18. CARDIO-VASCULAR DISEASES. Any of the following conditions:
a. If the heart disease was known to have been present during employment, there must be proof that an
acute exacerbation was clearly precipitated by the unusual strain by reasons of the nature of his/her work.

b. The strain of work that brings about an acute attack must be of sufficient severity and must be followed
within 24 hours by the clinical signs of a cardiac insult to constitute causal relationship.

c. If a person who was apparently asymptomatic before being subjected to strain at work showed signs and
symptoms of cardiac impairment during the performance of his/her work and such symptoms and signs
persisted, it is reasonable to claim a causal relationship subject to the following conditions:
1. If a person is a known hypertensive, it must be proven that his hypertension was controlled and that he
was compliant with treatment.

2. If a person is not known to be hypertensive during his employment, his previous health examinations
must show normal results in all of the following, but not limited to: blood pressure, chest X-ray,
electrocardiogram (ECG)/treadmill exam, CBC and urynalysis.
d. A history of substance abuse must be totally ruled out. (Emphasis supplied)

It is well to recall that the first law on workmen's compensation, Act No. 3428, worked upon the presumption of
compensability which means that if the injury or disease arose out of and in the course of employment, it was
presumed that the claim for compensation fell within the provisions of the law. PD 626 abandoned this
presumption. Hence, for the sickness and resulting disability or death to be compensable, the claimant has the
burden of proof to show, by substantial evidence, that the conditions for compensability is met.
Hence, in the present case, the fact that cardiovascular disease is listed as an occupational disease does not mean
automatic compensability. Julieta must show, by substantial evidence, that any of the conditions in item number 18 of
the Amended Rules on EC was satisfied or that the risk of Reynaldo in contracting his disease was increased by his
working conditions.

Julieta hinges her claim on paragraphs (a) and (b) of item number 18 of the ECC Board Resolution. She does not
dispute that Reynaldo had a pre-existing hypertension, having been diagnosed with such in 2002. However, she
claims that this illness, as well as the abdominal pain that Reynaldo suffered, was aggravated by the strenuous
conditions of his work as SOO III, which ultimately led to his death.

To support her claim, Julieta lays down the series of alleged strenuous work Reynaldo was subjected to, quoting
thus:
x x x Mr. Verzonilla comes (sic) from Manila as his death certificate would show. He therefore had to travel
in perhaps about two (2) hours or more including traffic, to get to Tagaytay. Starting July 1, he started
attending that day-long seminar. It cannot be denied that seminars, especially one for earthquake
assessment, would also involve some physical activities. Then on the 4th day, Mr. Verzonilla and company
went to at least five (5) different places in Tagaytay for the use of the [Global Positioning System (GPS)]
system. Inclusive of travel, this activity lasted for at least two and a half hours (2 1/2 hours). Thereafter, he
continued on with attending the lectures for that day until 7:30 p.m. [a]nd then this was followed by a
program which lasted at least until 10:00 [p.m.] Not long after, he suffered a cardiac arrest and at 1:25 a.m.
of July 5, 2012, he died. His death occurred in less than x x x 24 hours since his last strenuous activities in
that seminar.

And prior to this particular seminar, Mr. Verzonilla was also made to attend a Seminar on Partnership Build
for Disaster, Risk Reduction and Management Climate Change also in Tagaytay City which lasted from
June 18-20, 2012.
The CA, in affirming the ECC decision denying the claim of Julieta, ruled out paragraph (c), item 18 of the ECC Board
Resolution, thus:

Here, though it was shown that Reynaldo was diagnosed to be hypertensive, it also appears that his last
consultation with Dr. Alonso was on December 22, 2003. There was no evidence adduced to show that his
hypertension was controlled and that he was compliant with the treatment given, if any.
Moreover, the CA pronounced that "although cardiovascular disease is a listed occupational disease, its
compensability, nonetheless, requires compliance with all [the] conditions set forth in the rules," giving the impression
that Julieta is bound to prove the concurrence of ALL of the conditions in item number 18. This is mistaken. A simple
reading of the law shows that a claimant is required to prove merely the existence of "any" of the conditions
mentioned in the subject item, hence, only at least one thereof.

Indeed, it appears that the CA failed to appreciate whether Reynaldo's case falls under the paragraphs of Item 18
other than paragraph (c) thereof. Of particular importance is paragraph (b) which speaks of a situation wherein the
strain of work of the employee which caused an attack was severe and was followed within 24 hours by signs of a
cardiac insult. To the Court's mind, if the CA considered the foregoing, it would have not been so precipitate in
dismissing Julieta's claim.

Julieta makes a valid point that from the evidence presented, substantial proof was shown that Reynaldo's cardiac
arrest falls under, at least, paragraph (b) of item 18. This merely requires that: 1) the strain of work that brings about
an acute attack must be of sufficient severity and 2) it must be followed within 24 hours by the clinical signs of a
cardiac insult. The series of strenuous activities Reynaldo underwent prior to his heart attack is undisputed. Likewise,
that the cardiac arrest and the resulting death happened within 24 hours from such strain of work is clearly shown.
There is likewise substantial proof to support that Reynaldo's pre-existing heart disease was exacerbated by the
stresses of his work. Part of Reynaldo's job was to conduct and attend trainings and seminars and conduct hazard,
vulnerability and risk assessments.31 His job required him to render several hours of field work and, hence, spend
stressful and long hours travelling. Barely two weeks prior to his death, he attended a two-day out-of-town seminar.
He, in fact, died while in Tagaytay City, on the last day of a five-day seminar. He spent his last living hours going to
five different places and enduring hours of travel time. Upon his return to the hotel, he had to conduct another lecture
and attend a program which ended at about 10:00 p.m. About three hours thereafter, he suffered the cardiac arrest
which took his life.32 Hence, up to his death, Reynaldo was continuously exposed to stresses of his work which, at
least, contributed to his death.

In arriving at this conclusion, the Court stresses that in determining the compensability of an illness, it is not
necessary that the employment be the sole factor in the growth, development, or acceleration of a claimant's illness
to entitle him to compensation benefits.It is enough that his employment contributed, even in a small degree, to the
development of the disease.34 Moreover, the degree of proof in establishing at least a small work-connection is
merely substantial evidence. The Court has pronounced in GSIS v. Capacite:35
x x x the case of GSIS v. Vicencio x x x particularly states:

It is well-settled that the degree of proof required under P.D. No. 626 is merely substantial evidence, which means,
such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. What the law
requires is a reasonable work-connection and not a direct causal relation. It is enough that the hypothesis on which
the workman's claim is based is probable. Medical opinion to the contrary can be disregarded especially where there
is some basis in the facts for inferring a work connection. Probability, not certainty, is the touchstone. It is not
required that the employment be the sole factor in the growth, development or acceleration of a claimant's illness to
entitle him to the benefits provided for. It is enough that his employment contributed, even if to a small degree, to the
development of the disease.36 (Emphasis supplied)
In sum, the Court is convinced that Julieta was able to adduce substantial evidence to support her claims for
compensation benefits in relation to her late husband's death.

On a final note, it is well to recall that the constitutional guarantee of social justice towards labor demands a liberal
attitude in favor of the employee in deciding claims for compensability. This holds true despite PD 626's
abandonment of the presumption of compensability under the previous Workmen's Compensation Act. The Court has
ruled, thus:
Presidential Decree No. 626, as amended, is said to have abandoned the presumption of compensability and the
theory of aggravation prevalent under the Workmens Compensation Act. Despite such abandonment, however, the
present law has not ceased to be an employees' compensation law or a social legislation; hence, the liberality of the
law in favor of the working man and woman still prevails, and the official agency charged by law to implement the
constitutional guarantee of social justice should adopt a liberal attitude in favor of the employee in deciding claims for
compensability, especially in light of the compassionate policy towards labor which the 1987 Constitution vivifies and
enhances. (Emphasis and underscoring supplied)

COMPANY PRACTICE

RICARDO E. VERGARA, JR. vs. COCA-COLA BOTTLERS PHILIPPINES, INC.

G.R. No. 176985, April 1, 2013
PERALTA, J.:

DOCTRINE:
1. To be 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.
The common denominator in previously decided cases appears to be the regularity and deliberateness of the
grant of benefits over a significant 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.
2. Company practice, just like any other fact, habits, customs, usage or patterns of conduct, must be proven by the
offering party who must allege and establish specific, repetitive conduct that might constitute evidence of habit or
company practice.

FACTS:

Action: Before Us is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure assailing the
January 9, 2007 Decision and March 6, 2007 Resolution2 of the Court of Appeals (CA) which affirmed the January
31, 2006 Decision and March 8, 2006 Resolution of the National Labor Relations Commission (NLRC) modifying the
September 30, 2003 Decision5 of the Labor Arbiter (LA) by deleting the sales management incentives in the
computation of petitioner's retirement benefits.

Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May
1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Piñas City, Metro Manila. As
stipulated in respondent’s existing Retirement Plan Rules and Regulations at the time, the Annual Performance
Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement benefits, as follows:
Basic Monthly Salary + Monthly Average Performance Incentive (which is the total performance incentive earned
during the year immediately preceding ÷ 12 months) × No. of Years in Service.

Claiming his entitlement to an additional Ph₱474,600.00 as Sales Management Incentives (SMI) and to the amount
of Ph₱496,016.67 which respondent allegedly deducted illegally, representing the unpaid accounts of two dealers
within his jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the payment of his "Full
Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary
Damages, and Attorney’s Fees."

After a series of mandatory conference, both parties partially settled with regard the issue of merit increase and
length of service. Subsequently, they filed their respective Position Paper and Reply thereto dealing on the two
remaining issues of SMI entitlement and illegal deduction.

LA: Rendered a Decision in favor of petitioner, directing respondent to reimburse the amount illegally deducted from
petitioner’s retirement package and to integrate therein his SMI privilege.

NLRC: Upon appeal of respondent, however, the NLRC modified the award and deleted the payment of SMI.

Petitioner then moved to partially execute the reimbursement of illegal deduction, which the LA granted despite
respondent’s opposition. Later, without prejudice to the pendency of petitioner’s petition for certiorari before the CA,
the parties executed a Compromise Agreement on October 4, 2006, whereby petitioner acknowledged full payment
by respondent of the amount of Ph₱496,016.67 covering the amount illegally deducted.

The CA dismissed petitioner’s case on January 9, 2007 and denied his motion for reconsideration two months
thereafter. Hence, this present petition.

ISSUE:
Should the SMI be included in the computation of petitioner’s retirement benefits on the ground of consistent
company practice?

RULING:

No, the SMI should not be included in the computation of petitioner’s retirement benefits as it has not ripened into
consistent company practice.

Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. Thus,
any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is actually founded on the Constitutional
mandate to protect the rights of workers, to promote their welfare, and to afford them full protection. In turn, said
mandate is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be rendered in favor of labor."

There is diminution of benefits when the following requisites are present: (1) the grant or benefit is founded on a
policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the
practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the
diminution or discontinuance is done unilaterally by the employer.

To be 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 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.

Upon review of the entire case records, We find no substantial evidence to prove that the grant of SMI to all retired
DSSs regardless of whether or not they qualify to the same had ripened into company practice. Despite more than
sufficient opportunity given him while his case was pending before the NLRC, the CA, and even to this Court,
petitioner utterly failed to adduce proof to establish his allegation that SMI has been consistently, deliberately and
voluntarily granted to all retired DSSs without any qualification or conditions whatsoever. The only two pieces of
evidence that he stubbornly presented throughout the entirety of this case are the sworn statements of Renato C.
Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998,
respectively. They claimed that the SMI was included in their retirement package even if they did not meet the sales
and collection qualifiers. However, juxtaposing these with the evidence presented by respondent would reveal the
frailty of their statements.

The declarations of Hidalgo and Velazquez were sufficiently countered by respondent through the affidavits executed
by Norman R. Biola (Biola), Moises D. Escasura (Escasura), and Ma. Vanessa R. Balles (Balles). Biola pointed out
the various stop-gap measures undertaken by respondent beginning 1999 in order to arrest the deterioration of its
accounts receivables balance, two of which relate to the policies on the grant of SMI and to the change in the
management structure of respondent upon its re-acquisition by San Miguel Corporation. Escasura represented that
he has personal knowledge of the circumstances behind the retirement of Hidalgo and Velazquez. He attested that
contrary to petitioner’s claim, Hidalgo was in fact qualified for the SMI. As for Velazquez, Escasura asserted that
even if he (Velazquez) did not qualify for the SMI, respondent’s General Manager in its Calamba plant still granted
his (Velazquez) request, along with other numerous concessions, to achieve industrial peace in the plant which was
then experiencing labor relations problems. Lastly, Balles confirmed that petitioner failed to meet the trade receivable
qualifiers of the SMI. She also cited the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez (Gutierrez), both
DSSs of respondent who retired on January 31, 2002 and December 30, 2002, respectively. She noted that, unlike
Valencia, Gutierrez also did not receive the SMI as part of his retirement pay, since he failed to qualify under the
policy guidelines. The verity of all these statements and representations stands and holds true to Us, considering that
petitioner did not present any iota of proof to debunk the same.

Therefore, respondent's isolated act of including the SMI in the retirement package of Velazquez could hardly be
classified as a company practice that may be considered an enforceable obligation. To repeat, the principle against
diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a
practice over a long period of time which is consistent and deliberate; it presupposes that a company practice, policy
and tradition favorable to the employees has been clearly established; and that the payments made by the company
pursuant to it have ripened into benefits enjoyed by them. Certainly, a practice or custom is, as a general rule, not a
source of a legally demandable or enforceable right. Company practice, just like any other fact, habits, customs,
usage or patterns of conduct, must be proven by the offering party who must allege and establish specific, repetitive
conduct that might constitute evidence of habit or company practice.

CENTRAL AZUCARERA DE TARLAC vs. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU

G.R. No. 188949, July 26, 2010
NACHURA, J.:

DOCTRINE:

No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to
decipher. The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid
the benefit to its employees. Petitioner only changed the formula in the computation of the 13th-month pay after
almost 30 years and only after the dispute between the management and employees erupted. This act of petitioner in
changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith.

FACTS:

Action: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the
Decision dated May 28, 2009, and the Resolution2 dated July 28, 2009 of the Court of Appeals (CA) in CA-G.R. SP
No. 106657.

Petitioner is a domestic corporation engaged in the business of sugar manufacturing, while respondent is a legitimate
labor organization which serves as the exclusive bargaining representative of petitioner’s rank-and-file employees.
The controversy stems from the interpretation of the term "basic pay," essential in the computation of the 13th-month
pay.

The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) No. 851, petitioner granted its
employees the mandatory thirteenth (13th) - month pay since 1975. The formula used by petitioner in computing the
13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioner’s computation of the
Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and
legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years,
petitioner used this computation until 2006.

On November 6, 2004, respondent staged a strike. During the pendency of the strike, petitioner declared a temporary
cessation of operations. In December 2005, all the striking union members were allowed to return to work.
Subsequently, petitioner declared another temporary cessation of operations for the months of April and May 2006.
The suspension of operation was lifted on June 2006, but the rank-and-file employees were allowed to report for
work on a fifteen (15) day-per-month rotation basis that lasted until September 2006. In December 2006, petitioner
gave the employees their 13th-month pay based on the employee’s total earnings during the year divided by 12.

Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the
13th-month pay. It claimed that the divisor should have been eight (8) instead of 12, because the employees worked
for only 8 months in 2006. It likewise asserted that petitioner did not observe the company practice of giving its
employees the guaranteed amount equivalent to their one month pay, in instances where the computed 13th-month
pay was less than their basic monthly pay.

Petitioner and respondent tried to thresh out their differences in accordance with the grievance procedure as
provided in their collective bargaining agreement. During the grievance meeting, the representative of petitioner
explained that the change in the computation of the 13th-month pay was intended to rectify an error in the
computation, particularly the concept of basic pay which should have included only the basic monthly pay of the
employees.

For failure of the parties to arrive at a settlement, respondent applied for preventive mediation before the National
Conciliation and Mediation Board. However, despite four (4) conciliatory meetings, the parties still failed to settle the
dispute. On March 29, 2007, respondent filed a complaint against petitioner for money claims based on the alleged
diminution of benefits/erroneous computation of 13th-month pay before the Regional Arbitration Branch of the
National Labor Relations Commission (NLRC).

LA: rendered a Decision dismissing the complaint and declaring that the petitioner had the right to rectify the error in
the computation of the 13th-month pay of its employees.

Respondents filed an appeal.

NLRC: rendered a Decision reversing the Labor Arbiter. The dispositive portion of the Decision reads:

WHEREFORE, the decision appealed is reversed and set aside and respondent-appellee Central Azucarera
de Tarlac is hereby ordered to adhere to its established practice of granting 13th[-] month pay on the basis
of gross annual basic which includes basic pay, premium pay for work in rest days and special holidays,
night shift differential and paid vacation and sick leaves for each year.

Additionally, respondent-appellee is ordered to observe the guaranteed one[-]month pay by way of 13th
month pay.

Petitioner filed a motion for reconsideration. However, the same was denied in a Resolution dated November 27,
2008. Petitioner then filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.

CA: rendered a Decision dismissing the petition, and affirming the decision and resolution of the NLRC.

Aggrieved, petitioner filed the instant petition, alleging that the CA committed a reversible error in affirming the
Decision of the NLRC, and praying that the Decision of the Labor Arbiter be reinstated.

ISSUE:

Has the petitioner’s inclusion of salary-related benefits as part of the basic salary in the computation of the 13th-
month pay ripened into company practice or policy?
RULING:

Yes.

The petition is denied for lack of merit.

The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on
wage but not part of the wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by an employee
within a calendar year. All rank-and-file employees, regardless of their designation or employment status and
irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked
for at least one month during the calendar year. If the employee worked for only a portion of the year, the 13th-month
pay is computed pro rata.

Petitioner argues that there was an error in the computation of the 13th-month pay of its employees as a result of its
mistake in implementing P.D. No. 851, an error that was discovered by the management only when respondent
raised a question concerning the computation of the employees’ 13th-month pay for 2006. Admittedly, it was an error
that was repeatedly committed for almost thirty (30) years. Petitioner insists that the length of time during which an
employer has performed a certain act beneficial to the employees, does not prove that such an act was not done in
error. It maintains that for the claim of mistake to be negated, there must be a clear showing that the employer had
freely, voluntarily, and continuously performed the act, knowing that he is under no obligation to do so. Petitioner
asserts that such voluntariness was absent in this case.

The Rules and Regulations Implementing P.D. No. 851, promulgated on December 22, 1975, defines 13th-month
pay and basic salary as follows:

Sec. 2. Definition of certain terms. - As used in this issuance:

(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a
calendar year; (b) "Basic salary" shall include all remunerations or earnings paid by an employer to an
employee for services rendered but may not include cost-of-living allowances granted pursuant to
Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances
and monetary benefits which are not considered or integrated as part of the regular or basic salary of the
employee at the time of the promulgation of the Decree on December 16, 1975.

On January 16, 1976, the Supplementary Rules and Regulations Implementing P.D. No. 851 was issued. The
Supplementary Rules clarifies that overtime pay, earnings, and other remuneration that are not part of the basic
salary shall not be included in the computation of the 13th-month pay.

On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-Month Pay Law was issued.
Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13th-month pay required by
law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.

Furthermore, the term "basic salary" of an employee for the purpose of computing the 13th-month pay was
interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include
allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash
equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-
of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the
computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are
treated as part of the basic salary of the employees.

Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is included
in the term "basic salary" for purposes of computing the 13th-month pay of employees. From the inception of P.D.
No. 851 on December 16, 1975, clear-cut administrative guidelines have been issued to insure uniformity in the
interpretation, application, and enforcement of the provisions of P.D. No. 851 and its implementing regulations.

As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay based on the employees’ gross
annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays,
night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company
policy or practice which cannot be unilaterally withdrawn.

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to
employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the
employment contract, written or unwritten. The rule against diminution of benefits applies if it is shown that the grant
of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the
practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the
construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that
the correction is done soon after discovery of the error.

The argument of petitioner that the grant of the benefit was not voluntary and was due to error in the interpretation of
what is included in the basic salary deserves scant consideration. No doubtful or difficult question of law is involved in
this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was
manifested by the number of years the employer had paid the benefit to its employees. Petitioner only changed the
formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the
management and employees erupted. This act of petitioner in changing the formula at this time cannot be
sanctioned, as it indicates a badge of bad faith.

Furthermore, petitioner cannot use the argument that it is suffering from financial losses to claim exemption from the
coverage of the law on 13th-month pay, or to spare it from its erroneous unilateral computation of the 13th-month pay
of its employees. Under Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed employers
shall qualify for exemption from the requirement of the Decree only upon prior authorization by the Secretary of
Labor. In this case, no such prior authorization has been obtained by petitioner; thus, it is not entitled to claim such
exemption.

YUSHI KONDO v. TOYOTA BOSHOKU (PHILS.) CORPORATION, MAMORU MATSUNAGA, KAZUKI MIURA, AND
JOSELITO LEDESMA
G.R. No. 201396, September 11, 2019
JARDELEZA, J.:

DOCTRINE:

FACTS:

In this case, We reiterate that the employee bears the burden to prove by substantial evidence the fact of his
dismissal from employment. Absent any showing of an overt or positive act proving that the employer had dismissed
the employee, the latter's claim of illegal dismissal cannot be sustained as it would be self-serving, conjectural, and of
no probative value.

Yushi Kondo (petitioner), a Japanese citizen, applied with and was hired by respondent Toyota Boshoku Philippines
Corporation (Toyota) on September 26, 2007 as Assistant General Manager for Marketing, Procurement and
Accounting. His net monthly salary was P90,000.00, to be increased to P100,000.00 after six months. He was
assured of other benefits such as 13th month bonus, financial assistance to be given before Christmas, and 15 days
each of sick leave and vacation leave per year. Petitioner was also provided a service car and a local driver by
Toyota's President at the time, Fuhimiko Ito (Ito). Toyota caused the issuance of petitioner's Alien Employment
Permit (AEP).

As Assistant General Manager, petitioner implemented policy and procedural changes in his department, which have
been approved by Ito. After working for three months, petitioner was subjected to a performance evaluation, the
result of which was "perfect." Two months later, he was again subjected to another performance evaluation. This
time, his performance rating was only slightly above average. Petitioner protested the result of this evaluation,
reasoning that it was impossible to get that rating after only two months from the initial evaluation. The evaluation
supposedly coincided with the discovery by Toyota's Japan headquarters of the anomalies committed by Ito.

Petitioner was thereafter allegedly assigned the oldest company car and prevented from using other company cars
tor business travels. He was also prevented from further using his Caltex card tor gasoline expenses, and instructed
to pay for gas expenses with his own money, subject to reimbursement. He was restrained by Toyota's security
personnel from going out of the office even if it were for the purpose of performing his official duty, and prevented
from attending the meeting for the evaluation of employees.

When respondent Mamoru Matsunaga (Matsunaga) took over as President of Toyota, petitioner was transferred to
the Production Control, Technical Development and Special Project department as Assistant Manager. Respondent
Kazuki Miura (Miura) took over his former post. Petitioner allegedly objected to the transfer on the ground that it is in
violation of the terms of his AEP, and admitted having no knowledge, skills, and experience in production control and
technical development. Nonetheless, petitioner assumed his new post on July 1, 2008.

On September 1, 2008, petitioner was notified that his service car and driver will be withdrawn. He pleaded with
Matsunaga for the benefits to be retained since he would be helpless without them. Nonetheless, Matsunaga
allegedly brushed aside his plea and told him that he must shoulder his own transportation expenses.

On October 13, 2008, Toyota terminated the services of petitioner's driver. Since petitioner could not report for work,
he considered himself constructively dismissed. On the same day, he filed a complaint with the NLRC tor
constructive dismissal. illegal diminution of benefits, illegal transfer of department, harassment, and discrimination
against Toyota, Matsunaga, Miura, and Joseph Ledesma (Ledesma), corporate officers of Toyota (collectively,
respondents).

Respondents denied petitioner's allegations, arguing that petitioner was entitled to the service car and driver only for
a period of one year, after which he was expected to drive himself to and from work. The driver assigned to petitioner
was discharged due to the termination of his employment contract. Moreover, the free gasoline that may be availed
with the Caltex card is a benefit exclusively given to Japanese expatriates, which petitioner was not, being a local
hire. The reason why petitioner was able to use the card is that the service car he used was previously assigned to
an expatriate and it had an accompanying Caltex card. Petitioner also purportedly abused the Caltex card by using it
for personal trips. Respondents denied that petitioner was given the oldest company car, as in fact he was given a
year 2000 Toyota Corolla model. They denied excluding petitioner from any meeting, stating that the only meeting he
was excluded from was the one exclusively for top corporate officers. Finally, petitioner's transfer to another
department was an exercise of management prerogative. Petitioner had skills in planning, development, and special
projects, and was thus competent for his new position. Toyota allegedly had no intention of dismissing petitioner, as it
actually later sent him two notices to return to work.

LA: Issued a Decision holding that petitioner was constructively dismissed. Consequently, she directed the latter's
reinstatement to his old department without loss of seniority rights, and ordered respondents to pay him backwages,
moral and exemplary damages for their "dishonorable, unrighteous and despicably oppressive" acts toward
petitioner, and attorney's fees. However, the LA denied petitioner's claim for pro rata 13th month pay and other
benefits for not having been raised in the complaint, as well as his claim for actual damages for being
unsubstantiated.

First, the LA held that Toyota failed to prove that petitioner was entitled to the service car and driver for a limited
period of one year. None of the respondents had personal knowledge of the extent and limitation of the benefits
granted to petitioner, who was hired by Toyota's former President, Ito. Respondents did not even attempt to obtain
Ito's statement to support their allegation. They merely assumed that the benefits have a duration based on the
limited employment contract of petitioner's driver. Hence, the withdrawal of the benefit was without justification, and
thus unwarranted.

Second, there was no valid justification for the withdrawal of petitioner's Caltex card. According to respondents,
petitioner was not entitled to the benefit in the first place, and that he abused his use of the card. However, the LA
concluded that the gasoline allowance policy showed by respondents does not apply to petitioner as it applies only to
employees occupying the rank of assistant manager and up, who use their own vehicle in reporting to work.
Petitioner was not using his own vehicle but the service car provided by Toyota. Respondents also tailed to submit
the complete copy of Toyota's manual of operations, which supposedly contains the policy that only expatriates are
entitled to a Caltex card. On the contrary, there is a statement in the policy which indicates that the benefit is not
exclusive to expatriates.25 The LA further ruled that respondents' assessment of abuse of the Caltex card was only
presumed and not based on any mathematical computation.

Third, the LA held that petitioner's transfer from the Marketing, Procurement and Accounting Department to the
Production Control, Technical Development and Special Project Department of Toyota lacked justification. Petitioner
did not have the technical knowledge, skills and experience for his new post, as his background pertains to trading,
brokering and business consultancy. His transfer was not an exercise of management prerogative as he was not
appropriately trained for his new functions. Rather, it was a scheme for him to commit mistakes and create a valid
reason for his subsequent termination and deportation. Moreover, petitioner's transfer should have been approved by
the Secretary of Labor and Employment pursuant to Article 41 of the Labor Code.

The LA concluded that the foregoing circumstances amount to constructive dismissal as they made petitioner's work
conditions unbearable. Further, the removal of his service car, driver and Caltex card amounted to a violation of the
public policy of non-diminution of employee benefits. Consequently, the LA adjudged respondents to be jointly liable
to pay the abovementioned monetary awards to petitioner.

NLRC: Rendered a Decision reversing and setting aside the LA Decision and dismissing petitioner's complaint. There
was no constructive dismissal to speak of since petitioner claimed to have been "forced to resign" as a result of
respondents' acts. Hence, he had no more intention of going back to work. In fact, despite receipt of notices to report
for work, petitioner failed to do so. He is considered to have abandoned his job or voluntarily terminated his
employment relations with Toyota. Moreover, the primary and immediate cause of petitioner's claim of constructive
dismissal is the withdrawal of the car and driver assigned to him, which he considered essential requisites for his
continued employment. To make it appear that he was constructively dismissed, petitioner made various allegations,
but he failed to support them with substantial evidence. Further, his transfer to another department was an exercise
of Toyota's management prerogative. His position remained the same and there was no diminution of his benefits.
He also agreed to the transfer and assumed his new post As regards the alleged diminution of benefits, the NLRC
gave credence to Toyota's claim that the service car and driver benefits were limited to one year. Also, considering
that the benefit was not embodied in an employment contract and the driver's contract of employment had expired,
the privilege may be withdrawn anytime without amounting to a diminution of benefits. Finally, the NLRC believed
Toyota's explanation that petitioner was not entitled to the Caltex card because the benefit is extended to Japanese
expatriates only and not to local hires.

Petitioner filed a motion for reconsideration, but NLRC denied it. Hence, he filed a petition for certiorari with the Court
of Appeals (CA).

CA: Rendered the assailed Decision denying the petition. It held that it is not the function of certiorari proceedings to
review the factual findings of the NLRC, which findings are binding on the court if supported by substantial evidence.
Moreover, even if petitioner claimed that the NLRC gravely abused its discretion in reversing the Decision of the LA,
he nonetheless failed to allege that it was done capriciously or whimsically. He merely claimed that the NLRC was
"not correct" in deciding the issues. Thus, he conceded that the NLRC merely committed errors in judgment and not
errors in jurisdiction, which is the exclusive concern of a Rule 65 petition. The petition was dismissible on this
premise alone.

On the issues of constructive dismissal, abandonment and not reporting for work when required, the CA merely
adopted the findings of the NLRC on the rationale that it is not the function of certiorari proceedings to review findings
of fact of the NLRC.

Petitioner tiled a motion for reconsideration, but the CA denied it.

Petitioner insists that he alleged as ground for the allowance of his CA petition that the NLRC committed grave abuse
of discretion amounting to lack or excess of jurisdiction in reversing the Decision of the LA and dismissing his
complaint. The fact that he did not specifically use the words "capricious" or "whimsical" does not remove his petition
from the ambit of certiorari under Rule 65 of the Rules of Court. Moreover, the phrase "grave abuse of discretion
amounting to lack of or in excess of jurisdiction" means a capricious and whimsical exercise of judgment, such that to
state that the NLRC acted capriciously and whimsically would have been repetitive. On the second ground, petitioner
alleges that he raised only one issue in his CA petition, i.e., that the NLRC committed grave abuse of discretion
amounting to lack or in excess of jurisdiction. The "issues" be subsequently enumerated supported the charge of
"grave abuse of discretion."

ISSUE:

RULING:

The petition lacks merit.

In his pro forma complaint, petitioner indicated the following causes of action: illegal diminution of benefits, acts of
harassment forcing him to resign, receiving threats through text messages, car assignment discrimination, illegal
transfer of department, incomplete issuance of uniform, and discrimination of company activities. In ruling that
petitioner was constructively dismissed, the LA considered only the circumstances of diminution of benefits pertaining
to the withholding of the Caltex card and petitioner's car and driver benefits, and his transfer to another department.
She did not discuss the other causes of action. Accordingly, the main issue that was brought on appeal by
respondents to the NLRC was the alleged grave abuse of discretion on the part of the LA in ruling that petitioner was
constructively dismissed based on those particular circumstances.
Constructive dismissal exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. 64 It also exists
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. What is essential is that there is a lack of
"voluntariness in the employee's separation from employment."

Petitioner claimed that he was forced to resign. Hence, it is incumbent upon him to prove that his resignation was
involuntary and that it was actually a case of constructive dismissal, with clear, positive and convincing evidence.
This he failed to do.

We agree with the NLRC that, "[t]he primary and immediate cause for [petitioner's] claim of constructive dismissal is
the withdrawal of his assigned car and driver," which petitioner claimed as "essential requisites of [his] continued
employment.'' In fact, despite all the allegations in his complaint, petitioner started to not report for work on October
13, 2008, the day Toyota terminated the services of his driver.

To place matters in perspective, what petitioner essentially alleges is diminution of benefits. It just so happened that
the benefit allegedly unreasonably withdrawn was the means used by him to report for work.

The Court has held that there is diminution of benefits when the following are present: (1) the grant or benefit is
founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of
law; and (4) the diminution or discontinuance is done unilateral1y by the employer.

Under the first requisite, the benefit must be based on express policy, a written contract or has ripened into a
practice. Here, the grant of service car and local driver to petitioner was based neither on express policy or a written
contract. It may also not be considered company practice.

To be considered as a regular company practice, it must be shown 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. There must be 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 the grant thereof In sum, the benefit must be
characterized by regularity and voluntary and deliberate intent of the employer to grant the benefit over a
considerable period of time. The burden of proving that the benefit has ripened into practice rests in the employee.

In this case, petitioner failed to prove that the car and driver benefits were also being enjoyed by other employees
who held positions equivalent to his position, or that the benefits were given by the company itself with voluntary and
deliberate intent. On the contrary, the record shows that these benefits were granted by Toyota's former President
specifically to petitioner at the time he was hired, in a verbal agreement. As such, the grant of the benefits may be
viewed more as an accommodation given to petitioner by virtue of him being a fellow Japanese working in a foreign,
and presumably unfamiliar, land. Petitioner cannot demand a right to the service car and driver indefinitely, especially
under new administration, when the benefit ostensibly sprung only from the magnanimity of his former superior rather
than actual company practice.

As regards the Caltex card, Toyota consistently argued that the free gasoline that may be availed with it is provided
only to Japanese expatriates, and not to local hires like petitioner. The latter was able to enjoy the benefit as it came
with the car assigned to him. On this point, there is likewise no showing that petitioner's entitlement to the Caltex card
is based on an express policy, a written contract, or company practice. Considering that petitioner did not sign an
employment contract, he can only anchor his claim on company practice. However, he also failed to prove that the
card was being enjoyed by other employees or officials similarly situated as him, as would indicate Toyota's intention
to give the benefit consistently and deliberately. Hence, petitioner cannot demand continued use of the card.
Granting arguendo that the benefit amounted to company practice, there is essentially no diminution to speak of. The
record bears that the Caltex card was withdrawn by Toyota prior to the withdrawal of the car and driver benefits.
Petitioner did not raise this as an issue, verbally or in a written memorandum to his superior. Even then, petitioner's
gasoline expenses were subject to reimbursement. Hence, at the end of the day, it was still Toyota that paid for his
gasoline consumption.

Finally, petitioner argues that his transfer from the Marketing, Procurement and Accounting Department to the
Production Control, Technical Development and Special Project Department was an indication of constructive
dismissal because he lacked technical expertise and experience for the new position. Toyota justified this move as
an exercise of management prerogative which did not entail any change in the salary and benefits being enjoyed by
petitioner, who was expected to exercise the same managerial functions.

Notably, petitioner did not raise any objections to his transfer prior to the filing of the complaint, nor did he amply
demonstrate why he was unsuited for the new job. There was no proof of any verbal or written opposition to the
transfer. In fact, as pointed out by respondents, he was assigned to the new department on July 1, 2008, but he did
not complain of his new assignment until after more than three months, or on October 13, 2008, when he filed a
complaint with the NLRC. Petitioner did not allege and prove specific facts that would indicate his inability to function
fully in the new department as a result of his lack of expertise, or that his transfer constituted dear discrimination or
harassment. He also did not address Toyota's assertion that his new function required him merely to oversee the
department and carry out management policies, rather than participate in production and technical development. 76
Indeed, the mere fact of petitioner's transfer to the new department does not support his claim of constructive
dismissal.

The Court reiterates the basic rules of evidence that each party must prove his affirmative allegation, and that mere
allegation is not evidence. We also stress that the evidence to prove the fact of the employee's constructive dismissal
must be clear, positive, and convincing. Absent any showing of an overt or positive act proving that respondents had
dismissed petitioner, the latter's claim of illegal dismissal cannot be sustained.

Even so, the Court does not agree that petitioner abandoned his job. For abandonment to exist, two requisites must
concur: a) the employee failed to report for work or was absent without valid or justifiable reason; and b) there was a
clear intention to sever the employer-employee relationship manifested by some overt acts.78 The CA upheld the
NLRC's finding that petitioner's refusal to report for work despite receiving notices from Toyota is tantamount to
abandonment. In the first place, the NLRC should not have considered abandonment as an issue since Toyota never
raised it before the LA. Well settled is the rule, also applicable in labor cases, that issues not raised below cannot be
raised for the first time on appeal, because of basic considerations of due process. Moreover, petitioner's prayer for
reinstatement negates the existence of a clear intention to sever the employment relationship. He may have been
mistaken in assuming that he was dismissed, but his vigorous pursuit of this case shows his intent to resume work
with Toyota.

Finally, petitioner is not entitled to moral and exemplary damages and attorney's fees. Moral damages may be
awarded to an employee if his dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy, and that social humiliation, wounded feelings, grave
anxiety and the like resulted therefrom. Exemplary damages, on the other hand, are awarded when dismissal of the
employee was done in a wanton, oppressive or malevolent manner. As for attorney's fees, it is granted in actions for
recovery of wages where an employee was forced to litigate and thus incur expenses to protect his rights and
interests.

Here, it was not established that petitioner was constructively dismissed, much less that respondents acted in bad
faith or in an oppressive or malevolent manner. There is also no showing that he was not paid his wages.
Consequently, he cannot rightfully claim moral and exemplary damages and attorney's fees.