G.R. No.

184517               October 8, 2013

SME BANK INC., ABELARDO P. SAMSON, OLGA SAMSON and AURELIO VILLAFLOR,
JR., Petitioners, 
vs.
PEREGRIN T. DE GUZMAN,EDUARDO M. AGUSTIN, JR., ELICERIO GASPAR, , RICARDO GASPAR
JR., EUFEMIA ROSETE, FIDEL ESPIRITU, SIMEONESPIRITU, JR., and LIBERATO
MANGOBA, Respondents.
SERENO, CJ.:
Security of tenure is a constitutionally guaranteed right.1 Employees may not be terminated from their regular
employment except for just or authorized causes under the Labor Code2 and other pertinent laws. A mere change in
the equity composition of a corporation is neither a just nor an authorized cause that would legally permit the
dismissal of the corporation’s employees en masse.

FACTS
Respondent employees Elicerio Gaspar (Elicerio), Ricardo Gaspar, Jr.(Ricardo), Eufemia Rosete (Eufemia), Fidel
Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and Liberato Mangoba (Liberato) were employees of Small and
Medium Enterprise Bank, Incorporated (SME Bank).Originally, the principal shareholders and corporate directors of
the bank were Eduardo M. Agustin, Jr. (Agustin) and Peregrin de Guzman, Jr. (De Guzman).

In June 2001, SME Bank experienced financial difficulties. To remedy the situation, the bank officials proposed its
sale to Abelardo Samson(Samson).
Accordingly, negotiations ensued, and a formal offer was made to Samson. Samson then sent formal letters (Letter
Agreements) to Agustin and De Guzman, demanding the following as preconditions for the sale of SME Bank’s
shares of stock:
4. You shall guarantee the peaceful turn over of all assets as well as the peaceful transition of management
of the bank and shall terminate/retire the employees we mutually agree upon, upon transfer of shares in
favor of our group’s nominees;
xxxx
7. All retirement benefits, if any of the above officers/stockholders/board of directors are hereby waived
upon consummation [sic] of the above sale. The retirement benefits of the rank and file employees
including the managers shall be honored by the new management in accordance with B.R. No. 10, S. 1997.

Agustin and De Guzman accepted the terms and conditions proposed by Samson and signed the conforme portion of
the Letter Agreements.

Simeon Espiritu (Espiritu), then the general manager of SME Bank, held a meeting with all the employees of the
head office and of the Talaveraand Muñoz branches of SME Bank and persuaded them to tender their
resignations, with the promise that they would be rehired upon reapplication. His directive was allegedly done at the
behest of petitioner Olga Samson.

Relying on this representation, Elicerio, Ricardo, Fidel, Simeon, Jr., and Liberato tendered their resignations.
Elicerio, Ricardo, Fidel, Simeon, Jr., and Liberato submitted application letters. Both the resignation letters and
copies of respondent employees’ application letters were transmitted by Espiritu to Samson’s representative.

On 11 September 2001, Agustin and De Guzman sold 86.365% of the shares of stock of SME Bank to spouses
Abelardo and Olga Samson. Spouses Samson then became the principal shareholders of SME Bank, while Aurelio
Villaflor, Jr. was appointed bank president. As it turned out, respondent employees, except for Simeon, Jr., were not
rehired. After a month in service, Simeon, Jr. again resigned.

Respondent-employees demanded the payment of their respective separation pays, but their requests were
denied.1âwphi1

Aggrieved by the loss of their jobs, respondent employees filed a Complaint before the NLRC and sued SME Bank,
spouses Abelardo and Olga Samson and Aurelio Villaflor (the Samson Group) for unfair labor practice; illegal
dismissal; illegal deductions; underpayment; and nonpayment of allowances, separation pay and 13th month pay.
Subsequently, they amended their Complaint to include Agustin and De Guzman as respondents to the case.
The labor arbiter ruled that the buyer of an enterprise is not bound to absorb its employees, unless there is an
express stipulation to the contrary. However, he also found that respondent employees were illegally dismissed,
because they had involuntarily executed their resignation letters after relying on representations that they
would be given their separation benefits and rehired by the new management. Accordingly, the labor arbiter
decided the case against Agustin and De Guzman, but dismissed the Complaint against the Samson Group.

Dissatisfied with the Decision of the labor arbiter, respondent employees, Agustin and De Guzman brought
separate appeals to the NLRC. Respondent employees questioned the labor arbiter’s failure to award backwages,
while Agustin and De Guzman contended that they should not be held liable for the payment of the employees’
claims.

The NLRC found that there was only a mere transfer of shares – and therefore, a mere change of management –
from Agustin and De Guzman to the Samson Group. As the change of management was not a valid ground to
terminate respondent bank employees, the NLRC ruled that they had indeed been illegally dismissed. It further ruled
that Agustin, De Guzman and the Samson Group should be held jointly and severally liable for the employees’
separation pay and backwages.

NLRC denied the Motions for Reconsideration. Agustin and De Guzman, and Samson Gropu filed separate Rule 65
Petitions for Certiorari with the CA. The Petitions were not consolidated but both were denied. The CA in bot
Petitions affirmed the decision of the NLRC.

Motions for Reconsideration denied. Hence, this case.

ISSUES
WON respondent employees were illegally dismissed and, if so, which of the parties are liable for the claims of the
employees and the extent of the reliefs that may be awarded to these employees.

RULING
The instant Petitions are partly meritorious.
I
Respondent employees were illegally dismissed.

*****On Resignation couched in terms of gratitude

The Samson Group contends that Elicerio, Ricardo, Fidel, and Liberato voluntarily resigned from their posts,
while Eufemia retired from her position. As their resignations and retirements were voluntary, they were not
dismissed from their employment. In support of this argument, it presented copies of their resignation and
retirement letters, which were couched in terms of gratitude. We disagree.

While resignation letters containing words of gratitude may indicate that the employees were not coerced into
resignation, this fact alone is not conclusive proof that they intelligently, freely and voluntarily resigned. To rule
that resignation letters couched in terms of gratitude are, by themselves, conclusive proof that the employees
intended to relinquish their posts would open the floodgates to possible abuse. In order to withstand the test of
validity, resignations must be made voluntarily and with the intention of relinquishing the office, coupled
with an act of relinquishment. Therefore, in order to determine whether the employees truly intended to
resign from their respective posts, we cannot merely rely on the tenor of the resignation letters, but must take
into consideration the totality of circumstances in each particular case.

Here, the records show that Elicerio, Ricardo, Fidel, and Liberato only tendered resignation letters because
they were led to believe that, upon reapplication, they would be reemployed by the new management. As it
turned out, except for Simeon, Jr., they were not rehired by the new management. Their reliance on the
representation that they would be reemployed gives credence to their argument that they merely submitted
courtesy resignation letters because it was demanded of them, and that they had no real intention of leaving
their posts. We therefore conclude that Elicerio, Ricardo, Fidel, and Liberato did not voluntarily resign from
their work; rather, they were terminated from their employment.
****On Resignation vs. Retirement

As to Eufemia, a review of the records shows that, unlike her co-employees, she did not resign; rather, she submitted
a letter indicating that she was retiring from her former position.

The fact that Eufemia retired and did not resign, however, does not change our conclusion that illegal
dismissal took place. Retirement, like resignation, should be an act completely voluntary on the part of the
employee. If the intent to retire is not clearly established or if the retirement is involuntary, it is to be treated
as a discharge.

In this case, the facts show that Eufemia’s retirement was not of her own volition. The circumstances could not be
more telling. The facts show that Eufemia was likewise given the option to resign or retire in order to fulfill the
precondition in the Letter Agreements that the seller should "terminate/retire the employees mutually agreed
upon upon transfer of shares" to the buyers. Thus, like her other co-employees, she first submitted a letter of
resignation. For one reason or another, instead of resigning, she chose to retire and submitted a retirement
letter to that effect. It was this letter that was subsequently transmitted to the representative of the Samson Group.

In San Miguel Corporation v. NLRC, we have explained that involuntary retirement is tantamount to dismissal,
as employees can only choose the means and methods of terminating their employment, but are powerless as to
the status of their employment and have no choice but to leave the company. This rule squarely applies to
Eufemia’s case. Indeed, she could only choose between resignation and retirement, but was made to understand that
she had no choice but to leave SME Bank. Thus, we conclude that, similar to her other co-employees, she was
illegally dismissed from employment.

******* On Cessation of Business

The Samson Group further argues that, assuming the employees were dismissed, the dismissal is legal because
cessation of operations due to serious business losses is one of the authorized causes of termination under
Article 283 of the Labor Code.

Again, we disagree.

Rule: The law permits an employer to dismiss its employees in the event of closure of the business establishment
Conditions:
 the employer is required to serve written notices on the worker and the Department of Labor at least one
month before the intended date of closure. 
 the dismissed employees are entitled to separation pay
Exception: if the closure was due to serious business losses or financial reverses. 
Condition for the Exemption: the employer must justify the closure by presenting convincing
evidence that it actually suffered serious financial reverses

In this case, the records do not support the contention of SME Bank that it intended to close the business
establishment. On the contrary, the intention of the parties to keep it in operation is confirmed by the
provisions of the Letter Agreements requiring Agustin and De Guzman to guarantee the "peaceful transition
of management of the bank" and to appoint "a manager of the Samson Group’s choice to oversee bank
operations."

Even assuming that the parties intended to close the bank, the records do not show that the employees and the
Department of Labor were given written notices at least one month before the dismissal took place. Moreover, aside
from their bare assertions, the parties failed to substantiate their claim that SME Bank was suffering from serious
financial reverses. In fine, the argument that the dismissal was due to an authorized cause holds no water.
****** On the Transferees of the Bank not having Obligation to Absorb Employees

Petitioner bank also argues that, there being a transfer of the business establishment, the innocent transferees no
longer have any obligation to continue employing respondent employees, and that the most that they can do is to
give preference to the qualified separated employees; hence, the employees were validly dismissed.

The argument is misleading and unmeritorious. Contrary to petitioner bank’s argument, there was no transfer
of the business establishment to speak of, but merely a change in the new majority shareholders of the
corporation. There are two types of corporate acquisitions: asset sales and stock sales. In asset sales, the
corporate entity sells all or substantially all of its assets to another entity. In stock sales, the individual or corporate
shareholders sell a controlling block of stock to new or existing shareholders.

In asset sales, the rule is that the seller in good faith is authorized to dismiss the affected employees, but is liable for
the payment of separation pay under the law. The buyer in good faith, on the other hand, is not obliged to absorb the
employees affected by the sale, nor is it liable for the payment of their claims. The most that it may do, for reasons
of public policy and social justice, is to give preference to the qualified separated personnel of the selling firm.

The transaction in stock sales takes place at the shareholder level. Because the corporation possesses a personality
separate and distinct from that of its shareholders, a shift in the composition of its shareholders will not affect its
existence and continuity. Thus, notwithstanding the stock sale, the corporation continues to be the employer of its
people and continues to be liable for the payment of their just claims. Furthermore, the corporation or its new
majority share holders are not entitled to lawfully dismiss corporate employees absent a just or authorized cause.

In the case at bar, the Letter Agreements show that their main object is the acquisition by the Samson Group of
86.365% of the shares of stock of SME Bank. Hence, this case involves a stock sale, whereby the transferee acquires
the controlling shares of stock of the corporation. Thus, following the rule in stock sales, respondent employees may
not be dismissed except for just or authorized causes under the Labor Code.

********On the Malimos Case

Petitioner bank argues that, following our ruling in Manlimos v. NLRC, even in cases of stock sales, the new
owners are under no legal duty to absorb the seller’s employees, and that the most that the new owners may do is to
give preference to the qualified separated employees. Thus, petitioner bank argues that the dismissal was lawful.

We are not persuaded.

Manlimos dealt with a stock sale in which a new owner or management group acquired complete ownership of the
corporation at the shareholder level. The employees of the corporation were later "considered terminated, with their
conformity" by the new majority shareholders. The employees then re-applied for their jobs and were rehired on a
probationary basis. After about six months, the new management dismissed two of the employees for having
abandoned their work, and it dismissed the rest for committing "acts prejudicial to the interest of the new
management." Thereafter, the employees sought reinstatement, arguing that their dismissal was illegal, since they
"remained regular employees of the corporation regardless of the change of management."

We upheld the validity of the second termination, ruling that "the parties are free to renew the contract or not upon
the expiration of the period provided for in their probationary contract of employment." 

We take this opportunity to revisit our ruling in Manlimos insofar as it applied a doctrine on asset sales to a
stock sale case. Central Azucarera del Danao, San Felipe Neri School of Mandaluyong and MDII Supervisors
&Confidential Employees Association all dealt with asset sales, as they involved a sale of all or substantially all of
the assets of the corporation. The transactions in those cases were not made at the shareholder level, but at the
corporate level. Thus, applicable to those cases were the rules in asset sales: the employees may be separated from
their employment, but the seller is liable for the payment of separation pay; on the other hand, the buyer in good
faith is not required to retain the affected employees in its service, nor is it liable for the payment of their claims.
The rule should be different in Manlimos, as this case involves a stock sale. It is error to even discuss transfer of
ownership of the business, as the business did not actually change hands. The transfer only involved a change in the
equity composition of the corporation. To reiterate, the employees are not transferred to a new employer, but remain
with the original corporate employer, notwithstanding an equity shift in its majority shareholders. This being so, the
employment status of the employees should not have been affected by the stock sale. A change in the equity
composition of the corporate shareholders should not result in the automatic termination of the employment
of the corporation’s employees. Neither should it give the new majority shareholders the right to legally
dismiss the corporation’s employees, absent a just or authorized cause.
The right to security of tenure guarantees the right of employees to continue in their employment absent a
just or authorized cause for termination. This guarantee proscribes a situation in which the corporation procures
the severance of the employment of its employees – who patently still desire to work for the corporation – only
because new majority stockholders and a new management have come into the picture. This situation is a clear
circumvention of the employees’ constitutionally guaranteed right to security of tenure, an act that cannot be
countenanced by this Court.
It is thus erroneous on the part of the corporation to consider the employees as terminated from their
employment when the sole reason for so doing is a change of management by reason of the stock sale. The
conformity of the employees to the corporation’s act of considering them as terminated and their subsequent
acceptance of separation pay does not remove the taint of illegal dismissal. Acceptance of separation pay does
not bar the employees from subsequently contesting the legality of their dismissal, nor does it estop them
from challenging the legality of their separation from the service.

We therefore see it fit to expressly reverse our ruling in Manlimos insofar as it upheld that, in a stock sale, the
buyer in good faith has no obligation to retain the employees of the selling corporation; and that the dismissal of the
affected employees is lawful, even absent a just or authorized cause.

*****On Constructive Dismissal

As to Simeon Espiritu, Jr., We thus discuss his circumstance separately. We hold that Simeon, Jr. was likewise
illegally dismissed from his employment.

Similar to our earlier discussion, we find that his first courtesy resignation letter was also executed involuntarily.
Thus, it cannot be the basis of a valid resignation; and thus, at that point, he was illegally terminated from his
employment. He was, however, rehired by SME Bank under new management, although based on his allegations, he
was not reinstated to his former position or to a substantially equivalent one. Rather, he even suffered a reduction in
benefits and a demotion in rank. These led to his submission of another resignation letter.

We rule that these circumstances show that Simeon, Jr. was constructively dismissed. 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 or a diminution in pay" and other benefits.

These circumstances are clearly availing in Simeon, Jr.’s case. He was made to resign, then rehired under
conditions that were substantially less than what he was enjoying before the illegal termination occurred.
Thus, for the second time, he involuntarily resigned from his employment. Clearly, this case is illustrative of
constructive dismissal, an act prohibited under our labor laws.

II
SME Bank, Eduardo M. Agustin, Jr. and Peregrin de Guzman, Jr. are liable for illegal dismissal.

None of the parties dispute that SME Bank was the employer of respondent employees. The fact that there was a
change in the composition of its shareholders did not affect the employer-employee relationship between the
employees and the corporation, because an equity transfer affects neither the existence nor the liabilities of a
corporation. Thus, SME Bank continued to be the employer of respondent employees notwithstanding the
equity change in the corporation. This outcome is in line with the rule that a corporation has a personality separate
and distinct from that of its individual shareholders or members, such that a change in the composition of its
shareholders or members would not affect its corporate liabilities.

Therefore, we conclude that, as the employer of the illegally dismissed employees before and after the equity
transfer, petitioner SME Bank is liable for the satisfaction of their claims.
*****On the Liability of Corporate Officers in Illegal Dismissal Cases

Turning now to the liability of Agustin, De Guzman and the Samson Group for illegal dismissal, at the outset we
point out that there is no privity of employment contracts between Agustin, De Guzman and the Samson Group, on
the one hand, and respondent employees on the other. Rather, the employment contracts were between SME
Bank and the employees. However, this fact does not mean that Agustin, De Guzman and the Samson Group
may not be held liable for illegal dismissal as corporate directors or officers.

Bogo-Medellin Sugarcane Planters Association, Inc. v. NLRC, we laid down the rule as regards the liability of
corporate directors and officers in illegal dismissal cases, as follows:
GR: Corporate officers not personally liable for their official acts
REASON: a corporation, by legal fiction, has a personality separate and distinct from its officers,
stockholders and members.
EXN: Corporate officers exceeded their authority

However, this fictional veil may be pierced whenever the corporate personality is used as a means of
perpetuating a fraud or an illegal act, evading an existing obligation, or confusing a legitimate issue. In
cases of illegal dismissal, corporate directors and officers are solidarily liable with the corporation,
where terminations of employment are done with malice or in bad faith.

There is no question that both Agustin and De Guzman were corporate directors of SME Bank. An analysis of the
facts likewise reveals that the dismissal of the employees was done in bad faith. Motivated by their desire to dispose
of their shares of stock to Samson, they agreed to and later implemented the precondition in the Letter Agreements
as to the termination or retirement of SME Bank’s employees. However, instead of going through the proper
procedure, the bank manager induced respondent employees to resign or retire from their respective employments,
while promising that they would be rehired by the new management. Fully relying on that promise, they tendered
courtesy resignations or retirements and eventually found themselves jobless.

We therefore rule that, as Agustin and De Guzman are corporate directors who have acted in bad faith, they may be
held solidarily liable with SME Bank for the satisfaction of the employees’ lawful claims.

As to spouses Samson, we find that nowhere in the records does it appear that they were either corporate directors
or officers of SME Bank at the time the illegal termination occurred, except that the Samson Group had already
taken over as new management when Simeon, Jr. was constructively dismissed. Not being corporate directors or
officers, spouses Samson were not in legal control of the bank and consequently had no power to dismiss its
employees.

Furthermore, even if spouses Samson were already in control of the corporation at the time that Simeon, Jr. was
constructively dismissed, we refuse to pierce the corporate veil and find them liable in their individual steads. There
is no showing that his constructive dismissal amounted to more than a corporate act by SME Bank, or that spouses
Samson acted maliciously or in bad faith in bringing about his constructive dismissal.

Finally, as regards Aurelio Villaflor, while he may be considered as a corporate officer, being the president of SME
Bank, the records are bereft of any evidence that indicates his actual participation in the termination of respondent
employees. Not having participated at all in the illegal act, he may not be held individually liable for the satisfaction
of their claims.

SO ORDERED.

Discussions On
 Resignation
 Retirement
 Cessation of Business
 Asset Sales vs. Stock Sales
 Constructive Dismissal
 Piercing the Vein of Corporate Fiction
 G.R. No. 208908, March 11, 2015
THE COFFEE BEAN AND TEA LEAF PHILIPPINES, INC. AND WALDEN CHU, Petitioners, v. ROLLY P.
ARENAS, Respondent.

BRION, J.:
FACTS
Coffee Bean and Tea Leaf Philippines, Inc. (CBTL) hired Rolly P. Arenas (Arenas) to work as a “barista” at its
Paseo Center Branch. His principal functions included taking orders from customers and preparing their ordered
food and beverages. Upon signing the employment contract, Arenas was informed of CBTL’s existing employment
policies.

To ensure the quality of its crew’s services, CBTL regularly employs a “mystery guest shopper” who poses as a
customer, for the purpose of covertly inspecting the baristas’ job performance.

In April 2009, a mystery guest shopper at the Paseo Center Branch submitted a report stating that Arenas was seen
eating non-CBTL products at CBTL’s al fresco dining area while on duty.  As a result, the counter was left empty
without anyone to take and prepare the customers’ orders.

On another occasion, Katrina Basallo (Basallo), the duty manager of CBTL, conducted a routine inspection of the
Paseo Center Branch. While inspecting the store’s products, she noticed an iced tea bottle being chilled inside the
bin where the ice for the customers’ drinks is stored; thus, she called the attention of the staff on duty. When asked,
Arenas muttered, “kaninong iced tea?” and immediately picked the bottle and disposed it outside the store.

After inspection, Basallo prepared a store manager’s report which listed Arenas’ recent infractions, as follows:
 Leaving the counter unattended and eating chips in an unauthorized area while on duty
 Reporting late for work on several occasions; and
 Placing an iced tea bottle in the ice bin despite having knowledge of company policy prohibiting the same.

Based on the mystery guest shopper and duty manager’s reports, Arenas was required to explain his alleged
violations. However, CBTL found Arenas’ written explanation unsatisfactory, hence CBTL terminated his
employment.

Arenas filed a complaint for illegal dismissal. 

 LA ruled that he had been illegally dismissed. 

 NLRC affirmed the LA’s decision.
 CA issued its decision dismissing the petition for certiorari of CBLT.  The  CA ruled  that Arenas’ offenses fell short of
the required legal standards to justify his dismissal; and that these do not constitute serious misconduct or willful
disobedience, and gross negligence, to merit his termination from service. The CA denied CBTL’s motion for
reconsideration opening the way for this present appeal via a petition for review on certiorari.

RULING
We DENY the petition.

Our review of the records shows that the CA did not err in affirming the LA and the NLRC’s rulings. No grave
abuse of discretion tainted these rulings, thus, the CA’s decision also warrants this Court’s affirmation. The
infractions which Arenas committed do not justify the application of the severe penalty of termination from
service.

***** On leaving the counter unmanned

For willful disobedience to be a valid cause for dismissal, these two elements must concur:
1. the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and
2. the order violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge.

Though Arenas may have admitted these wrongdoings, these do not amount to a wanton disregard of CBTL’s
company policies. As Arenas mentioned in his written explanation, he was on a scheduled break when he was
caught eating at CBTL’s al fresco dining area. During that time, the other service crews were the one in
charge of manning the counter. Notably, CBTL’s employee handbook imposes only the penalty of written
warning for the offense of eating non-CBTL products inside the store’s premises.

****On Tardiness

CBTL also imputes gross and habitual neglect of duty to Arenas for coming in late in three separate instances.

Gross negligence implies a want or absence of, or failure to exercise even a slight care or diligence, or the
entire absence of care.  It evinces a thoughtless disregard of consequences without exerting any effort to avoid
them. There is habitual neglect if based on the circumstances, there is a repeated failure to perform one’s
duties for a period of time.

In light of the foregoing criteria, we rule that Arenas’ three counts of tardiness cannot be considered as gross
and habitual neglect of duty. The infrequency of his tardiness already removes the character of habitualness.
These late attendances were also broadly spaced out, negating the complete absence of care on Arenas’ part in the
performance of his duties. Even CBTL admitted in its notice to explain that this violation does not merit yet a
disciplinary action and is only an aggravating circumstance to Arenas’ other violations.20

****** On the Iced Tea in the Ice Bin

To further justify Arenas’ dismissal, CBTL argues that he committed serious misconduct when he lied about
using the ice bin as cooler for his bottled iced tea. Under CBTL’s employee handbook, dishonesty, even at the
first instance, warrants the penalty of termination from service.

For misconduct or improper behavior to be a just cause for dismissal:

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.

However, the facts on record reveal that there was no active dishonesty on the part of Arenas. When
questioned about who placed the bottled iced tea inside the ice bin, his immediate reaction was not to deny his
mistake, but to remove the bottle inside the bin and throw it outside. More importantly, when he was asked to
make a written explanation of his action, he admitted that the bottled iced tea was his.

Thus, even if there was an initial reticence on Arenas’ part, his subsequent act of owing to his mistake only
shows the absence of a deliberate intent to lie or deceive his CBTL superiors. On this score, we conclude that
Arenas’ action did not amount to serious misconduct.

Moreover, the imputed violations of Arenas, whether taken singly or as a whole, do not necessitate the imposition of
the strict and harsh penalty of dismissal from service. The LA, NLRC and the CA all consistently ruled that these
offenses are not grave enough to qualify as just causes for dismissal. Factual findings of the labor tribunals
especially if affirmed by the CA must be given great weight, and merit the Court’s respect.

As a final remark, we note that petitioner Walden Chu (Chu) should not be held jointly and severally liable with
CBTL for Arenas’ adjudged monetary awards. A corporation is a juridical entity with a legal personality separate
and distinct from those acting for and in its behalf and, in general, from the people comprising it. Thus, as a general
rule, an officer may not be held liable for the corporation’s labor obligations unless he acted with evident malice
and/or bad faith in dismissing an employee.

In the present case, there was no showing of any evident malice or bad faith on Chu’s part as CBTL’s president. His
participation in Arenas’ termination was not even sufficiently alleged and argued. Hence, he cannot be held
solidarily liable for CBTL’s liabilities to Arenas.

SO ORDERED.

Discussions On
 Willful Disobedience
 Gross Negligence
 Misconduct or Improper Behavior
  Piercing the Veil Doctrine

G.R. No. 208321               July 30, 2014

WESLEYAN UNIVERSITY PHILIPPINES, Petitioner, 
vs.
NOWELLA REYES, Respondent.

VELASCO, JR., J.:
FACTS
Respondent Nowella Reyes was appointed as WUP's University Treasurer on probationary basis. A little over a year
after, she was appointed as full time University Treasurer.

In 2009, a new WUP Board of Trustees was constituted. Among its first acts was to engage the services of
Nepomuceno Suner & Associates Accounting Firm (External Auditor) to investigate circulating rumors on alleged
anomalies in the contracts entered into by petitioner and in its finances.

Discovered following an audit were irregularities in the handling of petitioner’s finances, mainly, the encashment by
its Treasury Department of checks issued to WUP personnel, a practice purportedly in violation of the imprest
system of cash management, and the encashment of various crossed checks payable to the University Treasurer by
Chinabank despite management’s intention to merely have the funds covered thereby transferred from one of
petitioner’s bank accounts to another.

Respondent submitted her Explanation. Following which, WUP’s Human Resources Development Office (HRDO)
conducted an investigation. Finding respondent’s Explanation unsatisfactory, the HRDO, submitted an Investigation
Report to the University President containing its findings and recommending respondent’s dismissal as University
Treasurer.

Upon receipt of her notice of termination, respondent post-haste filed a complaint for illegal dismissal with the
Arbitration Branch of the National Labor Relations Commission.

ARGUMENTS
Respondent Nowella Reyes contended that her dismissal was illegal, void and unjust, for the following reasons:
 First, her 60-day preventive suspension violated the Labor Code provisions prohibiting such suspensions
to last for more than thirty (30) days. Thus, the fact that she was not reinstated to her former position
before the lapse of thirty (30) days, amounted to constructive dismissal; 
 Second, there was a violation of her right to substantive and procedural due process, as evidenced by
petitioner’s failure to apply the pertinent due process provisions under its Administrative and Personnel
Policy Manual; and
 Finally, the charges against her were based on mere suspicion and speculations and unsupported by
evidence.

Petitioner WUP, for its part, predicated its defense on the contention that respondent was a highly confidential
employee who handled significant amounts of money as University Treasurer and that the irregularities
attributed to her in the performance of her duties justify her dismissal on the basis of loss of trust and
confidence.

Petitioner also averred that the 60-day preventive suspension thus imposed does not necessarily make such
suspension void, inasmuch as the law merely requires that after a 30-day preventive suspension, the affected
employee shall automatically be reinstated. But in the case of respondent, there was no need for her automatic
reinstatement inasmuch as she was duly terminated within the 30-day period of her preventive suspension.

Moreover, respondent was duly afforded her right to due process since WUP substantially complied with the twin-
notice rule.

The Labor Arbiter declared that Nowella Reyes was illegally dismissed.
NLRC declared that respondent was legally dismissed.
CA found that the termination of Reyes was unjust. It restored the findings of the LA.

ISSUE
 WON Reyes’ dismissal on the ground of lack of trust and confidence is proper
RULING
Loss of trust and confidence as a ground for termination
As provided in Art. 282(c) of the Labor Code of the Philippines:
Article 282. Termination by employer. An employer may terminate an employment for any of the
following causes:

c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;

M+W Zander Philippines, Inc. v. Enriquez the requisites of a valid dismissal based on loss of trust and confidence.
As the case elucidates:
Loss of confidence should not be simulated. It should not be used as a subterfuge for causes which are
improper, illegal, or unjustified. Loss of confidence may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify earlier action
taken in bad faith.

The first requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be one holding a position of trust and confidence (Manegerial Employee or
Fiduciary Rank- and- File Employee).
There are two classes of positions of trust: managerial employees and fiduciary rank-and-file
employees.

Managerial employees are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions. Officers and members of the
managerial staff perform work directly related to management policies of their employer and
customarily and regularly exercise discretion and independent judgment.

The second class or fiduciary rank-and-file employees consist of cashiers, auditors, property
custodians, etc., 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.

The second requisite of terminating an employee for loss of trust and confidence is that there must be an
act that would justify the loss of trust and confidence. To be a valid cause for dismissal, the loss of
confidence must be based on a willful breach of trust and founded on clearly established facts.

Lima Land, Inc. v. Cuevas: difference between the criteria for determining the validity of invoking loss of trust and
confidence as a ground for terminating a managerial employee on the one hand and a rank-and-file employee on the
other.
With respect to rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal,
requires proof of involvement in the alleged events in question, and that mere uncorroborated
assertions and accusations by the employer would not suffice. Proof beyond reasonable doubt is
required.

With respect to a managerial employee, the mere existence of a basis for believing that such employee
has breached the trust of his employer would suffice for his dismissal. Proof beyond reasonable doubt
is not required.

On the other hand, loss of trust and confidence as a ground of dismissal has never been intended to
afford an occasion for abuse because of its subjective nature. It should not be used as a subterfuge for
causes which are illegal, improper, and unjustified. It must be genuine, not a mere afterthought intended
to justify an earlier action taken in bad faith. Let it not be forgotten that what is at stake is the means of
livelihood, the name, and the reputation of the employee. To countenance an arbitrary exercise of that
prerogative is to negate the employee’s constitutional right to security of tenure.
 Respondent’s employment classification is irrelevant in light of her proven willful breach
There is no doubt that respondent held a position of trust; thus, greater fidelity is expected of her. She was not an
ordinary rank-and-file employee but an employee occupying a very sensitive position. As University Treasurer, she
handled and supervised all monetary transactions and was the highest custodian of funds belonging to WUP. To be
sure, in the normal exercise of her functions, she regularly handled significant amounts of money of her employer
and managed a critical department.

The presence of the first requisite is certain. So is as regards the second requisite.

Indeed, the Court finds that petitioner adequately proved respondent’s dismissal was for a just
cause, based on a willful breach of trust and founded on clearly established facts as required by
jurisprudence. At the end of the day, the question of whether she was a managerial or rank-andfile
employee does not matter in this case because not only is there basis for believing that she breached
the trust of her employer, her involvement in the irregularities attending to petitioner’sfinances has
also been proved.

To recall, petitioner, per its account, allegedly lost trust and confidence in respondent owing to any or an interplay of
the following events:
1. she encashed a check payable to the University Treasurer in the amount of PhP 300,000;
2. she encashed crossed checks payable to the University Treasurer, when the intention of management in this
regard was to merely transfer funds from one of petitioner’s accounts to another in the same bank;
3. she allowed the Treasury Department to encash the checks issued to WUP personnel rather than requiring
the latter to have said checks encashed by the bank, in violation of the imprest system of accounting;
4. she caused the disbursement of checks without supporting check vouchers;
5. there were unliquidated cash advances; and (6) spurious duplicate checks bearing her signature were
encashed causing damage to petitioner.

In all, We find the Investigation Report of the HRDO a credible, extensive and thorough account of respondent’s involvement in
incidents which are sufficient grounds for petitioner’s loss of trust and confidence in her, to wit:
1. Respondent Nowella C. Reyes has committed breach of trust and confidence in the conduct of her office.
In her answer, Respondent admitted the encashment of the crossed check with the defense that the same was
done in the performance of her duty, not for her personal use but because of the request of University heads
who wanted their love gifts be given.
2. She also admitted habitual encashment of checks issued by the University to its personnel on the basis of practice
of previous administration.
The charge against Respondent of the act of improper encashment of a check, which aside from being
irregular is clearly violative of imprest system of cash management. Moreover, the same being a crossed
check, should not be negotiated for encashment to Chinabank – Cabanatuan Branch because of the
restriction indicated on its face, which Mrs. Reyes, by reason of her office knew very well.
3. On the last charge in the show cause order specifically the existence of duplicate checks in the account of the
University amounting to Php 1.050 Million, included in Respondent’s defenses were that among the checks
duplicated, only two of them were encashed with the University Teller, and the check originally named to Norma
de Jesus as payee was paid by the pick-up teller only through the assistance of the University teller.
Again, Respondent’s defense were void of truth and merit. The act of encashing checks issued by the
Treasury Office, clearly violative of imprest system of cash management which Mrs. Reyes by reason of her
office knew very well, showed that Respondent directly reneged in her duty to observe economic security
measures.

An Affidavit of Norma de Jesus stated that she actually encashed the check with the personnel of the Treasury
Office particularly Shirley Punay, who gave her the amount equivalent days after the check was handed to
the Treasury office.

However noble the intention of herein Respondent in helping her fellow workers in the University by her acts
of accommodation by encashing their checks directly withthe Treasury Office when Chinabank was already
closed, the same still reneged in her duty to protect the economic security of the University. An act of
misconduct which caused.

An employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests of the
employer. A company has the right to dismiss its employees if only as a measure of self-protection. This is all
the more true in the case of supervisors or personnel occupying positions of responsibility. In this case, let it
be remembered that respondent was not an ordinary rank-and-file employee as she was no less the Treasurer
who was in charge of the coffers of the University. It would be oppressive to require petitioner to retain in
their management an officer who has admitted to knowingly and intentionally committing acts which
jeopardized its finances and who was untrustworthy in the handling and custody of University funds.
G.R. No. 206629, September 14, 2016
NARCISO T. MATIS, Petitioner, v. MANILA ELECTRIC COMPANY, Respondent.

PERALTA, J.:
FACTS
Respondent Manila Electric Company (Meralco) hired petitioner Matis, and complainants Nemencio Hipolito, Jr.
(Hipolito), Raymundo M. Zufiiga5 (Zuniga), Gerardo de Guia (De Guia), and Ricardo Ignacio (Ignacio) on various
dates and in various capacities. At the time of their dismissal, Matis was a foreman; Hipolito and Zuniga were acting
foremen; De Guia was a stockman/driver; and Ignacio was a leadman.

In 2006, Matis and the others were dismissed on the grounds of serious misconduct, fraud or willful breach of trust,
commission of a crime or offense against the employer and other causes analogous to the foregoing. They were
dismissed for their alleged cooperation in the stealing of Meralco's electrical supplies by one Norberto Llanes
(Llanes), a non-Meralco employee.

March 25, 2006.

Matis and the rest of the crew of Trucks 1837  and  1891  were replacing a rotten pole in Pacheco 
Subdivision, Dalandan, Valenzuela City.

At around 10:30 in the morning while the Meralco crew were working at a distance, Llanes was hanging
around the work site. He appeared familiar with the crew as he was handing tools and drinking water with
them. He nonchalantly boarded the truck in the presence of Zuniga and De Guia, and rummaged through
the cargo bed for tools and materials and stashed them in his backpack without being stopped by any of the
crew. Thereafter, Matis and the other crew manning Truck 1891 arrived. Llanes boarded Truck 1891 and
stole materials while Matis was around. For more than two hours, Llanes was walking around, boarding
the trucks, freely sorting and choosing materials and tools inside the trucks then putting them in his
backpack, talking casually with the crew, and even drinking water from the crew's jug.

Unknown to them, a Meralco surveillance team, composed of Joseph Aguilar (Aguilar), Ariel Dola (Bola)
and Frederick Riano (Riano), was monitoring their activities and recording the same with a Video camera.
Due to reports of alleged pilferages occurring in Trucks 1837 and 1891, Meralco was prompted to create
the said team or "task force" to tail and monitor Matis and the others.

In a Memorandum, Meralco required them to appear before Meralco's counsel for an investigation relative to the
incident on May 25, 2006. Matis and the others denied any involvement in the stealing of the company properties.
Subsequently, they were dismissed.

Matis filed a complaint of illegal dismissal.

LA: Matis and the others were illegally dismissed. The LA considered their dismissal from service too harsh when
suspension would have sufficed given that they were not entirely faultless. The charge of serious misconduct cannot
prosper as there is no substantial evidence of their alleged cooperation and participation in the theft.

NLRC: Matis and the other complainants were validly dismissed. Their suspicious leniency and laxity in allowing
Llanes to board the trucks, conversing with him intimately, permitting him to return to the trucks with empty sacks
in tow, and the quantity of materials stolen, all video-taped and described in detail by the surveillance team, belie
their denial of involvement.

CA: denied petition for certiorari filed by Matis and affirmed the decision of the NLRC.

ISSUE
WON Matis and the others were illegally dismissed
RULING

I-Procedural Matters
Section 2. Time for filing; extension. — The petition shall be filed within fifteen (15) days from notice of
the judgment or final order or resolution appealed from, or of the denial of the petitioner's motion for new
trial or reconsideration filed in due time after notice of the judgment. On motion duly filed and served, with
full payment of the docket and other lawful fees and the deposit for costs before the expiration of the
reglementary period, the Supreme Court may for justifiable reasons grant an extension of thirty (30)
days only within which to file the petition. 

It is settled that the rules of procedure are meant to be tools to facilitate a fair and orderly conduct of proceedings.
The relaxation or suspension of procedural rules, or the exemption   of a   case   from   their operation, is warranted
when the purpose of justice requires it.

We note that in his statement of material dates, Matis alleged that his counsel received the denial of his Motion for
Reconsideration on April 11, 2013, while he asseverated in his statement of the matters and in his verification and
certification of non-forum shopping that his counsel received the same on March 11, 2013.

This Court, in a Resolution19 dated July 22, 2013, granted a 30-day extension within which to file his petition for
review on certiorari, counted from the expiration of the reglementary period, and granted his second motion for
extension of fifteen (15) days to file the petition filed by his new counsel. Thus, Matis filed his petition for review
on certiorari on May 30, 2013.

We resolve to allow the instant petition and decide on the merits of the case as petitioner adequately explained in his
petition the reason for his belated filing, and given that he promptly sought for extensions of time for cogent grounds
before the expiration of the time sought to be extended.

II-Substantive Matters

Gross Negligence vs. Fraud or Willful Neglect of Duties vs. Habitual Neglect

Gross negligence connotes want of care in the performance of one's duties. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. (not applicable here)

Fraud and willful neglect of duties imply bad faith on the part of the employee in failing to perform his job to the
detriment of the employer and the latter's business. (applicable)

Habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the
circumstances.

Records reveal that it was not only on May 25, 2006 that Llanes, the pilferer, was seen during a Meralco
operation as he was previously noticed by Meralco employees in past operations. Also, the evidence
ascertained the presence of Matis in the worksite where the pilferage took place, and his familiarity with
Llanes. Matis's tolerance of the activities of Llanes demonstrates his complicity in the theft, and not a mere
want of care in the performance of his duty or gross negligence.

Assuming Matis were negligent, his inaction can only be regarded as a single or isolated act of negligence
which cannot be considered as gross and habitual, hence, cannot be considered as a just cause for his
dismissal. Nevertheless, such finding will not warrant the reversal of the instant case.
 Loss of Confidence

Article 282 (c) of the Labor Code provides that an employer may terminate an employment for fraud or willful
breach by the employee of the trust reposed in him by his employer or duly-authorized representative. It is stressed
that loss of confidence as a just cause for the termination of employment is based on the premise that the
employee holds a position where greater trust is placed by management and from whom greater fidelity to duty is
correspondingly expected. The essence of the offense for which an employee is penalized is the betrayal of such
trust.

Loss of confidence as a ground for dismissal has never been intended to afford an occasion for abuse by the
employer of its prerogative, as it can easily be subject to abuse because of its subjective nature. A breach is willful
if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently.

Matis alleges that he may not be removed on the ground of breach of trust and confidence as he was not a
managerial employee or an employee primarily entrusted with the handling of company funds or property.

We are not persuaded.

Loss of confidence applies to:

1. employees occupying positions of trust and confidence, the managerial employees; and
2. employees who are routinely charged with the care and custody of the employer's money or property
which may include rank-and-file employees, e.g., cashiers, auditors, property custodians, or those who,
in the normal routine exercise of their functions, regularly handle significant amounts of money or
property.

It is established that Matis was a foreman. The vehicles being utilized in the repair and maintenance of
Meralco's distribution lines ordinarily carried necessary equipment, tools, supplies and materials. Thus,
Matis, as the foreman, is routinely entrusted with the care and custody of Meralco's properties in the exercise
of his function.

In the case of Apo Cement Corp. v. Baptisma, it was held that for an employer to validly dismiss an employee on
the ground of loss of trust and confidence, the following guidelines must be observed:
1. loss of confidence should not be simulated;
2. it should not be used as subterfuge for causes which are improper, illegal or unjustified;
3. it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
4. it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
5. More importantly, the loss must be founded on clearly established facts sufficient to warrant the employee's
separation from work.

Contrary to his allegation that he failed to notice the thievery because he and the crew were preoccupied with the
replacement of the rotting post, Matis lingered, by his admission, to supposedly look after the truck. As established,
the crew exhibited familiarity with the culprit during the entire operations. Based on the testimonies of the
witnesses, Llanes was seen picking up unused supplies and materials that were not returned to the company in the
past operations. He was casually boarding the trucks despite the same being prohibited from non-Meralco
employees. Matis was seen conversing intimately with Llanes inside Truck 1891. Thereafter, Llanes was able to
filch Meralco properties in the presence of Matis. Thus, Matis was complicit in the pilferage by being familiar
with Llanes, by his inaction while the looting was being perpetrated, and by not reporting the same to the
authorities and to Meralco. The totality of the circumstances convinces this Court that Matis is guilty of
breach of trust.

The established fact that Llanes, a non-Meralco employee, was often seen during company operations,
conversing with the foremen, for reason or reasons connected with the ongoing company operations,  gives 
rise  to  the question:  what was  he doing there? Apparently, he had been visiting Meralco worksites, at least in
the Valenzuela Sector, not simply to socialize, but to do something else. As testified to by witnesses, he was
picking up unused supplies and materials that were not returned to the company. From these factual
premises, it is not hard to conclude that this activity was for the mutual pecuniary benefit of himself and the
crew who tolerated the practice. For one working at the scene who had seen or who had shown familiarity with
Llanes (a non-Meralco employee), not to have known the reason for his presence is to disregard the obvious, or at
least the very suspicious.
Proof beyond reasonable doubt is not needed to justify the loss of confidence as long as the employer has
reasonable ground to believe that the employee is responsible for the misconduct and his participation therein
renders him unworthy of the trust and confidence demanded of his position . Meralco was able to establish
through substantial evidence that it has reasonable ground to believe that Matis's involvement in the incident
rendered him unworthy of the trust and confidence reposed upon him as a foreman of Meralco.

Additionally, an employee's acquittal in a criminal case does not automatically preclude a determination that
he has been guilty of acts inimical to the employer's interest resulting in loss of trust and confidence. An  
acquittal  in criminal   prosecution   does   not   have   the   effect   of extinguishing liability for dismissal on
the ground of breach of trust and confidence. The trial court acquitted Matis and the others due to
insufficiency of evidence to warrant conviction beyond reasonable doubt. While the evidence presented failed
to satisfy the quantum of proof required in criminal cases, the same substantially proved the dishonest act of
Matis which warranted his dismissal from employment.

WHEREFORE, the petition for review on certiorari filed by petitioner Narciso T. Matis is hereby DENIED. The
Decision and Resolution, dated June 11, 2012 and March 1, 2013, respectively, of the Court of Appeals affirming
with modification the Decision dated July 22, 2009 and Resolution dated December 28, 2009 of the National Labor
Relations Commission are hereby AFFIRMED.

SO ORDERED.
 THIRD DIVISION
G.R. No. 213934, November 09, 2016
MARY ANN G. VENZON, EDDIE D. GUTIERREZ, JOSE M. GUTIERREZ, JR. AND MONA LIZA L.
CABAL, Petitioners, v. ZAMECO II ELECTRIC COOPERATIVE, INC. AND ENGR. FIDEL S. CORREA,
GENERAL MANAGER, Respondents.

PERALTA,** J.:
Petitioners were regular employees of ZAMECO II Electric Cooperative, Inc. (ZAMECO II) occupying managerial
and rank-and-file positions. They filed a case for illegal dismissal from employment claiming that they were mere
victims of a power struggle between the two (2) factions fighting to control the management of ZAMECO II.

On October 20, 2014, this Court issued a Decision in G.R. Nos. 176935-36 stating that the National Electrification
Authority’s (NEA) power of supervision applies whether an electric cooperative remains as a non-stock
cooperative or opts to register with the CDA as a stock cooperative. This Court ruled:
This only means that even assuming arguendo that the petitioners validly registered ZAMECO II with the
CDA in 2007, the NEA is not completely ousted of its supervisory jurisdiction over electric cooperatives
under the R.A. No. 10531. This law may be considered as curative statute that is intended to address the
impact of a restructured electric power industry under the EPIRA on electric cooperatives, which has not
been fully addressed by the Philippine Cooperative Code of 2008.

FACTS
Petitioner Jose M. Gutierrez, Jr. was the Manager of Administrative and Personnel Department of ZAMECO II and
was hired on June 1, 2003. Petitioner Mary Ann Venzon was the Manager of Member Service Department and had
been with ZAMECO II since January 21, 1996. Petitioner Eddie Gutierrez was a member of the Operation and
Disconnection Team and was hired on April 29, 2002. Petitioner Monaliza L. Cabal was an accounting staff and
started working at ZAMECO II on August 1, 2001.34chanrobleslaw

In a Memorandum of 2009, OIC-General Manager Engr. Alvin Farrales designated petitioner Gutierrez, Jr. as
Officer-in-Charge of the cooperative during his official travel to Manila.

The next day, the Cooperative Development Authority (CDA) authorities arrived in ZAMECO II to assume
management of the cooperative. This was opposed by the existing management of ZAMECO II. The following day,
Petitioner Gutierrez, Jr. issued a Memorandum for and in behalf of Farrales directing the employees to proceed to
the main office in compliance with the directive of the CDA appointed officers. Thus, a meeting was held on the
same date at ZAMECO II's office in San Antonio led by CDA representatives. Petitioners Gutierrez, Jr., Venzon and
Gutierrez participated in the said meeting. Also, several meetings were held which were attended by employees and
officers of ZAMECO II who allegedly defected to the side of CDA appointed officers.

Likewise, on the same date, petitioners Venzon, Gutierrez and Gutierrez, Jr. were given separate memoranda by
Engr. Farrales directing them to explain why no disciplinary action should be taken against them for failure to report
for work on the said date and for violating the Company Code of Ethics and Discipline and the Employees Code of
Conduct. The charges against them were:
a. attending unauthorized meetings, gatherings or assembly of employees;
b. abandonment of work or of assigned duties;
c. misrepresentation or usurpation of functions;
d. giving unlawful orders that create confusion and disorder;
e. rumor mongering or gossiping with intent to destroy the reputation of the company or its officers and
employees; and/or
f. any act conduct or behavior not included in the above but which is prejudicial or detrimental to the
company or its employees and/or contrary to good order or discipline.
Incidentally, petitioner Gutierrez, Jr. had undergone medical treatment from September 8 to September 28, 2009. He
submitted medical certificates but did not file any application for sick leave. He, together with petitioner Gutierrez,
did not submit any explanation with regard to the above charges.

Petitioner Venzon answered the above charges. She explained that effective September 3, 2009 when CDA had
assumed jurisdiction over ZAMECO II, after a serious discernment, she recognized only the officers appointed by
the CDA, who were the ones dismissed by the National Electrification Administration (NEA), and Fidel Correa as
the General Manager.

Petitioner Cabal stopped reporting for work starting September 13, 2009.

On September 18, 2009, Farrales issued a Memorandum to the security personnel to deny entry to petitioners
Gutierrez, Jr, Gutierrez and Venzon and four other persons including Engr. Correa, and to not allow them to report
for work.

Farrales issued several memoranda:

a. for petitioner Venzon to return the laptop computer and other equipment entrusted to her;
b. for petitioner Gutierrez to answer the charges against him;
c. for petitioners Venzon, Jose Gutierrez, Jr., and Gutierrez placing them under preventive suspension
pending investigation by the Investigation and Appeals Committee (IAC).

Upon the recommendation of the IAC, petitioners were dismissed from employment. The order of dismissal was
served to them but they refused to receive the same.

Thereafter, petitioners filed a complaint for illegal dismissal, illegal suspension, non-payment of 13th month pay,
damages payment of allowances.

LA: petitioners to have been illegally dismissed from employment.

NLRC:
 termination of petitioners from employment was valid, but in view of their reinstatement because, instead
of playing neutral, they embroiled themselves in the ongoing corporate dispute
 it dismissed the case for being moot and academic
CA: In a Decision dated July 31, 2014, the CA affirmed the Decision of the NLRC. It held that the petitioners failed
to substantiate their claim, or point to a specific act on the part of the NLRC that can be construed as amounting to
grave abuse of discretion.

Hence, the instant Petition.

ISSUE
 WON Engr. Farrales of the Interim Board of Directors of ZAMECO II had the authority to suspend and
dismiss petitioners from employment
 WON petitioners where validly terminated from employment.

RULING
I
To resolve the first issue, We need to determine who between the two factions - the NEA appointed General
Manager Engr. Farrales or the CDA installed General Manager Engr. Correa - had the authority to manage
the affairs of ZAMECO II for the period from when the first memorandum was issued to petitioners, until when
petitioners were dismissed from employment.

Indeed, the decision of the Court in G.R. Nos. 176935-36 conclusively settled that it is NEA, and not the CDA,
that has jurisdiction and disciplinary authority over ZAMECO II. The substantial issues of the case have now
been laid to rest. The Court, however, cannot turn a blind eye to the contemptuous acts of the respondents during the
pendency of the case. If the Court condones these acts of interference and improper conduct, it would set a
dangerous precedent to future litigants in disregarding the interlocutory orders and processes of the Court.

Clearly, from the above pronouncement, during the period material to this case, the Interim Board of
Directors of ZAMECO appointed by the NEA had the jurisdiction and disciplinary authority over ZAMECO
II. Thus, Engr. Farrales, as General Manager, had the authority to suspend and dismiss petitioners.

II
We go now to the second issue as to whether the petitioners were validly dismissed from employment. The right to
security of tenure states that no employee shall be dismissed unless there are just or authorized causes and only after
compliance with procedural and substantive due process.

Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause of when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.

ART. 282. TERMINATION BY EMPLOYER

An employer may terminate an employment for any of the following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of 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;
e. Other causes analogous to the foregoing.

******On Serious Misconduct

Serious misconduct by the employee justifies the employer in terminating his or her employment. Misconduct is
defined as an improper or wrong conduct. It 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. To constitute a valid cause for the dismissal within the text and meaning of Article 282 of the Labor
Code, the employee s misconduct must be serious i.e., of such grave and aggravated character and not merely
trivial or unimportant.

Additionally, the misconduct must be related to the performance of the employees duties showing him to be unfit
to continue working for the employer. Further, and equally important and required, the act or conduct must have
been performed with wrongful intent.

In the case at bar, General Manager Farrales, himself, designated petitioner Gutierrez, Jr. as Officer-in-Charge of the
cooperative during his official travel to Manila on September 3, 2009. But when the CDA authorities arrived in
ZAMECO II to assume management of the cooperative which was opposed by the existing management of
ZAMECO II, petitioner Gutierrez, Jr. issued a Memorandum, allegedly signed on behalf of Farrales, directing the
employees to proceed to the main office in compliance with the directive of the CDA appointed officers. Hence, a
meeting was held on the same date at the cooperative's office in San Antonio led by CDA representatives.
Petitioners Gutierrez, Jr., Venzon and Gutierrez participated in the said meeting.

Petitioners obviously aligned themselves with the former Board of Directors led by Dominguez in trying to
wrest control of the management of ZAMECO II. In deciding to get involved in the power play, petitioners
relinquished their duties as employees. They defied the instructions and directives of the Interim Board of
Directors as well as that of the General Manager. Instead, they followed the instructions of the Board of
Directors and officers designated by the CDA. They even filed a civil action against Farrales and the Interim
Board of Directors.

Petitioners did not participate in the proceedings before the IAC because they did not recognize its authority.
It was the officers designated by the CDA whom they recognize. Their acts definitely undermined the
existence of the cooperative.
Under these factual premises, We cannot help but consider the petitioners' misconduct to be of
grave and aggravated character so that the cooperative was justified in imposing the highest
penalty available — dismissal. In ruling as We do now, We considered the balancing between petitioners'
tenurial rights and ZAMECO II's interests. Unfortunately for the petitioners, in this balancing under the
circumstances of the case, we have to rule against their tenurial rights in favor of the employer's management rights.

***** On Loss of Trust and Confidence

Furthermore, Article 296(c) states that loss of trust and confidence in the employee is a just cause for dismissal.
But it will validate an employee's dismissal only upon compliance with certain requirements, 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.

Loss of trust and confidence to be a valid cause for dismissal must be work related such as would show the
employee concerned to be unfit to continue working for the employer and it must be based on a willful breach of
trust and founded on clearly established facts. Such breach is willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. The loss of trust and confidence must spring from the voluntary or willful act of the employee, or by
reason of some blameworthy act or omission on the part of the employee.

While loss of trust and confidence should be genuine, it does not require proof beyond reasonable doubt, it being
sufficient that there is some basis to believe that the employee concerned is responsible for the misconduct
and that the nature of the employees participation therein rendered him unworthy of trust and confidence
demanded by his position.

There are two classes of positions of trust.

 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.
 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.

It is undisputed that at the time of their dismissal, the petitioners Gutierrez, Jr. and Venson were holding
managerial positions and greater fidelity and trust were expected of them. Farrales even designated petitioner
Gutierrez, Jr. as Officer-in-Charge of ZAMECO II during his official travel to Manila. Their positions were
unmistakably imbued with trust and confidence as they were charged with the delicate task of overseeing the
operations of their divisions. As managers, a high degree of honesty and responsibility, as compared with
ordinary rank-and-file employees, were required and expected of them.

It need not be stressed that the nature or extent of the penalty imposed on an erring employee must be commensurate
to the gravity of the offense as weighed against the degree of responsibility and trust expected of the employee's
position.

*****On Procedural Due Process

As to the standards of procedural due process, the same were likewise observed in effecting the petitioner's
dismissal. Petitioners were given written memorandum to inform them of the charges against them as well as notices
of termination in accordance with law.

***** On Social Justice

In protecting the rights of the workers, the law, however, does not authorize the oppression or self-destruction of the
employer. The constitutional commitment to the policy of social justice cannot be understood to mean that every
labor dispute shall automatically be decided in favor of labor. The constitutional and legal protection equally
recognizes the employer's right and prerogative to manage its operation according to reasonable standards and
norms of fair play.

WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed Decision of the Court of
Appeals in CA-G.R. SP No. 125798, dated July 31, 2014, is hereby AFFIRMED.
SO ORDERED.

G.R. No. 219430, November 07, 2016

JINKY S. STA. ISABEL, Petitioner, v. PERLA COMPAÑIA* DE SEGUROS, INC., Respondent.

PERLAS-BERNABE, J.:
FACTS
Perla, a corporation engaged in the insurance business hired Sta. Isabel as a Claims Adjuster with the task of
handling and settling claims of Perla's QC Branch. Later on, Perla discovered that Sta. Isabel owned a separate
insurance agency known as JRS Insurance Agency (JRS). To avoid conflict of interests, Perla instructed its QC
Branch manager to:
a. allow the licensing of JRS as a licensed agent of the QC Branch at the soonest time possible; and
b. forward all claims coded under JRS to Perla's Claims Department at the Head Office for processing,
evaluation, and approval.

Pending the resolution of the JRS issue, Sta. Isabel received a Notice to Explain why no disciplinary action should
be taken against her for her poor services towards the clients of PAIS Insurance Agency (PAIS), to which she
submitted her written explanation. Sta. Isabel attended a meeting with Perla's officers concerning the JRS and PAIS
incidents. Perla issued a Report on Status of the Hearing for Jinky Sta. Isabel wherein it resolved the foregoing
incidents by agreeing that: (a) claims under JRS shall be approved by the Head Office; and (b) claims under PAIS
will be transferred to the Head Office for processing.

Thereafter, Sta. Isabel received another Notice to Explain why no disciplinary action should be taken against her for
her poor services towards the clients of Ricsons Consultants and Insurance Brokers, Inc. (Ricsons). In view of Sta.
Isabel's failure to submit a written explanation and to appear before the Head Office to explain herself, Perla issued a
Final Written Warning to be more circumspect with her claims servicing, with a stem admonition that "any repetition
of the same offense or any acts analogous to the foregoing shall be dealt with more severely and shall warrant
drastic disciplinary action including the penalty of Termination in order to protect the interest of the company." On
even date, Perla likewise issued a Final Directive to Report to Head Office instructing Sta. Isabel to report to the
Head Office and explain her alleged refusal to receive the afore-cited Final Written Warning.

Subsequently, Perla issued the following to Sta. Isabel:

a. a Notice to Explain why no disciplinary action should be taken against her for failing to report to the Head
Office despite due notice; and
b. a Notice of Termination dismissing Sta. Isabel from employment on the ground of insubordination.

Consequently, Sta. Isabel filed the instant complaint for:

a. illegal dismissal;
b. underpayment of wages;
c. non-payment of overtime pay, service incentive leave pay, accrued leave pay, and 13th to 16th month pay;
d. retirement pay benefits under the corporation's Provident Fund; (e) actual, moral, and exemplary damages;
and
e. attorney's fees against Perla before the NLRC. In relation to her claim for illegal dismissal, Sta. Isabel
prayed for the grant of separation pay and backwages, maintaining that there is already strained relations
between her and Perla which would render reinstatement impossible.

In support of her complaint, Sta. Isabel claimed that Perla could no longer use the PAIS and Ricsons
incidents against her, considering that she was already penalized with multiple warnings to be more
circumspect with her claims servicing.

In its defense, Perla maintained that it validly terminated Sta. Isabel's employment on the ground of
insubordination.

LA: dismissed the complaint for lack of merit. LA found just cause in terminating Sta Isabel's employment, opining
that her disrespectful language in her letter dated November 27, 2012 not only constitutes serious misconduct, but
also insubordination as it showed her manifest refusal to cooperate with Perla.
NLRC: Sta. Isabel's dismissal was without just cause, hence, unlawful. Accordingly, the NLRC ordered Perla to pay
her separation pay, backwages, benefits under the Provident Fund, 14th month pay, and attorney's fees equivalent to
10% of all the monetary awards.
CA: nullified and set aside the NLRC ruling, and reinstated that of the LA. Sta. Isabel's dismissal was valid, it being
a valid exercise of management prerogative in dealing with its affairs, including the right to dismiss its erring
employees.

ISSUE
WON Sta. Isabel was validly dismissed on the ground of insubordination and/or serious misconduct (NO)

RULING
The Court finds that the CA committed reversible error in granting Perla's certiorari petition considering that the
NLRC's finding that Sta. Isabel was illegally dismissed from employment is supported by substantial evidence.

As may be gleaned from the records, Sta. Isabel received a total of three (3) Notices to Explain.

In the first Notice to Explain, Sta. Isabel was charged with serious misconduct for her poor services towards the clients of
PAIS. After Sta. Isabel submitted her written explanation and attended the corresponding meeting, Perla resolved the matter
through a Report on Status of the Hearing for Jinky Sta. Isabel wherein she was penalized with a "VERBAL WARNING to
improve on the claims servicing of clients in QC Branch." Thus, the proceedings with regard to the PAIS incident should be
deemed terminated.

In the second Notice to Explain, Sta. Isabel was charged with serious misconduct and gross neglect of duty for her poor services
towards the clients of Ricsons. Notwithstanding Sta. Isabel's failure to submit her written explanation despite due notice, Perla
went ahead and resolved the matter anyway in the Final Written Warning wherein it penalized her with a "FINAL WARNING to
be more circumspect in her claims servicing with agents, brokers, and assureds" with an admonition that "any repetition of the
same offense or any acts analogous to the foregoing shall be dealt with more severely and shall warrant drastic disciplinary action
including the penalty of Termination in order to protect the interest of the company." Hence, Perla's issuance of the Final Written
Warning should have likewise terminated the administrative proceedings relative to the Ricsons incident.

Finally, in the last Notice to Explain, Perla charged her of willful disobedience for her failure to appear before the Head Office
despite due notice. In the Notice of Termination of even date - although Perla insists that the date indicated therein was a mere
typographical error - Sta. Isabel was terminated from work on the ground of insubordination.

Since Sta. Isabel was actually dismissed on the ground of insubordination, there is a need to determine whether or
not there is sufficient basis to hold her guilty on such ground.

Insubordination or willful disobedience, is a just cause for termination of employment.

Willful disobedience or insubordination, as a just cause for the dismissal of an employee, necessitates the
concurrence of at least 2 requisites, namely:
1. the employee's assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and
2. the order violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge.

In this case, a plain reading of the Notice to Explain and Notice of Termination reveals that the charge of
insubordination against Sta. Isabel was grounded on her refusal to report to the Head Office despite due
notice. While Perla's directives for Sta. Isabel to report to the Head Office indeed appear to be reasonable,
lawful, and made known to the latter, it cannot be said that such directives pertain to her duties as a Claims
Adjuster, i.e., handling and settling claims of Perla's Quezon City Branch, regardless of whether her refusal
to heed them was actually willful or not. The aforesaid directives, whether contained in the Notice to Explain
dated November 9, 2012 or the Final Directive to Report to Head Office dated November 22, 2012, all pertain to
Perla's investigation regarding the Ricsons incident and, thus, were issued in compliance with the requisites of
procedural due process in administrative cases. Otherwise stated, such directives to appear before the Head
Office were for the purpose of affording Sta. Isabel an opportunity to be heard regarding the Notice to
Explain dated November 9, 2012. As correctly pointed out by the labor tribunals, Sta. Isabel's failure or
refusal to comply with the foregoing directives should only be deemed as a waiver of her right to procedural
due process in connection with the Ricsons incident, and is not tantamount to willful disobedience or
insubordination.

Besides, contrary to Perla's claim that it could not wrap up its investigation on the Ricsons incident due to Sta.
Isabel's continuous disregard of said directives, the Final Written Warning indubitably shows that Perla had already
taken care of the Ricsons complaint despite Perla's non-cooperation. To recapitulate, the Final Written Warning
stated that Perla:
a. took into consideration Sta. Isabel's refusal to appear before the Head Office or to submit her written
explanation;
b. deemed such refusal as a waiver of her opportunity to be heard; and
c. resultantly resolved the matter by penalizing Sta. Isabel with, among others, a "FINAL WARNING to be
more circumspect in her claims servicing with agents, brokers, and assureds." 

Clearly, Perla cannot base the charge of insubordination against Sta. Isabel in her refusal to report to the
Head Office in connection with the Ricsons complaint.

As an additional basis for Sta. Isabel's alleged insubordination, Perla argues that Sta. Isabel's letter dated
November 27, 2012 signifies her outright defiance of management authority, considering that as an employee,
she had no right to impose conditions on management on when and what circumstances she would explain
her side.

The Court finds the argument untenable and simply an afterthought to put some semblance of legality to Sta. Isabel's
dismissal.

A careful examination of the records reveals that Perla already issued Sta. Isabel's Notice of Termination
charging her of insubordination was issued even before Sta. Isabel wrote them the letter dated November 27,
2012. Evidently, Perla never took this letter into consideration in dismissing Sta. Isabel. In an attempt to cover
up this mishap, Perla claimed that the date indicated on the Notice of Termination was only a typographical error, as
it was actually issued on November 28, 2012, even presenting the private courier receipt showing that it was only
sent to Sta. Isabel on the latter date. While such private courier receipt indeed shows the date when the Notice of
Termination was sent, it does not prove that it was made on the same day. More revealing is the fact that this
November 27, 2012 letter allegedly showing insubordination on the part of Sta. Isabel was not even mentioned in
her Notice of Termination. Verily, Perla's excuse of typographical error in the date indicated on the Notice of
Termination is simply unacceptable for being a mere self-serving assertion that deserves no weight in law. Besides,
as aptly put by the NLRC, a careful perusal of such letter reveals that the wordings used therein were not
discourteous, accusatory, or inflammatory, nor was the letter written out of defiance and arrogance. Rather, it only
exhibits Sta. Isabel's confusion and frustration over the way the administrative proceedings against her were being
handled.

In sum, the totality of the foregoing circumstances shows that Sta. Isabel was not guilty of acts constituting
insubordination, which would have given Perla a just cause to terminate her employment. As such, the CA erred in
holding that the NLRC gravely abuse its discretion in ruling that Sta. Isabel's dismissal was illegal; hence, the NLRC
ruling must be reinstated. However, since the NLRC erred in reckoning the computation of Sta. Isabel's separation
pay from February 27, 2007 instead of the actual date of the commencement of her employment with Perla, a
modification of the NLRC ruling to reflect this correction is in order.

WHEREFORE, the petition is GRANTED. The Decision dated March 25, 2015 and the Resolution dated June 15,
2015 of the Court of Appeals in CA-G.R. SP No. 134676 are hereby REVERSED and SET ASIDE. Accordingly,
the Decision dated December 26, 2013 and the Resolution dated February 27, 2014 of the National Labor Relations
Commission in NLRC LAC No. 06-001823-13 are REINSTATED with MODIFICATION in that the computation
of separation pay due to petitioner Jinky S. Sta. Isabel should be counted from February 26, 2006, the actual date of
the commencement of her employment with respondent Perla Compañia de Seguros, Inc., instead of February 27,
2007.

SO ORDERED.
 G.R. Nos. 205685-86               June 22, 2015
EMMANUEL H. BERALDE, HAYDEE B. OCHE, EDGAR E. FERNANDEZ, RONALD M. DUMADAUG,
et al. 
vs.
LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION (GUIHING PLANTATION
OPERATIONS), RICA REGINA L. DA VILA (Chairman), EDWIN T. FABREGAR, JR. (VP-Banana
Production); GERARDO IGNACIO B. ONGKIKO, (Senior VP-HR), CELSO S. SANCHEZ (Production
Manager); and JESSEPEHINE 0. ALEGRE (Area Administrative Manager), Respondents.

PERALTA, J.:
FACTS
Lapanday Agricultural and Development Corporation (Lapanday) is engaged in the business of Banana plantation
and exporting of the same to its clientele abroad. Petitioners are employees in the said corporation.
Between the years 1992-1994, Lapanday retrenched and paid separation pay to some of its employees in a
downsizing effort. Thereafter, Lapanday allegedly re-hired some of their former employees with a promise that the
land they worked on will be eventually turned-over to them, since the land was covered by the Comprehensive
Agrarian Reform Program (CARP). The employees including several of the petitioners agreed to be retrenched and
re-hired.

Sometime in 1999, Lapanday again retrenched all its employees and offered to pay separation pay for their years of
service. Meanwhile, the land was not turned-over to them as promised since the DAR issued an Order exempting
said land from the coverage of the CARP.

On March 29, 1999, Lapanday and the employees, including petitioners, signed a new employment contract.
However, upon learning of the DAR's order of exemption, the employees filed a petition to revoke said order.
On January 4, 2008, Lapanday issued a Notice of Termination to all its employees, including herein petitioners. In
the said notice of termination, it was stated that the company is instituting a retrenchment program pursuant to the
Collective Bargaining Agreement (CBA) to prevent losses as a result of the dramatical increase in production costs
and lower productivity.

Several employees signed the notice, in the hopes of getting their separation pay and other benefits. Petitioners,
however, claimed that their separation pay was not given to them. They further alleged that those who refused to
sign the notice were not allowed to enter the work premises unless they would sign the notice. Lapanday, on the
other hand, claimed that despite its financial predicament, separation pay was offered to its employees.

Hence, without any recourse, petitioners filed a complaint for illegal dismissal.

LA:
 dismissed the complaint
 retrenchment is valid
 Lapanday to pay Php 8,286,174.53 representing the employees’ separation pay

NLRC: ruled that there was illegal dismissal and ordered reinstatement and payment of full backwages from the
dates they were dismissed until they are actually reinstated plus attorney’s fees equivalent to ten (10%) percent of
the aggregate monetary award due them

CA: ruled that there was illegal dismissal

Hence, petitioners filed the instant appeal questioning the appellate court's pronouncement of the legality of their
dismissal due to retrenchment.

ISSUE
WON the employees were illegally dismissed
RULING
The petition is without merit.

Retrenchment is the termination of employment initiated by the employer through no fault of the employees
and without prejudice to the latter, resorted to by management during periods of business recession;
industrial depression; or seasonal fluctuations, during lulls occasioned by lack of orders, shortage of
materials, conversion of the plant for a new production program, or the introduction of new methods or more
efficient machinery or automation. Retrenchment is a valid management prerogative. It is, however, subject to
faithful compliance with the substantive and procedural requirements laid down bylaw and jurisprudence. In the
discharge of these requirements, it is the employer who bears the onus, being in the nature of affirmative defense.

The pertinent provision of the Labor Code on the subject of retrenchment is instructive:
Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
worker and the DOLE at least one (1) month before the intended date thereof. In case of termination
due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures
or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered as one (1) whole year.

Therefore, for a valid retrenchment, the following requisites must be complied with:
a. the retrenchment is necessary to prevent losses and such losses are proven;
b. written notice to the employees and to the DOLE at least one month prior to the intended date of
retrenchment; and
c. payment of separation pay equivalent to one-month pay or at least one-half month pay for every year
of service, whichever is higher.
d. Ariola v. Philex Mining Corporation: In addition to the requirements, The Court later added the
requirements that the employer must use fair and reasonable criteria in ascertaining who would be
dismissed and retained among the employees and that the retrenchment must be undertaken in good faith.
Except for the written notice to the affected employees and the DOLE, non-compliance with any of these
requirements renders the retrenchment illegal.

In the instant case, Lapanday's financial condition before and at the time of petitioners' retrenchment,
justified petitioners retrenchment. The audited financial report presented in evidence was found to
conclusively show that Lapanday has indeed suffered serious financial losses for the last three years prior to
its retrenchment.

Lapanday instituted a retrenchment program as a result of the management's decision to limit its operation and
streamline positions and personnel requirements and arrest its increasing financial losses by downsizing its
workforce. Lapanday then was justified in implementing a retrenchment program since it was undergoing financial
reverses, not only for a single fiscal year, but for several years prior to and even after the program. We cannot ignore
the audited financial reports of independent and reputable external auditors such as Sycip Gorres Velayo & Co., as
no evidence can best attest to a company's economic status other than its financial statement.

Asian Alcohol Corporation v. National Labor Relations Commission:

The condition of business losses is normally shown by audited financial documents like yearly balance
sheets and profit and loss statements as well as annual income tax returns. It is our ruling that financial
statements must be prepared and signed by independent auditors. Unless duly audited, they can be assailed
as self-serving documents. But it is not enough that only the financial statements for the year during which
 retrenchment was undertaken, are presented in evidence. For it may happen that while the company has
indeed been losing, its losses may be on a downward trend, indicating that business is picking up and
retrenchment, being a drastic move, should no longer be resorted to. Thus, the failure of the employer to
show its income or loss for the immediately preceding year or to prove that it expected no abatement of
such losses in the coming years, may bespeak the weakness of its cause. It is necessary that the employer
also show that its losses increased through a period of time and that the condition of the company is not
likely to improve in the near future.
We also find that Lapanday complied with the requisite notices to the affected employees and the DOLE to effect a
valid retrenchment. As found by the Labor Arbiter and Court of Appeals:
Records show that the one (1) written notice requirement was duly filed by the respondent with the Office
of the DOLE and the Notices of Termination were duly served to its workers to take effect thirty (30) days
from their receipt. By reason of the hard "no retrenchment" stand of herein complainants, the latter refused
to receive the notices of termination, thus, copies of the Letters of Retrenchment were sent through
registered mail to the last known addresses of the complainants. It appears also that respondent submitted
to the Department of Labor and Employment its Reports on Employee Termination. On the matter of
separation pay, it is established that respondent company is willing to comply with the same.

*****On the Non-Cessation of Business

We likewise cannot sustain petitioners' argument that their dismissal was illegal on the basis that Lapanday did not
actually cease its operation, or that they have re-hired some of the dismissed employees and even hired new set of
employees to replace the retrenched employees.

The law acknowledges the right of every business entity to reduce its work force if such measure is made
necessary or compelled by economic factors that would otherwise endanger its stability or existence. In
exercising its right to retrench employees, the firm may choose to close all, or a part of, its business to avoid
further losses or mitigate expenses.

In the same manner, when Lapanday continued its business operation and eventually hired some of its
retrenched employees and new employees, it was merely exercising its right to continue its business. The fact
that Lapanday chose to continue its business does not automatically make the retrenchment illegal. We
reiterate that in retrenchment, the goal is to prevent impending losses or further business
reversals- it therefore does not require that there is an actual closure of the business. Thus,
when the employer satisfactorily proved economic or business losses with sufficient supporting evidence and have
complied with the requirements mandated under the law to justify retrenchment, as in this case, it cannot be said
that the subsequent acts of the employer to re-hire the retrenched employees or to hire new employees constitute bad
faith. It could have been different if from the beginning the retrenchment was illegal and the employer subsequently
hired new employees or rehired some of the previously dismissed employees because that would have constituted
bad faith. Consequently, when Lapanday continued its operation, it was merely exercising its prerogative to
streamline its operations, and to re-hire or hire only those who are qualified to replace the services rendered by the
retrenched employees in order to effect more economic and efficient methods of production and to forestall business
losses. The rehiring or reemployment of retrenched employees does not necessarily negate the presence or
imminence of losses which prompted Lapanday to retrench.

In spite of overwhelming support granted by the social justice provisions of our Constitution in favor of labor, the
fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and
employees, "the right of enterprises to reasonable returns of investment and to expansion and growth." To hold
otherwise would not only be oppressive and inhuman, but also counter-productive and ultimately subversive of the
nation's thrust towards a resurgence in our economy which would ultimately benefit the majority of our people.
Where appropriate and where conditions are in accord with law and jurisprudence, the Court has authorized valid
reductions in the work force to forestall business losses, the hemorrhaging of capital, or even to recognize an
obvious reduction in the volume of business which has rendered certain employees redundant.

**** On the Award of Separation Pay

The payment of separation pay would be due when a dismissal is on account of an authorized cause as in this case,
and the amount of separation pay depends on the ground for the termination of employment. When the termination
of employment is due to retrenchment to prevent losses, or to closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay is only an equivalent of "one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher." In the above
instances, a fraction of at least six (6) months is considered as one (1) whole year.
Consequently, petitioners are not entitled to backwages as it is well settled that backwages may be granted only
when there is a finding of illegal dismissal. Nevertheless, petitioners are entitled to separation pay as provided under
the law, equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher, and those other benefits that petitioners may been titled thereto under the retrenchment program.

SO ORDERED.

G.R. No. 213729, September 02, 2015

PHILIPPINE AIRLINES, INC., Petitioner, v. ALEXANDER P. BICHARA, Respondent.

PERLAS-BERNABE, J.:
FACTS
PAL hired Bichara as a flight attendant. Sometime in 1971, PAL implemented a retrenchment program. By April of
that year, Bichara voluntarily resigned. On May 15, 1975, he was rehired.

Illegal Demotion Case

In 1993, Bichara was included in PAL's Purser Upgrading Program in which he graduated. As flight purser, he was
required to take five (5) check rides for his performance evaluation and earn at least an 85% rating for each ride.
However, Bichara failed in the two (2) check rides with ratings of 83.46% and 80.63%. Consequently, on March 21,
1994, Bichara was demoted to the position of flight steward.

On March 22, 1994, Bichara appealed his demotion to PAL, but no action was taken; hence, he filed a complaint for
illegal demotion against PAL before the NLRC. Eventually, LA Nora issued a Decision (June 16, 1997 Decision)
declaring Bichara's demotion as illegal, and accordingly, ordered PAL to reinstate Bichara to his position as flight
purser. PAL filed an appeal before the NLRC and later before the CA, both of which, however, upheld LA Nora's
finding. PAL no longer appealed to the Court, thus, it rendered the June 16, 1997 Decision final and executory
on February 5, 2004.11

Illegal Retrenchment
During the pendency of the illegal demotion case before the CA, however, or on July 15, 1998, PAL implemented
another retrenchment program that resulted in the termination of Bichara's employment. This prompted him, along
with more than 1,400 other retrenched flight attendants, represented by the Flight Attendants and Stewards
Association of the Philippines (FASAP) a separate complaint for unfair labor practice, illegal retrenchment with
claims for reinstatement and payment of salaries, allowances, backwages, and damages against PAL. This case was
appealed all the way to this Court, entitled "Flight Attendants and Stewards Assn. of the Phils, v. PAL, Patria T.
Chiong, and CA" (FASAP case), which remains pending as of this time.17

Motion for Execution

Bichara reached the 60 year-old compulsory retirement age under the PAL-FASAP Collective Bargaining
Agreement (CBA).

Bichara filed a motion for execution of LA Nora's June 16, 1997 Decision, which PAL opposed by arguing that the
"complaint for illegal demotion was overtaken by supervening events, i.e., the retrenchment of Bichara in 1998 and
his having reached the compulsory retirement age in 2005."

Labor Arbiter Antonio R. Macam: granted Bichara's motion for execution,

NLRC: reversed and set aside LA Macam's Order and denied the motion for execution for being moot and
academic, considering Bichara's compulsory retirement in 2005, without prejudice to the latter's entitlement to
backwages and retirement benefits of a flight steward pursuant to this Court's final decision in the FASAP case.
CA: reversed and set aside the NLRC's ruling. The CA, however, observed that since Bichara was one of the
retrenched employees involved in the FASAP case, this Court's Decision dated October 2, 2009, wherein it ruled that
the retrenchment was illegal and thereby stated that "flight attendants who have reached their compulsory retirement
age of retirement shall receive backwages up to the date of their retirement only," should be made to apply. Thus,
instead of separation pay, Bichara is entitled to backwages from the time of his retrenchment up to the time he
reached the compulsory retirement age of 60. In addition, since the June 16, 1997 Decision, rendered in the illegal
demotion case, had already become final and executory, he is entitled to salary differentials of a flight purser from a
flight attendant from March 21, 1994, i.e., the date of his demotion, up to the time of his retrenchment in July
1998.37 He is also entitled to retirement benefits in accordance with the existing CBA at the time of his retirement.38
PAL moved for reconsideration39 which was denied in a Resolution40 dated July 30, 2014; hence, this petition.

ISSUE
The essential issue to be resolved is whether or not the CA erred in reversing the NLRC's Decision and thereby
awarding Bichara the aforementioned monetary awards.

RULING
A judgment should be implemented according to the terms of its dispositive portion is a long and well-established
rule.41 As such, where the writ of execution is not in harmony with and exceeds the judgment which gives it
life, the writ has pro tanto no validity.

A companion to this rule is the principle of immutability of final judgments, which states that a final judgment
may no longer be altered, amended or modified, even if the alteration, amendment or modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law and regardless of what court renders it. Any
attempt to insert, change or add matters not clearly contemplated in the dispositive portion violates the rule on
immutability of judgments.43 But like any other rule, this principle has exceptions, namely:
1. the correction of clerical errors;
2. the so-called nunc pro tunc entries which cause no prejudice to any party;
3. void judgments; and
4. whenever circumstances transpire after the finality of the decision rendering its execution unjust and
inequitable.

In this case, the final judgment sought to be executed is LA Nora's June 16, 1997 Decision, which was confined to
the directive that PAL reinstate Bichara as a flight purser in view of his illegal demotion to the position of
flight attendant:

Evidently, LA Macam went beyond the terms of the June 16, 1997 Decision when he directed the issuance of a writ
of execution ordering the payment of separation pay in lieu of reinstatement. Unlike the cases cited by the CA,
which all involved illegal dismissal cases, it would not be proper to accord such relief in this case since, in those
cases, the awards of separation pay in lieu of reinstatement were all hinged on the validity of the employee's
dismissal. Here, the validity of Bichara's termination is the subject matter of a separate case, i.e., the FASAP case,
which is still pending before this Court, and is also beyond the ambit of the illegal demotion proceedings. Hence,
LA Macam exceeded his authority when he ruled on this issue and directed PAL to pay Bichara separation pay in
lieu of reinstatement.

PAL's supervening retrenchment of its employees, which included Bichara, in July 1998, and his compulsory
retirement in July 2005, however, prevent the enforcement of the reinstatement of Bichara to the position of flight
purser under the June 16, 1997 Decision. Nonetheless, since this Decision had already settled the illegality of
Bichara's demotion with finality, this Court finds that Bichara should, instead, be awarded the salary
differential of a flight purser from a flight steward from the time of his illegal demotion on March 21, 1994 up
until the time he was retrenched in July 1998. Notably, unlike LA Macam's award of separation pay in lieu of
reinstatement, the award of salary differential is not dependent on the validity of his termination, as it is, in fact,
intrinsically linked to the illegality of Bichara's demotion. Hence, with this direct relation, there should be no
obstacle in rendering this award.

Further, it should be pointed out that the principle of immutability of judgments, from which the above-stated rule
on writ of executions proceed, allow courts, as an exception, to recognize circumstances that transpire after the
finality of the decision which would render its execution unjust and inequitable and act accordingly. Thus, in view
of the supervening events above-mentioned, this Court deems the award of salary differential to be the just and
equitable award under the circumstances herein prevailing. Jurisprudence holds that courts may modify or alter the
judgment to harmonize the same with justice and the facts when after judgment has been rendered and the latter has
become final, facts and circumstances transpire which render its execution impossible or unjust,48 as in this case.

As a last point, it deserves mentioning that since Bichara's illegal demotion has been finally decreed, he
should be entitled to (a) backwages, at the salary rate of a flight purser, from the time of retrenchment in July
1998 up until his compulsory retirement in July 2005; (b) retirement benefits of a flight purser in accordance
with the existing CBA at the time of Bichara's retirement; and (c) attorney's fees, moral, and exemplary
damages, if any, but only if this Court, in the FASAP case, finally rules that the subject retrenchment is
invalid. Otherwise, he should only be entitled to the above-stated salary differential, as well as the
corresponding separation pay required under the relevant CBA, or Article 29749 (formerly Article 283) of the
Labor Code if no such CBA provision exists. The awards of backwages, and retirement benefits, including attorney's
fees, moral, and exemplary damages, if any, cannot, however, be executed in these proceedings since they are
incidents which pertain to the illegal retrenchment case, hence, executable only when the FASAP case is finally
concluded.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated January 24, 2014 and the Resolution
dated July 30, 2014 of Court of Appeals in CA-G.R. SP. No. 118777 are hereby REVERSED and SET ASIDE. A
new one is entered ORDERING petitioner Philippine Airlines, Inc. to pay respondent Alexander P. Bichara the
salary differential of a flight purser from a flight attendant from the time of his illegal demotion on March 21, 1994
up until the time he was retrenched on July 15, 1998.

SO ORDERED.chanroblesvirtuallawlibrary
THIRD DIVISION
G.R. No. 194686, September 23, 2015
TRI-C GENERAL SERVICES, Petitioner, v. NOLASCO B. MATUTO, ROMEO E. MAGNO AND ELVIRA
B. LAVIÑA, Respondents.
DECISION
PERALTA, J.:
Fair evidentiary rule dictates that before employers are burdened to prove that they did not commit illegal dismissal,
it is incumbent upon the employee to first establish by substantial evidence the fact of his or her dismissal.1

For resolution of this Court is a petition for review on certiorari, dated December 23, 2010 of petitioner Tri-C
General Services, seeking the reversal of the Decision2 dated June 17, 2010 and Resolution3dated December 9, 2010
of the Court of Appeals (CA) in CA-G.R. SP No. 111644 reversing the Decision4 and Resolution5 dated June 30,
2009 and September 22, 2009, respectively, of the National Labor Relations Commission (NLRC) Second Division,
Quezon City in LAC No. 12-003297-07 which affirmed the Decision6 dated July 26, 2007 of the Labor Arbiter (LA)
in NLRC Case No. RAB-IV-12-20177-04-C. The assailed Decision and Resolution of the CA declared that
respondents Nolasco B. Matuto, Romeo E. Magno and Elvira B. Laviña were illegally dismissed, and ordered their
reinstatement and payment of full backwages.

The facts are as follows:chanRoblesvirtualLawlibrary

Petitioner Tri-C General Services, Inc. is a manpower agency engaged in the business of supplying services to all
PLDT Business Offices in Laguna.7

Respondents Nolasco Matuto (Matuto), Romeo Magno (Magno) and Elvira Laviña (Laviña) were hired by petitioner
as janitors/janitress assigned at the PLDT Business Office in Calamba City. Magno was hired on August 1, 1993
while Matuto was hired on June 5, 1995 and Laviña on February 4, 1996.8

On November 3, 2004, Matuto and Laviña were barred from their work place in PLDT-Calamba, while Magno was
denied entry on November 26, 2004.9

Thus, respondents filed an illegal dismissal case against petitioner on December 15, 2004.10 Carmela Quiogue, the
owner of Tri-C General Services, Inc., was impleaded in the complaint.11

For their part, respondents averred that sometime in January 1997, they spearheaded the first complaint of several
janitors against petitioner for underpayment of wages and violation of labor standards before the Department of
Labor and Employment. The LA decided on September 1, 2003 in their favor and ordered the petitioner to pay their
underpaid salaries. However, petitioner did not pay the respondents with the mandated minimum wage but merely
increased their salaries by P5.00 every year. They alleged that since then, they earned the ire of petitioner and
experienced harassment and intimidation.12

Respondents further alleged that assuming that petitioner had valid ground to terminate them, their termination was
still deemed illegal since petitioner failed to furnish them with the two notices required by law. They only received a
notice informing them that their services had already been terminated effective on the same date of the notice.13

In its defense, petitioner denied dismissing respondents. Sometime in October 2004, PLDT-Laguna informed
petitioner that it would implement cost-cutting measures and that it would discontinue, after careful assessment, the
services of respondents.14 Petitioner further claimed that it had no other recourse but to temporarily put the
respondents on "floating status" upon termination of client's contract since their work was entirely dependent on the
need for janitorial services of its clients. It alleged that the complaint for illegal dismissal was premature since the
six months legal period for placing an employee on a "floating status" has not yet lapsed.15 It insisted that it was a
legitimate exercise of its management prerogative.

In its reply to respondents' position paper, petitioner insisted that respondents abandoned their posts. It averred that
its Personnel Department sent a series of letters to the respondents• from October 2004 to November 2004.16 On
October 14, 2004, Matuto and Laviha received similar letters, reading as follows:cralawlawlibrary
From: PMI Personnel Department
Subject: Requested to Report at the Office

You are hereby requested to report on Saturday, October 16, 2004, 8:00 AM at our office #45 Zorra St., San
Francisco Del Monte, Quezon City.

In regards to the on going re-shuffling or Notice of transfer. 

Thank you.17chanrobleslaw

Subsequent letters dated October 19, 25 and November 11, 2004 pertain to the same request for the respondents to
report at petitioner's main office. Petitioner warned respondents Matuto and Laviña in a letter18 dated November 11,
2004 that failure to report at their office will mean that they were no longer interested in their work. When such
request went unheeded, petitioner sent the final letter, dated November 16, 2004, reading as
follows:cralawlawlibrary
From: Personnel Department
Subject: Failure to Report at the Office

You were given ample time to report at the office since October 16, 2004 at our office at #45 Zorra St., San
Francisco Del Monte, Quezon City, but you did not appear at all. Therefore, we took action that you are hereby
terminating your services with this company voluntarily.

Due to this, we were left with no recourse but to delete you from our active roster of employees effective today
November 16, 2004.

We wish you the best of luck.

Thank you.19chanrobleslaw

Respondent Magno received similar letters on November 11 and 16, 2004 directing him to report to petitioner's main
office. On November 22, 2004, he received a letter20 informing him that his failure to appear at the office left
petitioner with no recourse but to delete him from its active roster of employees.

The LA ruled in favor of the petitioner, the dispositive portion of the decision reads:cralawlawlibrary
WHEREFORE, premises considered, the complaint for illegal dismissal is DISMISSED for lack of merit except that
TRI-C GENERAL SERVICES, INC. is ordered to pay complainants their separation pay as
follows:chanRoblesvirtualLawlibrary

Nolasco Matuto -  P 42,432.00

Romeo Magno -       45,968.00
Elvira Laviña -         38,896.00
GRAND TOTAL - P127,296.00

SO ORDERED.21
chanrobleslaw

The LA considered the respondents on floating status and the legal period during which they could be placed under
floating status has not yet lapsed at the time of the filing of the complaint on December 15, 2004. Hence, they could
not be considered constructively dismissed.22

Respondents elevated the matters to the NLRC, wliich sustained the decision of the LA that they were not illegally
dismissed. The separation pay, however, was deleted. The dispositive portion of the decision states:cralawlawlibrary
WHEREFORE, premises considered, the appealed Decision is hereby AFFIRMED with MODIFICATION only
insofar as Our order for the monetary award of separation pay to be DELETED from the subject Decision, for lack
of basis.

SO ORDERED.23
chanrobleslaw

The NLRC ruled that the filing of the complaint was premature since petitioner had proof that it could only be sued
if no new post or assignment was given to respondents after the lapse of a period of six months. The awards of
separation pay to respondents were deleted for being misplaced absent any showing that respondents were illegally
dismissed.24

After their Motion for Reconsideration was denied,'respondents filed before the CA a petition for certiorari under
Rule 65. The CA reversed the findings of the LA and the NLRC and ruled for the respondents, the fallo of the
decision reads:cralawlawlibrary
WHEREFORE, the instant petition for certiorari is GRANTED. The assailed Decision and Resolution of the
public respondent National Labor Relations Commission are ANNULLED and SET ASIDE. Judgment is hereby
rendered declaring the petitioners Nolasco B. Matuto, Romeo E. Magno and Elvira B. Lavifia were illegally
dismissed from their employment by private respondent Tri-C General Services and, accordingly, ordering said
private respondent to reinstate the petitioners to their former positions without loss of seniority rights and with
payment of full backwages from the time of their illegal dismissal on 03 November 2004 (for petitioners Matuto and
Lavifia) and on 26 November 2004 (for petitioner Magno).

Private respondent is further ordered to pay petitioners the amounts equivalent to ten percent (10%) of the monetary
awards as and for attorney's fees.

This case is thus REMANDED to the Labor Arbiter for the computation, within 30 days from receipt hereof, of the
backwages, inclusive of allowances and other benefits due to petitioners, computed from the time their
compensation was withheld up to the time of their actual reinstatement, as well as the award of attorney's fees in
their favor.

SO ORDERED.25
chanrobleslaw

The CA held that the paramount consideration is the dire exigency of the business of the employer which compelled
it to put some of its employees temporarily out of work. It found that there was nothing to support petitioner's
allegation aside from its bare assertion that its client PLDT-Laguna requested for discontinuance of its services.
There was also no showing that there was lack of available posts to which the respondents might be assigned after
they were relieved from their last assignment.26

The CA denied petitioner's Motion for Reconsideration. Hence, the petitioner raised before this Court the following
issues:cralawlawlibrary
WHETHER THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ANNULLING AND SETTING
ASIDE THE DECISION ISSUED BY THE NATIONAL LABOR RELATIONS COMMISSION-SECOND
DIVISION.
WHETHER THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING THE MOTION FOR
RECONSIDERATION FILED BY TRI-C EVERLASTING FOR THE REVIEW OF ITS DECISION ISSUED ON
JUNE 17, 2010.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN DECLARING MATUTO, MAGNO AND
LAVIÑA AS ILLEGALLY DISMISSED BY TRI-C.
WHETHER THE HONORABLE,COURT OF APPEALS ERRED IN ORDERING THE: REINSTATEMENT OF
MATUTO, MAGNO AND LAVIÑA AND TO PAY THE LATTER'S BACKWAGES INCLUSIVE OF
ALLOWANCES AND OTHER BENEFITS DUE THEM AS WELL AS ATTORNEY'S FEES.27
chanrobleslaw

We find the instant petition meritorious.

In a petition for review on certiorari under Rule 45, we review the legal errors that the CA may have committed in
the assailed decision, in contrast with the review for jurisdictional error undertaken in an original certiorari action.
In reviewing the legal correctness of the CA decision in a labor case made under Rule 65 of the Rules of Court, this
Court examines the decision in the context that the CA determined the presence or the absence of grave abuse of
discretion in the NLRC decision before it and not on the basis of whether the NLRC decision, on the merits of the
case, was correct.28

The conflicting factual findings of the LA, the NLRC and the CA are not binding on us, and we retain the authority
to pass on the evidence presented and draw conclusions therefrom. In the exercise of its equity jurisdiction, this
Court would re-evaluate and re-examine the relevant findings.29

For the first two issues, petitioner alleged that the CA erred when it annulled and set aside the decision of the NLRC
and denied its motion for reconsideration. It posited that when the findings of fact of the LA is affirmed by the
NLRC, said finding is considered as final and is viewed with respect by the higher tribunals.

It has been settled that judicial review of labor cases does not go beyond the evaluation of the sufficiency of the
evidence upon which its labor officials' findings rest. Hence, the findings of facts and conclusion of the NLRC are
generally accorded not only great weight and respect but even clothed with finality and deemed binding on this
Court as long as they are supported by substantial evidence.30

It was held that in labor cases elevated to it via petition for certiorari, the CA is empowered to evaluate the
materiality and significance of the evidence alleged to have been capriciously, whimsically, or arbitrarily
disregarded by the NLRC in relation to all other evidence on record.31 To make this finding, the CA necessarily has
to view the evidence if only to determine if the NLRC ruling had basis in evidence.32

After a judicious study of the records of the case, this Court deems it proper to disregard the findings of the CA.

The Court is not unmindful of the rule in labor cases that the employer has the burden of proving that the
termination was for a valid or authorized cause. However, it is likewise incumbent upon the employees that they
should first establish by competent evidence the fact of their dismissal from employment.33 As an allegation is not
evidence, it is elementary that a party alleging a critical fact must support his allegation with substantial
evidence.34 It was also stressed that the evidence to prove the fact of dismissal must be clear, positive and
convincing.35

In the present case, the facts and the evidence do not establish a prima facie case that respondents were dismissed
from employment. Aside from their mere assertion and joint affidavit, respondents failed to adduce corroborative
and competent evidence to substantiate their conclusion that they were dismissed from employment. Respondents
did not even present the alleged notice of termination of their employment. Therefore, in the absence of any showing
of an overt or positive act proving that petitioner had dismissed respondents, the latter's claim of illegal dismissal
cannot be sustained as the same would be self-serving, conjectural and of no probative value.36

The records are devoid of any indication that they were barred from petitioner's premises or were otherwise deprived
of any work assignment after the discontinuance of their work in PLDT-Calamba. It was also not shown that
respondents reported or even tried to report to petitioner's office and requested for another work assignment after
being dismissed from PLDT-Calamba. On the contrary, the evidence presented by petitioner showed that they were
repeatedly summoned to report to its main office and did not even bother to show despite several notices. Moreover,
the rule 'that the employer bears the burden of proof in illegal dismissal cases finds no application in a case, like the
present petition, where the employer denied having dismissed the employees.37

Petitioner alleged that the CA erred in ruling that respondents were entitled to reinstatement, payment of backwages
and other monetary benefits. Petitioner believed that respondents are not entitled to the awards since they were not
illegally dismissed.

Under Article 27938 of the Labor Code and as settled in jurisprudence, an employee who is dismissed without just
cause and without due process is entitled to backwages and reinstatement or payment of separation pay in lieu
thereof. While we agree with the rulings of the LA and the NLRC that respondents were not illegally dismissed and
not guilty of abandonment, we do not agree with their decisions to dismiss the case for lack of merit. Instead, we
find that respondents are entitled to reinstatement without payment of backwages and other monetary benefits.

Anent the issue on the award of attorney's fees, Article 111 of the Labor Code provides that in cases of unlawful
withholding of wages, the culpable party may be assessed attorney's fees, equivalent to ten percent (10%) of the
amount of wages recovered. Likewise, we have recognized that "in actions for recovery of wages or where an
employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney's
fees is legally and morally justifiable."39 We have similarly so ruled in RTG Construction, Inc., et at. v. Facto40 in
which we specifically stated:cralawlawlibrary
xxx Settled is the rule that in actions for recovery of wages, or where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interests, a monetary award by way of attorney's fees is justifiable under
Article 111 of the Labor Code; Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article
2208 of the Civil Code. The award of attorney's fees is proper, and there need, not be any showing that the employer
acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages
were not paid accordingly.41
chanrobleslaw

In the present case, however, it was settled that respondents were not illegally dismissed from employment and their
wages were not withheld without valid and legal basis. There/fore, they are not entitled to receive attorney's fees.
As all circumstances surrounding the alleged termination are taken into account, petitioner should accept
respondents back and reinstate them to their former positions. However, under the principle of "no work, no pay,"
there should be no payment of backwages.42 In a case where the employee's failure to work was occasioned neither
by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each
party must bear his own loss.43

Absent any showing that there is strained relationship between petitioner and respondents, the order of reinstatement
shall stand. The doctrine of strained relations is not applied indiscriminately as to bar reinstatement, especially when
the employee has not indicated an aversion to returning to work or does not occupy a position of trust and
confidence in or has no say in the operation of the employer's business.44In this case, there was no evidence that
respondents disliked returning to their former posts and that they occupy a position of trust and confidence.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. Accordingly, the Decision dated
June 17, 2010 and Resolution dated December 9, 2010 of the Court of Appeals in CA-G.R. SP No. 111644 are
hereby REVERSED and SET ASIDE.

Petitioner Tri-C General Services, however is hereby ORDERED to REINSTATE respondents to their former

positions but without payment of backwages within a period of thirty (30) days from finality of judgment.
Respondents Nolasco B. Matuto, Romeo E. Magno and Elvira B. Laviña are ORDERED to report for work within
ten (10) days from notice from petitioner, otherwise, they shall be deemed to have abandoned their employment with
petitioner.

SO ORDERED.chanroblesvirtuallawlibrary