1

BAY HAVEN, INC., JOHNNY T. CO, G.R. No. 160859

and VIVIAN TE-FERNANDEZ,
Petitioners,

1997 commanding petitioners to pay respondents a total of P638,187.15

corresponding to the latter's claims for underpayment as petitioners' workers.[3]

- versus - Present:
FLORENTINO ABUAN, JOSELITO YNARES-SANTIAGO, J.
RAZON, JERRY ASENSE, HERCULES Chairperson
RICAFUENTE, MARIO GURAY, AUSTRIA-MARTINEZ,
ROLANDO NAELGA, JUAN VILLARUZ, CHICO-NAZARIO,
MARIO SANTIAGO, ROGELIO NACHURA, and
MOCORRO, CALPITO MENDOLES, REYES, JJ.
RENE CORALES, FRANCISCO
ABENTAJADO, BONNIE ESPAOLA,
ERNESTO DE JESUS and RODRIGO
RUZGAL, Promulgated:
Respondents. July 30, 2008
x----------------------------------------------------------x

The Regional Director based his Order on the results of the inspection conducted
on April 23, 1997 by one of its inspectors who found that petitioner New Bay Haven
Restaurant, located at the Army and Navy Club, Kalaw St., Manila, under the
ownership or management of petitioner Te, committed the following violations:
Labor Standards Law:
1.
Underpayment of minimum wage.
2.
Underpayment of thirteenth month pay.
3.
Underpayment of regular holiday pay.
4.
Underpayment of special holiday pay.
5.
Non-payment of night shift differential pay.

DECISION
AUSTRIA-MARTINEZ, J.:

Occupational Safety and Health Standards.

1. Non-registration of the firm under Rule 1020 of OSHS.[4]

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,

On December 18, 1997, New Bay-Haven Restaurant and its co-petitioner Te filed

seeking a reversal of the Decision[1] of the Court of Appeals (CA) dated July 15, 2003,

with the DOLE-NCR Regional Office a Motion for Reconsideration of the November 7,

which denied the petition for certiorari filed by Bay Haven, Inc., Johnny T. Co and

1997 order, alleging that the office had no jurisdiction over the case and that the

Vivian Te-Fernandez (Te) (petitioners) seeking the annulment of the Resolutions

order was issued in denial of petitioners' right to due process. [5] They argued that

dated April 18, 2000 and September 19, 2001, issued by Undersecretary Jose

jurisdiction over the case was lodged with the National Labor Relations Commission

M. Espaol, Jr. (DOLE Undersecretary) and Secretary Patricia Sto. Tomas (DOLE

(NLRC), and not the DOLE-NCR, due to the amount of the claims involved. They

Secretary), respectively, of the Department of Labor and Employment (DOLE), as

added that their right to due process was also denied because the order was issued

well as the Resolution[2] dated November 5, 2003 of the CA, which denied

without them being furnished copies of the complaint and the inspection report and

petitioners' motion for reconsideration.

without being notified of the hearings held in the case.[6]

The following are the antecedent facts.

On June 16, 1998, the DOLE-NCR Assistant Regional Director, acting for the Regional
Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the

Director, issued an Order granting petitioners' motion for reconsideration as he

exercise of its visitorial, inspection and enforcement powers, through its Regional

found merit in petitioners' allegation of absence of due process in the issuance of

Director for the National Capital Region (NCR), issued an Order dated November 7,

the first order.[7] The order, however, stated that the DOLE had jurisdiction over the

case, pursuant to the Labor Code, as amended by Republic Act (R.A.) No. 7730, that

documentary evidence proved that their obligations to respondents had been

intends to strengthen the visitorial and enforcement powers of the Secretary

discharged and that the DOLE had no jurisdiction over the case.[15]

of Labor and Employment.[8] Consequently, another hearing for the case was set.
Treating the motion for reconsideration as an appeal, the DOLE Undersecretary
During the hearing on September 14, 1998, petitioners submitted their Position

issued a Resolution dated April 18, 2000, denying the appeal filed by petitioners,

Paper attaching thereto payroll sheets and waivers and quitclaims allegedly signed

[16]

by the respondents to prove that petitioner properly paid respondents the amounts

upon to deny respondents' claims, and reiterating that the DOLE had jurisdiction to

due them.

decide the case.[17]

[9]

upholding the Regional Director's finding that the quitclaims could not be relied

Respondents Florentino Abuan, Francisco Abentajado, Mario Guray, Juan Villaruz,

On May 12, 2000, petitioners filed a Motion for Reconsideration [18] of the April 18,

Jerry Asense and Joselito Razon, however, outrightly denied the validity of the

2000 Resolution which was denied by DOLE Secretary Sto. Tomas in a

payroll sheets and quitclaims.In their Joint Affidavit dated October 29, 1998,

Resolution[19] dated September 19, 2001.

respondents claimed that the actual daily pay they received was much smaller than
the amounts stated in the payroll and they denied having received the cash amount

Aggrieved, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of

stated in the quitclaims.[10] They added that they were merely forced to sign the

Court with the CA, seeking to annul and set aside the April 18, 2000 Resolution and

payrolls and quitclaims in blank and in one sitting after they were accepted as

the September 19, 2001 Resolution,[20] docketed as CA-G.R. No. 68397.

applicants for their positions.[11]

On July 15, 2003, the CA rendered its Decision,[21] dismissing the petition, ruling that
the DOLE had jurisdiction over the labor standards case and that petitioners did not

On December 29, 1998, the DOLE-NCR Regional Director, giving credence to the

present enough evidence to refute the claims made by respondents.

affidavit of the respondents denying the validity of the payroll sheets and quitclaims,
issued an Order denying petitioners' motion for reconsideration of the Order

Petitioners filed a Motion for Reconsideration of the Decision which the CA denied in

dated November 7, 1997.

its Resolution[22] dated November 5, 2003.

[12]

The Order held petitioners New Bay Haven Restaurant,

Bay Haven, Inc., its President Johnny T. Co, and/or Vivian Te as the ones liable as
employers of respondents. However, the liability of petitioners was reduced
to P468,444.16.[13]

On January 18, 1999, petitioners filed a Motion for Reconsideration of the Order
dated December 29, 1998.[14] In the motion, petitioners insisted that their

Hence, herein petition assigning the following errors of the CA:

1.

THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE
JURISDICTION OF THE REGIONAL DIRECTOR FOR THE
NATIONAL CAPITAL REGION OF THE DEPARTMENT OF LABOR
AND EMPLOYMENT IN CASE NO. NCR-00-9703-RI-048-SPL
ENTITLED FLORENTINO ABUAN, ET AL., COMPLAINANTS
VERSUS NEW BAY HAVEN RESTAURANT, ET AL.,
RESPONDENTS; AND THE APPELLATE JURISDICTION OF THE

OFFICE OF THE SECRETARY OF THE DEPARTMENT OF LABOR

AND EMPLOYMENT IN CASE NO. OS-LS-005-019-099.
2.

3.

4.

THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED THE
RULING OF THE REGIONAL DIRECTOR OF DOLE-NCR AND
THE OFFICE OF THE SECRETARY OF THE DOLE WHICH
DECLARED THAT RESPONDENTS CALPITO MENDOLES AND
RENE CORALES ARE EMPLOYEES OF BAY HAVEN, INC.,
DESPITE LACK OF EVIDENCE TO SUPPORT THE RULING ON
THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS AND REVERSIBLE ERROR WHEN IT UPHELD THE
MONETARY
AWARD
OF P25,952.83 TO
RESPONDENT
ROLANDO NAELGA WHO WAS NOT ONE OF THOSE WHOSE
CLAIMS WAS [sic] MADE THE SUBJECT OF THE FINDINGS OF
THE LABOR AND [sic] EMPLOYMENT AND ENFORCEMENT
OFFICER OF THE DEPARTMENT OF LABOR AND EMPLOYMENT.
THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS AND REVERSIBLE ERROR WHEN IT SUSTAINED THE
AWARD OF OVERTIME PAY DESPITE ABSENCE OF EVIDENCE
TO SHOW THAT OVERTIME WORK HAD INDEED BEEN
RENDERED.

Respondents did not file a comment on the petition, but instead filed a
Memorandum[23] simultaneous with petitioners' filing of their Memorandum.[24]

In their Memorandum, respondents aver that the decision of the DOLE-NCR, as

upheld by the DOLE Secretary, was rendered in the exercise of its jurisdiction,
specifically its visitorial and enforcement powers as conferred by law.[25] They also
allege that petitioners were given the opportunity to present evidence to refute
respondents' claims, but failed to do so.[26]

We summarize the issues as follows: 1) whether the DOLE Secretary and her
authorized representatives have jurisdiction to impose the monetary liability against
petitioners; and 2) whether the DOLE-NCR, as upheld by the DOLE Secretary and
the CA committed an error in awarding the claims of respondents.

We deny the petition.

The DOLE Secretary and her authorized representatives such as the DOLE-NCR
Regional Director, have jurisdiction to enforce compliance with labor standards laws
under the broad visitorialand enforcement powers conferred by Article 128 of
the Labor Code, and expanded by R.A. No. 7730, to wit:
Art. 128. Visitorial and Enforcement Power. (a) The Secretary of Labor and Employment or his duly
authorized representatives, including labor regulation officers,
shall have access to employer's records and premises at any time
of the day or night whenever work is being undertaken therein,
and the right to copy therefrom, to question any employee and
investigate any fact, condition or matter which may be necessary
to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and
regulations issued pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and 217
of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based
on the findings of laboremployment and enforcement
officers or industrial safety engineers made in the course
of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases
where
the
employer
contests
the
findings
of
the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in
the course of inspection.
An order issued by the duly authorized representative of the
Secretary of Labor and Employment under this article may be
appealed to the latter. In case said order involves a monetary
award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and
Employment and Employment in the amount equivalent to the
monetary award in the order appealed from. (Emphasis supplied)

The Court has held that the visitorial and enforcement powers of the Secretary,

The records also clearly indicate that the Regional Director and the DOLE Secretary

exercised

resolved

through

his

representatives,

encompass

compliance

with

all labor standards laws and other laborlegislation, regardless of the amount of the
claims filed by workers.

[27]

the

case

based

only

on

the

following

violations

found

by

the labor inspection officer, which do not include illegal dismissal, thus:

This has been the rule since R.A. No. 7730 was enacted

1.
2.
3.
4.
5.
6.

on June 2, 1994, amending Article 128(b) of the Labor Code, to expand

the visitorial and enforcement powers of the DOLE Secretary. Under the former rule,
the DOLE Secretary had jurisdiction only in cases where the amount of the claim

Underpayment of minimum wage.

Underpayment of thirteenth month pay.
Underpayment of regular holiday pay.
Underpayment of special holiday pay.
Non-payment of night shift differential pay.
Non-registration of the firm under Rule 1020 of OSHS.

does not exceedP5,000.00.

The above-mentioned violations are within the jurisdiction of the DOLE Secretary
Petitioners argue, however, that DOLE-NCR should not have taken jurisdiction of the

and his representatives to address. The questioned Orders dated December 29,

case, because in respondent Abuan's complaint, one of the entries reads as follows:

1998, April 18, 2000 and September 19, 2001 did not mention illegal dismissal, and

Is there anything that the Department of Labor and Employment

can do to be of further assistance to you?
[Answer:] Illegal dismissal, no overtime, no holiday pay.[28]

properly so, because there was no such finding in the inspector's report.[31] Being in
the nature of compliance orders, said orders, under Art. 128(b) of the Labor Code,
are strictly based on the findings of labor employment and enforcement officers

Petitioners contend that the complaint's own allegation of illegal dismissal meant

x x x made in the course of inspection, and not on any complaint filed. Though a

that no more employer-employee relationship existed between petitioners and

complaint may initiate the case or an inspection, its allegations may not necessarily

respondents, depriving DOLE-NCR and the Secretary of Labor and Employment of

be upheld by the labor inspector or the Regional Director.

jurisdiction to entertain the complaint.[29] This allegedly is a requirement under Art.

128(b) of the Labor Code, hereinbefore quoted.

Moreover, Abuan's allegation of illegal dismissal was his personal accusation, and
did not necessarily apply to all the other employees. The records also do not

Petitioners' contentions are untenable. While it may be true that as far as

support a contrary finding. ButAbuan's other allegations of underpayment and

respondent Abuan is concerned, his allegation of illegal dismissal had deprived the

other potential violations of labor laws and regulations were within the obligation of

DOLE of jurisdiction as per Art. 217 of the Labor Code,[30] the same does not hold for

the

the rest of the respondents, who do not claim to have been illegally dismissed. For

affect Abuan's remaining co-workers. Under Art. 128, the Regional Director can

one, petitioners failed to raise this matter with the Regional Director or even the

conduct inspections and check all violations of labor laws, and enforce compliance

DOLE Secretary, thus, preventing the issue from being clarified.

measures for the benefit of allemployees, without being compelled to rely on a

Regional

Director

to

investigate,

especially

insofar

as

they

complaint that has been filed or its allegations. In fact, the article is silent on
whether the filing of a complaint is even required to initiate the exercise of the
inspection and enforcement powers.

Art. 128. Visitorial and Enforcement Power. (b) Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to
the labor standards
provisions
of
this
Code
and
other labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in
the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases
where the employer contests the findings of
the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not
considered in the course of inspection.

Petitioners also insinuate that they were effectively denied due process at the earlier
stages of the controversy, as they claim that during the inspection, the inspector did
not even bother to talk to any them. [32] Again, petitioners are raising serious, factual
allegations in this late stage of their appeal. They never mentioned this alleged
infraction in the very
Reconsideration[33] of

the

first

motion they filed

Regional

Director's

1997. Neither did they raise it in their Position Paper

or in their

Order
[34]

Motion

for

dated November

7,

dated September 14, 1998,

depriving the concerned officer, that is, the labor inspector, of the chance to deny or
refute such serious allegations.

x x x x (Emphasis supplied)
Petitioners themselves cannot deny that due process was afforded them after the
inspection. For one thing, their motion for reconsideration of the Order

Again, petitioners fail to persuade. The mere disagreement by the employer with

dated November 7, 1997 was granted, which resulted in the re-opening of the

the

proceedings and the holding of subsequent hearings. In these hearings, petitioners

presenting controverting evidence, does not automatically divest the DOLE

were given the chance to air their side. Petitioners also submitted their position

Secretary or any of his authorized representatives such as the regional directors, of

paper, in which they summarized all their arguments and presented their

jurisdiction

documentary evidence, such as a contract of lease, payroll sheets and quitclaims, to

the Labor Code.

findings

to

of

the labor officer,

exercise

or

their visitorial and

the

simple

enforcement

act

powers

of

under

refute the respondents' claims, as well as the inspector's findings. In the petition
now before us, petitioners themselves claim that they seasonably contested the
findings of the labor inspector.

[35]

Taking all these into consideration, the ineluctable

conclusion is that the demands of due process were satisfied, as petitioners had
been

given

all

the

opportunity

to

be

heard. It

has

been

held

that

where opportunity tobe heard, either through oral arguments or pleadings, is

accorded, there is no denial of due process.[36]

Under prevailing jurisprudence, the so-called exception clause in

Art. 128(b) of the Labor Code has the following elements, which must all concur to
divest the regional director of jurisdiction over workers' claims:
(a) that the employer contests the findings of
the labor regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to
examine evidentiary matters; and
(c) that such matters are not verifiable in the normal
course of inspection.[37]

Next, petitioners argue that the regional director was divested of jurisdiction
because petitioners contested the findings of the labor inspection officer. This,

Thus, in SSK Parts Corporation v. Camas,[38] in which the employer contested the

allegedly, is in accordance with Art. 128(b) of the Labor Code, which states:

Regional Director's finding of violations of labor standards, but such issue was

resolved by an examination of evidentiary matters which were verifiable in the

DOLE Secretary. For these reasons, the exclusion clause of Art.128(b) does not

ordinary course of inspection, it was held that there was no more need to indorse

apply.

the case to the arbitration branch of the NLRC. In Ex-BataanVeterans Security

Agency, Inc. v. Secretary of Labor,[39] the Court held:
The Court notes that EBVSAI did not contest the findings of
the labor regulations officer during the hearing or after receipt of
the notice of inspection results. It was only in its supplemental
motion for reconsideration before the Regional Director that
EBVSAI questioned the findings of the labor regulations officer and
presented documentary evidence to controvert the claims of
private respondents. But even if this was the case, the
Regional Director and the Secretary of Labor still looked
into and considered EBVSAIs documentary evidence and
found that such did not warrant the reversal of the
Regional Directors order. The Secretary of Labor also
doubted
the
veracity
and
authenticity
of EBVSAIs documentary evidence. Moreover, the pieces
of evidence presented by EBVSAI were verifiable in the
normal course of inspection because all employment records
of the employees should be kept and maintained in or about the
premises of the workplace, which in this case is
in Ambuklao Plant, the establishment where private respondents
were regularly assigned.[40] (Emphasis supplied)

Thus, the key requirement for the Regional Director and the DOLE Secretary to be
divested of jurisdiction is that the evidentiary matters are not verifiable in the
course of inspection. Where the evidence presented was verifiable in the normal
course of inspection, even if presented belatedly by the employer, the Regional
Director, and later the DOLE Secretary, may still examine them; and these officers
are not divested of jurisdiction to decide the case.

In the present case, petitioners' pieces of evidence of the alleged contract

of lease, payroll sheets, and quitclaims were all verifiable in the normal course of

In addition, the findings of the said officers on the invalidity or low probative value of
these documents are findings of a factual nature which this Court will accord with
great respect.[41]

As to the quitclaims, we need only to reiterate the policy laid down in AFP Mutual
Benefit Association, Inc. v. AFP-MBAI-EU,[42] which states:
In labor jurisprudence, it is well established that quitclaims and/or
complete releases executed by the employees do not estop them
from pursuing their claims arising from the unfair labor practice of
the employer.The basic reason for this is that such quitclaims
and/or complete releases are against public policy and, therefore,
null and void. The acceptance of termination pay does not divest
a laborer of the right to prosecute his employer for
unfair labor practice acts. (Cario vs. ACCFA, L-19808, September
29, 1966, 18 SCRA 163; Philippine Sugar Institute vs. CIR, L13475, September 29, 1960, 109 Phil. 452; Mercury Drug Co. vs.
CIR, L-23357, April 30, 1974, 56 SCRA 694, 704)
In the Cario case, supra, the Supreme Court, speaking thru Justice
Sanchez, said:
Acceptance of those benefits would not amount
to estoppel. The reason is plain. Employer and
employee, obviously, do not stand on the same
footing. The employer drove the employee to
the wall. The latter must have to get hold of
money. Because, out of job, he had to face the
harsh necessities of life. He thus found himself
in no position to resist money proffered. His,
then, is a case of adherence, not of choice. One
thing sure, however, is that petitioners did not
relent their claim. They pressed it. They are
deemed not to have waived any of their
rights. Renuntiatio non praesumitur.

inspection and, granting that they were not examined by the labor inspector, they
have nevertheless been thoroughly examined by the Regional Director and the

The principle enunciated above, however, should benefit only the respondents in
the present case who outrightly denied the quitclaims' validity, because it may be

supposed that those who did not protest petitioners' presentation of the quitclaims

their status,[47] but failed to do so. We can only conclude, therefore, that there is no

in evidence have admitted the same by their silence. [43] In such instance, only

substantial evidence to prove petitioners' obligations to these respondents.

respondents

Francisco Abentajado,

Mario Guray,

Juan Villaruz,

Jerry Asense and Joselito Razon are deemed to have blocked the quitclaims'

However, we do not sustain petitioners' allegation that the Regional Director and the

applicability against them.[44]

DOLE Secretary erroneously awarded overtime pay to the respondents, despite the
lack of proof that overtime work had been rendered. Suffice it to state that

Anent the second issue, petitioners contend that the Regional Director and the

petitioners' own evidence, which are the payroll sheets they submitted to the

DOLE Secretary committed error in their award of the various claims of respondents,

Regional Director,[48] show that respondents indeed rendered overtime work. This

specifically citing the award to certain respondents whom they deny having worked

amounts to an admission by petitioners, which may be used in evidence against

as their employees.

them.[49] Aptly, this then became one of the bases of the Regional Director's award
of overtime pay to respondents.

Here, there is merit in petitioners' contentions. Although the basic rule is that
questions of facts like this may not be addressed in a petition for review, there are

In summary, we hold that only the awards granted to the following respondents be

certain exceptions, such as when the judgment is based on a misapprehension of

affirmed:

facts.[45] At the earliest possible opportunity, that is, as early as the position paper

1.
2.
3.
4.
5.

filed on September 14, 1998, petitioners already denied being the employers of the
respondents Calpito Mendoles and
Reconsideration

[46]

Rene Corales. Later,

in

their

Motion

for

dated January 8, 2004, petitioners also disclaimed liability

to Rolando Naelga, who was not in the labor inspector's and Regional Director's
original list of petitioners' workers and against whom petitioners were not afforded
the chance to present countervailing evidence.Since then, petitioners have
consistently denied liability as employers of these respondents. These respondents,
however, not only failed to controvert this denial by petitioners, they also did not
participate in the proceedings of the case, as shown by the records. Thus, there was
a failure to prove the existence of an employer-employee relationship between
petitioners and these particular respondents. Respondents could have easily proven
their relationship by presenting any of the following: their appointment letters or
employment contracts, payrolls, organization charts, Social Security System
registration, personnel list, as well as the testimonies of co-employees to confirm

Juan Villaruz
Francisco Abentajado
Jerry Asense
Mario Guray
Joselito Razon

The award in favor of Florentino Abuan is deleted, as his claim for illegal dismissal
is within the original and exclusive jurisdiction of the Labor Arbiter, and outside of
the jurisdiction of the DOLE Secretary and the Regional Director. The awards
granted to the rest of the respondents are likewise deleted for lack of evidence to
prove petitioners' liability as to them.

WHEREFORE,

the

decision

appealed

from

is AFFIRMED,

with

the MODIFICATION that only respondents Juan Villaruz, Francisco Abentajado,

Jerry Asense, Mario Guray, and JoselitoRazon be GRANTED their monetary awards
while the awards given to the rest of the respondents are DELETED.

No costs.

SO ORDERED.

G.R. No. 152396

November 20, 2007

EX-BATAAN
VETERANS
SECURITY
AGENCY,
INC., petitioner,
vs.
THE SECRETARY OF LABOR BIENVENIDO E. LAGUESMA, REGIONAL
DIRECTOR BRENDA A. VILLAFUERTE, ALEXANDER POCDING, FIDEL
BALANGAY, BUAGEN CLYDE, DENNIS EPI, DAVID MENDOZA, JR.,
GABRIEL TAMULONG, ANTON PEDRO, FRANCISCO PINEDA, GASTON
DUYAO, HULLARUB, NOLI DIONEDA, ATONG CENON, JR., TOMMY
BAUCAS, WILLIAM PAPSONGAY, RICKY DORIA, GEOFREY MINO,
ORLANDO RILLASE, SIMPLICIO TELLO, M. G. NOCES, R. D. ALEJO,
and P. C. DINTAN, respondents.
DECISION
CARPIO, J.:

accidental report; (10) no safety committee; and (11) no trained first

aider.5 On the same date, the Regional Office issued a notice of
hearing6 requiring EBVSAI and private respondents to attend the hearing
on 22 March 1996. Other hearings were set for 8 May 1996, 27 May 1996
and 10 June 1996.
On 19 August 1996, the Director of the Regional Office (Regional Director)
issued an Order, the dispositive portion of which reads:
WHEREFORE, premises considered, respondent EX-BATAAN
VETERANS SECURITY AGENCY is herebyORDERED to pay the
computed deficiencies owing to the affected employees in the total
amount of SEVEN HUNDRED SIXTY THREE THOUSAND NINE
HUNDRED NINETY SEVEN PESOS and 85/PESOS within ten
(10) calendar days upon receipt hereof. Otherwise, a Writ of
Execution shall be issued to enforce compliance of this Order.

The Case
This is a petition for review 1 with prayer for the issuance of a temporary
restraining order or writ of preliminary injunction of the 29 May 2001
Decision2 and the 26 February 2002 Resolution 3 of the Court of Appeals in
CA-G.R. SP No. 57653. The 29 May 2001 Decision of the Court of Appeals
affirmed the 4 October 1999 Order of the Secretary of Labor in OS-LS-04-4097-280. The 26 February 2002 Resolution denied the motion for
reconsideration.

NAME

DEFICIENCY

1. ALEXANDER POCDING

P 36,380.85

2. FIDEL BALANGAY

36,380.85

3. BUAGEN CLYDE

36,380.85

4. DENNIS EPI

36,380.85

5. DAVID MENDOZA, JR.

36,380.85

6. GABRIEL TAMULONG

36,380.85

The Facts
Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of
providing security services while private respondents are EBVSAI's
employees assigned to the National Power Corporation at Ambuklao Hydro
Electric Plant, Bokod, Benguet (Ambuklao Plant).
On 20 February 1996, private respondents led by Alexander Pocding
(Pocding) instituted a complaint4 for underpayment of wages against
EBVSAI before the Regional Office of the Department of Labor and
Employment (DOLE).
On 7 March 1996, the Regional Office conducted a complaint inspection at
the Ambuklao Plant where the following violations were noted: (1) nonpresentation of records; (2) non-payment of holiday pay; (3) non-payment
of rest day premium; (4) underpayment of night shift differential pay; (5)
non-payment of service incentive leave; (6) underpayment of 13 th month
pay; (7) no registration; (8) no annual medical report; (9) no annual work

10

7. ANTON PEDRO

36,380.85

19. NOCES, M.G.

36,380.85

8. FRANCISCO PINEDA

36,380.85

20. ALEJO, R.D.

36,380.85

9. GASTON DUYAO

36,380.85

21. D[I]NTAN, P.C.

36,380.85

10. HULLARUB

36,380.85

TOTAL

P 763,997.85

11. NOLI D[EO]NIDA

36,380.85

xxxx
SO ORDERED.7

12. ATONG CENON, JR.

36,380.85

13. TOMMY BAUCAS

36,380.85

14. WILIAM PAPSONGAY

36,380.85

15. RICKY DORIA

36,380.85

16. GEOFREY MINO

36,380.85

17. ORLANDO R[IL]LASE

36,380.85

EBVSAI filed a motion for reconsideration 8 and alleged that the Regional
Director does not have jurisdiction over the subject matter of the case
because the money claim of each private respondent exceeded P5,000.
EBVSAI pointed out that the Regional Director should have endorsed the
case to the Labor Arbiter.
In a supplemental motion for reconsideration, 9 EBVSAI questioned the
Regional Director's basis for the computation of the deficiencies due to
each private respondent.
In an Order10 dated 16 January 1997, the Regional Director denied EBVSAI's
motion for reconsideration and supplemental motion for reconsideration.
The Regional Director stated that, pursuant to Republic Act No. 7730 (RA
7730),11 the limitations under Articles 12912 and 217(6)13 of the Labor Code
no longer apply to the Secretary of Labor's visitorial and enforcement
powers under Article 128(b). 14 The Secretary of Labor or his duly
authorized representatives are now empowered to hear and decide, in a
summary proceeding, any matter involving the recovery of any amount of
wages and other monetary claims arising out of employer-employee
relations at the time of the inspection.
EBVSAI appealed to the Secretary of Labor.

18. SIMPLICO TELLO

36,380.85

The Ruling of the Secretary of Labor

11

In an Order15 dated 4 October 1999, the Secretary of Labor affirmed with

modification the Regional Director's 19 August 1996 Order. The Secretary
of Labor ordered that the P1,000 received by private respondents Romeo
Alejo, Atong Cenon, Jr., Geofrey Mino, Dennis Epi, and Ricky Doria be
deducted from their respective claims. The Secretary of Labor ruled that,
pursuant to RA 7730, the Court's decision in the Servando16 case is no
longer controlling insofar as the restrictive effect of Article 129 on the
visitorial and enforcement power of the Secretary of Labor is concerned.
The Secretary of Labor also stated that there was no denial of due process
because EBVSAI was accorded several opportunities to present its side but
EBVSAI failed to present any evidence to controvert the findings of the
Regional Director. Moreover, the Secretary of Labor doubted the veracity
and authenticity of EBVSAI's documentary evidence. The Secretary of
Labor noted that these documents were not presented at the initial stage
of the hearing and that the payroll documents did not indicate the periods
covered by EBVSAI's alleged payments.
EVBSAI filed a motion for reconsideration which was denied by the
Secretary of Labor in his 3 January 2000 Order.17
EBVSAI filed a petition for certiorari before the Court of Appeals.
The Ruling of the Court of Appeals
In its 29 May 2001 Decision, the Court of Appeals dismissed the petition
and affirmed the Secretary of Labor's decision. The Court of Appeals
adopted the Secretary of Labor's ruling that RA 7730 repealed the
jurisdictional limitation imposed by Article 129 on Article 128 of the Labor
Code. The Court of Appeals also agreed with the Secretary of Labor's
finding that EBVSAI was accorded due process.
The Court of Appeals also denied EBVSAI's motion for reconsideration in its
26 February 2002 Resolution.
Hence, this petition.
The Issues
This case raises the following issues:
1. Whether the Secretary of Labor or his duly authorized
representatives acquired jurisdiction over EBVSAI; and

2. Whether the Secretary of Labor or his duly authorized

representatives have jurisdiction over the money claims of private
respondents which exceed P5,000.
The Ruling of the Court
The petition has no merit.
On the Regional Director's Jurisdiction over EBVSAI
EBVSAI claims that the Regional Director did not acquire jurisdiction over
EBVSAI because he failed to comply with Section 11, Rule 14 of the 1997
Rules of Civil Procedure.18 EBVSAI points out that the notice of hearing was
served at the Ambuklao Plant, not at EBVSAI's main office in Makati, and
that it was addressed to Leonardo Castro, Jr., EBVSAI's Vice-President.
The Rules on the Disposition of Labor Standards Cases in the Regional
Offices19 (rules) specifically state that notices and copies of orders shall be
served on the parties or their duly authorized representatives at their last
known address or, if they are represented by counsel, through the
latter.20 The rules shall be liberally construed 21 and only in the absence of
any applicable provision will the Rules of Court apply in a suppletory
character.22
In this case, EBVSAI does not deny having received the notices of hearing.
In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao,
detachment commander and bookkeeper of EBVSAI, respectively,
appeared before the Regional Director. They claimed that the 22 March
1996 notice of hearing was received late and manifested that the notices
should be sent to the Manila office. Thereafter, the notices of hearing were
sent to the Manila office. They were also informed of EBVSAI's violations
and were asked to present the employment records of the private
respondents for verification. They were, moreover, asked to submit, within
10 days, proof of compliance or their position paper. The Regional Director
validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question
the jurisdiction of the Regional Director after receiving the notices of
hearing and after appearing before the Regional Director.
On the Regional Director's Jurisdiction over the Money Claims
EBVSAI maintains that under Articles 129 and 217(6) of the Labor Code,
the Labor Arbiter, not the Regional Director, has exclusive and original
jurisdiction over the case because the individual monetary claim of private
respondents exceeds P5,000. EBVSAI also argues that the case falls under
the exception clause in Article 128(b) of the Labor Code. EBVSAI asserts
that the Regional Director should have certified the case to the Arbitration

12

Branch of the National Labor Relations Commission (NLRC) for a full-blown

hearing on the merits.
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:
While it is true that under Articles 129 and 217 of the Labor Code,
the Labor Arbiter has jurisdiction to hear and decide cases where
the aggregate money claims of each employee exceeds P5,000.00,
said provisions of law do not contemplate nor cover the visitorial
and enforcement powers of the Secretary of Labor or his duly
authorized representatives.
Rather, said powers are defined and set forth in Article 128 of the
Labor Code (as amended by R.A. No. 7730) thus:
Art. 128 Visitorial and enforcement power. --- x x x
(b) Notwithstanding the provisions of Article[s] 129 and
217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance
orders to give effect to [the labor standards provisions of
this Code and other] labor legislation based on the findings
of labor employment and enforcement officers or industrial
safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue
writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the
employer contests the findings of the labor employment
and enforcement officer and raises issues supported by
documentary proofs which were not considered in the
course of inspection.
xxxx
The aforequoted provision explicitly excludes from its coverage
Articles 129 and 217 of the Labor Code by the phrase
"(N)otwithstanding the provisions of Articles 129 and 217of this
Code to the contrary x x x" thereby retaining and further
strengthening the power of the Secretary of Labor or his duly
authorized representatives to issue compliance orders to give
effect to the labor standards provisions of said Code and other
labor legislation based on the findings of labor employment and
enforcement officer or industrial safety engineer made in the
course of inspection.23 (Italics in the original)

This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v.
Sensing,24 where we sustained the jurisdiction of the DOLE Regional
Director and held that "the visitorial and enforcement powers of the
DOLE Regional Director to order and enforce compliance with
labor standard laws can be exercised even where the individual
claim exceeds P5,000."
However, if the labor standards case is covered by the exception clause in
Article 128(b) of the Labor Code, then the Regional Director will have to
endorse the case to the appropriate Arbitration Branch of the NLRC. In
order to divest the Regional Director or his representatives of jurisdiction,
the following elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that
in order to resolve such issues, there is a need to examine evidentiary
matters; and (c) that such matters are not verifiable in the normal course
of inspection.25 The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the
notice of inspection results.26
In this case, the Regional Director validly assumed jurisdiction over the
money claims of private respondents even if the claims exceeded P5,000
because such jurisdiction was exercised in accordance with Article 128(b)
of the Labor Code and the case does not fall under the exception clause.
The Court notes that EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the notice of
inspection results. It was only in its supplemental motion for
reconsideration before the Regional Director that EBVSAI questioned the
findings of the labor regulations officer and presented documentary
evidence to controvert the claims of private respondents. But even if this
was the case, the Regional Director and the Secretary of Labor still looked
into and considered EBVSAI's documentary evidence and found that such
did not warrant the reversal of the Regional Director's order. The Secretary
of Labor also doubted the veracity and authenticity of EBVSAI's
documentary evidence. Moreover, the pieces of evidence presented by
EBVSAI were verifiable in the normal course of inspection because all
employment records of the employees should be kept and maintained in or
about the premises of the workplace, which in this case is in Ambuklao
Plant, the establishment where private respondents were regularly
assigned.27
WHEREFORE, we DENY the petition. We AFFIRM the 29 May 2001
Decision and the 26 February 2002 Resolution of the Court of Appeals in
CA-G.R. SP No. 57653.
SO ORDERED.

13

G.R. No. 87210 July 16, 1990

FILOMENA
BARCENAS, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), Rev. SIM
DEE the present Head Monk of the Manila Buddha Temple,
MANUEL CHUA, in his capacity as the President and Chairman of
the Board of Directors of the Poh Toh Buddhist Association of the
Philippines, Inc., and in his private capacity,respondents.
L.B. Camins for petitioner.
Lino M. Patajo and Jose J. Torrefranca for private respondents.

MEDIALDEA, J.:
This petition for review on certiorari (which We treat as a special civil
action for certiorari) seeks to annul the decision of the National Labor
Relations Commission dated November 29, 1988, which reversed the
decision of the Labor Arbiter dated February 10, 1988 in NLRC NCR Case
No. 12-4861-86 (Filomena Barcenas v. Rev. Sim See, etc., et al.) on the
ground that no employer-employee relationship exists between the parties.
Petitioner alleged in her position paper the following facts:
In 1978, Chua Se Su (Su for short) in his capacity as the Head Monk of the
Buddhist Temple of Manila and Baguio City and as President and Chairman
of the Board of Directors of the Poh Toh Buddhist Association of the Phils.
Inc. hired the petitioner who speaks the Chinese language as secretary and
interpreter. Petitioner's position required her to receive and assist Chinese
visitors to the temple, act as tourist guide for foreign Chinese visitors,
attend to the callers of the Head Monk as well as to the food for the temple
visitors, run errands for the Head Monk such as paying the Meralco, PLDT,
MWSS bills and act as liaison in some government offices. Aside from her
pay and allowances under the law, she received an amount of P500.00 per
month plus free board and lodging in the temple. In December, 1979, Su
assumed the responsibility of paying for the education of petitioner's
nephew. In 1981, Su and petitioner had amorous relations. In May, 1982, of
five months before giving birth to the alleged son of Su on October 12,
1982, petitioner was sent home to Bicol. Upon the death of Su in July,

1983, complainant remained and continued in her job. In 1985, respondent

Manuel Chua (Chua, for short) was elected President and Chairman of the
Board of the Poh Toh Buddhist Association of the Philippines, Inc. and Rev.
Sim Dee for short) was elected Head Buddhist Priest. Thereafter, Chua and
Dee discontinued payment of her monthly allowance and the additional
P500.00 effective 1983. In addition, petitioner and her son were evicted
forcibly from their quarters in the temple by six police officers. She was
brought first to the Police precinct in Tondo and then brought to Aloha
Hotel where she was compelled to sign a written undertaking not to return
to the Buddhist temple in consideration of the sum of P10,000.00.
Petitioner refused and Chua shouted threats against her and her son. Her
personal belongings including assorted jewelries were never returned by
respondent Chua.
Chua and DEE on the other hand, claimed that petitioner was never an
employee of the Poh Toh Temple but a servant who confined herself to the
temple and to the personal needs of the late Chua Se Su and thus, her
position is coterminous with that of her master.
On February 10, 1988, the Labor Arbiter rendered a decision, the
dispositive portion of which states:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the complainant Filomena Barcenas,
and the respondent corporation is hereby ordered to pay
her the following:
1. P26,575.00 backwages from August 9, 1986 up to date
hereof.,
2. P14,650.00 as separation pay;
3. P18,000.00 as unpaid wages from August, 1983 up to
August 8, 1986; and
4. P10,000.00 moral damages.
Complainant's charge of unfair labor practice is hereby
dismissed for lack of merit.
SO ORDERED.

14

Respondents appealed to the National Labor Relations Commission which,

as earlier stated, reversed the above decision of the Labor Arbiter. Hence,
this instant petition.
A painstaking review of the records compels Us to dismiss the petition.
At the outset, however, We agree with the petitioner's claim that she was a
regular employee of the Manila Buddhist Temple as secretary and
interpreter of its Head Monk, Su As Head Monk, President and Chairman of
the Board of Directors of the Poh Toh Buddhist Association of the
Philippines, Su was empowered to hire the petitioner under Article V of the
By-laws of the Association which states:
. . . (T)he President or in his absence, the Vice President
shall represent the Association in all its dealings with the
public, subject to the Board, shall have the power to enter
into any contract or agreement in the name of the
Association, shall manage the active business operation of
the Association, shall deal with the bank or banks . . . 2
Respondent NLRC represented by its Legal Offices 3 argues that since
petitioner was hired without the approval of the Board of Directors of the
Poh Toh Buddhist Association of the Philippines, Inc., she was not an
employee of respondents. This argument is specious. The required Board
approval would appear to relate to the acts of the President in representing
the association "in all its dealings with the public." And, even granting that
prior Board approval is required to confirm the hiring of the petitioner, the
same was already granted, albeit, tacitly. It must be noted that petitioner
was hired in 1978 and no whimper of protest was raised until this present
controversy.
Moreover, the work that petitioner performed in the temple could not be
categorized as mere domestic work. Thus, We find that petitioner, being
proficient in the Chinese language, attended to the visitors, mostly
Chinese, who came to pray or seek advice before Buddha for personal or
business problems; arranged meetings between these visitors and Su and
supervised the preparation of the food for the temple visitors; acted as
tourist guide of foreign visitors; acted as liaison with some goverment
offices; and made the payment for the temple's Meralco, MWSS and PLDT
bills. Indeed, these tasks may not be deemed activities of a household
helper. They were essential and important to the operation and religious
functions of the temple.

In spite of this finding, her status as a regular employee ended upon her
return to Bicol in May, 1982 to await the birth of her love-child allegedly by
Su The records do not show that petitioner filed any leave from work or
that a leave was granted her. Neither did she return to work after the birth
of her child on October 12, 1982, whom she named Robert Chua alias Chua
Sim Tiong. The NLRC found that it was only in July, 1983 after Su died that
she went back to the Manila Buddhist Temple. Petitioner's pleadings failed
to rebut this finding. Clearly, her return could not be deemed as a
resumption of her old position which she had already abandoned.
Petitioner herself supplied the reason for her return. She stated:
. . . (I)t was the death-bed instruction to her by Chua Se Su
to stay at the temple and to take care of the two boys and
to see to it that they finish their studies to become monks
and when they are monks to eventually take over the two
temples as their inheritance from their father Chua Se Su. 4
Thus, her return to the temple was no longer as an employee but rather as
Su's mistress who is bent on protecting the proprietary and hereditary
rights of her son and nephew. In her pleadings, the petitioner claims that
they were forcefully evicted from the temple, harassed and threatened by
respondents and that the Poh Toh Buddhist Association is a trustee
corporation with the children as cestui que trust. These claims are not
proper in this labor case. They should be appropriately threshed out in the
complaints already filed by the petitioner before the civil courts. Due to
these claims, We view the respondents' offer of P10,000.00 as indicative
more of their desire to evict the petitioner and her son from the temple
rather than an admission of an employer-employee relations.
Anent the petitioner's claim for unpaid wages since May, 1982 which she
filed only in 1986, We hold that the same has already prescribed. Under
Article 292 of the Labor Code, all money claims arising from employeremployee relations must be filed within three years from the time the
cause of action accrued, otherwise they shall forever be barred.
Finally, while petitioner contends that she continued to work in the temple
after Su died, there is, however, no proof that she was re-hired by the new
Head Monk. In fact, she herself manifested that respondents made it clear
to her in no uncertain terms that her services as well as her presence and
that of her son were no longer needed. 5 However, she persisted and
continued to work in the temple without receiving her salary because she
expected Chua and Dee to relent and permit the studies of the two

15

boys. 6 Consequently, under these circumstances, no employer-employee

relationship could have arisen.
ACCORDINGLY, the decision of the National Labor Relations Commission
dated November 29, 1988 is hereby AFFIRMED for the reasons aforestated.
No costs.
SO ORDERED.

16

DIOSCORO F. BACSIN, G.R. No. 146053

Petitioner,
Present:
QUISUMBING, J., Chairperson,
- versus - CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
EDUARDO O. WAHIMAN, Promulgated:
Respondent.
April 30, 2008
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:

asked her to come closer, and when she did, held her hand, then touched
and fondled her breast. She stated that he fondled her breast five times,
and that she felt afraid. [3] A classmate of hers, one Vincent B. Sorrabas,
claiming to have witnessed the incident, testified that the fondling incident
did happen just as AAA related it.[4]

Petitioner was charged with Misconduct in a Formal Charge

dated February 12, 1996 by Regional Director Vivencio N. Muego, Jr. of the
CSC.[5]

In his defense, petitioner claimed that the touching incident happened by

accident, just as he was handing AAA a lesson book. [6] He further stated

In this Petition for Review on Certiorari, petitioner Dioscoro F. Bacsin

questions the Decision[1] dated August 23, 2000 of the First Division of the

that the incident happened in about two or three seconds, and that the girl
left his office without any complaint.[7]

Court of Appeals (CA) in CA-G.R. SP No. 51900, which affirmed Resolution

No. 98-0521 dated March 11, 1998 and Resolution No. 99-0273 dated

Resolution of the CSC

January 28, 1999, both issued by the Civil Service Commission (CSC),
dismissing petitioner from the service for Grave Misconduct.

In Resolution No. 98-0521 dated March 11, 1998, the CSC found petitioner
guilty of Grave Misconduct (Acts of Sexual Harassment), and dismissed him

Facts of the Case

from the service.[8]Specifically, the CSC found the petitioner to have

committed an act constituting sexual harassment, as defined in Sec. 3 of

Petitioner is a public school teacher of Pandan Elementary School, Pandan,

Republic Act No. (RA) 7877, the Anti-Sexual Harassment Act of 1995.

Mambajao, Camiguin Province. Respondent Eduardo O. Wahiman

is the father of AAA, an elementary school student of the petitioner.

Petitioner filed a motion for reconsideration, but the same was denied in
Resolution No. 99-0273 dated January 28, 1999.

AAA claimed that on August 16, 1995, petitioner asked her to be at his
office to do an errand.[2] Once inside, she saw him get a folder from one of
the cartons on the floor near his table, and place it on his table. He then

Decision of the Court of Appeals

17

Service Commission and affirmed by the Court of

Appeals is in accord with Rule XIV, Section (23) of
the Omnibus Civil Service Rules and applicable
rulings.

Petitioner then brought the matter to the CA under Rule 43 of the 1997
Rules of Civil Procedure, the recourse docketed as CA-G.R. SP No. 51900.

Petitioner raised the following issues before the CA:

1.

2.
3.

3.

Whether or not the charge of Misconduct, a

lesser offense, includes the offense of Grave
Misconduct; a greater offense.

Whether or not there were efforts by [AAA],

her parents and the Honorable Civil Service
Commission to magnify the accidental touching
incident on August 16, 1995;

The petition is without merit.

Whether or not the guilt of the petitioner was

supported by the evidence on record; and

Petitioner argues that the CSC cannot validly adjudge him guilty

Whether or not there was irregularity in the

imposition of the penalty of removal.[9]

of an offense, such as Grave Misconduct (Acts of Sexual Harassment),

In resolving the case, the CA determined that the issue revolved

He further argues that the offense of Misconduct does not include the

around petitioners right to due process, and based on its finding that

different from that specified in the formal charge which was Misconduct.

graver offense of Grave Misconduct.

petitioner had the opportunity to be heard, found that there was no

violation of that right. The CA ruled that, even if petitioner was formally

This argument is unavailing.

charged with disgraceful and immoral conduct and misconduct, the CSC
found that the allegations and evidence sufficiently proved petitioners guilt
of grave misconduct, punishable by dismissal from the service.

The Issues Before Us

As Dadubo v. Civil Service Commission teaches:

The charge against the respondent in an
administrative case need not be drafted with the precision
of an information in a criminal prosecution. It is sufficient
that he is apprised of the substance of the charge against
him; what is controlling is the allegation of the acts
complained of, not the designation of the offense. [10]

The petitioner now raises the following issues in the present petition:
1.

2.

Whether or not the petitioner could be guilty

of acts of sexual harassment, grave misconduct,
which was different from or an offense not alleged
in the formal charge filed against him at the
inception of the administrative case.
Assuming petitioner was guilty of disgraceful
and immoral conduct and misconduct as charged
by complainant, whether or not the penalty of
dismissal from the service imposed by the Civil

It is clear that petitioner was sufficiently informed of the basis of

the charge against him, which was his act of improperly touching one of
his students. Thus informed, he defended himself from such charge. The
failure to designate the offense specifically and with precision is of no
moment in this administrative case.

18

misconduct denotes intentional wrongdoing or deliberate violation of a

The formal charge, while not specifically mentioning RA 7877, The

rule of law or standard of behavior.[13]

Anti-Sexual Harassment Act of 1995, imputes on the petitioner acts

covered and penalized by said law. Contrary to the argument of

We agree with the rulings of the CSC and the CA.

petitioner, the demand of a sexual favor need not be explicit or

stated. In Domingo v. Rayala,[11] it was held, It is true that this provision

In grave misconduct, the elements of corruption, clear intent to

calls for a demand, request or requirement of a sexual favor. But it is not

violate the law, or flagrant disregard of established rule must be manifest.

necessary that the demand, request, or requirement of a sexual favor be

[14]

articulated in a categorical oral or written statement.

It may be

7877, and is doubtless inexcusable. The particular act of petitioner cannot

discerned, with equal certitude, from the acts of the offender. The CSC

in any way be construed as a case of simple misconduct. Sexually

found, as did the CA, that even without an explicit demand from

molesting a child is, by any norm, a revolting act that it cannot but be

petitioner his act of mashing the breast of AAA was sufficient to constitute

categorized as a grave offense. Parents entrust the care and molding of

sexual harassment. Moreover, under Section 3 (b) (4) of RA 7877, sexual

their children to teachers, and expect them to be their guardians while in

harassment in an education or training environment is committed (w)hen

school. Petitioner has violated that trust. The charge of grave misconduct

the sexual advances result in an intimidating, hostile or offensive

proven against petitioner demonstrates his unfitness to remain as a

environment for the student, trainee or apprentice. AAA even testified

teacher and continue to discharge the functions of his office.

The act of petitioner of fondling one of his students is against a law, RA

that she felt fear at the time petitioner touched her. [12] It cannot then be

Petitioners second argument need not be discussed further, as he

said that the CSC lacked basis for its ruling, when it had both the facts

was rightly found guilty of grave misconduct. Under Rule IV, Section 52 of

and the law. The CSC found the evidence presented by the complainant

the CSC Uniform Rules on Administrative Cases, Grave Misconduct carries

sufficient to support a finding of grave misconduct. It is basic that factual

with it the penalty of dismissal for the first offense. Thus, the penalty

findings of administrative agencies, when supported by substantial

imposed on petitioner is in accordance with the Rules.

evidence, are binding upon the Court.

Petitioner was not denied due process of law, contrary to his
Leaving aside the discrepancy of the designation of the offense in

claims. The essence of due process is simply an opportunity to be heard,

the formal charge, it must be discussed whether or not petitioner is

or, as applied to administrative proceedings, an opportunity to explain

indeed guilty, as found by the CA and CSC, of Grave Misconduct, as

ones side or an opportunity to seek for a reconsideration of the action or

distinguished from Simple Misconduct. From the findings of fact of the

ruling complained of.[15] These elements are present in this case, where

CSC, it is clear that there is misconduct on the part of petitioner. The term

petitioner was properly informed of the charge and had a chance to refute
it, but failed.

19

A teacher who perverts his position by sexually harassing a

student should not be allowed, under any circumstance, to practice this
noble profession. So it must be here.

WHEREFORE,

in

view

of

the

foregoing,

this

petition

is

hereby DISMISSED, and the decision of the CA in CA-G.R. SP No. 51900 is

hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

20

OCEAN
BUILDERS
CONSTRUCTION
CORP., and/or DENNIS HAO,
Petitioners,

Hao gave Bladimir P1,000.00 and ordered Silangga to instead bring

G.R. No. 150898

Bladimir to the nearest hospital.

Present:
- versus SPOUSES
ANTONIO
CUBACUB,
Respondents.

and

ANICIA

CARPIO MORALES, Chairperson,

BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

Along with co-workers Narding and Tito Vergado, Silangga thus

brought Bladimir to the Caybiga Community Hospital (Caybiga Hospital), a
primary-care hospital around one kilometer away from the office of the
company.

Promulgated:
April 13, 2011
The hospital did not allow Bladimir to leave the hospital. He was
x--------------------------------------------------x
DECISION

then confined, with Narding keeping watch over him. The next day, April
13, 1995, a doctor of the hospital informed Narding that they needed to
talk to Bladimirs parents, hence, on Silanggas request, their co-workers
June Matias and Joel Edrene fetched Bladimirs parents from Tarlac.

CARPIO MORALES, J.:

Bladimir Cubacub (Bladimir) was employed as maintenance man by

At about 8 oclock in the evening of the same day, April 13, 1995,

petitioner company Ocean Builders Construction Corp. at its office in

Bladimirs parents-respondent spouses Cubacub, with their friend Dr.

Caloocan City.

Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital and transferred
Bladimir to the Quezon City General Hospital (QCGH) where he was placed

On April 9, 1995, Bladimir was afflicted with chicken pox. He was

in the intensive care unit and died the following day, April 14, 1995.

thus advised by petitioner Dennis Hao (Hao), the companys general

The death certificate issued by the QCGH recorded Bladimirs

manager, to rest for three days which he did at the companys barracks
where he lives free of charge.

immediate cause of death as cardio-respiratory arrest and the antecedent

cause as pneumonia. On the other hand, the death certificate issued by Dr.

Three days later or on April 12, 1995, Bladimir went about his usual
chores of manning the gate of the company premises and even cleaned

Frias recorded the causes of death as cardiac arrest, multiple organ system
failure, septicemia and chicken pox.

the company vehicles. Later in the afternoon, however, he asked a coworker, Ignacio Silangga (Silangga), to accompany him to his house in

Bladimirs parents-herein respondents later filed on August 17, 1995 before

Capas, Tarlac so he could rest. Informed by Silangga of Bladimirs intention,

the

Tarlac

Regional

Trial

Court

(RTC)

at

Capas

a complaint

for

damages against petitioners, alleging that Hao was guilty of negligence

21

which resulted in the deterioration of Bladimirs condition leading to his

4.

P18,107.75 as reimbursement of expenses

for the 5-day wake covered by Exhibits F to F17;

5.

P30,000.00 as funeral expenses at Prudential

Funeral Homes covered by Exhibit I;
P6,700.00 for acquisition of memorial lot at
Sto. Rosario Memorial Park covered by Exhibit J;

death.

By Decision of April 14, 1997, [1] Branch 66 of the Tarlac RTC at Capas

6.

dismissed the complaint, holding that Hao was not negligent. It ruled that
Hao was not under any obligation to bring Bladimir to better tertiary

7.

P50,000.00 as moral damages;

hospitals, and assuming that Bladimir died of chicken pox aggravated by

8.

P20,000.00 as exemplary damages;

pneumonia or some other complications due to lack of adequate facilities

9.

P15,000.00 as attorneys fees and

at the hospital, the same cannot be attributed to Hao.

10. Cost of suit.

SO ORDERED.[2]

On respondents appeal, the Court of Appeals, by Decision of June 22,

2001, reversed the trial courts decision, holding that by Haos failure to
bring Bladimir to a better-equipped hospital, he violated Article 161 of the

The motion for reconsideration was denied by Resolution [3] of November

Labor Code. It went on to state that Hao should have foreseen that

26, 2001, hence this petition.

Bladimir, an adult, could suffer complications from chicken pox and, had he
been brought to hospitals like St. Lukes, Capitol Medical Center, Philippine

Petitioners maintain that Hao exercised the diligence more than what the

General Hospital and the like, Bladimir could have been saved.

law requires, hence, they are not liable for damages.

Thus the appellate court disposed:

WHEREFORE, the decision of the Regional Trial Court of
Capas, Tarlac, Branch 66 in Civil Case No. 349 dated April
14, 1997 is hereby REVERSED and SET ASIDE and a new
one rendered holding the defendants solidarily liable to
plaintiffs-appellants for the following:

The petition is meritorious.

At the onset, the Court notes that the present case is one for damages
based

on torts,

the

employer-employee

relationship

being

merely

1.

P50,000.00 for the life of Bladimir Cubacub;

incidental. To successfully prosecute an action anchored on torts, three

2.

P584,630.00 for loss of Bladimirs earning

capacity;

elements must be present, viz: (1) duty (2) breach (3) injury and proximate

P4,834.60 as reimbursement of expenses

incurred at Quezon City General Hospital as
evidenced by Exhibits E to E-14 inclusive;

duty of petitioners to provide adequate medical assistance to the

3.

causation. The assailed decision of the appellate court held that it was the

employees under Art. 161 of the Labor Code, failing which a breach is
committed.

22

well as a dental clinic and an infirmary or

emergency hospital with one bed capacity for
every one hundred (100) employees when
the number of employees exceeds three
hundred (300). (emphasis and underscoring
supplied)

Art. 161 of the Labor Code provides:

ART. 161. Assistance of employer. It shall be the duty of any
employer to provide all the necessary assistance to
ensure the adequate and immediate medical and dental
attendance and treatment to an injured or sick employee in
case of emergency. (emphasis and underscoring supplied)
The Implementing Rules of the Code do not enlighten what the phrase
adequate and immediate medical attendance means in relation to an
emergency. It would thus appear that the determination of what it means is
left to the employer, except when a full-time registered nurse or physician
are available on-site as required, also under the Labor Code, specifically
Art. 157 which provides:
Article 157. Emergency Medical and Dental Services. It shall be
the duty of every employer to furnish his employees in any
locality with free medical and dental attendance and
facilities consisting of:
(a)

(b)

(c)

The services of a full-time registered

nurse when the number of employees
exceeds fifty (50) but not more than two
hundred (200) except when the employer
does not maintain hazardous workplaces, in
which case, the services of a graduate firstaider shall be provided for the protection of
workers, where no registered nurse is
available. The Secretary of Labor and
Employment shall provide by appropriate
regulations, the services that shall be
required where the number of employees
does not exceed fifty (50) and shall
determine by appropriate order, hazardous
workplaces for purposes of this Article;
The services of a full-time registered
nurse, a part-time physician and dentist, and
an emergency clinic, when the number of
employees exceeds two hundred (200) but
not more than three hundred (300); and
The services of a full-time physician,
dentist and a full-time registered nurse as

In the present case, there is no allegation that the company

premises are hazardous. Neither is there any allegation on the number of
employees the company has. If Haos testimony[4] would be believed, the
company had only seven regular employees and 20 contractual employees
still short of the minimum 50 workers that an establishment must have
for it to be required to have a full-time registered nurse.
The Court can thus only determine whether the actions taken by
petitioners

when

Bladimir

became

ill

amounted

to

the

necessary

assistance to ensure adequate and immediate medical . . . attendance to

Bladimir as required under Art. 161 of the Labor Code.

As found by the trial court and borne by the records, petitioner

Haos advice for Bladimir to, as he did, take a 3-day rest and to later have
him brought to the nearest hospital constituted adequate and immediate
medical attendance that he is mandated, under Art. 161, to provide to a
sick employee in an emergency.

Chicken pox is self-limiting. Hao does not appear to have a medical

background. He may not be thus expected to have known that Bladimir
needed to be brought to a hospital with better facilities than the Caybiga
Hospital, contrary to appellate courts ruling.

AT ALL EVENTS, the alleged negligence of Hao cannot be

considered as the proximate cause of the death of Bladimir. Proximate

23

cause is that which, in natural and continuous sequence, unbroken by an

QCGH, septicemia and chicken pox per Dr. Frias. In fact, Dr. Frias admitted

efficient intervening cause, produces injury, and without which, the result

that the causes of death in both certificates were the same. [8]

would not have occurred.[5] An injury or damage is proximately caused by

an act or failure to act, whenever it appears from the evidence in the case

Be that as it may, Dr. Frias could not be considered as Bladimirs

that the act or omission played a substantial part in bringing about or

attending physician, he having merely ordered Bladimirs transfer to the

actually causing the injury or damage, and that the injury or damage was

QCGH after seeing him at theCaybiga Hospital. He thereafter left Bladimir

either a direct result or a reasonably probable consequence of the act or

to the care of doctors at QCGH, returning to Capas, Tarlac at 4 oclock the

omission.

following morning or eight hours after seeing Bladimir.As he himself

[6]

testified upon cross-examination, he did not personally attend to Bladimir

Verily, the issue in this case is essentially factual in nature. The dissent,

anymore once the latter was brought to the ICU at QCGH. [9]

apart from adopting the appellate courts findings, finds that Bladimir
contracted chicken pox from a co-worker and Hao was negligent in not

It bears emphasis that a duly-registered death certificate is

bringing that co-worker to the nearest physician, or isolating him as

considered a public document and the entries therein are presumed

well. This finding is not, however, borne by the records. Nowhere in the

correct, unless the party who contests its accuracy can produce positive

appellate courts or even the trial courts decision is there any such definite

evidence establishing otherwise.[10] The QCGH death certificate was

finding that Bladimir contracted chicken pox from a co-worker. At best, the

received by the City Civil Registrar on April 17, 1995. Not only was the

only allusion to another employee being afflicted with chicken pox was

certificate shown by positive evidence to be inaccurate. Its credibility,

when Hao testified that he knew it to heal within three days as was the

more than that issued by Dr. Frias, becomes more pronounced as note is

case of another worker, without reference, however, as towhen it

taken of the fact that he was not around at the time of death.

happened.

[7]

IN FINE, petitioner company and its co-petitioner manager Dennis

On the issue of which of the two death certificates is more credible,

Hao are not guilty of negligence.

the dissent, noting that Dr. Frias attended to Bladimir during his last illness,
holds that the certificate which he issued citing chicken pox as
antecedent cause deserves more credence.

WHEREFORE, the petition is GRANTED. The challenged Decision

of

the

Court

of

hereby DISMISSED.
There appears, however, to be no conflict in the two death
certificates on the immediate cause of Bladimirs death since both cite
cardio-respiratory arrest due to complications from pneumonia per

Appeals

is REVERSED,

and

the

complaint

is

24

JEROMIE D. ESCASINAS and EVAN RIGOR

SINGCO,
Petitioners,

Agreement (MOA)[2] pursuant to Article 157 of the Labor Code, as

G.R. No. 178827

amended.

Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
NACHURA,*
BRION, and
PERALTA,** JJ.

- versus -

SHANGRI-LAS MACTAN ISLAND RESORT

and DR. JESSICA J.R. PEPITO,
Respondents.

Respondent doctor for her part claimed that petitioners were

already working for the previous retained physicians of Shangri-la before
she was retained by Shangri-la; and that she maintained petitioners
services upon their request.

Promulgated:
March 4, 2009

By Decision[3] of May 6, 2003, Labor Arbiter Ernesto F. Carreon declared

petitioners to be regular employees of Shangri-la. The Arbiter thus ordered

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

Shangri-la to grant them the wages and benefits due them as regular

DECISION

employees from the time their services were engaged.

CARPIO MORALES, J.:

In finding petitioners to be regular employees of Shangri-la, the

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco

(petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica
Joyce R. Pepito (respondent doctor) to work in her clinic at respondent
Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a
retained physician.

Arbiter noted that they usually perform work which is necessary and
desirable to Shangri-las business; that they observe clinic hours and render
services only to Shangri-las guests and employees; that payment for their
salaries were recommended to Shangri-las Human Resource Department
(HRD); that respondent doctor was Shangri-las in-house physician, hence,
also an employee; and that the MOA between Shangri-la and respondent

In late 2002, petitioners filed with the National Labor Relations

Commission (NLRC) Regional Arbitration Branch No. VII (NLRC-RAB No. VII)

doctor was an insidious mechanism in order to circumvent [the doctors]

tenurial security and that of the employees under her.

a complaint[1] for regularization, underpayment of wages, non-payment of

holiday pay, night shift differential and 13 th month pay differential against
respondents, claiming that they are regular employees of Shangri-la. The
case was docketed as RAB Case No. 07-11-2089-02.

Shangri-la and respondent doctor appealed to the NLRC. Petitioners

appealed too, but only with respect to the non-award to them of some of
the benefits they were claiming.
By Decision[4] dated March 31, 2005, the NLRC granted Shangri-las and

Shangri-la

claimed,

however,

that

petitioners

were

not

its

employees but of respondent doctor whom it retained via Memorandum of

respondent doctors appeal and dismissed petitioners complaint for lack of

merit, it finding that no employer-employee relationship exists between

25

petitioner and Shangri-la. In so deciding, the NLRC held that the Arbiter

employer-employee

relationship

erred in interpreting Article 157 in relation to Article 280 of the Labor Code,

petitioners. The

as what is required under Article 157 is that the employer should provide

employment of petitioners being under the supervision and control of

the services of medical personnel to its employees, but nowhere in said

respondent doctor and since Shangri-la is not principally engaged in the

article is a provision that nurses are required to be employed; that contrary

business of providing medical or healthcare services, petitioners could not

to the finding of the Arbiter, even if Article 280 states that if a worker

be regarded as regular employees of Shangri-la.

appellate

court

exists

between

concluded

that

all

Shangri-la

and

aspects

the

of

performs work usually necessary or desirable in the business of the

employer, he cannot be automatically deemed a regular employee; and
that the MOA amply shows that respondent doctor was in fact engaged by

Petitioners motion for reconsideration having been denied by

Resolution[6] of July 10, 2007, they interposed the present recourse.

Shangri-la on a retainer basis, under which she could hire her own nurses
and other clinic personnel.

Petitioners insist that under Article 157 of the Labor Code, Shangrila is required to hire a full-time registered nurse, apart from a physician,

Brushing aside petitioners contention that since their application

hence, their engagement should be deemed as regular employment, the

for employment was addressed to Shangri-la, it was really Shangri-la which

provisions of the MOA notwithstanding; and that the MOA is contrary to

hired them and not respondent doctor, the NLRC noted that the

public policy as it circumvents tenurial security and, therefore, should be

applications for employment were made by persons who are not parties to

struck down as being void ab initio. At most, they argue, the MOA is a mere

the case and were not shown to have been actually hired by Shangri-la.

job contract.

On the issue of payment of wages, the NLRC held that the fact

And petitioners maintain that respondent doctor is a labor-only

that, for some months, payment of petitioners wages were recommended

contractor for she has no license or business permit and no business name

by Shangri-las HRD did not prove that it was Shangri-la which pays their

registration, which is contrary to the requirements under Sec. 19 and 20 of

wages. It

the Implementing Rules and Regulations of the Labor Code on sub-

thus

credited

respondent

doctors

explanation

that

the

recommendations for payment were based on the billings she prepared for

contracting.

salaries of additional nurses during Shangri-las peak months of operation,

in accordance with the retainership agreement, the guests payments for
medical services having been paid directly to Shanrgi-la.

Petitioners add that respondent doctor cannot be a legitimate

independent contractor, lacking as she does in substantial capital, the
clinic having been set-up and already operational when she took over as

Petitioners thereupon brought the case to the Court of Appeals

retained physician; that respondent doctor has no control over how the

which, by Decision[5] of May 22, 2007, affirmed the NLRC Decision that no

clinic is being run, as shown by the different orders issued by officers of

26

Shangri-la forbidding her from receiving cash payments and several

purchase orders for medicines and supplies which were coursed thru

(a)

The services of a full-time

registered nurse when the
number of employees exceeds
fifty (50) but not more than
two hundred (200) except
when the employer does not
maintain
hazardous
workplaces, in which case the
services of a graduate first-aider
shall be provided for the protection
of the workers, where no registered
nurse is available. The Secretary of
Labor shall provide by appropriate
regulations the services that shall
be required where the number of
employees does not exceed fifty
(50) and shall determine by
appropriate
order
hazardous
workplaces for purposes of this
Article;

(b)

The
services
of
a fulltime registered nurse, a parttime physician and dentist, and
an emergency clinic, when the
number of employees exceeds
two hundred (200) but not
more than three hundred (300);
and

(c)

The services of a full-time

physician, dentist and full-time
registered nurse as well as a dental
clinic,
and
an
infirmary
or
emergency hospital with one bed
capacity for every one hundred
(100) employees when the number
of
employees
exceeds
three
hundred (300).

Shangri-las Purchasing Manager, circumstances indubitably showing that

she is not an independent contractor but a mere agent of Shangri-la.

In its Comment,[7] Shangri-la questions the Special Powers of

Attorneys (SPAs) appended to the petition for being inadequate. On the
merits, it prays for the disallowance of the petition, contending that it
raises factual issues, such as the validity of the MOA, which were never
raised during the proceedings before the Arbiter, albeit passed upon by
him in his Decision; that Article 157 of the Labor Code does not make it
mandatory for a covered establishment to employ health personnel; that
the services of nurses is not germane nor indispensable to its operations;
and that respondent doctor is a legitimate individual independent
contractor who has the power to hire, fire and supervise the work of the
nurses under her.

The resolution of the case hinges, in the main, on the correct

interpretation of Art. 157 vis a vis Art. 280 and the provisions on
permissible job contracting of the Labor Code, as amended.

The Court holds that, contrary to petitioners postulation, Art. 157

does not require the engagement of full-time nurses as regular
employees of a company employing not less than 50 workers. Thus,
the Article provides:

ART.
157. Emergency
medical
and
dental
services. It shall be the duty of every employer to
furnish his employees in any locality with free medical
and dental attendance and facilities consisting of:

In cases of hazardous workplaces, no employer

shall engage the services of a physician or dentist who
cannot stay in the premises of the establishment for at
least two (2) hours, in the case of those engaged on parttime basis, and not less than eight (8) hours in the case of
those
employed
on
full-time
basis. Where
the
undertaking is nonhazardous in nature, the

27

physician and dentist may be engaged on retained

basis, subject to such regulations as the Secretary
of Labor may prescribe to insure immediate
availability of medical and dental treatment and
attendance in case of emergency. (Emphasis and
underscoring supplied)

Under the foregoing provision, Shangri-la, which employs more

than 200 workers, is mandated to furnish its employees with the services
of

a full-time registered nurse, a part-time physician and dentist, and an

emergency

clinic

which

means

that it

should provide

or

make

shall render services for and in behalf of

another, no matter how necessary for the
latters business,even without being
hired as an employee. This set-up is
precisely true in the case of an
independent contractorship as well as in an
agency agreement. Indeed, Article 280
of the Labor Code, quoted by the
appellate court, is not the yardstick
for determining the existence of an
employment relationship. As it is, the
provision
merely
distinguishes
between
two
(2)
kinds
of
employees, i.e., regular and casual. x x
x[10] (Emphasis and underscoring supplied)

available such medical and allied services to its employees, not

necessarily to hire or employ a service provider. As held in Philippine

The phrase services of a full-time registered nurse should thus be taken to

Global Communications vs. De Vera:

refer to the kind of services that the nurse will render in the companys

[8]

x x x while it is true that the

provision
requires
employers
to
engage the services of medical
practitioners in certain establishments
depending on the number of their
employees, nothing is there in the law
which says that medical practitioners
so engaged be actually hired as
employees, adding that the law, as
written, only requires the employer to
retain, not employ, a part-time physician
who needed to stay in the premises of the
non-hazardous workplace for two (2) hours.
(Emphasis and underscoring supplied)

The term full-time in Art. 157 cannot be construed as referring to

the type of employment of the person engaged to provide the services, for
Article 157 must not be read alongside Art. 280[9] in order to vest employeremployee relationship on the employer and the person so engaged. So De

premises and to its employees, not the manner of his engagement.

As to whether respondent doctor can be considered a legitimate
independent contractor, the pertinent sections of DOLE Department Order
No. 10, series of 1997, illuminate:
Sec. 8. Job contracting. There is job contracting
permissible under the Code if the following conditions are
met:
(1) The contractor carries on an independent
business and undertakes the contract work on his own
account under his own responsibility according to his own
manner and method, free from the control and direction of
his employer or principal in all matters connected with the
performance of the work except as to the results thereof;
and
(2) The contractor has substantial capital or
investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in
the conduct of his business.

Vera teaches:
x x x For, we take it that any
agreement may provide that one party

Sec. 9. Labor-only contracting. (a) Any person who

undertakes to supply workers to an employer shall be

28

deemed to be engaged in labor-only contracting where

such person:
(1) Does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises and other materials; and
(2) The workers recruited and placed by such
persons are performing activities which are directly
related to the principal business or operations of the
employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is
hereby prohibited and the person acting as contractor shall
be considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly
employed by him.
(c) For cases not falling under this Article, the
Secretary of Labor shall determine through appropriate
orders whether or not the contracting out of labor is
permissible in the light of the circumstances of each case
and after considering the operating needs of the employer
and the rights of the workers involved. In such case, he
may prescribe conditions and restrictions to insure the
protection and welfare of the workers. (Emphasis supplied)

On

the

other

hand,

existence

employer- employee relationship is established by the presence

following

of an
of

the

determinants: (1) the selection and engagement of theworkers;

(2) power of dismissal; (3) the payment of wages by whatever means; and
(4) the power to control the worker's conduct, with the latter assuming
primacy in the overall consideration.[12]

Against the above-listed determinants, the Court holds that

respondent doctor is a legitimate independent contractor. That Shangri-la
provides the clinic premises and medical supplies for use of its employees
and guests does not necessarily prove that respondent doctor lacks
substantial capital and investment. Besides, the maintenance of a clinic
and provision of medical services to its employees is required under Art.
157,

which

are

not

directly

related

to

Shangri-las

principal

business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who

The existence of an independent and permissible contractor
relationship

is

generally

the staff[13]; group life, group personal accident insurance and life/death

determinants: whether the contractor is carrying on an independent

insurance[14] for the staff with minimum benefit payable at 12 times the

business; the nature and extent of the work; the skill required; the term

employees last drawn salary, as well as value added taxes and withholding

and duration of the relationship; the right to assign the performance of a

taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of

specified piece of work; the control and supervision of the work to another;

the service charges from Shangri-las guests who avail of the clinic

the employer's power with respect to the hiring, firing and payment of the

services. It is unlikely that respondent doctor would report petitioners as

contractor's workers; the control of the premises; the duty to supply the

workers, pay their SSS premium as well as their wages if they were not

premises, tools, appliances, materials and labor; and the mode, manner

indeed her employees.[15]

and terms of payment.

by

considering

the

underwrites the following: salaries, SSS contributions and other benefits of

following

[11]

established

29

With respect to the supervision and control of the nurses and clinic
staff, it is not disputed that a document, Clinic Policies and Employee
Manual[16] claimed to have been prepared by respondent doctor exists, to
which petitioners gave their conformity [17] and in which they acknowledged
their co-terminus employment status. It is thus presumed that said
document, and not the employee manual being followed by Shangri-las
regular workers, governs how they perform their respective tasks and
responsibilities.

Contrary to petitioners contention, the various office directives

issued

by

Shangri-las

officers

do

not

imply

that

it is

Shangri-las

management and not respondent doctor who exercises control over them
or that Shangri-la has control over how the doctor and the nurses perform
their work. The letter[18] addressed to respondent doctor dated February 7,
2003 from a certain Tata L. Reyes giving instructions regarding the
replenishment of emergency kits is, at most, administrative in nature,
related as it is to safety matters; while the letter [19] dated May 17, 2004
from Shangri-las Assistant Financial Controller, Lotlot Dagat, forbidding the
clinic from receiving cash payments from the resorts guests is a matter of
financial policy in order to ensure proper sharing of the proceeds,
considering that Shangri-la and respondent doctor share in the guests
payments for medical services rendered. In fine, as Shangri-la does not
control how the work should be performed by petitioners, it is not
petitioners employer.
WHEREFORE, the petition is hereby DENIED. The Decision of the
Court of Appeals dated May 22, 2007 and the Resolution dated July 10,
2007 are AFFIRMED.

SO ORDERED.

30

EMMANUEL BABAS, DANILO T. BANAG, ARTURO V.

VILLARIN, SR., EDWIN JAVIER, SANDI BERMEO,
REX ALLESA, MAXIMO SORIANO, JR., ARSENIO
ESTORQUE, and FELIXBERTO ANAJAO,
Petitioners,
- versus -

LORENZO SHIPPING CORPORATION,

Respondent.

G.R. No. 186091

Present:
CARPIO, J.
Chairperson,
NACHURA,
PERALTA,
DEL CASTILLO,* and
MENDOZA, JJ.
Promulgated:
December 15, 2010

(BMSI). Under the Agreement, BMSI undertook to provide maintenance and

repair services to LSCs container vans, heavy equipment, trailer chassis,
and generator sets. BMSI further undertook to provide checkers to inspect
all containers received for loading to and/or unloading from its vessels.

Simultaneous with the execution of the Agreement, LSC leased its

equipment, tools, and tractors to BMSI.[4] The period of lease was
coterminous with the Agreement.

BMSI then hired petitioners on various dates to work at LSC as checkers,

welders, utility men, clerks, forklift operators, motor pool and machine

x------------------------------------------------------------------------------------x

shop workers, technicians, trailer drivers, and mechanics. Six years later,
or on May 1, 2003, LSC entered into another contract with BMSI, this time,

DECISION

a service contract.[5]

NACHURA, J.:
In September 2003, petitioners filed with the Labor Arbiter (LA) a
complaint for regularization against LSC and BMSI. On October 1, 2003,
Petitioners Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin

LSC terminated theAgreement, effective October 31, 2003. Consequently,

Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque,

petitioners lost their employment.

and Felixberto Anajao appeal by certiorari under Rule 45 of the Rules of

BMSI asserted that it is an independent contractor. It averred that

Court the October 10, 2008 Decision [1] of the Court of Appeals (CA) in CA-

it was willing to regularize petitioners; however, some of them lacked the

G.R. SP. No. 103804, and the January 21, 2009 Resolution, [2] denying its

requisite qualifications for the job. BMSI was willing to reassign petitioners

reconsideration.

who were willing to accept reassignment. BMSI denied petitioners claim for
underpayment of wages and non-payment of 13thmonth pay and other

Respondent Lorenzo Shipping Corporation (LSC) is a duly organized

benefits.

domestic corporation engaged in the shipping industry; it owns several

equipment necessary for its business. On September 29, 1997, LSC

LSC, on the other hand, averred that petitioners were employees of BMSI

entered into a General Equipment Maintenance Repair and Management

and were assigned to LSC by virtue of the Agreement. BMSI is an

Services Agreement[3] (Agreement) with Best Manpower Services, Inc.

independent job contractor with substantial capital or investment in the

31

form of tools, equipment, and machinery necessary in the conduct of its

business. The Agreement between LSC and BMSI constituted legitimate job
contracting. Thus, petitioners were employees of BMSI and not of LSC.

After due proceedings, the LA rendered a decision [6] dismissing petitioners

complaint. The LA found that petitioners were employees of BMSI. It was
BMSI which hired petitioners, paid their wages, and exercised control over
them.

Petitioners appealed to the National Labor Relations Commission (NLRC),

arguing that BMSI was engaged in labor-only contracting. They insisted
that their employer was LSC.

On January 16, 2008, the NLRC promulgated its decision. [7] Reversing the
LA, the NLRC held:
We find from the records of this case that respondent BMSI
is not engaged in legitimate job contracting.
First, respondent BMSI has no equipment, no office
premises, no capital and no investments as shown in the
Agreement itself which states:
xxxx
VI. RENTAL OF EQUIPMENT
[6.01.] That the CLIENT has several forklifts
and truck tractor, and has
offered to the CONTRACTOR
the use of the same by way
of lease, the monthly rental
of which shall be deducted
from the total monthly
billings of the CONTRACTOR
for the services covered by
this Agreement.

6.02. That the CONTRACTOR has agreed to

rent the CLIENTs forklifts and
truck tractor.
6.03. The parties herein have agreed
to execute a Contract of
Lease for the forklifts and
truck tractor that will be
rented
by
the
CONTRACTOR. (p.
389,
Records)
True enough, parties signed a Lease Contract (p.
392, Records) wherein respondent BMSI leased several
excess equipment of LSC to enable it to discharge its
obligation under the Agreement. So without the equipment
which respondent BMSI leased from respondent LSC, the
former would not be able to perform its commitments in
the Agreement.
In Phil. Fuji Xerox Corp. v. NLRC (254 SCRA 294) the
Supreme Court held:
x x x. The phrase substantial capital and
investment in the form of tools, equipment,
machineries, work premises, and other
materials which are necessary in the
conduct
of
his
business,
in
the
Implementing Rules clearly contemplates
tools, equipment, etc., which are directly
related to the service it is being contracted
to render. One who does not have an
independent business for undertaking the
job contracted for is just an agent of the
employer. (underscoring ours)
Second, respondent BMSI has no independent business or
activity or job to perform in respondent LSC free from the
control of respondent LSC except as to the results
thereof. In view of the absence of such independent
business or activity or job to be performed by respondent
BMSI in respondent LSC [petitioners] performed work that
was necessary and desirable to the main business of
respondent LSC. Respondents were not able to refute the
allegations of [petitioners] that they performed the same
work that the regular workers of LSC performed and they
stood side by side with regular employees of respondent
LSC performing the same work. Necessarily, the control on
the manner and method of doing the work was exercised
by respondent LSC and not by respondent BMSI since the

32

latter had no business of its own to perform in respondent

LSC.
Lastly, respondent BMSI has no other client but respondent
LSC. If respondent BMSI were a going concern, it would
have other clients to which to assign [petitioners] after its
Agreement with LSC expired. Since there is only one client,
respondent LSC, it is easy to conclude that respondent
BMSI is a mere supplier of labor.
After concluding that respondent BMSI is engaged in
prohibited labor-only contracting, respondent LSC became
the employer of [petitioners] pursuant to DO 18-02.
[Petitioners] therefore should be reinstated to their former
positions or equivalent positions in respondent LSC as
regular employees with full backwages and other benefits
without loss of seniority rights from October 31, 2003,
when they lost their jobs, until actual reinstatement
(Vinoya v. NLRC, 324 SCRA 469). If reinstatement is not
feasible, [petitioners] then should be paid separation pay
of one month pay for every year of service or a fraction of
six months to be considered as one year, in addition to full
backwages.
Concerning [petitioners] prayer to be paid wage
differentials and benefits under the CBA, We have no doubt
that [petitioners] would be entitled to them if they are
covered by the said CBA. For this purpose, [petitioners]
should first enlist themselves as union members if they so
desire, or pay agency fee. Furthermore, only [petitioners]
who signed the appeal memorandum are covered by this
Decision. As regards the other complainants who did not
sign the appeal, the Decision of the Labor Arbiter
dismissing this case became final and executory. [8]

3.
4.
5.
6.
7.
8.
9.

Edwin L. Javier
Rex Allesa
Arturo Villarin, [Sr.]
Felixberto C. Anajao
Arsenio Estorque
Maximo N. Soriano, Jr.
Sandi G. Bermeo

Consequently, respondent Lorenzo Shipping Corp. is

ordered to reinstate [petitioners] to their former positions
as regular employees and pay their wage differentials and
benefits under the CBA.
If reinstatement is not feasible, both respondents Lorenzo
Shipping Corp. and Best Manpower Services are adjudged
jointly and solidarily to pay [petitioners] separation pay of
one month for every year of service, a fraction of six
months to be considered as one year.
In addition, respondent LSC and BMSI are solidarily liable to
pay [petitioners] full backwages from October 31, 2003
until actual reinstatement or, if reinstatement is not
feasible, until finality of this Decision.
Respondent LSC and respondent BMSI are likewise
adjudged to be solidarily liable for attorneys fees
equivalent to ten (10%) of the total monetary award.
xxxx
SO ORDERED.[9]

LSC went to the CA via certiorari. On October 10, 2008, the CA rendered
the now challenged Decision,[10] reversing the NLRC. In holding that BMSI
was an independentcontractor, the CA relied on the provisions of

The NLRC disposed thus:

the Agreement, wherein BMSI warranted that it is an independent

WHEREFORE, the appeal of [petitioners] is GRANTED. The

Decision of the Labor Arbiter is hereby REVERSED, and a
NEW ONE rendered finding respondent Best Manpower
Services, Inc. is engaged in prohibited labor-onlycontracting and finding respondent Lorenzo Shipping Corp.
as the employer of the following [petitioners]:
1.
2.

Emmanuel B. Babas
Danilo Banag

contractor, with adequate capital, expertise, knowledge, equipment, and

personnel necessary for the services rendered to LSC. According to the CA,
the fact that BMSI entered into a contract of lease with LSC did not ipso
facto make BMSI a labor-only contractor; on the contrary, it proved that
BMSI had substantial capital. The CA was of the view that the law only
required substantial capital or investment. Since BMSI had substantial

33

capital, as shown by its ability to pay rents to LSC, then it qualified as an

In Toyota Motor Phils. Corp. Workers Association (TMPCWA), et al.

independent contractor. It added that even under the control test, BMSI

v. National Labor Relations Commission,[16] citing Loquias v. Office of the

would be the real employer of petitioners, since it had assumed the entire

Ombudsman,[17] we

charge and control of petitioners services. The CA further held that BMSIs

requirements only with regard to the petitioner who signed the petition,

Certificate of Registration as an independent contractor was sufficient

but not his co-petitioner who did not sign nor authorize the other petitioner

proof that it was an independent contractor. Hence, the CA absolved LSC

to sign it on his behalf. Thus, the petition can be given due course only as

from liability and instead held BMSI as employer of petitioners.

to the parties who signed it. The other petitioners who did not sign the

stated

that

the

petition

satisfies

the

formal

verification and certificate against forum shopping cannot be recognized as

The fallo of the CA Decision reads:

petitioners and have no legal standing before the Court. The petition
should

WHEREFORE, premises considered, the instant petition

is GRANTED and the assailed decision and resolution of
public
respondent
NLRC
are REVERSED and SET
ASIDE.Consequently, the decision of the Labor Arbiter
dated September 29, 2004 is REINSTATED.
SO ORDERED.[11]

dismissed

outright

with

respect

to

the

non-conforming

petitioners.

Thus, we dismiss the petition insofar as petitioners Soriano and

Anajao are concerned.

Petitioners vigorously insist that they were employees of LSC; and

Petitioners filed a motion for reconsideration, but the CA denied it

on January 21, 2009.[12]

be

that

BMSI

is

not

an

independent

contractor,

but

labor-only

contractor. LSC, on the other hand, maintains that BMSI is an independent

Hence, this appeal by petitioners, positing that:

contractor, with adequate capital and investment. LSC capitalizes on the

ratiocination made by the CA.

THE HONORABLE COURT OF APPEALS ERRED IN IGNORING

THE CLEAR EVIDENCE OF RECORD THAT RESPONDENT WAS
ENGAGED IN LABOR-ONLY CONTRACTING TO DEFEAT
PETITIONERS RIGHT TO SECURITY OF TENURE. [13]

In declaring BMSI as an independent contractor, the CA, in the

challenged Decision, heavily relied on the provisions of the Agreement,
wherein BMSI declared that it was an independent contractor, with

Before resolving the petition, we note that only seven (7) of the

substantial capital and investment.

nine petitioners signed the Verification and Certification.[14] Petitioners

Maximo Soriano, Jr. (Soriano) and Felixberto Anajao (Anajao) did not sign

De Los Santos v. NLRC[18] instructed us that the character of the

the Verification and Certification, because they could no longer be located

business, i.e., whether as labor-only contractor or as job contractor, should

by their co-petitioners.

be measured in terms of, and determined by, the criteria set by statute.

[15]

34

The parties cannot dictate by the mere expedience of a unilateral

declaration in a contract the character of their business.

On the other hand, permissible job contracting or subcontracting

refers to an arrangement whereby a principal agrees to put out or farm out
with the contractor or subcontractor the performance or completion of a

In San

Miguel

Semillano, Nelson

specific job, work, or service within a definite or predetermined period,

Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and

regardless of whether such job, work, or service is to be performed or

Merlyn N. Policarpio,

completed within or outside the premises of the principal. [21]

[19]

Corporation

v.

Vicente

B.

this Court explained:

Despite the fact that the service contracts contain

stipulations
which
are
earmarks
of
independent
contractorship, they do not make it legally so. The
language of a contract is neither determinative nor
conclusive of the relationship between the parties.
Petitioner SMC and AMPCO cannot dictate, by a declaration
in a contract, the character of AMPCO's business, that is,
whether as labor-only contractor, or job contractor.
AMPCO's character should be measured in terms of, and
determined by, the criteria set by statute.

A person is considered engaged in legitimate job contracting or

subcontracting if the following conditions concur:

(a) The contractor carries on a distinct and independent business

and undertakes the contract work on his account under his own
responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected

Thus, in distinguishing between prohibited labor-only contracting and

with the performance of his work except as to the results thereof;

permissible job contracting, the totality of the facts and the surrounding
(b) The contractor has substantial capital or investment; and

circumstances of the case are to be considered.

Labor-only contracting, a prohibited act, is an arrangement where

(c) The agreement between the principal and the contractor or

the contractor or subcontractor merely recruits, supplies, or places workers

subcontractor assures the contractual employees' entitlement to all

to perform a job, work, or service for a principal. In labor-only contracting,

labor and occupational safety and health standards, free exercise of the

the following elements are present: (a) the contractor or subcontractor

right to self-organization, security of tenure, and social welfare benefits. [22]

does not have substantial capital or investment to actually perform the job,
work, or service under its own account and responsibility; and (b) the
employees

recruited,

supplied,

or

placed

by

such

contractor

or

subcontractor perform activities which are directly related to the main

business of the principal.[20]

Given the above standards, we sustain the petitioners contention

that BMSI is engaged in labor-only contracting.
First, petitioners worked at LSCs premises, and nowhere else.
Other than the provisions of the Agreement, there was no showing that it
was BMSI which established petitioners working procedure and methods,
which supervised petitioners in their work, or which evaluated the same.

35

There was absolute lack of evidence that BMSI exercised control over them

Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada,

or their work, except for the fact that petitioners were hired by BMSI.

Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio, [24] we held

that a Certificate of Registration issued by the Department of Labor and

Second, LSC was unable to present proof that BMSI had substantial

Employment is not conclusive evidence of such status. The fact of

capital. The record before us is bereft of any proof pertaining to the

registration simply prevents the legal presumption of being a mere labor-

contractors capitalization, nor to its investment in tools, equipment, or

only contractor from arising.[25]

implements actually used in the performance or completion of the job,

work, or service that it was contracted to render. What is clear was that the
equipment used by BMSI were owned by, and merely rented from, LSC.

Indubitably,

BMSI

can

only

be

classified

as

labor-only

contractor. The CA, therefore, erred when it ruled otherwise. Consequently,

the workers that BMSI supplied to LSC became regular employees of the

In Mandaue Galleon Trade, Inc. v. Andales,[23] we held:

latter.[26] Having gained regular status, petitioners were entitled to security

of tenure and could only be dismissed for just or authorized causes and

The law casts the burden on the contractor to

prove that it has substantial capital, investment,
tools, etc. Employees, on the other hand, need not prove
that the contractor does not have substantial capital,
investment, and tools to engage in job-contracting.

after they had been accorded due process.

Petitioners
its Agreement with

lost

their

employment

BMSI. However,

when

the

LSC

terminated

termination

of

Third, petitioners performed activities which were directly related to the

LSCs Agreement with BMSI cannot be considered a just or an authorized

main business of LSC. The work of petitioners as checkers, welders, utility

cause for petitioners dismissal. In Almeda v. Asahi Glass Philippines. Inc. v.

men, drivers, and mechanics could only be characterized as part of, or at

Asahi Glass Philippines, Inc.,[27] this Court declared:

least clearly related to, and in the pursuit of, LSCs business. Logically,
when petitioners were assigned by BMSI to LSC, BMSI acted merely as a
labor-only contractor.

Lastly, as found by the NLRC, BMSI had no other client except for
LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the
NLRC finding that BMSI is a labor-only contractor.

The CA erred in considering BMSIs Certificate of Registration as

sufficient proof that it is an independent contractor. In San Miguel

The sole reason given for the dismissal of

petitioners by SSASI was the termination of its service
contract with respondent. But since SSASI was a labor-only
contractor, and petitioners were to be deemed the
employees of respondent, then the said reason would not
constitute a just or authorized cause for petitioners
dismissal. It would then appear that petitioners were
summarily dismissed based on the aforecited reason,
without compliance with the procedural due process for
notice and hearing.
Herein petitioners, having been unjustly dismissed
from work, are entitled to reinstatement without loss of
seniority rights and other privileges and to full back wages,

36

inclusive of allowances, and to other benefits or their

monetary
equivalents
computed
from
the
time
compensation was withheld up to the time of actual
reinstatement. Their earnings elsewhere during the periods
of their illegal dismissal shall not be deducted therefrom.

Accordingly, we hold that the NLRC committed no grave abuse of

discretion in its decision. Conversely, the CA committed a reversible error
when it set aside the NLRC ruling.

WHEREFORE, the petition is GRANTED. The Decision and the

Resolution

of

the

Court

of

Appeals

in

CA-G.R.

SP.

No.

103804

are REVERSED and SET ASIDE.Petitioners Emmanuel Babas, Danilo T.

Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, and
Arsenio Estorque are declared regular employees of Lorenzo Shipping
Corporation. Further, LSC is ordered to reinstate the seven petitioners to
their former position without loss of seniority rights and other privileges,
and to pay full backwages, inclusive of allowances, and other benefits or
their monetary equivalent, computed from the time compensation was
withheld up to the time of actual reinstatement.

No pronouncement as to costs.
SO ORDERED.

37

G.R. No. 199166

April 20, 2015

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN

AND
MA.
CRISTINA
SUMAYAO,Petitioners,
vs.
ABS-CBN CORPORATION (FORMERLY, ABS-CBN BROADCASTING
CORPORATION) AND AMALIA VILLAFUERTE, Respondents.
DECISION
PEREZ, J.:
The existence of an employer-employee relationship is at the heart of this
Petition for Review on Certiorari filed pursuant to Rule 45 of the Rules of
Court, primarily assailing the 29 June 2011 Decision 1 rendered by the
Fourth Division of the Court of Appeals (CA) in CA-G.R. SP No. 116928
which ruled out said relationship between the parties.
The Facts
Respondent ABS-CBN Corporation (formerly ABS-CBN Broadcasting
Corporation) is a television and radio broadcasting corporation which, for
its Regional Network Group in Naga City, employed respondent Amalia
Villafuerte (Villafuerte) as Manager. There is no dispute regarding the fact
that, thru Villafuerte, ABS-CBN engaged the services of petitioners Nelson
Begino (Begino) and Gener Del Valle (Del Valle) sometime in 1996 as
Cameramen/Editors for TV Broadcasting. Petitioners Ma. Cristina Sumayao
(Sumayao) and Monina Avila-Llorin (Llorin) were likewise similarly engaged
as reporters sometime in 1996 and 2002, respectively. With their services
engaged by respondents thru Talent Contracts which, though regularly
renewed over the years, provided terms ranging from three (3) months to
one (1) year, petitioners were given Project Assignment Forms which
detailed, among other matters, the duration of a particular project as well
as the budget and the daily technical requirements thereof. In the
aforesaid capacities, petitioners were tasked with coverage of news items
for subsequent daily airings in respondents TV Patrol Bicol Program. 2
While specifically providing that nothing therein shall be deemed or
construed to establish an employer-employee relationship between the
parties, the aforesaid Talent Contracts included, among other matters,
provisions on the following matters: (a) the Talents creation and
performance of work in accordance with the ABS-CBNs professional

standards and compliance with its policies and guidelines covering

intellectual property creators, industry codes as well as the rules and
regulations of the Kapisanan ng mga Broadcasters sa Pilipinas (KBP) and
other regulatory agencies; (b) the Talents non-engagement in similar work
for a person or entity directly or indirectly in competition with or adverse to
the interests of ABS-CBN and non-promotion of any product or service
without prior written consent; and (c) the results-oriented nature of the
talents work which did not require them to observe normal or fixed
working hours.3 Subjected to contractors tax, petitioners remunerations
were denominated as Talent Fees which, as of last renewal, were admitted
to be pegged per airing day at P273.35 for Begino, P 302.92 for Del Valle, P
323.08 for Sumayao and P 315.39 for Llorin.4
Claiming that they were regular employees of ABS-CBN, petitioners filed
against respondents the complaint5docketed as Sub-RAB 05-04- 00041-07
before the National Labor Relations Commissions (NLRC) Sub-Regional
Arbitration Branch No. 5, Naga City. In support of their claims for
regularization, underpayment of overtime pay, holiday pay, 13th month
pay, service incentive leave pay, damages and attorney's fees, petitioners
alleged that they performed functions necessary and desirable in ABSCBN's business. Mandated to wear company IDs and provided all the
equipment they needed, petitioners averred that they worked under the
direct control and supervision of Villafuerte and, at the end of each day,
were informed about the news to be covered the following day, the routes
they were to take and, whenever the subject of their news coverage is
quite distant, even the start of their workday. Due to the importance of the
news items they covered and the necessity of their completion for the
success of the program, petitioners claimed that, under pain of immediate
termination, they were bound by the companys policy on, among others,
attendance and punctuality.6
Aside from the constant evaluation of their actions, petitioners were
reportedly subjected to an annual competency assessment alongside other
ABS-CBN employees, as condition for their continued employment.
Although their work involved dealing with emergency situations at any
time of the day or night, petitioners claimed that they were not paid the
labor standard benefits the law extends to regular employees. To avoid
paying what is due them, however, respondents purportedly resorted to
the simple expedient of using said Talent Contracts and/or Project
Assignment Forms which denominated petitioners as talents, despite the
fact that they are not actors or TV hosts of special skills. As a result of this
iniquitous situation, petitioners asseverated that they merely earned an
average of P7,000.00 to P8,000.00 per month, or decidedly lower than

38

the P21,773.00 monthly salary ABS-CBN paid its regular rank-and-file

employees. Considering their repeated re-hiring by respondents for
ostensible fixed periods, this situation had gone on for years since TV
Patrol Bicol has continuously aired from 1996 onwards.7
In refutation of the foregoing assertions, on the other hand, respondents
argued that, although it occasionally engages in production and generates
programs thru various means, ABS-CBN is primarily engaged in the
business of broadcasting television and radio content. Not having the full
manpower complement to produce its own program, the company had
allegedly resorted to engaging independent contractors like actors,
directors, artists, anchormen, reporters, scriptwriters and various
production and technical staff, who offered their services in relation to a
particular program. Known in the industry as talents, such independent
contractors inform ABSCBN of their availability and were required to
accomplish Talent Information Forms to facilitate their engagement for and
appearance on designated project days. Given the unpredictability of
viewer preferences, respondents argued that the company cannot afford to
provide regular work for talents with whom it negotiates specific or
determinable professional fees on a per project, weekly or daily basis,
usually depending on the budget allocation for a project. 8
Respondents insisted that, pursuant to their Talent Contracts and/or Project
Assignment Forms, petitioners were hired as talents, to act as reporters
and/or cameramen for TV Patrol Bicol for designated periods and rates.
Fully aware that they were not considered or to consider themselves as
employees of a particular production or film outfit, petitioners were
supposedly engaged on the basis of the skills, knowledge or expertise they
already possessed and, for said reason, required no further training from
ABS-CBN. Although petitioners were inevitably subjected to some degree of
control, the same was allegedly limited to the imposition of general
guidelines on conduct and performance, simply for the purpose of
upholding the standards of the company and the strictures of the industry.
Never subjected to any control or restrictions over the means and methods
by which they performed or discharged the tasks for which their services
were engaged, petitioners were, at most, briefed whenever necessary
regarding the general requirements of the project to be executed. 9
Having been terminated during the pendency of the case, Petitioners filed
on 10 July 2007 a second complaint against respondents, for regularization,
payment of labor standard benefits, illegal dismissal and unfair labor
practice, which was docketed as Sub-RAB 05-08-00107-07. Upon
respondents motion, this complaint was dismissed for violation of the rules

against forum shopping in view of the fact that the determination of the
issues in the second case hinged on the resolution of those raised in the
first.10 On 19 December 2007, however, Labor Arbiter Jesus Orlando
Quiones (Labor Arbiter Quiones) resolved Sub-RAB 05-04-00041-07 in
favor of petitioners who, having rendered services necessary and related to
ABS-CBNs business for more than a year, were determined to be its
regular employees. With said conclusion found to be buttressed by, among
others, the exclusivity clause and prohibitions under petitioners Talent
Contracts and/or Project Assignment Forms which evinced respondents
control over them,11 Labor Arbiter Quiones disposed of the case in the
following wise:
WHEREFORE, finding merit in the causes of action set forth by the
complainants, judgment is hereby rendered declaring complainants
MONINA AVILA-LLORIN, GENER L. DEL VALLE, NELSON V. BEGINO and MA.
CRISTINA V. SUMAYAO, as regular employees of respondent company, ABSCBN BROADCASTING CORPORATION.
Accordingly, respondent ABS-CBN Broadcasting Corporation is hereby
ORDERED to pay complainants, subject to the prescriptive period provided
under Article 291 of the Labor Code, however applicable, the total amount
of Php2,440,908.36, representing salaries/wage differentials, holiday pay,
service incentive leave pay and 13th month pay, to include 10% of the
judgment award as attorneys fees of the judgment award (computation of
the monetary awards are attached hereto as integral part of this decision).
Moreover, respondents are directed to admit back complainants to work
under the same terms and conditions prevailing prior to their separation
or, at respondents' option, merely reinstated in the payroll.
Other than the above, all other claims and charges are ordered DISMISSED
for lack of merit.12
Aggrieved by the foregoing decision, respondents elevated the case on
appeal before the NLRC, during the pendency of which petitioners filed a
third complaint against the former, for illegal dismissal, regularization,
nonpayment of salaries and 13th month pay, unfair labor practice,
damages and attorneys fees. In turn docketed as NLRC Case No. Sub-RABV-05-03-00039-08, the complaint was raffled to Labor Arbiter Quiones
who issued an Order dated 30 April 2008, inhibiting himself from the case
and denying respondents motion to dismiss on the grounds of res judicata
and forum shopping.13 Finding that respondents control over petitioners
was indeed manifest from the exclusivity clause and prohibitions in the

39

Talent Contracts and/or Project Assignment Forms, on the other hand, the
NLRC rendered a Decision dated 31 March 2010, affirming said Labor
Arbiters appealed decision.14 Undeterred by the NLRCs 31 August 2010
denial of their motion for reconsideration,15 respondents filed the Rule 65
petition for certiorari docketed before the CA as CA-G.R. SP No. 116928
which, in addition to taking exceptions to the findings of the assailed
decision, faulted petitioners for violating the rule against forum shopping. 16
On 29 June 2011, the CA rendered the herein assailed decision, reversing
the findings of the Labor Arbiter and the NLRC. Ruling out the existence of
forum shopping on the ground that petitioners' second and third
complaints were primarily anchored on their termination from employment
after the filing of their first complaint, the CA nevertheless discounted the
existence of an employer-employee relation between the parties upon the
following findings and conclusions: (a) petitioners, were engaged by
respondents as talents for periods, work and the program specified in the
Talent Contracts and/or Project Assignment Forms concluded between
them; (b) instead of fixed salaries, petitioners were paid talent fees
depending on the budget allocated for the program to which they were
assigned; (c) being mainly concerned with the result, respondents did not
exercise control over the manner and method by which petitioner
accomplished their work and, at most, ensured that they complied with the
standards of the company, the KBP and the industry; and, (d) the existence
of an employer-employee relationship is not necessarily established by the
exclusivity clause and prohibitions which are but terms and conditions on
which the parties are allowed to freely stipulate. 17
Petitioners motion for reconsideration of the foregoing decision was
denied in the CA's 3 October 2011 Resolution, 18 hence, this petition.
The Issues
Petitioners seek the reversal of the CAs assailed Decision and Resolution
on the affirmative of the following issues:

1. Whether or not the CA seriously and reversibly erred in not dismissing

respondents petition for certiorari in view of the fact that they did file a
Notice of Appeal at the NLRC level and did not, by themselves or through
their duly authorized representative, verify and certify the Memorandum of
Appeal they filed thereat, in accordance with the NLRC Rules of Procedure;
and 2. Whether or not the CA seriously and reversibly erred in brushing
aside the determination made by both the Labor Arbiter and the NLRC of
the existence of an employer-employee relationship between the parties,
despite established jurisprudence supporting the same.
The Court's Ruling
The Court finds the petition impressed with merit.
Petitioners preliminarily fault the CA for not dismissing respondents Rule
65 petition for certiorari in view of the fact that the latter failed to file a
Notice of Appeal from the Labor Arbiters decision and to verify and certify
the Memorandum of Appeal they filed before the NLRC. While concededly
required under the NLRC Rules of Procedure, however, these matters
should have been properly raised during and addressed at the appellate
stage before the NLRC. Instead, the record shows that the NLRC took
cognizance of respondents appeal and proceeded to resolve the same in
favor of petitioners by affirming the Labor Arbiters decision. Not having
filed their own petition for certiorari to take exception to the liberal attitude
the NLRC appears to have adopted towards its own rules of procedure,
petitioners were hardly in the proper position to raise the same before the
CA or, for that matter, before this Court at this late stage. Aside from the
settled rule that a party who has not appealed is not entitled to affirmative
relief other than the ones granted in the decision 19 rendered, liberal
interpretation of procedural rules on appeal had, on occasion, been favored
in the interest of substantive justice.20
Although the existence of an employer-employee relationship is, on the
other hand, a question of fact 21 which is ordinarily not the proper subject of
a Rule 45 petition for review on certiorari like the one at bar, the conflicting
findings between the labor tribunals and the CA justify a further
consideration of the matter.22 To determine the existence of said relation,
case law has consistently applied the four-fold test, to wit: (a) the selection
and engagement of the employee; (b) the payment of wages;(c) the power
of dismissal; and (d) the employer's power to control the employee on the
means and methods by which the work is accomplished. 23 Of these criteria,
the so-called "control test" is generally regarded as the most crucial and
determinative indicator of the presence or absence of an employer-

40

employee relationship. Under this test, an employer-employee relationship

is said to exist where the person for whom the services are performed
reserves the right to control not only the end result but also the manner
and means utilized to achieve the same.24
In discounting the existence of said relationship between the parties, the
CA ruled that Petitioners' services were, first and foremost, engaged thru
their Talent Contracts and/or Project Assignment Forms which specified the
work to be performed by them, the project to which they were assigned,
the duration thereof and their rates of pay according to the budget therefor
allocated. Because they are imbued with public interest, it cannot be
gainsaid, however, that labor contracts are subject to the police power of
the state and are placed on a higher plane than ordinary contracts. The
recognized supremacy of the law over the nomenclature of the contract
and the stipulations contained therein is aimed at bringing life to the policy
enshrined in the Constitution to afford protection to labor. 25 Insofar as the
nature of ones employment is concerned, Article 280 of the Labor Code of
the Philippines also provides as follows:
ART. 280. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such actually
exists.
It has been ruled that the foregoing provision contemplates four kinds of
employees, namely: (a) regular employees or those who have been
engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer; (b) project employees or those
whose employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of

the engagement of the employee; (c) seasonal employees or those who

work or perform services which are seasonal in nature, and the
employment is for the duration of the season; and (d) casual employees or
those who are not regular, project, or seasonal employees. 26 To the
foregoing classification of employee, jurisprudence has added that of
contractual or fixed term employee which, if not for the fixed term, would
fall under the category of regular employment in view of the nature of the
employees engagement, which is to perform activity usually necessary or
desirable in the employers business.27
The Court finds that, notwithstanding the nomenclature of their Talent
Contracts and/or Project Assignment Forms and the terms and condition
embodied therein, petitioners are regular employees of ABS-CBN. Time and
again, it has been ruled that the test to determine whether employment is
regular or not is the reasonable connection between the activity performed
by the employee in relation to the business or trade of the employer. 28As
cameramen/editors and reporters, petitioners were undoubtedly
performing functions necessary and essential to ABS-CBNs business of
broadcasting television and radio content. It matters little that petitioners
services were engaged for specified periods for TV Patrol Bicol and that
they were paid according to the budget allocated therefor. Aside from the
fact that said program is a regular weekday fare of the ABS-CBNs Regional
Network Group in Naga City, the record shows that, from their initial
engagement in the aforesaid capacities, petitioners were continuously rehired by respondents over the years. To the mind of the Court,
respondents repeated hiring of petitioners for its long-running news
program positively indicates that the latter were ABS-CBNs regular
employees.
If the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems
the repeated or continuing performance as sufficient evidence of the
necessity, if not indispensability of that activity in the business. 29 Indeed,
an employment stops being co-terminous with specific projects where the
employee is continuously re-hired due to the demands of the employers
business.30 When circumstances show, moreover, that contractually
stipulated periods of employment have been imposed to preclude the
acquisition of tenurial security by the employee, this Court has not
hesitated in striking down such arrangements as contrary to public policy,
morals, good customs or public order. 31 The nature of the employment
depends, after all, on the nature of the activities to be performed by the
employee, considering the nature of the employers business, the duration
and scope to be done, and, in some cases, even the length of time of the

41

performance and its continued existence. 32 In the same manner that the
practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law,
it has, consequently, been ruled that the assertion that a talent contract
exists does not necessarily prevent a regular employment status. 33
As cameramen/editors and reporters, it also appears that petitioners were
subject to the control and supervision of respondents which, first and
foremost, provided them with the equipments essential for the discharge of
their functions. Prepared at the instance of respondents, petitioners Talent
Contracts tellingly provided that ABS-CBN retained "all creative,
administrative, financial and legal control" of the program to which they
were assigned. Aside from having the right to require petitioners "to attend
and participate in all promotional or merchandising campaigns, activities or
events for the Program," ABS-CBN required the former to perform their
functions "at such locations and Performance/Exhibition Schedules" it
provided or, subject to prior notice, as it chose determine, modify or
change. Even if they were unable to comply with said schedule, petitioners
were required to give advance notice, subject to respondents
approval.34 However obliquely worded, the Court finds the foregoing terms
and conditions demonstrative of the control respondents exercised not only
over the results of petitioners work but also the means employed to
achieve the same.
In finding that petitioners were regular employees, the NLRC further ruled
that the exclusivity clause and prohibitions in their Talent Contracts and/or
Project Assignment Forms were likewise indicative of respondents control
over them. Brushing aside said finding, however, the CA applied the ruling
in Sonza v. ABS-CBN Broadcasting Corporation 35 where similar restrictions
were considered not necessarily determinative of the existence of an
employer-employee relationship. Recognizing that independent contractors
can validly provide his exclusive services to the hiring party, said case
enunciated that guidelines for the achievement of mutually desired results
are not tantamount to control. As correctly pointed out by petitioners,
however, parallels cannot be expediently drawn between this case and
that of Sonza case which involved a well-known television and radio
personality who was legitimately considered a talent and amply
compensated as such. While possessed of skills for which they were
modestly recompensed by respondents, petitioners lay no claim to fame
and/or unique talents for which talents like actors and personalities are
hired and generally compensated in the broadcast industry.

Later echoed in Dumpit-Murillo v. Court of Appeals, 36 this Court has

rejected the application of the ruling in the Sonza case to employees
similarly situated as petitioners in ABS-CBN Broadcasting Corporation v.
Nazareno.37The following distinctions were significantly observed between
employees like petitioners and television or radio personalities like Sonza,
to wit:
First. In the selection and engagement of respondents, no peculiar or
unique skill, talent or celebrity status was required from them because
they were merely hired through petitioners personnel department just like
any ordinary employee.
Second. The so-called "talent fees" of respondents correspond to wages
given
as
a
result
of
an
employer-employee
relationship.1wphi1 Respondents did not have the power to bargain for
huge talent fees, a circumstance negating independent contractual
relationship.
Third. Petitioner could always discharge respondents should it find their
work unsatisfactory, and respondents are highly dependent on the
petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that
respondents are independent contractors.
The presumption is that when the work done is an integral part of the
regular business of the employer and when the worker, relative to the
employer, does not furnish an independent business or professional
service, such work is a regular employment of such employee and not an
independent contractor. The Court will peruse beyond any such agreement
to
examine
the
facts
that
typify
the
parties
actual
relationship.38 (Emphasis omitted)
Rather than the project and/or independent contractors respondents claim
them to be, it is evident from the foregoing disquisition that petitioners are
regular employees of ABS-CBN. This conclusion is borne out by the
ineluctable showing that petitioners perform functions necessary and
essential to the business of ABS-CBN which repeatedly employed them for
a long-running news program of its Regional Network Group in Naga City. In
the course of said employment, petitioners were provided the equipments
they needed, were required to comply with the Company's policies which

42

entailed prior approval and evaluation of their performance. Viewed from

the prism of these considerations, we find and so hold that the CA
reversibly erred when it overturned the NLRC's affirmance of the Labor
Arbiter's finding that an employer-employee relationship existed between
the parties. Given the fact, however, that Sub-RAB-V-05-03-00039-08 had
not been consolidated with this case and appears, for all intents and
purposes, to be pending still, the Court finds that the reinstatement of
petitioners ordered by said labor officer and tribunal should, as a relief
provided in case of illegal dismissal, be left for determination in said case.
WHEREFORE, the Court of Appeals' assailed Decision dated 29 June 2011
and Resolution dated 3 October 2011 in CA-G.R. SP No. 116928 are
REVERSED and SET ASIDE. Except for the reinstatement of Nelson V.
Begino, Gener Del Valle, Monina Avila-Llorin and Ma. Cristina Sumayao, the
National Labor and Relations Commission's 31 March 2010 Decision is,
accordingly, REINSTATED.
SO ORDERED.

43

SAN MIGUEL CORPORATION,

Petitioner,

G.R. No. 164257

Present:

- versus -

VICENTE B. SEMILLANO, NELSON

MONDEJAR,
JOVITO
REMADA,
ALILGILAN
MULTI-PURPOSE
COOP
(AMPCO) AND MERLYN V. POLIDARIO,
Respondents.

CARPIO, J., Chairperson,

NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:
July 5, 2010

x ------------------------------------------------------------------------------------------------x
DECISION
MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of

Court assailing (i) the February 19, 2004 Decision [1] of the Court of Appeals
in CA-G.R. SP. No. 75209 which reversed and set aside the February 28,
2002 and September 27, 2002 Resolutions of the National Labor Relations
Commission in NLRC Case No. V-000588-98; and (ii) its May 28, 2004
Resolution[2] denying petitioners motion for the reconsideration thereof.

The facts of the case, as found by the Court of Appeals, [3] are as follows:

xxx It appears that AMPCO hired the services of

Vicente et al. [Vicente Semillano, Nelson Mondejar, Jovito
Remada and Alex Hawod,[4] respondents herein] on different
dates in December [of 1991 and] 1994. All of them were
assigned to work in SMCs Bottling Plant situated at Brgy.
Granada Sta. Fe, Bacolod City, in order to perform the
following tasks: segregating bottles, removing dirt
therefrom, filing them in designated places, loading and
unloading the bottles to and from the delivery trucks, and
performing other tasks as may be ordered by SMCs
officers. [They] were required to work inside the premises of
SMC using [SMCs] equipment. [They] rendered service with
SMC for more than 6 months.
Subsequently, SMC entered into a Contract of
Services[5] with AMPCO designating the latter as the
employer of Vicente, et al. As a result, Vicente et al. failed
to claim the rights and benefits ordinarily accorded a
regular employee of SMC. In fact, they were not paid their
13th month pay. On June 6, 1995, they were not allowed to
enter the premises of SMC. The project manager of AMPCO,
Merlyn Polidario, told them to wait for further instructions
from the SMCs supervisor. Vicente et al. waited for one
month, unfortunately, they never heard a word from SMC.
Consequently, Vicente et al., as complainants, filed
on July 17, 1995 a COMPLAINT FOR ILLEGAL DISMISSAL with
the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC
and Rufino I. Yatar [SMC Plant Manager], as respondents.
xxx Complainants alleged that they were fillers of SMC
Bottling Plant xxx assigned to perform activities necessary
and desirable in the usual business of SMC. xxx They claim
that they were under the control and supervision of SMC
personnel and have worked for more than 6 months in the
company. As such, they assert that they are regular
employees of SMC.
However, SMC utilized AMPCO making it appear that the
latter was their employer, so that SMC may evade the
responsibility of paying the benefits due them under the
law. Finally, complainants contend that AMPCO and SMC
failed to give their 13th month pay and that they were
prevented from entering the SMCs premises. Hence,

44

complainants contend that they were illegally dismissed

from service.
On the other hand, respondent SMC raised the
defense
that
it
is
not
the
employer
of
the
complainants. According to SMC, AMPCO is their employer
because the latter is an independent contractor xxx. Also
SMC alleged that it was AMPCO that directly paid their
salaries and remitted their contributions to the SSS. Finally,
SMC assails the jurisdiction of the Labor Arbiter contending
that the instant dispute is intra-cooperative in nature falling
within the jurisdiction of the Arbitration Committee of the
Cooperative Development Authority.

On April 30, 1998, the Labor Arbiter (LA) rendered his decision.
[6]

The dispositive portion of which reads:

Wherefore, premises considered, judgment is
hereby rendered declaring herein complainants as regular
employees of San Miguel Corporation and the latter is
ordered:
1.

2.

To reinstate complainants to their

previous
or
equivalent
positions
without loss of seniority rights with
payment of full backwages from the
time of their illegal dismissal up to the
time of their actual reinstatement; and
To
pay
complainants
counsel
attorneys fees 10% of the total award
or P36,625.76.

Per
our
computation
complainants
Vicente
Semillano, Nelson Mondejar and Jovito Remada are entitled
to the amount of P122,085.88 each as full backwages
covering the period June 6, 1995 up to April 30, 1998.

Accordingly, respondents filed a motion for partial execution of the

decision of the Labor Arbiter praying for their immediate reinstatement.
[8]

Petitioner San Miguel Corporation (SMC) filed its Opposition to the

motion.[9] The LA, however, rendered no ruling thereon.[10]

Petitioner appealed the LA Decision to the NLRC. Initially, the NLRC

Fourth Division affirmed with modifications the findings of the LA as follows:
WHEREFORE, premises considered, the appeals of
respondents AMPCO and SMC are denied for lack of merit
and the decision appealed from is affirmed with a
modification in the following:
a.

Respondent SMC to pay complainants

their backwages from June 6, 1995 up
to and until July 22, 1998;

b.

Respondent SMC to pay complainants

their accrued salaries and allowances
from July 23, 1998 up to the present;
and

c.

Respondent SMC to pay complainants

ten percent (10%) of the total award as
attorneys fees.

Complainants, to restate, are regular employees of

San Miguel Corporation and the latter is ordered to
reinstate complainants to their former position as
pilers/segregators.

Petitioner SMC moved for a reconsideration of the foregoing

decision. In a Resolution dated February 28, 2002, the NLRC acted on the

SO ORDERED.[7]
motion and reversed its earlier ruling. It absolved petitioner from liability
and instead held AMPCO, as employer of respondents, liable to pay for

45

respondents backwages, accrued salaries, allowances, and attorneys

AMPCO was a labor-only contractor since a capital of nearly one million

fees. In holding that AMPCO was an independent contractor, NLRC was of

pesos was insufficient for it to qualify as an independent contractor. Thus,

the view that the law only required substantial capital or investment. Since

the decretal portion reads:

AMPCO had substantial capital of nearly one (1) million then it qualified as
an independent contractor. The NLRC added that even under the control
test, AMPCO would be the real employer of the respondents, since it had
assumed the entire charge and control of respondents services. Hence, an
employer-employee

relationship

existed

between

AMPCO

and

the

respondents.

WHEREFORE, premises considered, the instant

petition is GRANTED. The assailed Resolutions dated
February 28, 2002 and September 27, 2002 both issued by
the public respondent National Labor Relations Commission
in the case docketed as RAB CASE NO. 06-07-10298-95 are
hereby SET ASIDE and a new one entered reinstating its
original Decision dated June 30, 2000, which affirmed with
modification the decision of the Labor Arbiter dated April
30, 1998. No pronouncement as to costs.
SO ORDERED.

Respondents timely filed their motion for reconsideration of the

NLRC resolution but it was denied.[11]

Feeling

aggrieved

over

the

SMC filed a motion for reconsideration but it was denied by the CA

in its May 28, 2004 Resolution.[12]

turnaround

by

the

NLRC,

the

Hence, this petition for review on certiorari.

respondents filed a petition for review on certiorari under Rule 65 with the
Court of Appeals (CA), which favorably acted on it.

Petitioner SMC argues that the CA wrongly assumed that it

exercised power of control over the respondents just because they

In overturning the commissions ruling, the Court of Appeals

ironically applied the same control test that the NLRC used to resolve the
issue of who the actual employer was. The CA, however, found that
petitioner SMC wielded (i) the power of control over respondent, as SMC
personnel supervised respondents performance of loading and unloading of
beer bottles, and (ii) the power of dismissal, as respondents were refused
entry by SMC to its premises and were instructed by the AMPCO manager
to wait for further instructions from the SMCs supervisor. The CA added that

performed their work within SMCs premises. In advocacy of its claim that
AMPCO is an independent contractor, petitioner relies on the provisions of
the service contract between petitioner and AMPCO, wherein the latter
undertook to provide the materials, tools and equipment to accomplish the
services contracted out by petitioner. The same contract provides that
AMPCO shall have exclusive discretion in the selection, engagement and
discharge of its employees/personnel or otherwise in the direction and

46

control thereof. Petitioner also adds that AMPCO determines the wages of

finality, when supported by ample evidence [14] and affirmed by the CA. The

its employees/personnel who shall be within its full control.

fact that the NLRC, in its subsequent resolution, reversed its original
decision does not render the foregoing inapplicable where the resolution
itself is not supported by substantial evidence.

Petitioner further argues that respondents action is essentially

one for regularization (as employees of SMC) which is nowhere

Department

of

Labor

and

Employment

(DOLE)

Department

recognized or allowed by law. Lastly, petitioner contends that the case

Order No. 10, Series of 1997, defines job contracting and labor-only

involves an intra-cooperative dispute, which is within the original and

contracting as follows:

exclusive jurisdiction of the Arbitration Committee of the Cooperative

and, thereafter, the Cooperative Development Authority.

In its Comment,[13] respondent AMPCO essentially advanced the

same arguments in support of its claim as a legitimate job contractor.

The only issue that needs to be resolved is whether or not

AMPCO is a legitimate job contractor. A claim that an action for
regularization has no legal basis and is violative of petitioners

Sec. 8. Job contracting. There is job contracting permissible

under the Code if the following conditions are met:
(1) The contractor carries on an independent
business and undertakes the contract
work on his own account under his own
responsibility according to his own
manner and method, free from the
control
and direction of his employer or principa
l in all
matters
connected
with
the
performance of the work except as to
the results thereof; and

constitutional and statutory rights is, therefore, dependent upon the

resolution of the issue posed above.

The petition fails.

Generally, the findings of fact made by the Labor Arbiter and the
NLRC, as the specialized agencies presumed to have the expertise on
matters within their respective fields, are accorded much respect and even

(2) The contractor has substantial capital or

investment in the form of tools,
equipment,
machineries,
work
premises, and other materials which are
necessary in the conduct of his
business.
Sec. 9. Labor-only contracting. (a) Any person who
undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where such
person:

47

(1) Does not have substantial capital or

investment in the form of tools,
equipment,
machineries,
work
premises and other materials; and
(2) The workers recruited and placed by
such persons are performing activities
which are directly related to the
principal business or operations of the
employer in which workers are
habitually employed.
(b) Labor-only contracting as defined herein is hereby
prohibited and the person acting as contractor shall be
considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly
employed by him.

(c) For cases not falling under this Article, the Secretary of
Labor shall determine through appropriate orders whether
or not the contracting out of labor is permissible in the light
of the circumstances of each case and after considering the
operating needs of the employer and the rights of the
workers involved. In such case, he may prescribe conditions
and restrictions to insure the protection and welfare of the
workers.

The "right to control" shall refer to the right reserved

to the person for whom the services of the contractual
workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in
reaching that end.

The test to determine the existence of independent contractorship

is whether or not the one claiming to be an independent contractor has
contracted to do the work according to his own methods and without being
subject to the control of the employer, except only as to the results of the
work.[15]

The existence of an independent and permissible contractor

relationship is generally established by the following criteria: whether or
not the contractor is carrying on an independent business; the nature and
extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of a specified piece of
work; the control and supervision of the work to another; the employer's

Section 5 of Department Order No. 18-02 (Series of 2002) of the

Rules Implementing Articles 106 to 109 of the Labor Code further provides

power with respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply the premises,
tools, appliances, materials, and labor; and the mode, manner and terms

that:
Substantial capital or investment refers to capital
stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries
and work premises, actually and directly used by the
contractor or subcontractor in the performance or
completion of the job work or service contracted
out. (emphasis supplied)

of payment.[16]

Although there may be indications of an independent contractor

arrangement between petitioner and AMPCO, the most determinant of
factors exists which indicate otherwise.

48

neither petitioner nor AMPCO has shown that the latter had clients other
Petitioners averment that AMPCO had total assets amounting
to P932,599.22 and income of P2,777,603.46 in 1994 was squarely
debunked by the LA. Thus:
Furthermore, there are no pieces of evidence that
AMPCO has substantial capital or investment. An
examination its Statement of Income and Changes in
Undivided Savings show that its income for the year 1994
was P2,777,603.46 while its operating expenses for said
year is P2,718,315.33 or a net income of P59,288.13 for the
year 1994; that its cash on hand for 1994 is P22,154.80.

In fact, the NLRC in its original decision likewise stated as follows:

In contrast, the (sic) AMPCOs main business activity
is trading, maintaining a store catering to members and the
public. Its job contracting with SMC is only a minor activity
or sideline. The component of AMPCOs substantial capital
are [sic]in fact invested and used in the trading business.
This is palpably shown in the sizable amount of its accounts
receivables amounting to more than P.6M out of its
members capital of only P.47M in 1994.

than petitioner. Therefore, AMPCO has no independent business.

In connection therewith, DOLE Department Order No. 10 also states
that an independent contractor carries on an independent business and
undertakes the contract work on his own account, under his own
responsibility, according to his own manner and method, and free from the
control and direction of his employer or principal in all matters connected
with the performance of the work except as to the results thereof. This
embodies what has long been jurisprudentially recognized as the control
test[18] to determine the existence of employer-employee relationship.

In the case at bench, petitioner faults the CA for holding that the
respondents were under the control of petitioner whenever they performed
the task of loading in the delivery trucks and unloading from them. It,
however, fails to show how AMPCO took entire charge, control and
supervision of the work and service agreed upon. AMPCOs Comment on the
Petition is likewise utterly silent on this point. Notably, both petitioner and
AMPCO chose to ignore the uniform finding of the LA, NLRC (in its original
decision) and the CA that one of the assigned jobs of respondents was to
perform other acts as may be ordered by SMCs officers. Significantly,

Neither

did

petitioner

prove

that

AMPCO

had

substantial

equipment, tools, machineries, and supplies actually and directly used by it

AMPCO, opted not to challenge the original decision of the NLRC that found
it a mere labor-only contractor.

in the performance or completion of the segregation and piling job. In fact,

as correctly pointed out by the NLRC in its original decision, there is nothing
in AMPCOs list[17] of fixed assets, machineries, tools, and equipment which it

Moreover, the Court is not convinced that AMPCO wielded exclusive

could have used, actually and directly, in the performance or completion of

discretion in the discharge[19] of respondents. As the CA correctly pointed

its contracted job, work or service with petitioner. For said reason, there can
be no other logical conclusion but that the tools and equipment utilized by
respondents are owned by petitioner SMC. It is likewise noteworthy that

out, Merlyn Polidario, AMPCOs project manager, even told respondents to

wait for further instructions from the SMCs supervisor after they were

49

prevented from entering petitioner SMCs premises. Based on the foregoing,

Petitioner also argues that among the permissible contracting

no other logical conclusion can be reached than that it was petitioner, not

arrangements include work or services not directly related or not integral to

AMPCO, who wielded power of control.

the main business or operation of the principal including work related to

manufacturing processes of manufacturing establishments. [24] The Court is

Despite the fact that the service contracts [20] contain stipulations

not persuaded. The evidence is clear that respondents performed activities

which are earmarks of independent contractorship, they do not make it

which were directly related to petitioners main line of business. Petitioner is

legally so. The language of a contract is neither determinative nor

primarily engaged in manufacturing and marketing of beer products, and

conclusive of the relationship between the parties. Petitioner SMC and

respondents work of segregating and cleaning bottles is unarguably an

AMPCO cannot dictate, by a declaration in a contract, the character of

important part of its manufacturing and marketing process.

AMPCOs business, that is, whether as labor-only contractor, or job

contractor. AMPCOs character should be measured in terms of, and

Lastly, petitioner claims that the present case is outside the jurisdiction of

determined by, the criteria set by statute.[21] At a closer look, AMPCOs

the labor tribunals because respondent Vicente Semillano is a member of

actual status and participation regarding respondents employment clearly

AMPCO, not SMC. Precisely, he has joined the others in filing this complaint

belie the contents of the written service contract.

because it is his position that petitioner SMC is his true employer and liable
for all his claims under the Labor Code.

Petitioner cannot rely either on AMPCOs Certificate of Registration

as an Independent Contractor issued by the proper Regional Office of the

Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO,

the labor-only contractor, for all the rightful claims of respondents. Under

DOLE to prove its claim. It is not conclusive evidence of such status. The

this set-up, AMPCO, as the "labor-only" contractor, is deemed an agent of

fact of registration simply prevents the legal presumption of being a mere

the principal (SMC). The law makes the principal responsible over the

labor-only contractor from arising.

employees of the "labor-only" contractor as if the principal itself directly

[22]

In distinguishing between permissible

job contracting and prohibited labor-only contracting, the totality of the

hired the employees.[25]

facts and the surrounding circumstances of the case are to be considered.

[23]

WHEREFORE, the petition is DENIED. The February 19, 2004

Decision of the Court of Appeals, reversing the decision of the National
Labor Relations Commission and reinstating the decision of the Labor
Arbiter, is AFFIRMED.

50

SO ORDERED.

51

JOSE MEL BERNARTE, G.R. No. 192084

Petitioner,
Present:

- versus - CARPIO, J., Chairperson,

BRION,
DEL
CASTILLO,*
PEREZ, and
SERENO, JJ.
PHILIPPINE BASKETBALL
ASSOCIATION (PBA), JOSE
EMMANUEL M. EALA, and Promulgated:
PERRY MARTINEZ,
Respondents. September 14, 2011
x-----------------------------------------------------------------------------------------x
DECISION
CARPIO, J.:
The Case
This is a petition for review 1 of the 17 December 2009 Decision 2 and 5 April
2010 Resolution3 of the Court of Appeals in CA-G.R. SP No. 105406. The
Court of Appeals set aside the decision of the National Labor Relations
Commission (NLRC), which affirmed the decision of the Labor Arbiter, and
held that petitioner Jose Mel Bernarte is an independent contractor, and
not an employee of respondents Philippine Basketball Association (PBA),
Jose Emmanuel M. Eala, and Perry Martinez. The Court of Appeals denied
the motion for reconsideration.
The Facts
The facts, as summarized by the NLRC and quoted by the Court of
Appeals, are as follows:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they
were invited to join the PBA as referees. During the leadership of
Commissioner Emilio Bernardino, they were made to sign contracts on a
year-to-year basis. During the term of Commissioner Eala, however,
changes were made on the terms of their employment.

Complainant Bernarte, for instance, was not made

contract during the first conference of the All-Filipino
was from February 23, 2003 to June 2003. It was only
second conference when he was made to sign a one
month contract for the period July 1 to August 5, 2003.

to sign a
Cup which
during the
and a half

On January 15, 2004, Bernarte received a letter from the Office of

the Commissioner advising him that his contract would not be
renewed citing his unsatisfactory performance on and off the court.
It was a total shock for Bernarte who was awarded Referee of the
year in 2003. He felt that the dismissal was caused by his refusal
to fix a game upon order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was
invited to join the PBA pool of referees in February 2001. On March
1, 2001, he signed a contract as trainee. Beginning 2002, he
signed a yearly contract as Regular Class C referee. On May 6,
2003,
respondent
Martinez
issued
a
memorandum
to Guevarra expressing dissatisfaction over his questioning on the
assignment of referees officiating out-of-town games. Beginning
February 2004, he was no longer made to sign a contract.
Respondents aver, on the other hand, that complainants entered
into two contracts of retainer with the PBA in the year 2003. The
first contract was for the period January 1, 2003 to July 15, 2003;
and the second was for September 1 to December 2003. After the
lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not

employees of the PBA. Their respective contracts of retainer were
simply not renewed. PBA had the prerogative of whether or not to
renew their contracts, which they knew were fixed.4
In her 31 March 2005 Decision,5 the Labor Arbiter6 declared petitioner an
employee whose dismissal by respondents was illegal. Accordingly, the
Labor Arbiter ordered the reinstatement of petitioner and the payment
of backwages, moral and exemplary damages and attorneys fees, to wit:
WHEREFORE, premises considered all respondents who are here
found to have illegally dismissed complainants are hereby ordered

52

to (a) reinstate complainants within thirty (30) days from the date
of receipt of this decision and to solidarily pay complainants:

1. backwages from January 1,

2004 up to the finality of this
Decision, which to date is
2. moral damages

SO ORDERED.10

JOSE
MELRENATO GUEVARRA
The Court of Appeals Ruling
BERNARTE
P536,250.00
100,000.00
50,000.00

P211,250.00
The Court of Appeals found petitioner an independent contractor since
respondents did not exercise any form of control over the means and
100,000.00
methods by which petitioner performed his work as a basketball referee.
50,000.00 The Court of Appeals held:

3. exemplary damages
4. 10% attorneys fees

68,625.00

36,125.00

TOTAL

P754,875.00

P397,375.00

or a total of P1,152,250.00

The rest of the claims are hereby dismissed for lack of merit or basis.

While the NLRC agreed that the PBA has no control over the
referees acts of blowing the whistle and making calls during
basketball games, it, nevertheless, theorized that the said acts
refer to the means and methods employed by the referees in
officiating basketball games for the illogical reason that said acts
refer only to the referees skills. How could a skilled referee perform
his job without blowing a whistle and making calls? Worse, how can
the PBA control the performance of work of a referee without
controlling his acts of blowing the whistle and making calls?

SO ORDERED.7
In its 28 January 2008 Decision,8 the NLRC affirmed the Labor Arbiters
judgment. The dispositive portion of the NLRCs decision reads:
WHEREFORE, the appeal is hereby DISMISSED. The Decision of
Labor Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is
AFFIRMED.

Moreover, this Court disagrees with the Labor Arbiters finding (as
affirmed by the NLRC) that the Contracts of Retainer show that
petitioners have control over private respondents.
xxxx

SO ORDERED.9
Respondents filed a petition for certiorari with the Court of Appeals, which
overturned the decisions of the NLRC and Labor Arbiter. The dispositive
portion of the Court of Appeals decision reads:

Neither do We agree with the NLRCs affirmance of the Labor

Arbiters conclusion that private respondents repeated hiring made
them regular employees by operation of law.11

The Issues
WHEREFORE,
the
petition
is
hereby GRANTED.
The
assailed Decision dated January 28, 2008 and Resolution dated
August 26, 2008 of the National Labor Relations Commission
areANNULLED and SET ASIDE. Private respondents complaint
before the Labor Arbiter is DISMISSED.

The main issue in this case is whether petitioner is an employee of

respondents, which in turn determines whether petitioner was illegally
dismissed.

53

Petitioner raises the procedural issue of whether the Labor Arbiters

decision has become final and executory for failure of respondents to
appeal with the NLRC within the reglementaryperiod.

expiration of ten (10) days after mailing, unless the court otherwise
provides. Service by registered mail is complete upon actual
receipt by the addressee, or after five (5) days from the date he
received the first notice of the postmaster, whichever date is
earlier.

The Ruling of the Court

The petition is bereft of merit.
The Court shall first resolve the procedural issue posed by petitioner.
Petitioner contends that the Labor Arbiters Decision of 31 March 2005
became final and executory for failure of respondents to appeal with the
NLRC within the prescribed period. Petitioner claims that the Labor Arbiters
decision was constructively served on respondents as early as August 2005
while respondents appealed the Arbiters decision only on 31 March 2006,
way beyond the reglementary period to appeal. Petitioner points out that
service of an unclaimed registered mail is deemed complete five days from
the date of first notice of the post master. In this case three notices were
issued by the post office, the last being on 1 August 2005. The unclaimed
registered mail was consequently returned to sender. Petitioner presents
the Postmasters Certification to prove constructive service of the Labor
Arbiters decision on respondents. The Postmaster certified:
xxx
That upon receipt of said registered mail matter, our registry in
charge, Vicente Asis, Jr., immediately issued the first registry notice
to claim on July 12, 2005 by the addressee. The second and third
notices were issued on July 21 and August 1, 2005, respectively.
That the subject registered letter was returned to the sender (RTS)
because the addressee failed to claim it after our one month
retention period elapsed. Said registered letter was dispatched
from this office to Manila CPO (RTS) under bill #6, line 7, page1,
column 1, on September 8, 2005.12
Section 10, Rule 13 of the Rules of Court provides:

SEC. 10. Completeness of service. Personal service is complete

upon actual delivery. Service by ordinary mail is complete upon the

The rule on service by registered mail contemplates two situations: (1)

actual service the completeness of which is determined upon receipt by
the addressee of the registered mail; and (2) constructive service the
completeness of which is determined upon expiration of five days from the
date the addressee received the first notice of the postmaster. 13
Insofar as constructive service is concerned, there must be conclusive
proof that a first notice was duly sent by the postmaster to the
addressee.14 Not only is it required that notice of the registered mail be
issued but that it should also be delivered to and received by the
addressee.15 Notably, the presumption that official duty has been regularly
performed is not applicable in this situation. It is incumbent upon a party
who relies on constructive service to prove that the notice was sent to, and
received by, the addressee.16
The best evidence to prove that notice was sent would be a certification
from the postmaster, who should certify not only that the notice was issued
or sent but also as to how, when and to whom the delivery and receipt was
made. The mailman may also testify that the notice was actually
delivered.17
In this case, petitioner failed to present any concrete proof as to how, when
and to whom the delivery and receipt of the three notices issued by the
post office was made. There is no conclusive evidence showing that the
post office notices were actually received by respondents, negating
petitioners claim of constructive service of the Labor Arbiters decision on
respondents. The Postmasters Certification does not sufficiently prove that
the three notices were delivered to and received by respondents; it only
indicates that the post office issued the three notices. Simply put, the
issuance of the notices by the post office is not equivalent to delivery to
and receipt by the addressee of the registered mail. Thus, there is no proof
of completed constructive service of the Labor Arbiters decision on
respondents.
At any rate, the NLRC declared the issue on the finality of the Labor
Arbiters decision moot as respondents appeal was considered in the
interest of substantial justice. We agree with the NLRC. The ends of justice
will be better served if we resolve the instant case on the merits rather

54

than allowing the substantial issue of whether petitioner is an independent

contractor or an employee linger and remain unsettled due to procedural
technicalities.
The existence of an employer-employee relationship is ultimately a
question of fact. As a general rule, factual issues are beyond the province
of this Court. However, this rule admits of exceptions, one of which is
where there are conflicting findings of fact between the Court of Appeals,
on one hand, and the NLRC and Labor Arbiter, on the other, such as in the
present case.18
To determine the existence of an employer-employee relationship, case law
has consistently applied the four-fold test, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employee on the
means and methods by which the work is accomplished. The socalledcontrol test is the most important indicator of the presence or
absence of an employer-employee relationship.19
In this case, PBA admits repeatedly engaging petitioners services, as
shown in the retainer contracts. PBA pays petitioner a retainer fee,
exclusive of per diem or allowances, as stipulated in the retainer contract.
PBA can terminate the retainer contract for petitioners violation of its
terms and conditions.
However, respondents argue that the all-important element of control is
lacking in this case, making petitioner an independent contractor and not
an employee of respondents.
Petitioner contends otherwise. Petitioner asserts that he is an employee of
respondents since the latter exercise control over the performance of his
work. Petitioner cites the following stipulations in the retainer contract
which evidence control: (1) respondents classify or rate a referee; (2)
respondents require referees to attend all basketball games organized or
authorized by the PBA, at least one hour before the start of the first game
of each day; (3) respondents assign petitioner to officiate ballgames, or to
act as alternate referee or substitute; (4) referee agrees to observe and
comply with all the requirements of the PBA governing the conduct of the
referees whether on or off the court; (5) referee agrees (a) to keep himself
in good physical, mental, and emotional condition during the life of the
contract; (b) to give always his best effort and service, and loyalty to the
PBA, and not to officiate as referee in any basketball game outside of the
PBA, without written prior consent of the Commissioner; (c) always to
conduct himself on and off the court according to the highest standards of

honesty or morality; and (6) imposition of various sanctions for violation of

the terms and conditions of the contract.
The foregoing stipulations hardly demonstrate control over the means and
methods by which petitioner performs his work as a referee officiating a
PBA basketball game. The contractual stipulations do not pertain to, much
less dictate, how and when petitioner will blow the whistle and make calls.
On the contrary, they merely serve as rules of conduct or guidelines in
order to maintain the integrity of the professional basketball league. As
correctly observed by the Court of Appeals, how could a skilled referee
perform his job without blowing a whistle and making calls?
x x x [H]ow can the PBA control the performance of work of a referee
without controlling his acts of blowing the whistle and making calls? 20
In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the
relationship between a television and radio station and one of its talents,
the Court held that not all rules imposed by the hiring party on the hired
party indicate that the latter is an employee of the former. The Court held:
We find that these general rules are merely guidelines towards the
achievement of the mutually desired result, which are top-rating
television and radio programs that comply with standards of the
industry. We have ruled that:
Further, not every form of control that a party reserves to himself
over the conduct of the other party in relation to the services being
rendered may be accorded the effect of establishing an employeremployee relationship. The facts of this case fall squarely with the
case of Insular Life Assurance Co., Ltd. v. NLRC. In said case, we
held that:
Logically, the line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address
both the result and the means used to achieve it.22
We agree with respondents that once in the playing court, the referees
exercise their own independent judgment, based on the rules of the game,
as to when and how a call or decision is to be made. The referees decide
whether an infraction was committed, and the PBA cannot overrule them
once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of

55

the PBA officers cannot and do not determine which calls to make or not to
make and cannot control the referee when he blows the whistle because
such authority exclusively belongs to the referees. The very nature of
petitioners job of officiating a professional basketball game undoubtedly
calls for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an
independent contractor: (1) the referees are required to report for work
only when PBA games are scheduled, which is three times a week spread
over an average of only 105 playing days a year, and they officiate games
at an average of two hours per game; and (2) the only deductions from the
fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work
eight hours per day for five days a week, petitioner is required to report for
work only when PBA games are scheduled or three times a week at two
hours per game. In addition, there are no deductions for contributions to
the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees salaries. These undisputed circumstances
buttress the fact that petitioner is an independent contractor, and not an
employee of respondents.
Furthermore, the applicable foreign case law declares that a referee is an
independent contractor, whose special skills and independent judgment
are required specifically for such position and cannot possibly be controlled
by the hiring party.
In Yonan v. United States Soccer Federation, Inc.,23 the United States
District Court of Illinois held that plaintiff, a soccer referee, is an
independent contractor, and not an employee of defendant which is the
statutory body that governs soccer in the United States. As such, plaintiff
was not entitled to protection by the Age Discrimination in Employment
Act. The U.S. District Court ruled:
Generally, if an employer has the right to control and direct the
work of an individual, not only as to the result to be achieved, but
also as to details by which the result is achieved, an
employer/employee relationship is likely to exist. The Court must
be careful to distinguish between control[ling] the conduct of
another party contracting party by setting out in detail his
obligations consistent with the freedom of contract, on the one
hand, and the discretionary control an employer daily exercises
over its employees conduct on the other.

Yonan asserts that the Federation closely supervised his

performance at each soccer game he officiated by giving him an
assessor, discussing his performance, and controlling what clothes
he wore while on the field and traveling. Putting aside that the
Federation did not, for the most part, control what clothes he wore,
the Federation did not supervise Yonan, but rather evaluated his
performance
after
matches. That
the
Federation
evaluated Yonan as a referee does not mean that he was an
employee. There is no question that parties retaining independent
contractors may judge the performance of those contractors to
determine if the contractual relationship should continue. x x x
It is undisputed that the Federation did not control the
way Yonan refereed his games. He had full discretion and authority,
under the Laws of the Game, to call the game as he saw fit. x x x In
a similar vein, subjecting Yonan to qualification standards and
procedures like the Federations registration and training
requirements does not create an employer/employee relationship.
xxx
A position that requires special skills and independent judgment
weights in favor of independent contractor status. x x x Unskilled
work, on the other hand, suggests an employment relationship.
x x xHere, it is undisputed that soccer refereeing, especially at the
professional and international level, requires a great deal of skill
and natural ability. Yonan asserts that it was the Federations
training that made him a top referee, and that suggests he was an
employee. Though substantial training supports an employment
inference, that inference is dulled significantly or negated when the
putative employers activity is the result of a statutory requirement,
not the employers choice. x x x

In McInturff v. Battle Ground Academy of Franklin,24 it was held

that the umpire was not an agent of the Tennessee Secondary
School Athletic Association (TSSAA), so the players vicarious
liability claim against the association should be dismissed. In
finding that the umpire is an independent contractor, the Court of
Appeals of Tennesse ruled:

The TSSAA deals with umpires to achieve a result-uniform rules for

all baseball games played between TSSAA member schools. The
TSSAA does not supervise regular season games. It does not tell an

56

official how to conduct the game beyond the framework

established by the rules. The TSSAA does not, in the vernacular of
the case law, control the means and method by which the umpires
work.
In addition, the fact that PBA repeatedly hired petitioner does not by itself
prove that petitioner is an employee of the former. For a hired party to be
considered an employee, the hiring party must have control over the
means and methods by which the hired party is to perform his work, which
is absent in this case. The continuous rehiring by PBA of petitioner simply
signifies the renewal of the contract between PBA and petitioner, and
highlights the satisfactory services rendered by petitioner warranting such
contract renewal. Conversely, if PBA decides to discontinue petitioners
services at the end of the term fixed in the contract, whether for
unsatisfactory services, or violation of the terms and conditions of the
contract, or for whatever other reason, the same merely results in the nonrenewal of the contract, as in the present case. The non-renewal of the
contract between the parties does not constitute illegal dismissal of
petitioner by respondents.
WHEREFORE, we DENY the petition and AFFIRM the assailed decision of
the Court of Appeals.
SO ORDERED.

57

G.R. No. 205300, March 18, 2015

FONTERRA BRANDS PHILS., INC., Petitioner, v. LEONARDO1 LARGADO
AND TEOTIMO ESTRELLADO, Respondents.
DECISION
VELASCO JR., J.:

were not illegally dismissed. As a matter of fact, they were the ones who
refused to renew their contract and that they voluntarily complied with the
requirements for them to claim their corresponding monetary benefits in
relation thereto; and (2) they were consecutively employed by Zytron and
A.C. Sicat, not by Fonterra. The dispositive portion of the Decision 2 reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
DISMISSING
the
instant
case
for
utter
lack
of
merit.
SO ORDERED.

The Case

This is a Petition for Review on Certiorari under Rule 45 of the Rules of

Court seeking the reversal and setting aside of the Decision of the Court of
Appeals (CA) dated September 6, 2012, as well as its January 11, 2013
Resolution denying reconsideration thereof, in CA-G.R. SP No. 114227,
entitledLeonardo Largado and Teotimo P. Estrellado v. National Labor
Relations Commission (NLRC), Fonterra Brands Phils., Inc./Carlo Mendoza,
Zytron Marketing & Promotions Corp./Francisco Valencia, A.C. Sicat
Marketing & Promotional Services/Arturo Sicat.
The Facts

The NLRC affirmed the Labor Arbiter, finding that respondents separation
from Zytron was brought about by the execution of the contract between
Fonterra and A.C. Sicat where the parties agreed to absorb Zytrons
personnel, including respondents. Too, respondents failed to present any
evidence that they protested this set-up. Furthermore, respondents failed
to refute the allegation that they voluntarily refused to renew their contract
with A.C. Sicat. Also, respondents did not assert any claim against Zytron
and A.C. Sicat. The NLRC disposed of the case in this wise:
WHEREFORE, premises
considered,
the
appeals
are
hereby
ordered DISMISSED and the Decision of the Labor Arbiter is AFFIRMED
[in]toto.
SO ORDERED.3

Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of

Zytron Marketing and Promotions Corp. (Zytron) for the marketing and
promotion of its milk and dairy products. Pursuant to the contract, Zytron
provided Fonterra with trade merchandising representatives (TMRs),
including respondents Leonardo Largado (Largado) and Teotimo Estrellado
(Estrellado). The engagement of their services began on September 15,
2003 and May 27, 2002, respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions
contract, effective June 5, 2006. Fonterra then entered into an agreement
for manpower supply with A.C. Sicat Marketing and Promotional Services
(A.C. Sicat). Desirous of continuing their work as TMRs, respondents
submitted their job applications with A.C. Sicat, which hired them for a
term of five (5) months, beginning June 7, 2006 up to November 6, 2006.
When respondents 5-month contracts with A.C. Sicat were about to expire,
they allegedly sought renewal thereof, but wereallegedly refused. This
prompted respondents to file complaints for illegal dismissal,
regularization, non-payment of service incentive leave and 13 th month pay,
and actual and moral damages, against petitioner, Zytron, and A.C. Sicat.
The Labor Arbiter dismissed the complaint and ruled that: (1) respondents

The NLRC decision was assailed in a petition under Rule 65 before the CA.
Ruling on the petition, the CA, in the questioned Decision, 4 found that A.C.
Sicat satisfies the requirements of legitimate job contracting, but Zytron
does not. According to the CA: (1) Zytrons paid-in capital of P250,000
cannot be considered as substantial capital; (2) its Certificate of
Registration was issued by the DOLE months after respondents supposed
employment ended; and (3) its claim that it has the necessary tools and
equipment for its business is unsubstantiated. Therefore, according to the
CA,
respondents
were
Fonterras
employees.
Additionally, the CA held that respondents were illegally dismissed since
Fonterra itself failed to prove that their dismissal is lawful. However, the
illegal dismissal should be reckoned from the termination of their supposed
employment with Zytron on June 6, 2006. Furthermore, respondents
transfer to A.C. Sicat is tantamount to a completely new engagement by
another employer. Lastly, the termination of their contract with A.C. Sicat
arose from the expiration of their respective contracts with the latter. The
CA, thus, ruled that Fonterra is liable to respondents and ordered the
reinstatement of respondents without loss of seniority rights, with full

58

backwages, and other benefits from the time of their illegal dismissal up to
the time of their actual reinstatement. The fallo of the Decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED. The
assailed Decision dated 20 November 2009 and Resolution dated 5 March
2010 of the National Labor Relations Commission (NLRC), Seventh Division,
are hereby ANULLED and SET ASIDE. Private respondent Fonterra Brand,
Inc. is hereby ordered to REINSTATE [respondents] without loss of seniority
rights. Private respondents Fonterra Brand, Inc. and Zytron Marketing and
Promotional Corp. are hereby further ORDERED to jointly and severally
pay petitioners their full backwages and other benefits from the time of
their illegal dismissal up to the time of their actual reinstatement; and
attorneys
fees.

II.

Succinctly, the issues in the case at bar are: (1) whether or not Zytron and
A.C. Sicat are labor-only contractors, making Fonterra the employer of
herein respondents; and (2) whether or not respondents were illegally
dismissed.
Our Ruling

We

SO ORDERED.

Respondents never claimed nor adduced evidence that they were

dismissed from employment by Zytron. In fact, Zytron denies
terminating them from work. The CA, thus, erred in finding that
respondents were illegally dismissed.

find

merit

in

the

petition.

The Issues

As regards the CAs conclusion that Zytron is not a legitimate job

contractor, We are of the view that such is immaterial to the resolution of
the illegal dismissal issue for one reason: We find that respondents
voluntarily terminated their employment with Zytron, contrary to their
allegation that their employment with Zytron was illegally terminated.

Petitioner presents the following issues for Our resolution:

We do not agree with the CA that respondents employment with Zytron

was
illegally
terminated.

Zytron and Fonterra moved for reconsideration, but to no avail. Hence, this
petition.

I.

The CA erred in ruling that Zytron was a mere labor-only contractor

to petitioner Fonterra, in that:
a.

As held by the Court, there is no absolute figure that

constitutes substantial capital for an independent
contractor, and the same should instead be measured
against the type of work it is obligated to do for the
principal. It is most respectfully submitted that, here, the
merchandising work undertaken by Zytrons paid-in capital
of P250,000 was as of 1990, the year it was incorporated;

b.

As shown in its Articles of Incorporation, Zytron had been

in business since 1990, or more than a decade before it
signed a merchandising agreement with petitioner
Fonterra;

c.

Very importantly, petitioner Fonterra never exercised the

right to control respondents and other employees of
Zytron. Indeed, respondents neither alleged that petitioner
exercised control over them nor presented proof in support
thereof in any of their previous pleadings.

As correctly held by the Labor Arbiter and the NLRC, the termination of
respondents employment with Zytron was brought about by the cessation
of their contracts with the latter. We give credence to the Labor Arbiters
conclusion that respondents were the ones who refused to renew their
contracts with Zytron, and the NLRCs finding that they themselves
acquiesced
to
their
transfer
to
A.C.
Sicat.
By refusing to renew their contracts with Zytron, respondents effectively
resigned from the latter. Resignation is the voluntary act of employees who
are compelled by personal reasons to dissociate themselves from their
employment, done with the intention of relinquishing an office,
accompanied
by
the
act
of
abandonment. 5
Here, it is obvious that respondents were no longer interested in continuing
their employment with Zytron. Their voluntary refusal to renew their
contracts was brought about by their desire to continue their assignment in
Fonterra which could not happen in view of the conclusion of Zytrons
contract with Fonterra. Hence, to be able to continue with their
assignment, they applied for work with A.C. Sicat with the hope that they
will be able to continue rendering services as TMRs at Fonterra since A.C.
Sicat is Fonterras new manpower supplier. This fact is even acknowledged
by the CA in the assailed Decision where it recognized the reason why
respondents applied for work at A.C. Sicat. The CA stated that [t]o
continuously work as merchandisers of Fonterra products, [respondents]
submitted their job applications to A.C. Sicat xxx. 6 This is further bolstered

59

by the fact that respondents voluntarily complied with the requirements for
them to claim their corresponding monetary benefits in relation to the
cessation
of
their
employment
contract
with
Zytron.
In short, respondents voluntarily terminated their employment with Zytron
by refusing to renew their employment contracts with the latter, applying
with A.C. Sicat, and working as the latters employees, thereby abandoning
their previous employment with Zytron. Too, it is well to mention that for
obvious reasons, resignation is inconsistent with illegal dismissal. This
being the case, Zytron cannot be said to have illegally dismissed
respondents,
contrary
to
the
findings
of
the
CA.
As regards respondents employment with A.C. Sicat and its termination via
non-renewal of their contracts, considering that in labor-only contracting,
the law creates an employer-employee relationship between the principal
and the labor-only contractors employee as if such employees are directly
employed by the principal employer, and considers the contractor as
merely the agent of the principal,7 it is proper to dispose of the issue on
A.C. Sicats status as a job contractor first before resolving the issue on the
legality
of
the
cessation
of
respondents
employment.
In this regard, We defer to the findings of the CA anent A.C. Sicats status
as a legitimate job contractor, seeing that it is consistent with the rules on
job contracting and is sufficiently supported by the evidence on record.
A person is considered engaged in legitimate job contracting or
subcontracting if the following conditions concur:
1.

The contractor or subcontractor carries on a distinct and

independent business and undertakes to perform the job, work or
service on its own account and under its own responsibility
according to its own manner and method, and free from the control
and direction of the principal in all matters connected with the
performance of the work except as to the results thereof;

2.

The contractor or
investment; and

subcontractor

has

substantial

capital

or

3.

The agreement between the principal and contractor or

subcontractor assures the contractual employees entitlement to all
labor and occupational safety and health standards, free exercise
of the right to self-organization, security of tenure, and social and
welfare benefits.8

On the other hand, contracting is prohibited when the contractor or

subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal and if any of the following elements are
present, thus:

1.

The contractor or subcontractor does not have substantial capital

or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; or

2.

The contractor does not exercise the right to control over the
performance of the work of the contractual employee.9

The CA correctly found that A.C. Sicat is engaged in legitimate job

contracting. It duly noted that A.C. Sicat was able to prove its status as a
legitimate job contractor for having presented the following evidence, to
wit:
1.

Certificate of Business Registration;

2.

Certificate of Registration with the Bureau of Internal Revenue;

3.

Mayors Permit;

4.

Certificate of Membership with the Social Security System;

5.

Certificate of Registration with the Department of Labor and

Employment;

6.

Company Profile; and

7.

Certifications issued by its clients.10

Furthermore, A.C. Sicat has substantial capital, having assets totaling

P5,926,155.76 as of December 31, 2006. Too, its Agreement with Fonterra
clearly sets forth that A.C. Sicat shall be liable for the wages and salaries of
its employees or workers, including benefits, premiums, and protection due
them, as well as remittance to the proper government entities of all
withholding taxes, Social Security Service, and Medicare premiums, in
accordance
with
relevant
laws.
The appellate court further correctly held that Fonterras issuance of
Merchandising Guidelines, stock monitoring and inventory forms, and
promo mechanics, for compliance and use of A.C. Sicats employees
assigned to them, does not establish that Fonterra exercises control over
A.C. Sicat. We agree with the CAs conclusion that these were imposed only
to ensure the effectiveness of the promotion services to be rendered by the
merchandisers as it would be risky, if not imprudent, for any company to
completely entrust the performance of the operations it has contracted
out.

60

hereby REINSTATED.
These sufficiently show that A.C. Sicat carries out its merchandising and
promotions business, independent of Fonterras business. Thus, having
settled that A.C. Sicat is a legitimate job contractor, We now determine
whether the termination of respondents employment with the former is
valid.
We agree with the findings of the CA that the termination of respondents
employment with the latter was simply brought about by the expiration of
their
employment
contracts.
Foremost, respondents were fixed-term employees. As previously held by
this Court, fixed-term employment contracts are not limited, as they are
under the present Labor Code, to those by nature seasonal or for specific
projects with predetermined dates of completion; they also include those
to which the parties by free choice have assigned a specific date of
termination.11 The determining factor of such contracts is not the duty of
the employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.12
In the case at bar, it is clear that respondents were employed by A.C. Sicat
as project employees. In their employment contract with the latter, it is
clearly stated that [A.C. Sicat is] temporarily employing [respondents] as
TMR[s] effective June 6[, 2006] under the following terms and conditions:
The need for your service being only for a specific project, your temporary
employment will be for the duration only of said project of our client,
namely to promote FONTERRA BRANDS products xxx which is expected to
be
finished
on
or
before
Nov.
06,
2006. 13
Respondents, by accepting the conditions of the contract with A.C. Sicat,
were well aware of and even acceded to the condition that their
employment thereat will end on said pre-determined date of termination.
They cannot now argue that they were illegally dismissed by the latter
when it refused to renew their contracts after its expiration. This is so since
the non-renewal of their contracts by A.C. Sicat is a management
prerogative, and failure of respondents to prove that such was done in bad
faith militates against their contention that they were illegally dismissed.
The expiration of their contract with A.C. Sicat simply caused the natural
cessation of their fixed-term employment there at. We, thus, see no reason
to
disturb
the
ruling
of
the
CA
in
this
respect.
With

these,

We

need

not

belabor

the

other

assigned

errors.

IN VIEW OF THE FOREGOING, the instant Petition for Review

is GRANTED. The assailed Decision of the Court of Appeals dated
September 6, 2012 and its January 11, 2013 Resolution denying
reconsideration
thereof,
in
CA-G.R.
SP
No.
114227,
are
hereby REVERSED and SET ASIDE. The Decision of the National Labor
Relations Commission dated November 20, 2009 and its Resolution dated
March 5, 2010 in NLRC Case No. RAB IV 12-23927-06-Q are

SO ORDERED.

61

G.R. No. 179654

September 22, 2014

HACIENDA
LEDDY/RICARDO
vs.
PAQUITA VILLEGAS, Respondent.

GAMBOA,

JR., Petitioner,

DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Decision 1 dated May 25, 2007 and
Resolution2 dated August 10, 2007 of the Court of Appeals in CA-G.R. SP
No. 01923,3 which granted the Petition for Certiorari under Rule 65 of the
1997 Rules of Civil Procedure filed by Villegas, and reversed the January
26, 2006 and March 31, 2006 Orders of the National Labor Relations
Commission (NLRC). These two Orders issued by the NLRC reversed the
December 3, 2003 Decision of Executive Labor Arbiter Danilo Acosta.
The facts, as culled from the records, are as follows:
Villegas is an employee at the Hacienda Leddy as early as 1960, when it
was still named Hacienda Teresa. Later on named Hacienda Leddy owned
by Ricardo Gamboa Sr., the same was succeeded by his son Ricardo
Gamboa, Jr. During his employment up to the time of his dismissal, Villegas
performed sugar farming job 8 hours a day, 6 days a week work,
continuously for not less than 302 days a year, and for which services he
was paidP45.00 per day. He likewise worked in petitioner's coconut lumber
business where he was paid P34.00 a day for 8 hours work.
On June 9, 1993, Gamboa went toVillegas' house and told him that his
services were no longer needed without prior notice or valid reason.
Hence, Villegas filed the instant complaint for illegal dismissal.
Gamboa, on the other hand, denied having dismissed Villegas but admitted
in his earlier position paper thatVillegas indeed worked with the said farm
owned by his father, doing casual and odd jobs until the latter's death in
1993.4 He was even given the benefit of occupying a small portion of the
land where his house was erected. He, however, maintained that Villegas
ceased working at the farm as early as 1992, contrary to his allegation that
he was dismissed.5

However, later, Gamboaapparently retracted and instead insisted that the

farm records reveal that the only time Villegas rendered service for the
hacienda was only in the year 1993,specifically February 9, 1993 and
February 11, 1993 when he was contracted by the farm to cut coconut
lumber which were given to regular workers for the repairs of their
houses.6 Gamboa added that they informed Villegas that they need the
property, hence, they requested that he vacateit, but he refused. Thus,
Gamboa surmised that Villegas filed the instant complaint to gain leverage
so he would not be evicted from the land he is occupying. He further
argued that during his employment, Villegas was paid in accordance with
the rate mandated by law and that his claim for illegal dismissal was
merely a fabrication as he was the one who opted not to work. The Labor
Arbiter found thatthere was illegal dismissal. 7 The dispositive portion of the
decision reads:
WHEREFORE, in view of all the foregoing, respondent Ricardo Gamboa, Jr.,
is hereby ordered to pay complainant Paquito Villegas the amount of One
Hundred Forty Thousand Three Hundred Eight Pesos and Eighty-Four/00
(P140,308.84), representing his wage differential, backwages and
separation pay, the award to be deposited with this office within ten (10)
days from receipt of this decision.
SO ORDERED.8
On appeal, on January 26, 2006, the NLRC set aside and vacated the Labor
Arbiter's decision.9 Complainant moved for reconsideration, but was
denied.10
Thus, viapetition for certiorariunder Rule 65 of the Rules of Court, raising
grave abuse of discretion as ground, Villegas appealed before the Court of
Appeals and sought the annulment of the Resolutions of the NLRC.
In the disputed Decision11 dated May 25, 2007, the Court of Appeals
granted the petition and annulled and set aside the NLRC Decision dated
January 26, 2006 and Resolution dated March 31, 2006. It further
reinstated the Labor Arbiter's Decision dated December 3, 2003.
Hence, this appeal anchored on the following grounds:
I

62

WHETHER THE COURT OFAPPEALS COMMITTED REVERSIBLE ERROR, BASED

ON SUBSTANTIAL QUESTIONS OF LAW, IN REVERSING THE DECISION OF
THE NLRC AND AFFIRMING THE DECISION OF the EXECUTIVE LABOR
ARBITER DECLARING THAT RESPONDENT IS A REGULAR WORKER, THE
FINDINGS NOT BEING IN ACCORD WITH LAW;
II
WHETHER THE COURT OFAPPEALS COMMITTED REVERSIBLE ERROR, BASED
ON SUBSTANTIAL QUESTIONS OF LAW, IN REVERSING THE DECISION OF
THE NLRC AND AFFIRMING THE DECISION OF THE EXECUTIVE LABOR
ARBITER AND FAILED TO CONSIDER THE MOTIVE OF THE RESPONDENT IN
FILING THE CASE AND THE CREDIBILITY OF HIS WITNESS;
III
THAT ASSUMING WITHOUT ADMITTING THAT RESPONDENT IS A REGULAR
WORKER, THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR, BASED ON SUBSTANTIAL QUESTIONS OF LAW, IN REVERSING THE
DECISION OF THE NLRC AND AFFIRMING THE DECISION OF THE EXECUTIVE
LABOR ARBITER IN DIRECTING A STRAIGHT COMPUTATION FOR WAGE
DIFFERENTIALS, BACKWAGES AND SEPARATION PAY, THE FINDINGS NOT
BEING INACCORD WITH LAW.
Petitioner disputed that there exists an employer-employee relationship
between him and Villegas. He claimed that respondent was paid on a
piece-rate basis without supervision. 12 Petitioner added that since his job
was not necessary or desirable in the usual business or trade of the
hacienda, he cannot be considered as a regular employee. Petitioner
insisted that it was Villegas who has stopped working in the hacienda and
that he was not dismissed.
We deny the petition.
The issue of Villegas' alleged illegal dismissal is anchored on the existence
of an employer-employee relationship between him and Gamboa; thus,
essentially a question of fact. Generally, the Court does not review errors
that raise factual questions. However, when there is conflict among the
factual findings of the antecedent deciding bodies like the LA, the NLRC
and the CA, "it is proper, in the exercise of Our equity jurisdiction, to review
and re-evaluate the factual issues and to look into the records of the case
and re-examine the questioned findings."13

A perusal of the records would show that respondent, having been

employed in the subject Hacienda while the same was still being managed
by petitioner's father until the latter's death in 1993, is undisputed as the
same was even admitted by Gamboa in his earlier pleadings. 14 While
refuting that Villegas was a regular employee, petitioner however failed to
categorically deny that Villegas was indeed employed in their hacienda
albeit he insisted that Villegas was merely a casual employee doing odd
jobs.
The rule is long and well settled that, in illegal dismissal cases like the one
at bench, the burden of proof is upon the employer to show that the
employees termination from service is for a just and valid cause. The
employers case succeeds or fails on the strength of its evidence and not
the weakness of that adduced by the employee, in keeping with the
principle that the scales of justice should be tilted in favor of the latter in
case of doubt in the evidence presented by them. Often described as more
than a mere scintilla, the quantum of proof is substantial evidence which is
understood as such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion, even if other equally reasonable
minds might conceivably opine otherwise.15
In the instant case, if we are to follow the length of time that Villegas had
worked with the Gamboas, it should be more than 20 years of service.
Even Gamboa admitted that by act of generosity and compassion, Villegas
was given a privilege of erecting his house inside the hacienda during his
employment.16 While it may indeed be an act of good will on the part of the
Gamboas, still, such act is usually done by the employer either out of
gratitude for the employees service orfor the employer's convenience as
the nature of the work calls for it. Indeed, petitioner's length of service is
an indication of the regularity of his employment. Even assuming that he
was doing odd jobs around the farm, such long period of doing said odd
jobs is indicative that the same was either necessary or desirable to
petitioner's trade or business. Owing to the length ofservice alone, he
became a regular employee, by operation of law, one year after he was
employed.
Article 280 of the Labor Code, describes a regular employee as one who is
either (1) engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which he is employed.

63

In Integrated Contractor and Plumbing Works, Inc. v. National Labor

Relations Commission,17 we held that the testto determine whether
employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer. If the employee has been performing
the job for at least one year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and continuing need for
its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business. Clearly,with more than 20
years of service, Villegas, without doubt, passed this test to attain
employment regularity.
While length of time may not be the controlling test to determine if Villegas
is indeed a regular employee, it is vital in establishing if he was hired to
perform tasks which are necessary and indispensable to the usual business
or trade of the employer. If it was true that Villegas worked in the hacienda
only in the year 1993, specifically February 9,1993 and February 11, 1993,
why would then hebe given the benefit toconstruct his house in the
hacienda? More significantly, petitioner admitted that Villegas had worked
in the hacienda until his father'sdemise. Clearly, even assuming that
Villegas' employment was only for a specific duration, the fact that he was
repeatedly re-hired over a long periodof time shows that his job is
necessary and indispensable to the usual business or trade of the
employer.
Gamboa likewise argued that Villegas was paid on a piece-rate
basis.18 However, payment on a piece-ratebasis does not negate regular
employment. "The term wage is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission
basis. Payment by the piece is just a method of compensation and does not
define the essence of the relations."19
We are likewise unconvinced thatit was Villegas who suddenly stopped
working. Considering that hewas employed with the Gamboas for more
than 20 years and was even given a place to call his home, it does not
make sense why Villegas would suddenly stop working therein for no
apparent reason. To justify a finding of abandonment of work, there must
be proof of a deliberate and unjustified refusal on the part of an employee
to resume his employment. The burden of proof is on the employer to show
an unequivocal intent on the part of the employee to discontinue
employment. Mere absence is not sufficient. It must be accompanied by

manifest acts unerringly pointing to the fact that the employee simply does
not want to work anymore.20
Petitioner failed to discharge this burden. Other than the self-serving
declarations in the affidavit of his employee, petitioner did not adduce
proof of overt acts of Villegas showing his intention to abandon his work.
Abandonment is a matter of intention;it cannot be inferred or presumed
from equivocal acts. On the contrary, the filing of the instant illegal
dismissal complaint negates any intention on his part to sever their
employment relationship. The delay of morethan 1 year infiling the instant
illegal dismissal case likewise is non-issue considering that the complaint
was filed within a reasonable period during the three-year period provided
under Article 291 of the Labor Code. 21 As aptly observed by the appellate
court, Villegas appeared tobe without educational attainment. He could not
have known that he has rights as a regular employee that is protected by
law.
The Labor Code draws a fine line between regular and casual employees to
protect the interests of labor. We ruled in Baguio Country Club Corporation
v. NLRC22 that "its language evidently manifests the intent to safeguard the
tenurial interest of the worker who may be denied the rights and benefits
due a regular employee by virtue of lopsided agreements with the
economically powerful employer who can maneuver to keep an employee
on a casual status for as long as convenient." Thus, notwithstanding any
agreements to the contrary, what determines whether a certain
employment is regular or casual is not the will and word of the employer,
to which the desperate worker often accedes, much less the procedure of
hiring the employee or the manner of paying his salary. It is the nature of
the activities performed in relation to the particular business or trades
considering all circumstances, and in some cases the length of time of its
performance and itscontinued existence.23
All these having discussed, as a regular worker, Villegas is entitled to
security of tenure under Article 279 ofthe Labor Code and can only be
removed for cause. We found no valid cause attending to his dismissal and
found also that his dismissal was without due process.
Article 277(b) of the Labor Code provides that:
x x x Subject to the constitutional right of workers to security of tenure and
their right to be protected against dismissal except for a just and
authorized cause and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose

64

employment is sought to be terminated a written notice containing a

statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of
Labor and Employment. x x x
The failure of the petitioner to comply with these procedural guidelines
renders its dismissal of Villegas illegal.1wphi1 An illegally dismissed
employee should be entitled to either reinstatement - if viable, or
separation pay if reinstatement is no longer viable, plus backwages in
either instance.24 Considering that reinstatement is no longer feasible
because of strained relations between the employee and the employer,
separation pay should be granted. The basis for computing separation pay
is usually the length of the employee's past service, while that for
backwages is the actual period when the employee was unlawfully
prevented from working.25 It should be emphasized, however, that the
finality of the illegal dismissal decision becomes the reckoning point. In
allowing separation pay, the final decision effectively declares that the
employment relationship ended so that separation pay and backwages are
to be computed up to that point. The decision also becomes a judgment for
money from which another consequence flows - the payment of interest in
case of delay.26
WHEREFORE, premises considered, the Decision dated May 25, 2007 and
Resolution dated August 10, 2007 of the Court of Appeals are hereby
AFFIRMED. The Decision dated December 3, 2003 of the Labor Arbiter in
RAB Case No. 06-08-10480-94 is hereby REINSTATED. This case is hereby
REMANDED to the Labor Arbiter for the recomputation of respondent's
separation pay and backwages with legal interest.
SO ORDERED.

65

G.R. No. 200857, October 22, 2014

FVR SKILLS AND SERVICES EXPONENTS, INC. (SKILLEX),
FULGENCIO V. RANA AND MONINA R. BURGOS, Petitioners, v. JOVERT
SEVA, JOSUEL V. VALENCERINA, JANET ALCAZAR, ANGELITO
AMPARO, BENJAMIN ANAEN, JR., JOHN HILBERT BARBA, BONIFACIO
BATANG, JR., VALERIANO BINGCO, JR., RONALD CASTRO, MARLON
CONSORTE, ROLANDO CORNELIO, EDITO CULDORA, RUEL DUNCIL,
MERV1N FLORES, LORD GALISIM, SOTERO GARCIA, JR., REY
GONZALES, DANTE ISIP, RYAN ISMEN, JOEL JUNIO, CARLITO LATOJA,
ZALDY MARRA, MICHAEL PANTANO, GLENN PILOTON, NORELDO
QUIRANTE, ROEL RANCE, RENANTE ROSARIO AND LEONARDA
TANAEL, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari the challenge to the
December 22, 2011 decision2and the March 2, 2012 resolution3 (assailed
CA rulings) of the Court of Appeals (CA) in CA-G.R. SP No. 120991. These
assailed CA rulings affirmed the April 28, 2011 decision 4 and the June 16,
2011 resolution5 (NLRC rulings) of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 08-001687-10 (NLRC NCR Case Nos. 08-11557-09
and 08-11399-09). The NLRC rulings in turn reversed and set aside the June
4, 2010 decision6 of the labor arbiter (LA).

2. Jovert R. Seva

July 29, 1999

Supervisor

3. Valeriano Bingco, Jr.

August 1, 1999

Leadman

4. Michael Pantano

January 22, 1999

Janitor

5. Marlon C. Consorte

May 6, 1999

Janitor

6. Lord Galisim

May 28, 1999

Janitor

7. Sotero A. Garcia, Jr.

April 14, 2000

Janitor

8. Joel G. Junio

May 4, 2000

Service Crew

9. ZaldyR. Marra

August 21, 2001

Janitor

10. Ryan G. Ismen

April 20, 2002

Janitor

11. Glenn Piloton

January 6, 2003

Janitor

12. Rey V. Gonzales

August 15,2003

Janitor/Sanitation Aide

Factual Antecedents

The twenty-eight (28) respondents in this case were employees of

petitioner FVR Skills and Services Exponents, Inc. (petitioner), an
independent contractor engaged in the business of providing janitorial and
other manpower services to its clients. As early as 1998, some of the
respondents had already been under the petitioner's employ.
The respondents' respective names, dates of hiring, and positions are
indicated in the table7 below.

Respondents

1. Edito Culdora

Date of Hiring

February 14, 1998

Position

Janitor

66

13.Roel P. Ranee

August 16, 2003

Janitor/Sanitation Aide

25. Carlito Latoja

February 1, 2007

Janitor/ Sanitation Aide

14. Mervin D. Flores

January 1, 2004

Janitor

26. Ruel Duncil

February 1, 2007

Janitor/Sanitation Aide

15. Renante Rosario

January 13, 2004

Janitor

27. Bonifacio P. Batang, Jr. February 1, 2007

Janitor/Sanitation Aide

16. Ronald Castro

February 2, 2004

Service Crew

28. Josuel Valencerina

Supervisor

17. John Hilbert D. Barba February 22, 2004

18. Noreldo S. Quirante

March 13, 2004

19. Benjamin C. Anaen, Jr. April 22, 2004

20. Rolando G. Cornelio

21. Angelito A. Amparo

August 5, 2004

July 28, 2005

February 1, 2007

Service Crew

Janitor

Service Crew

Halfway through the service contract, the petitioner asked the respondents
to execute individual contracts which stipulated that their respective
employments shall end on December 31, 2008, unless earlier terminated. 10

Janitor

Janitor
Aide

22. Leonarda Tanael

February 1, 2007

Janitor

23. Janet Alcazar

March 1, 2007

Janitor

24. Dante F. Isip

February 1, 2007

Janitor

On April 21, 2008, the petitioner entered into a Contract of Janitorial

Service (service contract)8 with Robinsons Land Corporation (Robinsons).
Both agreed that the petitioner shall supply janitorial, manpower and
sanitation services to Robinsons Place Ermita Mall for a period of one year
-from January 1, 2008 to December 31, 2008. 9 Pursuant to this, the
respondents
were
deployed
to
Robinsons.

Aide/Sanitation

The petitioner and Robinsons no longer extended their contract of janitorial

services. Consequently, the petitioner dismissed the respondents as they
were project employees whose duration of employment was dependent on
the
petitioner's
service
contract
with
Robinsons.
The respondents responded to the termination of their employment by
filing a complaint for illegal dismissal with the NLRC. They argued that they
were not project employees; they were regular employees who may only
be dismissed for just or authorized causes. 11 The respondents also asked
for payment of their unpaid wage differential, 13 th month pay differential,
service incentive leave pay, holiday pay and separation pay. 12
The Labor Arbitration Rulings

The LA ruled in the petitioner's favor. He held that the respondents were
not regular employees. They were project employees whose employment
was dependent on the petitioner's service contract with Robinsons. Since
this contract was not renewed, the respondents' employment contracts

67

must

also

be

terminated.13

Also, in light of the petitioner's admission during the clarificatory hearing

that the respondents were entitled to their wage differential pay,
13th month differential pay and holiday pay, the LA granted the
respondents' money claims in the amount of P103,501.01. 14
The respondents disagreed with the LA and appealed to the NLRC, which
reversed the LA's ruling, and held that they were regular employees. The
NLRC considered that the respondents had been under the petitioner's
employ for more than a year already, some of them as early as 1998.
Thus, as regular employees, the respondents may only be dismissed for
just or authorized causes, which the petitioner failed to show. The NLRC
also awarded the respondents their separation pay of one (1) month for
every year of service as well as their full backwages from February 1, 2009
the date of their illegal dismissal, until the finality of the decision. 15
The CA's Ruling

respondents in the course of asking them to sign their individual

employment contracts.18
The Petition

The petitioner now submits that the CA erred in ruling that the respondents
were regular employees and that they had been illegally dismissed. The
respondents' contracts of employments did not only provide for a fixed
term, but were also dependent on the continued existence of the
Robinsons' service contract.19 Since this main contract had not been
renewed, the respondents' respective employment contracts were properly
terminated. Based on this reasoning, no illegal dismissal took place, only
the
expiration
of
the
respondents'
fixed
term
contracts.
In the absence of any illegal dismissal, the CA also erred in affirming the
NLRC's
award
of
separation
pay
to
the
respondents.
Lastly, the petitioner asserts that Rana and Burgos should not be held
solidarily liable with the corporation for respondents' monetary claims;
they have personalities separate and distinct from the corporation.

The CA dismissed the petitioner's certiorari petition and affirmed the

NLRC's
decision.

The Case for the Respondents

The CA noted that the petitioner individually hired the respondents on

various dates from 1998 to 2007, to work as janitors, service crews and
sanitation aides. These jobs were necessary or desirable to the petitioner's
business of providing janitorial, manpower and sanitation services to its
clients. The continuing need for the respondents' services, which lasted for
more than a year, validated that the respondents were regular and not
project
employees.16

The respondents reiterate that even before the execution of the

petitioner's service contract with Robinsons, they had already been
working for the petitioner between the years 1998 to 2007. Since their
hiring, they had been performing janitorial and other manpower activities
that were necessary or desirable to the petitioner's business. 20

The CA also ruled that the fixed term employment contracts signed by the
respondents had no binding effect. The petitioner only used these
contracts to justify the respondents' illegal dismissal; the petitioner never
asked the respondents to execute any contract since their initial hiring.
Only after it became apparent that the petitioner's service contract with
Robinsons would not be renewed (after its expiration on December 31,
2008), did the petitioner ask the respondents to sign their employment
contracts.17 This circumstance, coupled with the threat that the
respondents would not be given their salaries if they would not sign the
contracts, showed the petitioner's intent to use the contracts to prevent
the
respondents
from
attaining
regular
status.
Lastly, the CA held that petitioners Fulgencio V. Rana (Rana) and Monina R.
Burgos (Burgos), the president and general manager of FVR Skills and
Services Exponents, Inc., respectively, are solidarily liable with the
corporation for the payment of the respondents' monetary awards. As
corporate officers, they acted in bad faith when they intimidated the

They further argue that the employment contracts they executed were
void since these were signed under duress; the petitioner threatened not to
release
their
salaries
if
they
would
refuse
to
sign. 21
Lastly, the respondents assert that the CA did not err in holding Rana and
Burgos solidarily liable with the corporation. These officers acted in bad
faith when they obliged the respondents to execute the employment
contracts under threat.22
The Court's Ruling
We

resolve

The
employees,
Article

280

respondents
not
(now

Article

294)23 of

to DENY the

petition.

are
project

regular
employees.

the

Labor

Code

governs

the

68

determination of whether an employee is a regular or a project employee. 24

Under this provision, there are two kinds of regular employees, namely: (1)
those who were engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer; and (2) those
casual employees who became regular after one year of service, whether
continuous or broken, but only with respect to the activity for which they
have
been
hired.
We distinguish these two types of regular employees from a project
employee, or one whose employment was fixed for a specific project or
undertaking, whose completion or termination had been determined at the
time
of
engagement.
A careful look at the factual circumstances of this case leads us to the legal
conclusion that the respondents are regular and not project employees.
The primary standard in determining regular employment is
the reasonable connection between the particular activity performed by
the employee and the employer's business or trade. This connection can
be ascertained by considering the nature of the work performed and its
relation to the scheme of the particular business, or the trade in its
entirety.25
Guided by this test, we conclude that the respondents' work as
janitors, service crews and sanitation aides, are necessary or
desirable to the petitioner's business of providing janitorial and
manpower services to its clients as an independent contractor.
Also, the respondents had already been working for the petitioner as early
as 1998. Even before the service contract with Robinsons, the
respondents were already under the petitioner's employ.26They
had been doing the same type of work and occupying the same
positions from the time they were hired and until they were
dismissed in January 2009. The petitioner did not present any evidence
to refute the respondents' claim that from the time of their hiring until the
time of their dismissal, there was no gap in between the projects where
they were assigned to. The petitioner continuously availed of their services
by
constantly
deploying
them
to
its
clients.
Lastly, under Department Order (DO) 18-02,27 the applicable labor issuance
to the petitioner's case, the contractor or subcontractor is considered as
the employer of the contractual employee for purposes of enforcing the
provisions of the Labor Code and other social legislation. 28
DO 18-02 grants contractual employees all the rights and privileges due
a regular employee, including the following: (a) safe and healthful
working conditions; (b) labor standards such as service incentive
leave, rest days, overtime pay, holiday pay, 13th month pay and
separation pay; (c) social security and welfare benefits; (d) self-

organization, collective bargaining and peaceful concerted action; and (e)

security
of
tenure.29
In this light, we thus conclude that although the respondents were
assigned as contractual employees to the petitioner's various clients,
under the law, they remain to be the petitioner's regular employees, who
are entitled to all the rights and benefits of regular employment.
The
contracts,
signed,

respondents'
which
are

were

employment
belatedly
voidable.

The records show that at the time of the respondents' dismissal, they had
already been continuously working for the petitioner for more than a year.
Despite this, they never signed any employment contracts with the
petitioner, except the contracts they belatedly signed when the petitioner's
own contract of janitorial services with Robinsons neared expiration.
As already discussed, for an employee to be validly categorized as a
project employee, it is necessary that the specific project or
undertaking had been identified and its period and completion
date determined and made known to the employee at the time of
his engagement. This provision ensures that the employee is completely
apprised of the terms of his hiring and the corresponding rights and
obligations arising from his undertaking. Notably, the petitioner's service
contract with Robinsons was from January 1 to December 31, 2008. The
respondents were only asked to sign their employment contracts for their
deployment with Robinsons halfway through 2008, when the petitioner's
service
contract
was
about
to
expire.
We find the timing of the execution of the respondents' respective
employment contracts to be indicative of the petitioner's calculated plan to
evade the respondents' right to security of tenure, to ensure their easy
dismissal as soon as the Robinsons' contract expired. The attendant
circumstances cannot but raise doubts as to the petitioner's good faith.
If the petitioner really intended the respondents to be project
employees, then the contracts should have been executed right
from the time of hiring, or when the respondents were first
assigned to Robinsons, not when the petitioner's service contract
was winding up. The terms and conditions of the respondents'
engagement should have been disclosed and explained to them from the
commencement of their employment. The petitioner's failure to do so
supports the conclusion that it had been in bad faith in evading the
respondents'
right
to
security
of
tenure.
In Glory Philippines, Inc. v. Vergara,30 the Court rejected the validity of a
fixed term contract belatedly executed, and ruled that its belated signing
was a deliberate employer ploy to evade the employees' right to security
of tenure. As the Court explained:ChanRoblesVirtualawlibrary

69

To us, the private respondent's illegal intention became clearer from such
acts. Its making the petitioners sign written employment contracts
a few days before the purported end of their employment periods
(as stated in such contracts) was a diaphanous ploy to set periods
with a view for their possible severance from employment should
the private respondent so willed it. If the term of the employment
was truly determined at the beginning of the employment, why
was there delay in the signing of the ready-made contracts that
were entirely prepared by the employer? Also, the changes in the
positions supposedly held by the petitioners in the company belied the
private respondent's adamant contention that the petitioners were hired
solely for the purpose of manning PIS during its alleged dry run period that
ended on October 20, 1998. We view such situation as a very obvious ploy
of the private respondent to evade the petitioner's eventual
regularization.31 [Emphasis ours]

Moreover, under Article 1390 of the Civil Code, contracts where the
consent of a party was vitiated by mistake, violence, intimidation, undue
influence or fraud, are voidable or annullable. The petitioner's threat of
nonpayment of the respondents' salaries clearly amounted to intimidation.
Under this situation, and the suspect timing when these contracts were
executed, we rule that these employment contracts were voidable and
were effectively questioned when the respondents filed their illegal
dismissal
complaint.
The
illegally

respondents

were
dismissed.

To be valid, an employee's dismissal must comply with the

substantive and procedural requirements of due process.
Substantively, a dismissal should be supported by a just or authorized
cause.32 Procedurally, the employer must observe the twin notice and
hearing requirements in carrying out an employee's dismissal. 33
The petitioner argues that these substantive and procedural requisites do
not apply to the respondents' case since they were employed under fixed
term contracts. According to the petitioner, the respondents' employment
contracts lapsed by operation of law as the necessary consequence of the
termination and non-renewal of its service contract with Robinsons.
Because of this, there was no illegal dismissal to speak of, only contract
expiration.
We

do

not

agree

with

the

petitioner.

Having already determined that the respondents are regular employees

and not project employees, and that the respondents' belated employment
contracts could not be given any binding effect for being signed under
duress, we hold that illegal dismissal took place when the petitioner failed

to comply with the substantive and procedural due process requirements

of
the
law.
The petitioner also asserts that the respondents' subsequent absorption by
Robinsons' new contractors - Fieldmen Janitorial Service Corporation and
Altaserv - negates their illegal dismissal. This reasoning is patently
erroneous. The charge of illegal dismissal was made only against the
petitioner which is a separate juridical entity from Robinsons' new
contractors; it cannot escape liability by riding on the goodwill of others.
By law, the petitioner must bear the legal consequences of its violation of
the respondents' right to security of tenure. The facts of this case show
that since the respondents' hiring, they had been under the petitioner's
employ as janitors, service crews and sanitation aides. Their services
had been continuously provided to the petitioner without any gap.
Notably, the petitioner never refuted this allegation of the
respondents. Further, there was no allegation that the petitioner
went out of business after the non-renewal of the Robinsons'
service contract.Thus, had it not been for the respondents' dismissal,
they would have been deployed to the petitioner's other existing clients.
In DM. Consunji, Inc. v. Jamin,34 an employee was dismissed after the
expiration of the project he was last engaged in. After ruling that the
respondent-employee was a regular and not a project employee, this Court
affirmed the grant of backwages, computed from the time of the
employee's illegal dismissal until his actual reinstatement. In these lights,
we rule that the respondents are entitled to their full backwages, inclusive
of their allowances and other benefits from the time of their dismissal up to
their
actual
reinstatement.35
With regard to the award of separation pay, we agree with the CA's finding
that this litigation resulted to strained relations between the petitioner and
the respondents. Thus, we also affirm the CA's ruling that instead of
reinstatement, the respondents should be paid their respective separation
pays equivalent to one (1) month pay for every year of service. 36
We cannot give credence to the petitioner's assertion that under Section
10 of DO 18-02,37 the respondents are not entitled to separation pay
because their employment was terminated due to the completion of the
project where they had been engaged. This provision must be construed
with
the
rest
of
DO
18-02's
other
provisions.
As earlier pointed out, Section 7 of DO 18-02 treats contractual employees
as the independent contractor's regular employees for purposes of
enforcing the Labor Code and other social legislation laws. Consequently, a
finding of regular employment entitles them to the rights granted to
regular employees, particularly the right to security of tenure and to
separation
pay.
Thus, a holistic reading of DO 18-02, 38 guides us to the conclusion that

70

Section 10 only pertains to contractual employees who are really project

employees. They are not entitled to separation pay since the end of the
project for which they had been hired necessarily results to the termination
of their employment. On the other hand, we already found that the
respondents are the petitioner's regular employees. Thus, their illegal
dismissal entitles them to backwages and reinstatement or separation pay,
in
case
reinstatement
is
no
longer
feasible.
Solidary

liability

of

the

petitioner's

officers

Finally, we modify the CA's ruling that Rana and Burgos, as the petitioner's
president and general manager, should be held solidarity liable with the
corporation for its monetary liabilities with the respondents.
A corporation is a juridical entity with legal personality separate and
distinct from those acting for and in its behalf and, in general, from the
people comprising it. The general rule is that, obligations incurred by
the corporation, acting through its directors, officers and
employees,
are
its
sole
liabilities. 39
A director or officer shall only be personally liable for the obligations of the
corporation, if the following conditions concur: (l)the complainant alleged
in the complaint that the director or officer assented to patently unlawful
acts of the corporation, or that the officer was guilty of gross negligence or
bad faith; and (2) the complainant clearly and convincingly proved such
unlawful
acts,
negligence
or
bad
faith. 40
In the present case, the respondents failed to show the existence of the
first requisite. They did not specifically allege in their complaint that Rana
and Burgos willfully and knowingly assented to the petitioner's patently
unlawful act of forcing the respondents to sign the dubious employment
contracts in exchange for their salaries. The respondents also failed to
prove that Rana and Burgos had been guilty of gross negligence or bad
faith
in
directing
the
affairs
of
the
corporation.
To hold an officer personally liable for the debts of the corporation, and
thus pierce the veil of corporate fiction, it is necessary to clearly and
convincingly establish the bad faith or wrongdoing of such officer, since
bad faith is never presumed. 41 Because the respondents were not able to
clearly show the definite participation of Burgos and Rana in their illegal
dismissal, we uphold the general rule that corporate officers are not
personally liable for the money claims of the discharged employees, unless
they acted with evident malice and bad faith in terminating their
employment.42
WHEREFORE, in light of these considerations, we hereby DENY the
petition. We AFFIRM withMODIFICATION the Court of Appeals' decision
dated December 22, 2011 and resolution dated March 2, 2012 in CA-G.R.
SP No. 120991, which also AFFIRMED the National Labor Relation
Commission's decision dated April 28, 2011 and resolution dated June 16,

2011. Petitioners Fulgencio V. Rana and Monina R. Burgos are hereby

absolved from paying the respondents' monetary awards in their personal
capacity.
No
costs.
SO ORDERED.

71

G.R. No. 208567, November 26, 2014

JEANETTE V. MANALO, VILMA P. BARRIOS, LOURDES LYNN
MICHELLE FERNANDEZ AND LEILA B. TAIO, Petitioners, v. TNS
PHILIPPINES INC., AND GARY OCAMPO, Respondents.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court
assails the January 29, 2013 Decision 1 and the August 7, 2013
Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 117637, which
set aside the July 23, 2010 Decision 3 of the National Labor Relations
Commission (NLRC) and its October 28, 2010 Resolution 4 and reinstated
the May 29, 2009 Decision 5 of the Labor Arbiters finding that petitioners
were
project
employees.
Respondent TNS Philippines Inc. (TNS), with Gary Ocampo as its president
and general manager, was engaged primarily in the business of marketing
research and information, as well as research consultancy and other valueadded services to a wide base of clients, both local and international. 6As a
market research facility, TNS conducted public surveys about consumer
goods, products, merchandise and/or services of its clients. 7 TNS hired
several field personnel on a project-to-project basis whose functions were
the following: a) to gather data on consumer goods, commodities,
merchandise, and such other products as requested by clients, through
personal interviews, telephone interviews and/or such other modes akin to
the foregoing; and b) to submit the gathered data to the company for
evaluation
and/or
analysis.8
Petitioners Jeanette V. Manalo, Vilma P. Barrios, Lourdes Lynn Michelle
Fernandez, and Leila B. Taio(petitioners) were hired by TNS as field
personnel on various dates starting 1996 for several projects. They were
made to sign a project-to-project employment contract. Thereafter, TNS
would file the corresponding termination report with the Department of
Labor
and
Employment
Regional
Office(DOLE-RO).9
Petitioners were likewise assigned office-based tasks for which they were
required to be in the office from 9:00 oclock in the morning to 6:00 oclock
in the evening, but most of the time, they worked beyond 6:00 oclock
without receiving the corresponding overtime pay. These office-based tasks
were not on a per project basis and petitioners did not sign any contract for
these jobs. These assignments were not reported to the DOLE either. 10
Later in August 2008, a meeting among the Field Interviewers (FIs) was
called by TNS field manager. They were told that all old FIs assigned in the

tracking projects would be pulled out eventually and replaced by new FIs
contracted from an agency. Old FIs would be assigned only to adhoc
projects which were seasonal. This prompted petitioners to file a
consolidated
complaint
for
regularization
before
the
LA. 11
On October 20, 2008, petitioners and TNS were required to file their
respective position papers. On October 21, 2008, petitioners were advised
by TNS not to report for work anymore because they were being pulled out
from their current assignments and that they were not being lined up for
any continuing or incoming projects because it no longer needed their
services. They were also asked to surrender their company
IDs.12 Petitioners, thereafter, filed a complaint for illegal dismissal, overtime
pay, damages, and attorneys fees against TNS. Later, the labor cases for
regularization
and
illegal
dismissal
were
consolidated.
On May 29, 2009, the LA rendered a decision, 13dismissing the complaint on
the ground that petitioners were found to be project employees who knew
the nature of their positions as such at the time of their employment and
who agreed with full understanding that the contracts would lapse upon
completion of the project stated in their respective contracts. 14 The LA
further ruled that even if petitioners were continuously rehired for several
and different projects, the determining factor was whether, at the time of
hiring, the employment was fixed for a specific project or undertaking and
its
completion
was
predetermined.15
The LA was also of the view that petitioners were not illegally dismissed
because as project employees, the employer-employee relationship was
terminated upon completion of the project or phase for which they were
hired. The term of their employment was coterminus with the duration and
until
the
accomplishment
of
the
project. 16
As to the claim for overtime pay and damages, the LA held that petitioners
were not entitled to them.Field personnel were excluded from the coverage
of the minimum requirements on hours of work and overtime pay.
Aggrieved, petitioners filed an appeal before the NLRC. Consequently, the
NLRC rendered its judgment17 in favor of petitioners and reversed the LA
ruling. Thus:
We note that, initially, complainants used to be project employees as
shown by the samples of project-to-project employment contracts, project
clearance slips, and the establishment termination reports adduced in
evidence. Case records, however, show that the last time respondent
company filed an establishment termination report was in
November 2007 indicating project completion on November 30,
2007. What is clear though is that complainants were allowed to
continue working after November 30, 2007. Respondent company did
not adduce in evidence employment contracts relating to the latest

72

employment of the complainants. In the absence of proof that the

subsequent employment of the complainants continued to be on a projectto-project basis under a contract of employment, complainants are
considered to have become regular employees after November 30,
2007. The failure to present contract of project employment means
that
the
employees
are
regular.18

EMPLOYEES

[Emphases supplied]

Petitioners assert that the factual circumstances of the case undoubtedly

show their regular employment status and that the NLRC correctly
exercised its discretion. The respondents argue otherwise insisting that the
decision of the CA was correct.

The NLRC further ruled that, being regular employees, petitioners were
illegally dismissed because TNS, who had the burden of proving legality in
dismissal cases, failed to show how and why the employment of petitioners
was terminated on October 21, 2008. 19 Thus, the NLRC set aside the LA
decision and held TNS liable for illegal dismissal, ordering the latter to pay
petitioners
their
respective
backwages
and
separation
pay. 20
TNS moved for reconsideration, but its motion was denied. Thus, it filed a
petition for certiorari with prayer for preliminary injunction and/or
temporary
restraining
order
before
the
CA.
On January 29, 2013, the CA ruled in favor of TNS and opined that the
projects assigned to petitioners were distinct and separate from the other
undertakings of TNS; that they were required to sign project-to-project
employment contracts; and that a corresponding termination report was
made to DOLE for every accomplished project.Further, it stated that the
repeated re-hiring of petitioners for at least one (1) year did not ipso
facto convert their status to regular employees. According to the CA, the
mere fact that a project employee had worked on a specific project for
more than one (1) year did not necessarily change his status from project
employee
to
regular
or
permanent
employee.21
As to the issue of grave abuse of discretion, the CA held that the NLRC
committed such abuse when it refused to consider the pieces of evidence
submitted by TNS during its determination of the merits of the latters
motion for reconsideration. It stressed that the technical rules of evidence
were not binding in labor cases, 22 that even if the evidence was not
submitted to the LA, the fact that it was duly introduced on appeal before
the
NLRC
was
enough
basis
for
it
to
admit
them. 23
Not in conformity, petitioners filed a motion for reconsideration but it was
eventually
denied.
Hence, this petition presenting the following
ARGUMENTS:
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED
IN HOLDING THAT THE PETITIONERS ARE NOT REGULAR

OF

THE

RESPONDENT

COMPANY.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED

IN RULING THAT THE HONORABLE NLRC COMMITTED GRAVE ABUSE
OF DISCRETION.24

The Courts Ruling

At the outset, it must be stressed that the Court is not a trier of facts. In
petitions for review under Rule 45, the Court only resolves pure questions
of law and is precluded from reviewing factual findings of the lower
tribunals,subject to certain exceptions.This case is an exception as this
Court may review factual conclusions of the CA when they are contrary to
those
of
the
NLRC
or
of
the
Labor
Arbiter. 25
Upon review of the records, the evidence failed to clearly, accurately,
consistently, and convincingly show that petitioners were still project
employees
of
TNS.
Article 280 of the Labor Code, as amended, clearly defined a project
employee as one whoseemployment has been fixed for a specific
project or undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season.Additionally, a
project employee is one whose termination of his employment contract is
reported to the DOLE everytime the project for which he was engaged has
been
completed.
In their Comment,26 the respondents stressed that the NLRC decision was
mainly anchored upon the supposed lack of compliance with the
termination report requirement under the applicable DOLE Department
Orders. The NLRC ruled that petitioners were regular employees for having
been allowed to continue working after the last submitted termination
report. Thus, TNS submitted, albeit belatedly, the termination reports from
November 2007 up to the last termination report filed on November 18,
2008, by attaching it to the motion for reconsideration filed before the
NLRC.27
Although TNS belatedly submitted the supposed lacking termination
reports, it failed to show the corresponding project employment contracts
of petitioners covering the period indicated in the said termination

73

reports.TNS itself stated in its motion for reconsideration 28 before the NLRC
that the project employee status of the employee could be proved by the
employment contracts signed voluntarily by the employees and by the
termination report filed with the DOLE after the completion of every
project.29Yet, no project employment contracts were shown. It is wellsettled that rules of evidence shall be liberally applied in labor cases, but
this does not detract from the principle that piecemeal presentation of
evidence is simply not in accord with orderly justice. 30The NLRC was correct
in saying that in the absence of proof that the subsequent employment of
petitioners continued to be on a project-to-project basis under a contract of
employment, petitioners were considered to have become regular
employees.31
TNS contended that the repeated and successive rehiring of project
employees does not qualify petitioners as regular employees, as length of
service is not the controlling determinant of the employment tenure of a
project employee, but whether the employment has been fixed for a
specific project or undertaking and its completion has been determined at
the time of the engagement of the employee. The repeated rehiring was
only a natural consequence of the experience gained from past service
rendered
in
other
projects.32
In Maraguinot, Jr. v. NLRC,33 the Court held that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, rehired
by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a regular employee.
Although it is true that the length of time of the employees service is not a
controlling determinant of project employment, it is vital in determining
whether he was hired for a specific undertaking or in fact tasked to perform
functions vital, necessary and indispensable to the usual business or trade
of the employer.34 Petitioners successive re-engagement in order to
perform the same kind of work firmly manifested the necessity and
desirability of their work in the usual business of TNS as a market research
facility.35 Undisputed also is the fact that the petitioners were assigned
office-based tasks from 9:00 oclock in the morning up to 6:00 oclock in
the evening, at the earliest, without any corresponding remuneration.
The project employment scheme used by TNS easily circumvented the law
and precluded its employees from attaining regular employment status in
the subtlest way possible.Petitioners were rehired not intermittently, but
continuously,contract after contract, month after month, involving the very
same tasks. They practically performed exactly the same functions over
several years. Ultimately,without a doubt, the functions they performed
were indeed vital and necessary to the very business or trade of TNS.
Granting arguendo that petitioners were rehired intermittently, a careful
review of the project employment contracts of petitioners reveals some

other vague provisions. Oddly, one of the terms and conditions in the said
contract stated that:
1.

The need for your services being determinable and for a specific
project starting ____________ your employment will be for the
duration of said project of the Company, namely Project ___________
which is expected to be finished on _____________. The Company
shall have the option of renewing or extending the period
of this agreement for such time as it may be necessary to
complete the project or because we need further time to
determine your competence on the job.

To the Court, the phrase because we need further time to determine your
competence on the job would refer to a probationary employment. Such
phrase changes the tenor of the contract and runs counter to the very
nature of a project employment. TNS can, therefore, extend the contract
which was already fixed when it deemed it necessary to determine
whether or not the employee was qualified and fit for the job. Corollarily,
TNS can likewise pre-terminate the contract not because the specific
project was completed ahead of time, but because of failure to qualify for
the job.Consistently, the terms and conditions of the contract, reads:
4. It is expressly agreed and understood that the Company may terminate
your employment after compliance with procedural requirements of law,
without benefit of termination pay and without any obligation on the part
of the Company, in the event of any breach of any conditions hereof:

a) If the project is completed or cancelled before the expected date of

completion as specified in paragraph 1 hereof;

b) If we should find that you are not qualified, competent or

efficient in the above-stated positions for which you are hired
in accordance with the company standards made known to you
at the start of your employment;

xxx

For said reason, at the outset, the supposed project employment contract
was highly doubtful. In determining the true nature of an employment, the
entirety of the contract, not merely its designation or by which it was
denominated, is controlling.Though there is a rule that conflicting

74

provisions in a contract should be harmonized to give effect to all, 36in this

case, however, harmonization is impossible because project employment
and probationary employment are distinct from one another and cannot
co-exist with each other.Hence, should there be ambiguity in the provisions
of the contract, the rule is that all doubts, uncertainties, ambiguities and
insufficiencies should be resolved in favor of labor. 37 This is in consonance
with the constitutional policy of providing full protection to labor.

Finally,nowhere in the NLRC resolution denying TNS motion for

reconsideration can it be found it outrightly denied the said motion for
belatedly submitting the lacking termination reports. In resolving the
motion, the NLRC also took into consideration the records of the case,
meaning, including those belatedly submitted, and despite review of these
records, it still found the evidence insufficient to overturn its decision
against
TNS.

In sum, petitioners are deemed to have become regular employees. As

such, the burden of proving the legality of their dismissal rests upon
TNS.Having failed to discharge such burden of proving a just or authorized
cause,
TNS
is
liable
for
illegal
dismissal.

To reiterate,the technical rules of evidence are not binding on labor

tribunals.Such a rule, however, is not a license for parties to a case to be
remiss in their duty to present every and all proofs, at the earliest
opportunity, that will best support their claim and help the courts to fully,
exhaustively
and
speedily
resolve
the
controversy.

Accordingly, as correctly ruled by the NLRC, each petitioner is entitled to

backwages from the time of their dismissal up to the finality of this
decision plus separation pay, following their prayer for such relief in lieu of
reinstatement, computed as follows as of May 29, 2009:

SO ORDERED.

a) Backwages:

October 21, 2008 to May 29, 2009 = 7.27 mos.

P382.00 x 26 days x 7.27 mos.

P72, 205.64

b) Separation Pay:

December 1, 2008 to May 29, 2009 = 5.93 mos.

P382.00 x 26 days x 5.03 mps./12

WHEREFORE, the petition is GRANTED. The January 29, 2013 Decision

and the August 7, 2013 Resolution of the Court of Appeals in CA-G.R. SP
No. 117637 are SET ASIDE. The July 23, 2010 Decision of the National
Labor
Relations
Commission
is
hereby REINSTATED.

P4,908.10

P77,113.80

75

G.R. Nos. 174365-66

February 4, 2015

ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO

DELA RAMA, JR., RICKY S. NICOLAS, CRISPULO D. DONOR, GALO
FALGUERA,
and
NATIONAL
LABOR
RELATIONS
COMMISSION,Petitioners,
vs.
COCA-COLA BOTTLERS PHILIPPINES,* Respondent.

Basan

July 13, 1996

January 31, 1997

Donor

September 16, 1995

February 13, 1997

Nicolas

May 10, 1996

January 30, 1997

Falguera

January 15, 1991

April 1996

DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to reverse and set aside the Decision 1 dated August
31, 2005 and Resolution 2 dated August 24, 2006 of the Court of Appeals
(CA) in CA-G.R. SP Nos. 80977 & 87071, which reversed the Resolutions
dated January 30, 20033 and September 24, 20034 of the National Labor
Relations Commission (NLRC) in NLRC 00-02-01419-97.
The factual antecedents are as follows.
On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L.
Tumabiao, Jr., Roberto Dela Rama,Jr., Ricky S. Nicolas, Crispulo D. Donor,
Galo Falguera filed a complaint for illegal dismissal with money claims
against respondent Coca-Cola Bottlers Philippines, alleging that respondent
dismissed them without just cause and prior written notice required by law.
In their position paper, petitioners provided for the following material
dates:5

Name of Petitioner

Date of Hiring

Date of Dismissal

Dela Rama

November 16, 1995

February 13, 1997

Dizon

October 1988

December 15, 1996

Tumabiao

February 2, 1992

February 13, 1997

Respondent corporation, however, countered that it hired petitioners as

temporary route helpers to act as substitutes for its absent regular route
helpers merely for a fixed period in anticipation of the high volume of work
in its plants or sales offices. 6 As such, petitioners claims have no basis for
they knew that their assignment as route helpers was temporary in
duration.
On August 21, 1998, the Labor Arbiter ruled in favor of petitioners and
found that since they were performing activities necessary and desirable to
the usual business of petitioner for more than the period for regularization,
petitioners are considered as regular employees, and thus, their dismissal
was done contrary to law in the absence of just cause and prior written
notice.7 Thus, it ordered respondent to reinstate petitioners with full
backwages from the time their salaries were withheld until their actual
reinstatement and to pay their lump sum increase extended to them in
their collective bargaining agreement, their accrued vacation and sick
leave benefits, as well as monetary awards and attorneys fees. 8
On January 30, 2003, the NLRC affirmed the Labor Arbiters decision and
rejected respondents contention that petitioners were merely employed
for a specific project or undertaking the completion or termination of which
has been determined at the time of their engagement. It stressed that
nowhere in the records of the case was it shown that petitioners were hired
as project or seasonal employees, respondent having failed to submit any

76

contract of project or other similar proof thereof. 9 It also noted that neither
can petitioners be considered as probationary employees for the fact that
they had performed their services for more than six (6) months. In
addition, the NLRC upheld the Labor Arbiters ruling that petitioners, as
route helpers, performed work directly connected or necessary and
desirable in respondents ordinary business of manufacturing and
distributing its softdrink products. Thus, respondent failed to overcome
petitioners assertion that they were regular employees. As such, their
employment could only be terminated with just cause and after the
observance of the required due process. Thereafter, the subsequent
motion for reconsideration filed by respondent was further denied by the
NLRC on September 24, 2003.
On December 9, 2003, respondent filed a petition for certiorari 10 with the
CA alleging grave abuse of discretion on the part of the NLRC in finding
that petitioners were regular employees. In the meantime, petitioners filed
before the Labor Arbiter a Motion for Issuance of a Writ of
Execution11 dated December 15, 2003, to which respondent filed a
Manifestation and Motion with attached Opposition.12 On March 25, 2004,
the Labor Arbiter ordered that the Writ of Execution be issued, which was
affirmed by the NLRC on June 21, 2004. Consequently, respondent filed
another petition for Certiorari 13 on October 22, 2004, claiming that the
NLRC committed grave abuse of discretion in directing the execution of a
judgment, the propriety and validity of which was still under determination
of the appellate court.
In its Decision dated August 31, 2005, the CA consolidated respondents
two (2) petitions for certiorari and reversed the rulings of the NLRC and the
Labor Arbiter in the following wise:
That the respondents "performed duties which are necessary or desirable
in the usual trade or business of Coca-Cola," is of no moment. This is not
the only standard for determining the status of ones employment. Such
fact does not prevent them from being considered as fixed term employees
of Coca-Cola whose engagement was "fixed" for a specific period. The
respondents repeated hiring for various periods (ranging from more than
six months for private respondent Basan to eight years in the case of
private respondent Dizon) would not automatically categorize them as
REGULAR EMPLOYEES.

Brent, fixed term employment continues to be allowed and enforceable in

this jurisdiction. Not being permanent regular employees, it must be held
that the respondents are not entitled to reinstatement and payment of full
backwages.14
Petitioners sought a reconsideration of the CAs Decision on procedural and
substantive grounds. On the procedural, they alleged that respondent, in
filing its appeal of the Labor Arbiters August 21, 1998 decision with the
NLRC only on December 20, 1998, rendered the Decision of the Labor
Arbiter final and executory, and thus, deprived the CA of jurisdiction to
alter the final judgment.15 They also claimed that the Resolutions of the
NLRC have become final and executory in view of the Entries of Judgment
dated December 16, 2003 and September 16, 2004 issued by the NLRC. As
to the substantial matter, petitioners assert that they are regular
employees entitled to security of tenure.
On August 24, 2006, the CA denied petitioners motion for reconsideration
in saying that it is no longer necessary to discuss whether respondent was
able to timely appeal the Labor Arbiters decision to the NLRC, in view of
the fact that the latter had already given due course to said appeal by
deciding the case on the merits and, more importantly, petitioners failure
to raise the alleged infirmity before the NLRC in opposition to respondents
appeal.
Hence, the instant petition invoking the following grounds:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY AND PATENTLY
ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO THE LACK OR EXCESS OF JURISDICTION IN RULING
THAT THE PETITIONERS WERE NOT REGULAR EMPLOYEES.
II.
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN THE CHALLENGED DECISIONS AS TO WARRANT THE
EXERCISE
OF
THE
COURTS
DISCRETIONARY
APPELLATE
JURISDICTION.

xxxx
It being supported by facts on record and there being no showing that the
employment terms were foisted on the employees through circumstances
vitiating or diminishing their consent, following Brent School, Inc. vs.
Zamora(G.R. No. 48494, Feb. 5, 1990), the respondents must be
considered as fixed term employees whose "seasonal employment" or
employment for a "period" have been "set down." After all, as conceded by

Petitioners essentially maintain that contrary to the findings of the CA, they
were continuously hired by respondent company to perform duties
necessary and desirable in the usual trade or business and are, therefore,
regular employees. They allege that if their services had really been
engaged for fixed specific periods, respondent should have at least
provided the contracts of employment evidencing the same.

77

For its part, respondent contends that the petition should be denied due
course for its verification and certification of non-forum shopping was
signed by only one of the petitioners. It alleges that even assuming the
validity of the same, it should still be dismissed for the appellate court
aptly found that petitioners were fixed-term employees who were hired
intermittently. Respondent also asserts that petitioners failed to completely
substantiate their claims, for during the hearing conducted before the
Labor Arbiter on March 11, 1998, the payslips presented by petitioners
merely established the following employment terms:

Name
of Length of Service
Petitioner

Dates

Dela Rama 5 months, 4 months

Between
November
And March 31, 1996

Dizon

4
2
9 months

Tumabiao

3 months

Basan

6.5
1 month

Donor

1 month
1 month

30,

months In
months In
In 1996

From
November
To January 31, 1997

months From
May
To
December
From
January
To January 31, 1997

1995

1993
1994

15,

15,
31,
15,

From
February
15,
To
March
15,
From
December
15,
To January 15, 1997

1996

1996
1996
1997

1996
1996
1996

Nicolas

8.5 months

In 1996 and 1997

Falguera

6 months

From
To 1997

1992

Considering that the evidence presented showed that petitioners merely

rendered their services for periods of less than a year, respondent claims
that petitioners could not have attained regular employment status. It
added that its failure to present petitioners employment contracts was
due to a fire that destroyed its Manila Plant where said contracts were
kept. Nevertheless, respondent persistently asserts that where a fixed
period of employment was agreed upon knowingly and voluntarily by the
petitioners, the duration of which was made known to them at the time of
their engagement, petitioners cannot now claim otherwise. In addition, it
disagrees with the contention that petitioners, as route helpers, were
performing functions necessary or desirable to its business.
The petition is impressed with merit.
On the procedural issue, We hold that while the general rule is that the
verification and certification of non-forum shopping must be signed by all
the petitioners in a case, the signature of only one of them, petitioner
Basan in this case, appearing thereon may be deemed substantial
compliance with the procedural requirement. Jurisprudence is replete with
rulings that the rule on verification is deemed substantially complied with
when one who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the verification, and when
matters alleged in the petition have been made in good faith or are true
and correct.16 Similarly, this Court has consistently held that when under
reasonable or justifiable circumstances, as when all the petitioners share a
common interest and invoke a common cause of action or defense, as in
this case, the signature of only one of them in the certification against
forum
shopping
substantially
complies
with
the
certification
requirement.17 Thus, the fact that the petition was signed only by petitioner
Basan does not necessarily result in its outright dismissal for it is more in
accord with substantial justice to overlook petitioners procedural
lapses.18 Indeed, the application of technical rules of procedure may be
relaxed in labor cases to serve the demand of justice. 19
As for the primordial issue in this case, it must be noted that the same has
already been resolved in Magsalin v. National Organization of Working
Men,20 wherein this Court has categorically declared that the nature of
work of route helpers hired by Coca Cola Bottlers Philippines, Inc. is

78

necessary and desirable in its usual business or trade thereby qualifying

them as regular employees, to wit:
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest
manufacturers of softdrinks in the country. Respondent workers have long
been in the service of petitioner company. Respondent workers, when
hired, would go with route salesmen on board delivery trucks and
undertake the laborious task of loading and unloading softdrink products of
petitioner company to its various delivery points.
Even while the language of law might have been more definitive, the
clarity of its spirit and intent, i.e., to ensure a "regular" worker's security of
tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity performed
by the employee in relation to the usual business or trade of the employer.
The standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a
fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business
or trade is pursued in the usual course. It is distinguished from a specific
undertaking that is divorced from the normal activities required in carrying
on the particular business or trade. But, although the work to be performed
is only for a specific projector seasonal, where a person thus engaged has
been performing the job for at least one year, even if the performance is
not continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the
necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be
regular with respect to such activity and while such activity exists.
The argument of petitioner that its usual business or trade is softdrink
manufacturing and that the work assigned to respondent workers as sales
route helpers so involves merely "postproduction activities," one which is
not indispensable in the manufacture of its products, scarcely can be
persuasive. If, as so argued by petitioner company, only those whose work
are directly involved in the production of softdrinks may be held
performing functions necessary and desirable in its usual business or
trade, there would have then been no need for it to even maintain regular
truck sales route helpers.1wphi1 The nature of the work performed must
be viewed from a perspective of the business or trade in its entirety and
not on a confined scope.
The repeated rehiring of respondent workers and the continuing need for
their services clearly attest to the necessity or desirability of their services
in the regular conduct of the business or trade of petitioner company. The
Court of Appeals has found each of respondents to have worked for at least
one year with petitioner company. While this Court, in Brent School, Inc. vs.

Zamora, has upheld the legality of a fixed-term employment, it has done

so, however, with a stern admonition that where from the circumstances it
is apparent that the period has been imposed to preclude the acquisition of
tenurial security by the employee, then it should be struck down as being
contrary to law, morals, good customs, public order and public policy. The
pernicious practice of having employees, workers and laborers, engaged
for a fixed period of few months, short of the normal six-month
probationary period of employment, and, thereafter, to be hired on a dayto-day basis, mocks the law. Any obvious circumvention of the law cannot
be countenanced. The fact that respondent workers have agreed to be
employed on such basis and to forego the protection given to them on
their security of tenure, demonstrate nothing more than the serious
problem of impoverishment of so many of our people and the resulting
unevenness between labor and capital. A contract of employment is
impressed with public interest. The provisions of applicable statutes are
deemed written into the contract, and "the parties are not at liberty to
insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other." 21
In fact, in Pacquing, et. al. v. Coca-Cola Philippines, Inc., 22 this Court applied
the ruling cited above under the principle of stare decisis et non quieta
movere (follow past precedents and do not disturb what has been settled).
It was held therein that since petitioners, as route helpers, were performing
the same functions as the employees in Magsalin, which are necessary and
desirable in the usual business or trade of Coca Cola Philippines, Inc., they
are considered as regular employees entitled to security of tenure.
Here, respondent, in its position paper, expressly admitted that petitioners
were employed as route helpers in anticipation of the high volume of work
in its plants and sales offices. 23 As such, respondents contention that
petitioners could not have attained regular employment status for they
merely rendered services for periods of less than a year cannot be
sustained in view of the Magsalin doctrine previously cited. Indeed, the
"pernicious practice" of engaging employees for a fixed period short of the
six-month probationary period of employment, and again, on a day-to-day
basis thereafter, mocks the law.
At this point, it is worth recalling that Article 280 of the Labor Code, as
amended, provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
projector undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the

79

work or services to be performed is seasonal in nature and the

employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity
exists. Thus, pursuant to the Article quoted above, there are two kinds of
regular employees, namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those who have rendered at least one year
of service, whether continuous or broken, with respect to the activities in
which they are employed.24 Simply stated, regular employees are classified
into: (1) regular employees by nature of work; and (2) regular employees
by years of service. The former refers to those employees who perform a
particular activity which is necessary or desirable in the usual business or
trade of the employer, regardless of their length of service; while the latter
refers to those employees who have been performing the job, regardless of
the nature thereof, for at least a year.25
Petitioners, in this case, fall under the first kind of regular employee above.
As route helpers who are engaged in the service of loading and unloading
softdrink products of respondent company to its various delivery points,
which is necessary or desirable in its usual business or trade, petitioners
are considered as regular employees. That they merely rendered services
for periods of less than a year is of no moment since for as long as they
were performing activities necessary to the business of respondent, they
are deemed as regular employees under the Labor Code, irrespective of
the length of their service.
Nevertheless, respondent, as in Magsalin, also asserts that even assuming
that petitioners were performing activities which are usually necessary or
desirable in its usual business or trade, they were employed not as regular
employees but only for a fixed period, which is well within the boundaries
of the law, as ruled in Brent School, Inc. v. Zamora, 26 viz.:
There is, on the other hand, the Civil Code, which has always recognized,
and continues to recognize, the validity and propriety of contracts and
obligations with a fixed or definite period, and imposes no restraints on the
freedom of the parties to fix the duration of a contract, whatever its object,
be it specie, goods or services, except the general admonition against
stipulations contrary to law, morals, good customs, public order or public
policy. Under the Civil Code, therefore, and as a general proposition, fixedterm employment contracts are not limited, as they are under the present
Labor Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include those to which the
parties by free choice have assigned a specific date of termination.

xxxx
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary,
unjust in its effects and apt to lead to absurd and unintended
consequences.27
Thus, under the above Brent doctrine, while it was not expressly
mentioned in the Labor Code, this Court has recognized a fixed-term type
of employment embodied in a contract specifying that the services of the
employee shall be engaged only for a definite period, the termination of
which occurs upon the expiration of said period irrespective of the
existence of just cause and regardless of the activity the employee is
called upon to perform.28Considering, however, the possibility of abuse by
employers in the utilization of fixed-term employment contracts, this Court,
in Brent, laid down the following criteria to prevent the circumvention of
the employees security of tenure:
1) The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper
pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee
dealt with each other on more or less equal terms with no moral
dominance exercised by the former or the latter. 29 Unfortunately,
however, the records of this case is bereft of any proof which will
show that petitioners freely entered into agreements with
respondent to perform services for a specified length of time. In
fact, there is nothing in the records to show that there was any
agreement at all, the contracts of employment not having been
presented. While respondent company persistently asserted that
petitioners knowingly agreed upon a fixed period of employment

80

and repeatedly made reference to their contracts of employment,

the expiration thereof being made known to petitioners at the time
of their engagement, respondent failed to present the same in
spite of all the opportunities to do so. Notably, it was only at the
stage of its appeal to the CA that respondent provided an
explanation as to why it failed to submit the contracts they
repeatedly spoke of.30 Even granting that the contracts of
employment were destroyed by fire, respondent could have easily
submitted other pertinent files, records, remittances, and other
similar documents which would show the fixed period of
employment voluntarily agreed upon by the parties. They did not,
however, aid this Court with any kind of proof which might tend to
show that petitioners were truly engaged for specified periods,
seemingly content with the convenient excuse that the contracts
were destroyed by fire. Indeed, respondents failure to submit the
necessary documents, which as employers are in their possession,
gives rise to the presumption that their presentation is prejudicial
to its cause.31
While fixed term employment is not per se illegal or against public policy,
the criteria above must first be established to the satisfaction of this Court.
Yet, the records of this case reveal that for years, petitioners were
repeatedly engaged to perform functions necessary to respondents
business for fixed periods short of the six-month probationary period of
employment. If there was really no intent to circumvent security of tenure,
respondent should have made it clear to petitioners that they were being
hired only for fixed periods in an agreement freely entered into by the
parties. To this Court, respondents act of hiring and re-hiring petitioners
for periods short of the legal probationary period evidences its intent to
thwart petitioners security of tenure, especially in view of an awareness
that ordinary workers, such as petitioners herein, are never on equal terms
with their employers.32 It is rather unjustifiable to allow respondent to hire
and rehire petitioners on fixed terms, never attaining regular
status.33 Hence, in the absence of proof showing that petitioners knowingly
agreed upon a fixed term of employment, We uphold the findings of the
Labor Arbiter and the NLRC and so rule that petitioners are, indeed, regular
employees, entitled to security of tenure. Consequently, for lack of any
clear, valid, and just or authorized cause in terminating petitioners'
employment, We find respondent guilty of illegal dismissal.
WHEREFORE, premises considered, the instant petition is GRANTED. The
assailed Decision dated August 31, 2005 and Resolution dated August 24,
2006 of the Court of Appeals in CA-G.R. SP Nos. 80977 & 87071 are SET
ASIDE. The Resolutions dated January 30, 2003 and September 24, 2003 of
the NLRC in NLRC 00-02-01419-97, affirming in toto the Decision dated
August 21, 1998 of the Labor Arbiter are REINSTATED with MODIFICATION.
Taking into account petitioners' reinstatement in 199934 and petitioner
Falguera's receipt of P792,815.64 separation pay,35 respondent is hereby
ORDERED to pay petitioners the following: (1) backwages computed from

the date their salaries were withheld from them until their actual
reinstatement; (2) allowances and other benefits, or their monetary
equivalent, at the time of their dismissal; (3) attorney's fees equivalent to
ten percent ( 10%) of the monetary awards; and (4) interest at six percent
( 6%) per annum of the total monetary awards, computed from the finality
of this Decision until their full satisfaction. For this purpose, the records of
this case are hereby REMANDED to the Labor Arbiter for proper
computation of said awards, deducting amounts already received. Costs
against petitioner.
SO ORDERED.

81

G.R. No. 179640, March 18, 2015

HACIENDA CATAYWA/MANUEL VILLANUEVA, owner, JOEMARIE
VILLANUEVA,
manager,
MANCY
AND
SONS
ENTERPRISES,
INC., Petitioners, v. ROSARIO LOREZO, Respondent.
DECISION
PERALTA, J.:

Consequently, the SSC rendered its Resolution dated October 12, 2005,
thus:

Before this Court is a petition for review on certiorari dated September 28,
2007 of petitioner Hacienda Cataywa, Manuel Villanueva, et al.,
(petitioners) seeking to reverse and set aside the Resolutions, dated
October 17, 20061 and August 10, 2007,2 respectively, of the Court of
Appeals (CA) and the Resolution and Order, dated October 12, 2005 and
March 8, 2006, respectively, of the Social Security Commission, ordering
petitioners to pay jointly and severally all delinquent contributions, 3%
penalty per month of delayed payment and damages to respondent
Rosario
Lorezo.
The

Petitioners Manuel and Jose Villanueva refuted in their answer, the

allegation that not all contributions of respondent were remitted.
Petitioners alleged that all farm workers of Hda. Cataywa were reported
a^id their contributions were duly paid and remitted to SSS. It was the late
Domingo Lizares, Jr. who managed and administered the hacienda. 5 While,
Talisay Farms, Inc. filed a motion to dismiss on the ground of lack of cause
of action in the absence of an allegation that there was an employeremployee relationship between Talisay Farms and respondent. 6

antecedent

facts

follow:

On October 22, 2002, respondent Rosario Lorezo received, upon inquiry, a

letter from the Social Security System (SSS) Western Visayas Group
informing her that she cannot avail of their retirement benefits since per
their record she has only paid 16 months. Such is 104 months short of the
minimum requirement of 120 months payment to be entitle to the benefit.
She was also informed that their investigation of her alleged employment
under employer Hda. Cataywa could not be confirmed because Manuel
Villanueva was permanently residing in Manila and Joemarie Villanueva
denied having managed the farm. She was also advised of her options:
continue paying contributions as voluntary member; request for refund;
leave her contributions in-trust with the System, or file a petition before
the Social Security Commission (SSC) so that liabilities, if any, of her
employer
may
be
determined.3
Aggrieved, respondent then filed her Amended Petition dated September
30, 2003, before the SSC. She alleged that she was employed as laborer in
Hda. Cataywa managed by Jose Marie Villanueva in 1970 but was reported
to the SSS only in 1978. She alleged that SSS contributions were deducted
from her wages from 1970 to 1995, but not all were remitted to the SSS
which, subsequently, caused the rejection of her claim. She also impleaded
Talisay Farms, Inc. by virtue of its Investment Agreement with Mancy and
Sons Enterprises. She also prayed that the veil of corporate fiction be
pierced since she alleged that Mancy and Sons Enterprises and Manuel and
Jose
Marie
Villanueva
are
one
and
the
same. 4

WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds,

that Rosario M. Lorezo was a regular employee subject to compulsory
coverage of Hda. Cataywa/Manuel Villanueva/ Mancy and Sons Enterprises,
Inc. within the period of 1970 to February 25, 1990. In view thereof, the
aforenamed respondents are hereby ordered to pay jointly and severally,
within thirty (30) days from receipt hereof, all delinquent contributions
within the proven employment period computed in accordance with the
then prevailing minimum wage (at 11 months per year) in the amount of
P8,293.90, the 3% per month penalty on the delayed payment of
contributions in the amount of P59,786.10 (computed as of September 9,
2005), pursuant to Section 22 of the SS Law and the damages in the
amount of P32,356.21 for misrepresentation of the real date of
employment, pursuant to Section 24 (b) of the said statute.
The SSS, on the other hand, is ordered to pay (subject to existing rules and
regulations) petitioner Rosario M. Lorezo her retirement benefit, upon the
filing of the claim therefor, and to inform this Commission of its compliance
herewith.
SO

ORDERED.7

The SSC denied petitioners' Motion for Reconsideration. The petitioner,

then, elevated the case before the CA where the case was dismissed
outrightly due to technicalities, thus:
The Court Resolved to DISMISS the instant petition on the basis of the
following observations:
1.

Signatory to the Verification failed to attach his authority to sign

for
and
[in]
behalf
of
the
other
Petitioners.
(Violation of Section 5, Rule 43 of the Rules of Court, in relation to
Section 7, Rule 45 of the Rules of Court)

82

2.

Certified true copies of pleadings and documents relevant and

pertinent
to
the
petition
are
incomplete,
to
wit:
-Petitioner
failed
to
attach
the
following:
- Petition/Amended Petition filed before the SSS of Makati City
- Respondents' Answer filed before the SSS of Makati City
- Parties' respective position paper filed before the SSS of Makati
City
- Parties' respective memorandum of appeal filed before the
Commission

(Violation of Section 6, Rule 43 of the Rules of Court, in relation to Section

7,
Rule
43
of
the
Rules
of
Court) 8

Following the denial of petitioners' Motion for Reconsideration of the CA,

petitioner filed with this Court the present petition stating the following
grounds:
1) THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN STRICTLY AND RIGIDLY APPLYING THE TECHNICAL RULES OF PROCEDURE
AND DISMISSING THE CASE ON TECHNICALITY WITHOUT EVALUATING THE
MERITS
OF
THE
CASE;ChanRoblesVirtualawlibrary
2) THE [SSC] COMMITTED REVERSIBLE ERROR IN MAKING CONCLUSIONS
FOUNDED ON SPECULATIONS AND SURMISES NOT CONFORMING TO
EVIDENCE ON RECORD, MAKING MANIFESTLY MISTAKEN INFERENCES, AND
RENDERING JUDGMENT BASED ON MISAPPREHENSION OF FACTS AND
MISAPPLICATION OF THE LAW, RULING AND RENDERING JUDGMENT THAT:
a) RESPONDENT WORKED FROM 1970 TO FEBRUARY 25,1990
b) PETITIONERS ARE LIABLE FOR DELINQUENT CONTRIBUTIONS
c) PETITIONERS ARE LIABLE FOR 3% PER MONTH PENALTY
d) PETITIONERS ARE LIABLE FOR DAMAGES DUE TO MISREPRESENTATION
e) MANCY & SONS ENTERPRISES, INC. AND MANUEL VILLANUEVA ARE ONE
AND THE SAME.9

The

petition

is

partially

meritorious.

Petitioners argues that the CA has been too rigid in the application of the
rules of procedure in dismissing the appeal without evaluation of the
merits.
This Court has emphasized that procedural rules should be treated with

utmost respect and due regard, since they are designed to facilitate the
adjudication of cases to remedy the worsening problem of delay in the
resolution of rival claims and in the administration of justice. However, this
Court has recognized exceptions to the Rules, but only for the most
compelling reasons where stubborn obedience to the Rules would defeat
rather
than
serve
the
ends
of
justice.10
As in the case of Obut v. Court of Appeals,11 this Court held that "judicial
orders are issued to be obeyed, nonetheless a non-compliance is to be
dealt with as the circumstances attending the case may warrant. What
should guide judicial action is the principle that a party-litigant is to be
given the fullest opportunity to establish the merits of his complaint of
defense rather than for him to lose life, liberty, honor or property on
technicalities."12
When the CA dismisses a petition outright and the petitioner files a motion
for the reconsideration of such dismissal, appending thereto the requisite
pleadings, documents or order/resolution, this would constitute substantial
compliance with the Revised Rules of Court. 13 Thus, in the present case,
there was substantial compliance when in their Motion for Reconsideration,
they attached a secretary certificate giving Joemarie's authority to sign on
behalf of the corporation. Petitioners also included the necessary
attachment.14
At the outset, it is settled that this Court is not a trier of facts and will not
weigh evidence all over again. 15 However, considering the issues raised
which can be resolved on the basis of the pleadings and documents filed,
and the fact that respondent herself has asked this Court for early
resolution, this Court deems it more practical and in the greater interest of
justice not to remand the case to the CA but, instead, to resolve the
controversy
once
and
for
all.
Petitioners are of the opinion that the SSC committed reversible error in
making conclusions founded on speculations and surmises that respondent
worked from 1970 to February 25, 1990. Petitioners argue that the SSC did
not give credence nor weight at all to the existing SSS Form R-1A and farm
bookkeeper Wilfredo Ibalobor. Petitioners insist that after thirty long years,
all the records of the farm were already destroyed by termites and
elements, thus, they relied on the SSS Form R-1A as the only remaining
source of information available. Petitioners also alleged that respondent
was
a
very
casual
worker.
This

Court

disagrees.

It was settled that there is no particular form of evidence required to Drove

the existence of the employer-employee relationship. Any competent and
relevant evidence to prove such relationship may be admitted. This may
entirely be testimonial.16 If only documentary evidence would be required
to demonstrate the relationship, no scheming employer would be brought
before the bar of justice. 17 Petitioners erred in insisting that, due to

83

passage of time, SSS Form R-1A is the only remaining source of information
available to prove when respondent started working for them. However,
such form merely reflected the time in which the petitioners reported the
respondent for coverage of the SSS benefit. They failed to substantiate
their claim that it was only in 1978 that respondent reported for work.
The records are bereft of any showing that Demetria Denaga and Susano
Jugue harbored any ill will against the petitioners prompting them to
execute false affidavit. There lies no reason for this Court not to afford full
faith and credit to their testimonies. Denaga, in her Joint Affidavit with
Jugue, stated that she and respondent started working in Hda. Cataywa in
1970 and like her, she was reported to the SSS on December 19, 1978. 18 It
was also revealed in the records that the SSC found that Denaga was
employed by Manuel Villanueva at Hda. Cataywa from 1970 to December
1987.19
Jurisprudence has identified the three types of employees mentioned in the
provision20 of the Labor Code: (1) regular employees or those who have
been engaged to perform activities that are usually necessary or desirable
in the usual business or trade of the employer; (2) project employees or
those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined
at the time of their engagement, or those whose work or service is
seasonal in nature and is performed for the duration of the season; and (3)
casual employees or those who are neither regular nor project
employees.21
Farm workers generally fall under the definition of seasonal employees. 22 It
was also consistently held that seasonal employees may be considered as
regular employees when they are called to work from time to time. 23 They
are in regular employment because of the nature of the job, and not
because of the length of time they have worked. However, seasonal
workers who have worked for one season only may not be considered
regular
employees.24
The nature of the services performed and not the duration thereof, is
determinative of coverage under the law. 25 To be exempted on the basis of
casual employment, the services must not merely be irregular, temporary
or intermittent, but the same must not also be in connection with the
business or occupation of the employer. 26 Thus, it is erroneous for the
petitioners to conclude that the respondent was a very casual worker
simply because the SSS form revealed that she had 16 months of
contributions. It does not, in any way, prove that the respondent performed
a job which is not in connection with the business or occupation of the
employer
to
be
considered
as
casual
employee.
The test for regular employees to be considered as such has been
thoroughly explained in De Leon v. NLRC,27viz.:

The primary standard, therefore, of determining a regular employment is

the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer.
The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be determined
by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is also considered regular, but only with respect to such
activity
and
while
such
activity
exists.28

A reading of the records would reveal that petitioners failed to dispute the
allegation that the respondent performed hacienda work, such as planting
sugarcane point, fertilizing, weeding, replanting dead sugarcane fields and
routine miscellaneous hacienda work. 29 They merely alleged that
respondent was a very casual worker because she only rendered work for
16 months.30 Thus, respondent is considered a regular seasonal worker and
not
a
casual
worker
as
the
petitioners
alleged.
Petitioners also assert that the sugarcane cultivation covers only a period
of six months, thus, disproving the allegation of the respondent that she
worked for 11 months a year for 25 years. This Court has classified farm
workers as regular seasonal employees who are called to work from time to
time and the nature of their relationship with the employer is such that
during the off season, they are temporarily laid off; but reemployed during
the summer season or when their services may be needed.31 Respondent,
therefore, as a farm worker is only a seasonal employee. Since petitioners
provided that the cultivation of sugarcane is only for six] months,
respondent cannot be considered as regular employee during the months
when
there
is
no
cultivation.
Based on the foregoing facts and evidence on record, petitioners are liable
for delinquent contributions. It being proven by sufficient evidence that
respondent started working for the hacienda in 1970, it follows that
petitioners are liable for deficiency in the SSS contributions.
The imposition upon and payment by the delinquent employer of the three
percent (3%) penalty for the late remittance of premium contributions is
mandatory and cannot be waived by the System. The law merely gives to
the Commission the power to prescribe the manner of paying the
premiums. Thus, the power to remit or condone the penalty for late
remittance of premium contributions is not embraced therein. 32 Petitioners
erred in alleging that the imposition of penalty is not proper.

84

Petitioners also insist that the award of damages for misrepresentation is

without
basis.
This
Court
disagrees.
The law provides that should the employer misrepresent the true date of
the employment of the employee member, such employer shall pay to the
SSS damages equivalent to the difference between the amount of benefit
to which the employee member or his beneficiary is entitled had the
proper contributions been remitted to the SSS and the amount payable on
the basis of the contributions actually remitted. However, should the
employee member or his beneficiary is entitled to pension benefits, the
damages shall be equivalent to the accumulated pension due as of the
date of settlement of the claim or to the five years' pension, whichever is
higher,
including
the
dependent's
pension. 33
Lastly, petitioners aver that there is no legal basis to pierce the veil of
corporation
entity.

appeared as employer. However, this does not prove, in any way, that the
corporation is used to defeat public convenience, justify wrong, protect
fraud, or defend crime, or when it is made as a shield to confuse the
legitimate issues, warranting that its separate and distinct personality be
set aside. Also, it was not alleged nor proven that Mancy and Sons
Enterprises, Inc. functions only for the benefit of Manuel Villanueva, thus,
one
cannot
be
an
alter
ego
of
the
other.
WHEREFORE, the petition for review on certiorari dated September 28,
2007 of petitioners Hda. Cataywa, Manuel Villanueva, et al. is
hereby DENIED. Consequently, the resolution by the Social Security
Commission
is
hereby AFFIRMED with MODIFICATIONS that
the
delinquent contributions should be computed as six months per year of
service, and the case against Manuel and Jose Marie Villanueva
be DISMISSED.
SO ORDERED

It was held in Rivera v. United Laboratories, Inc.34 that While a corporation may exist for any lawful purpose, the law will regard it
as an association of persons or, in case of two corporations, merge them
into one, when its corporate legal entity is used as a cloak for fraud or
illegality. This is the doctrine of piercing the veil of corporate fiction. The
doctrine applies only when such corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, or when it is
made as a shield to confuse the legitimate issues, or where a corporation is
the mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted
as to make it merely an instrumentality, agency, conduit or adjunct of
another corporation. To disregard the separate juridical personality of a
corporation, the wrongdoing must be established clearly and convincingly.
It cannot be presumed.35

This Court has cautioned against the inordinate application of this doctrine,
reiterating the basic rule that "the corporate veil may be pierced only if it
becomes a shield for fraud, illegality or inequity committed against a third
person.36
The Court has expressed the language of piercing doctrine when applied to
alter ego cases, as follows: Where the stock of a corporation is owned by
one person whereby the corporation functions only for the benefit of such
individual owner, the corporation and the individual should be deemed the
same.37
This Court agrees with the petitioners that there is no need to pierce the
corporate veil. Respondent failed to substantiate her claim that Mancy and
Sons Enterprises, Inc. and Manuel and Jose Marie Villanueva are one and
the same. She based her claim on the SSS form wherein Manuel Villanueva

85

G.R. No. 199554, February 18, 2015

ZENAIDA PAZ, Petitioner, v. NORTHERN TOBACCO REDRYING CO.,
INC., AND/OR ANGELO ANG, Respondents.
DECISION
LEONEN, J.:
Zenaida Paz filed this Petition1 praying that the computation of Petitioners
Retirement Pay as determined by the National Labor Relations Commission
in
its
Decision
dated
08
December
2008
be
reinstated. 2
Northern Tobacco Redrying Co., Inc. (NTRCI), a flue-curing and redrying of
tobacco leaves business,3employs approximately 100 employees with
seasonal workers tasked to sort, process, store and transport tobacco
leaves during the tobacco season of March to September. 4

The Labor Arbiter in his Decision16 dated July 26, 2005 [c]onfirm[ed] that
the correct retirement pay of Zenaida M. Paz [was] ?12,487.50. 17
The National Labor Relations Commission in its Decision 18 dated December
8, 2008 modified the Labor Arbiters Decision. It likewise denied
reconsideration. The Decisions dispositive portion reads:
WHEREFORE, premises considered, the decision of the labor arbiter is
herebyMODIFIED. Complainant Appellant Zenaida Paz[s] retirement pay
should be computed pursuant to RA 7641 and that all the months she was
engaged to work for respondent for the last twenty eight (28) years should
be added and divide[d] by six (for a fraction of six months is considered as
one year) to get the number of years [for] her retirement pay[.]
Complainant Teresa Lopez is hereby entitled to her separation pay
computed at one half month pay for every year of service, a fraction of six
months shall be considered as one year, plus backwages from the time she
was illegally dismissed up to the filing of her complaint.
The

NTRCI hired Zenaida Paz (Paz) sometime in 1974 as a seasonal sorter, paid
P185.00 daily. NTRCI regularly re-hired her every tobacco season since
then. She signed a seasonal job contract at the start of her employment
and a pro-forma application letter prepared by NTRCI in order to qualify for
the
next
season.5
On May 18, 2003,6 Paz was 63 years old when NTRCI informed her that she
was considered retired under company policy.7 A year later, NTRCI told her
she
would
receive
P12,000.00
as
retirement
pay. 8

rest

of

the

decision

stays.

SO ORDERED.19

The Court of Appeals in its Decision20 dated May 25, 2011 dismissed the
Petition and modified the National Labor Relations Commissions Decision
in that financial assistance is awarded to . . . Zenaida Paz in the amount of
P60,356.25:21

Paz, with two other complainants, filed a Complaint for illegal dismissal
against NTRCI on March 4, 2004.9 She amended her Complaint on April 27,
2004 into a Complaint for payment of retirement benefits, damages, and
attorneys fees10 as P12,000.00 seemed inadequate for her 29 years of
service.11 The Complaint impleaded NTRCIs Plant Manager, Angelo Ang, as
respondent.12 The Complaint was part of the consolidated Complaints of
17
NTRCI
workers.13

WHEREFORE, the Petition is hereby DISMISSED. The Decision dated 8

December 2008 and Resolution dated 16 September 2009 of the National
Labor
Relations
Commission
in
NLRC
CA
No.
046642-05(5)
are MODIFIED in that (1) financial assistance is awarded to private
respondent Zenaida Paz in the amount of P60,356.25; and (2) the dismissal
of private respondent Teresa Lopez is declared illegal, and thus, she is
awarded backwages and separation pay, in accordance with the foregoing
discussion.

NTRCI countered that no Collective Bargaining Agreement (CBA) existed

between NTRCI and its workers. Thus, it computed the retirement pay of
its seasonal workers based on Article 287 of the Labor Code. 14

SO ORDERED.22

NTRCI raised the requirement of at least six months of service a year for
that year to be considered in the retirement pay computation. It claimed
that Paz only worked for at least six months in 1995, 1999, and 2000 out of
the 29 years she rendered service. Thus, Pazs retirement pay amounted
to P12,487.50 after multiplying her ?185.00 daily salary by 22 working
days
in
a
month,
for
three
years. 15

The Court of Appeals found that while applying the clear text of Article 287
resulted in the amount of P12,487.50 as retirement pay, this amount
[was] so meager that it could hardly support . . . Paz, now that she is weak
and old, unable to find employment.23 It discussed jurisprudence on
financial assistance and deemed it appropriate to apply the formula: Onehalf-month pay multiplied by 29 years of service divided by two yielded
P60,356.25
as
Pazs
retirement
pay. 24

86

Paz comes before this court seeking to reinstate the National Labor
Relations Commissions computation.25 NTRCI filed its Comment,26 and this
court
deemed
waived
the
filing
of
a
Reply. 27
Petitioner Paz contends that respondent NTRCI failed to prove the alleged
company policy on compulsory retirement for employees who reached 60
years of age or who rendered 30 years of service, whichever came first. 28
Consequently, Article 287, as amended by Republic Act No. 7641, 29applies
and entitles her to retirement pay . . . equivalent to [at least] one-half
month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year. 30 She adds that she was then 63
years old, and while one may opt to retire at 60 years old, the compulsory
retirement age is 65 years old under Article 287, as amended. 31
Petitioner Paz then argues respondent NTRCIs misplaced reliance
on Philippine Tobacco Flue-Curing & Redrying Corp. v. National Labor
Relations
Commission32 as
that
case
involved
separation
pay
computation.33
Lastly, petitioner Paz contends lack of legal basis that an employee should
have at least worked for six (6) months for a particular season for that
season to be included in the computation of retirement pay[.] 34 She
submits that regular seasonal employees are still considered employees
during off-season, and length of service determination should be applied in
retirees
favor.35
Respondent NTRCI counters that in retirement pay computation this court
should consider its ruling inPhilippine Tobacco on computing separation
pay of seasonal employees. It submits that the proviso a fraction of at
least six (6) months being considered as one (1) whole year appears in
both Article 287 on retirement pay and Articles 283 and 284 on separation
pay.36
Respondent NTRCI argues that unlike regular employees, seasonal workers
like petitioner Paz can offer their services to other employers during offseason. Thus, the six-month rule avoids the situation where seasonal
workers receive retirement pay twice an even more favorable position
compared
with
regular
employees.37
Both parties appear to agree on petitioner Pazs entitlement to retirement
pay. The issue before this court involves its proper computation. We also
resolve
whether
there
was
illegal
dismissal.
We

affirm

Regular

the

Court

of

Appeals
seasonal

decision

with

modification.
employees

Article 28038 of the Labor Code and jurisprudence identified three types of
employees, namely: (1) regular employees or those who have been

engaged to perform activities which are usually necessary or desirable in

the usual business or trade of the employer; (2) project employees or those
whose employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of
the season; and (3) casual employees or those who are neither regular nor
project
employees.39
Jurisprudence also recognizes the status of regular seasonal employees. 40
Mercado, Sr. v. National Labor Relations Commission 41 did not consider as
regular employees the rice and sugar farmland workers who were paid with
daily wages. This was anchored on the Labor Arbiters findings that
petitioners were required to perform phases of agricultural work for a
definite period, after which their services [were] available to any farm
owner.42
This court explained that the proviso in the second paragraph of Article
280 in that any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular
employee applies only to casual employees and not project and
regular
employees
in
the
first
paragraph
of
Article
280. 43
On the other hand, the workers of La Union Tobacco Redrying Corporation
in Abasolo v. National Labor Relations Commission 44 were considered
regular seasonal employees since they performed services necessary and
indispensable to the business for over 20 years, even if their work was only
during tobacco season.45 This court applied the test laid down in De Leon
v. National Labor Relations Commission46 for determining regular
employment status:
[T]he test of whether or not an employee is a regular employee has been
laid down inDe Leon v. NLRC, in which this Court held:
The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the
employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity, and while such activity exists.

87

Thus, the nature of ones employment does not depend solely on the will or
word of the employer. Nor on the procedure for hiring and the manner of
designating the employee, but on the nature of the activities to be
performed by the employee, considering the employer's nature of business
and
the
duration
and
scope
of
work
to
be
done.
In the case at bar, while it may appear that the work of petitioners is
seasonal, inasmuch as petitioners have served the company for
many years, some for over 20 years, performing services
necessary and indispensable to LUTORCOs business, serve as
badges of regular employment.
Moreover, the fact that
petitioners do not work continuously for one whole year but only
for the duration of the tobacco season does not detract from
considering them in regular employment since in a litany of cases this
Court has already settled that seasonal workers who are called to work
from time to time and are temporarily laid off during off-season are not
separated from service in said period, but are merely considered on leave
until
re-employed.
Private respondent's reliance on the case of Mercado v. NLRC is misplaced
considering that since in said case of Mercado, although the respondent
company therein consistently availed of the services of the petitioners
therein from year to year, it was clear that petitioners therein were not in
respondent company's regular employ. Petitioners therein performed
different phases of agricultural work in a given year. However, during that
period, they were free to contract their services to work for other farm
owners, as in fact they did. Thus, the Court ruled in that case that their
employment would naturally end upon the completion of each project or
phase of farm work for which they have been contracted. 47 (Emphasis
supplied, citations omitted)

The sugarcane workers in Hacienda Fatima v. National Federation of

Sugarcane Workers-Food and General Trade48 were also considered as
regular employees since they performed the same tasks every season for
several years:
For respondents to be excluded from those classified as regular employees,
it is not enough that they perform work or services that are seasonal in
nature. They must have also been employed only for the duration of one
season. . . . Evidently, petitioners employed respondents for more than one
season. Therefore, the general rule of regular employment is applicable.
.

The CA did not err when it ruled that Mercado v. NLRC was not applicable
to the case at bar. In the earlier case, the workers were required to
perform phases of agricultural work for a definite period of time, after
which their services would be available to any other farm owner. They

were not hired regularly and repeatedly for the same phase/s of
agricultural work, but on and off for any single phase thereof. On the other
hand, herein respondents, having performed the same tasks for
petitioners every season for several years, are considered the
latters regular employees for their respective tasks. Petitioners
eventual refusal to use their services even if they were ready, able and
willing to perform their usual duties whenever these were available and
hiring of other workers to perform the tasks originally assigned to
respondents amounted to illegal dismissal of the latter. 49 (Emphasis
supplied, citation omitted)

Respondent NTRCI engaged the services of petitioner Paz as a seasonal

sorter50 and had been regularly rehired from 1974,51 until she was informed
in 2003 that she was being retired under company policy. 52
The services petitioner Paz performed as a sorter were necessary and
indispensable to respondent NTRCIs business of flue-curing and redrying
tobacco leaves. She was also regularly rehired as a sorter during the
tobacco seasons for 29 years since 1974. These considerations taken
together allowed the conclusion that petitioner Paz was a regular seasonal
employee, entitled to rights under Article 279 53 of the Labor Code:
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 or 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.

Illegal

dismissal

and

backwages

Petitioner Paz initially filed a Complaint for illegal dismissal seeking

separation pay, but later amended her Complaint into one for payment of
retirement pay.54 Despite the amendment, she maintained in her
subsequent pleadings that she had been made to retire even before she
reached the compulsory retirement age of 65 under Article 287, as
amended.55
Petitioner Paz alleged that respondent NTRCI required her to report on
March 18, 2003 for the 2003 tobacco season, but she suffered a mild
stroke sometime in April. Nevertheless, respondent NTRCI extended her
employment contract until May 18, 2003 when she was informed that she
was
retired
under
company
policy. 56
Since petitioner Paz was unlearned and not knowledgeable in law, [she]

88

just accepted such fact and waited to be paid her separation/retirement

benefit as promised by . . . NTRCI. 57 Unfortunately, after a year of waiting,
respondent NTRCI only offered her around P12,000.00 for all her services
since
1974.58
The National Labor Relations Commission recognized that like the other
complainants against respondent NTRCI, petitioner Paz was at a loss in
what cause of action to take whether illegal dismissal or payment of
retirement
pay.59
Petitioner Pazs amendment of her Complaint was not fatal to her cause of
action
for
illegal
dismissal.
First, petitioner Paz never abandoned her argument that she had not
reached the compulsory retirement age of 65 pursuant to Article 287, as
amended, when respondent NTRCI made her retire on May 18, 2003.

An award of full backwages is inclusive of allowances and other benefits

or their monetary equivalent, from the time their actual compensation was
withheld.
.
.
.65
Backwages, considered as actual damages,66 requires proof of the loss
suffered. The Court of Appeals found no positive proof of the total number
of months that she actually rendered work.67 Nevertheless, petitioner
Pazs daily pay of P185.00 was established. She also alleged that her
employment
periods
ranged
from
three
to
seven
months. 68
Since the exact number of days petitioner Paz would have worked between
May 18, 2003 until she would turn 65 in 2005 could not be determined with
specificity, this court thus awards full backwages in the amount of
P22,200.00 computed by multiplying P185.00 by 20 days, then by three
months,
then
by
two
years.
Due

Second, the National Labor Relations Commission found that respondent

NTRCI failed to prove a valid company retirement policy, yet it required its
workers to retire after they had reached the age of 60. 60 The Court of
Appeals also discussed that while respondent NTRCI produced guidelines
on its retirement policy for seasonal employees, it never submitted a copy
of its Collective Bargaining Agreement and even alleged in its Position
Paper
that
none
existed.61
Petitioner Paz was only 63 years old on May 18, 2003 with two more years
remaining before she would reach the compulsory retirement age of 65.
Retirement is the result of a bilateral act of the parties,
a voluntary agreement between the employer and the employee whereby
the latter, after reaching a certain age, agrees to sever his or her
employment with the former.62 Article 287, as amended, allows for
optional retirement at the age of at least 60 years old.

process

and

nominal

damages

The Labor Code requires employers to comply with both procedural and
substantive due process in dismissing employees. Agabon v. National
Labor Relations Commission69 discussed these rules and enumerated the
four possible situations considering these rules:
Dismissals based on just causes contemplate acts or omissions attributable
to the employee while dismissals based on authorized causes involve
grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was unjust,
separation
pay
may
be
granted.

The National Labor Relations Commission considered petitioner Pazs

amendment of her Complaint on April 27, 2004 akin to an optional
retirement when it determined her as illegally dismissed from May 18,
2003 to April 27, 2004, thus being entitled to full backwages from May 19,
2003
until
April
26,
2004. 64

Procedurally, (1) if the dismissal is based on a just cause under Article 282,
the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating
the employment: a notice specifying the grounds for which dismissal is
sought a hearing or an opportunity to be heard and after hearing or
opportunity to be heard, a notice of the decision to dismiss; and (2) if the
dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and
Employment written notices 30 days prior to the effectivity of his
separation.

Again, petitioner Paz never abandoned her argument of illegal dismissal

despite the amendment of her Complaint. This implied lack of intent to
retire until she reached the compulsory age of 65. Thus, she should be
considered as illegally dismissed from May 18, 2003 until she reached the
compulsory retirement age of 65 in 2005 and should be entitled to full
backwages
for
this
period.

From the foregoing rules four possible situations may be derived: (1) the
dismissal is for a just cause under Article 282 of the Labor Code, for an
authorized cause under Article 283, or for health reasons under Article 284,
and due process was observed; (2) the dismissal is without just or
authorized cause but due process was observed; (3) the dismissal is
without just or authorized cause and there was no due process; and (4) the

Consequently, if the intent to retire is not clearly established or if the

retirement is involuntary, it is to be treated as a discharge. 63

89

dismissal is for just or authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer
will
not
suffer
any
liability.
In the second and third situations where the dismissals are illegal, Article
279 mandates that the employee is entitled to reinstatement without loss
of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time of actual
reinstatement.
In the fourth situation, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the dismissal.
However, the employer should be held liable for non-compliance with the
procedural requirements of due process.70 (Emphasis in the original)

Agabon focused on the fourth situation when dismissal was for just or
authorized cause, but due process was not observed.71 Agabon involved a
dismissal for just cause, and this court awarded P30,000.00 as nominal
damages for the employers non-compliance with statutory due
process.72 Jaka Food Processing Corporation v. Pacot73 involved a dismissal
for authorized cause, and this court awarded P50,000.00 as nominal
damages for the employers non-compliance with statutory due process. 74
The difference in amounts is based on the difference in dismissal ground. 75
Nevertheless, this court has sound discretion in determining the amount
based on the relevant circumstances.76 In De Jesus v. Aquino,77 this court
awarded P50,000.00 as nominal damages albeit the dismissal was for just
cause.78
Petitioner Pazs case does not fall under the fourth situation but under the
third situation on illegal dismissal for having no just or authorized cause
and
violation
of
due
process.
Respondent NTRCI had considered petitioner Paz retired at the age of 63
before she reached the compulsory age of 65. This does not fall under the
just causes for termination in Article 282 of the Labor Code, the authorized
causes for termination in Article 283, or disease as a ground for
termination
in
Article
284.
As regards due process, the Omnibus Rules Implementing the Labor Code
provides:
Section 2. Standard of due process: requirements of notice. In all cases of
termination of employment, the following standards of due process shall be
substantially
observed.

I. For termination of employment based on just causes as defined in Article

282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;ChanRoblesVirtualawlibrary
(b) A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given opportunity
to respond to the charge, present his evidence or rebut the evidence
presented
against
him;
and
(c) A written notice [of] termination served on the employee indicating that
upon due consideration of all the circumstance, grounds have been
established to justify his termination. . . .79

There was no showing that respondent NTRCI complied with these due
process requisites. Thus, consistent with jurisprudence, 80 petitioner Paz
should
be
awarded
P30,000.00
as
nominal
damages.
Retirement

pay

An employer may provide for retirement benefits in an agreement with its

employees such as in a Collective Bargaining Agreement. Otherwise,
Article
287
of
the
Labor
Code,
as
amended,
governs.
Since respondent NTRCI failed to present a copy of a Collective Bargaining
Agreement on the alleged retirement policy, 81 we apply Article 287 of the
Labor Code, as amended by Republic Act No. 7641. This provides for the
proper computation of retirement benefits in the absence of a retirement
plan or agreement:82
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching
the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared the compulsory retirement age, who has served
at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6)
months
being
considered
as
one
whole
year.
Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the
13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.83 (Emphasis supplied)

90

Respondent NTRCI followed the formula in Article 287 and offered

petitioner Paz the amount of P12,487.5084 as retirement pay based on the
three years she worked for at least six months in 1995, 1999, and 2000. 85
The Labor Arbiter agreed with respondent NTRCIs computation based on
these three years and reached the same amount as petitioner Pazs
retirement
pay.86

The formula that petitioner proposes, wherein a year of work is equivalent

to actual work rendered for 303 days, is both unfair and inapplicable,
considering that Articles 283 and 284 provide that in connection with
separation pay, a fraction of at least six months shall be considered one
whole year. Under these provisions, an employee who worked for only six
months in a given year which is certainly less than 303 days is
considered
to
have
worked
for
one
whole
year.

On appeal, the National Labor Relations Commission found that petitioner

Paz became a regular seasonal employee by virtue of her long years of
service and the repetitive hiring of her services by respondent NTRCI every
season.87 It then considered her as having worked for every tobacco
season from 1974 to 2003 or for a total of 29 years. 88

. . . . Finally, Manila Hotel Company v. CIR did not rule that seasonal
workers are considered at work during off-season with regard to the
computation of separation pay. Said case merely held that, in regard to
seasonal workers, the employer-employee relationship is not severed
during off-season but merely suspended.92 (Citations omitted)

The National Labor Relations Commission discussed that [i]t would be a

great injustice if [petitioner Pazs] services which did not last long for six
months be disregarded in computing her retirement pay especially so that
it is upon the sole discretion of the respondent company on how long her
services for a given season was required. 89 Thus, it explained that
Zenaida Pazs retirement pay should be computed pursuant to RA 7641
and that all the months she was engaged to work for respondent for the
last twenty eight (28) years should be added and divide[d] by six (for a
fraction of six months is considered as one year) to get the number of
years
her
retirement
pay
should
be
computed. 90
The National Labor Relations Commission also discussed that applying the
computation of separation pay in Philippine Tobacco to this case would
render nugatory the very purpose of RA 7641, which seeks to reward
employees of their long and dedicated service to their employer, as well as
its humanitarian purpose to provide for the retirees sustenance and
hopefully even comfort, when he no longer has the stamina to continue
earning
his
livelihood.91
This court in Philippine Tobacco explained its computation of separation
pay as follows:
The amount of separation pay is based on two factors: the amount of
monthly salary and the number of years of service. Although the Labor
Code provides different definitions as to what constitutes one year of
service, Book Six does not specifically define one year of service for
purposes of computing separation pay. However, Articles 283 and 284
both state in connection with separation pay that a fraction of at least six
months shall be considered one whole year. Applying this to the case at
bar, we hold that the amount of separation pay which respondent
members of the Lubat and Luris groups should receive is one-half (1/2)
their respective average monthly pay during the last season they worked
multiplied by the number of years they actually rendered service, provided
that they worked for at least six months during a given year.

Philippine Tobacco considered Articles 283 and 284 of the Labor Code on
separation pay, and these articles include the proviso a fraction of at least
six (6) months shall be considered one (1) whole year.
While the present case involves retirement pay and not separation pay,
Article 287 of the Labor Code on retirement pay similarly provides that a
fraction of at least six (6) months being considered as one whole year.
Thus, this courts reading of this proviso in the Labor Code in Philippine
Tobacco applies in this case. An employee must have rendered at least six
months in a year for said year to be considered in the computation.
Petitions for review pursuant to Rule 45 of the Rules of Court can raise only
questions of law.93 Generally, this court accords great respect for factual
findings by quasi-judicial bodies, even according such findings with finality
when
supported
by
substantial
evidence.94
The Court of Appeals found no positive proof o[n] the total number of
months [petitioner Paz] actually rendered work [for respondent NTRCI]. 95
On the other hand, both the Labor Arbiter and the Court of Appeals
established from the records that she rendered at least six months of
service
for
1995,
1999,
and
2000
only. 96
Based on these factual findings, retirement pay pursuant to Article 287 of
the Labor Code was correctly computed at P12,487.50 and was awarded to
petitioner
Paz.
Financial

assistance

In addition, this court agrees with the Court of Appeals award of financial
assistance in the amount of P60,356.25 97 by applying the following
formula: one-half-month pay98 multiplied by 29 years in service and then
divided
by
2.99

91

The amount of P12,487.50 is indeed too meager to support petitioner Paz

who has become old, weak, and unable to find employment. 100
Republic Act No. 7641 is a social legislation 101 with the purpose of
provid[ing] for the retirees sustenance and hopefully even comfort, when
he [or she] no longer has the stamina to continue earning his [or her]
livelihood.102
The Court of Appeals recognized and emphasized petitioner Pazs three
decades of hard work and service with respondent NTRCI. However, it
disagreed with the National Labor Relations Commissions retirement pay
computation for lack of factual basis:
Private respondent Paz rendered almost three decades of dedicated service
to petitioner, and to that, she gave away the prime of her life. In those
long years of hard work, not a single transgression or malfeasance of any
company rule or regulation was ever reported against her. Old age and
infirmity now weaken her chances of employment. Veritably, We can call
upon the same social and compassionate justice allowing financial
assistance in special circumstances. These circumstances indubitably
merit equitable concessions, via the principle of compassionate justice
for
the
working
class.
In awarding retirement benefits, the NLRC deemed it proper to
add all the months of service rendered by private respondent Paz,
then divide it by six to arrive at the number of years of service.
We cannot, however, subscribe to this computation because there
is no positive proof of the total number of months that she
actually rendered work.103 (Emphasis supplied, citations omitted)

At most, the Petition alleges that [p]etitioner [was] regularly hired every
season by respondents, her employment periods ranging from three (3) to
seven (7) months.104 None of the lower courts, not even the National
Labor Relations Commission that proposed the formula, made a factual
determination on the total number of months petitioner Paz rendered
actual
service.
In any event, this court has awarded financial assistance as a measure of
social justice [in] exceptional circumstances, and as an equitable
concession.105
In Eastern Shipping Lines, Inc. v. Sedan,106 Sedan was granted equitable
assistance equal to one-half-month pay for each year of his 23 years of
service with no derogatory record.107 This court discussed jurisprudence on
the grant of financial assistance:

We are not unmindful of the rule that financial assistance is allowed only in
instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Neither are
we unmindful of this Courts pronouncements in Arc-Men Food Industries
Corporation v. NLRC, and Lemery Savings and Loan Bank v. NLRC, where
the Court ruled that when there is no dismissal to speak of, an award of
financial
assistance
is
not
in
order.
But we must stress that this Court did allow, in several instances, the grant
of financial assistance. In the words of Justice Sabino de Leon, Jr., now
deceased, financial assistance may be allowed as a measure of social
justice and exceptional circumstances, and as an equitable concession.
The instant case equally calls for balancing the interests of the employer
with those of the worker, if only to approximate what Justice Laurel calls
justice
in
its
secular
sense.
In this instance, our attention has been called to the following
circumstances: that private respondent joined the company when he was a
young man of 25 years and stayed on until he was 48 years old; that he
had given to the company the best years of his youth, working on board
ship for almost 24 years; that in those years there was not a single report
of him transgressing any of the company rules and regulations; that he
applied for optional retirement under the companys non-contributory plan
when his daughter died and for his own health reasons; and that it would
appear that he had served the company well, since even the company said
that the reason it refused his application for optional retirement was that it
still needed his services; that he denies receiving the telegram asking him
to report back to work; but that considering his age and health, he
preferred to stay home rather than risk further working in a ship at sea.

In our view, with these special circumstances, we can call upon the same
social and compassionate justice cited in several cases allowing financial
assistance. These circumstances indubitably merit equitable concessions,
via the principle of compassionate justice for the working class. Thus,
we agree with the Court of Appeals to grant financial assistance to private
respondent.108
(Citations
omitted)
We agree with the Court of Appeals that petitioner Pazs circumstances
indubitably merit equitable concessions, via the principle of
compassionate
justice
for
the
working
class. 109
Petitioner Paz worked for respondent NTRCI for close to three decades. She
had no record of any malfeasance or violation of company rules in her long
years of service.110 Her advanced age has rendered her weak and lessened
her
employment
opportunities.
Eastern Shipping Lines awarded Sedan with financial assistance equal to
one-half-month pay for every year of service. Sedan was hired as a 3rd

92

marine engineer and oiler from 1973 until his last voyage in 1997. 111 On
the other hand, petitioner Paz was a seasonal employee who worked for
periods ranging from three to seven months a year. 112 This court thus finds
the following Court of Appeals formula for financial assistance as equitable:
one-half-month pay multiplied by 29 years in service and then divided by
2.
This court has discussed that labor law determinations are not
only secundum rationem but alsosecundum caritatem.113 The award of
P60,356.25 as financial assistance will serve its purpose in providing
petitioner Paz sustenance and comfort after her long years of service.
Finally, legal interest of 6% per annum shall be imposed on the award of
full backwages beginning May 18, 2003 when petitioner Paz was deemed
retired, until 2005 when she reached compulsory retirement age, in the
amount of P2,664.00114 Legal interest of 6% per annum shall also be
imposed on the award of retirement pay beginning 2005 until full
satisfaction.
WHEREFORE,
the
Court
of
Appeals
Decision
is AFFIRMED with MODIFICATION in that respondent Northern Tobacco
Redrying Co., Inc. is hereby ordered to pay petitioner Zenaida Paz the
following:
(1)

P22,200.00

as

full

backwages;ChanRoblesVirtualawlibrary

(2) P30,000.00 as nominal damages for non-compliance with due

process;ChanRoblesVirtualawlibrary
(3)
(4)

P12,487.50
P60,356.25

as

retirement
as

pay;ChanRoblesVirtualawlibrary

financial

assistance;

and

(5) P2,664.00 as legal interest for the award of full backwages, and legal
interest of 6% per annum for the award of retirement pay beginning 2005
until
full
satisfaction.
SO ORDERED

93

G.R. No. 172038

DANTE
D.
vs.
MAERSK
FILIPINAS
A.S., respondents.

April 14, 2008

DE

On June 27, 1999, petitioner was informed of his discharge through a

notice captioned "Notice according to CBA Article 1 (7)," to wit:
LA

CRUZ, petitioner,
To: 3rd engineer Dante D. de la Cruz

CREWING,

INC.

and

ELITE

SHIPPING

DECISION
CORONA, J.:
This petition for review on certiorari 1 seeks to set aside the November 26,
2004 decision2 and March 9, 2006 resolution 3 of the Court of Appeals (CA)
in CA-G.R. SP No. 74097.
Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third
engineer for the vessel M/S Arktis Morning through its local agency in the
Philippines, co-respondent Maersk Filipinas Crewing Inc. The contract of
employment was for a period of nine months, starting April 19, 1999, with
a monthly basic salary of US$1,004.00 plus other benefits.
Petitioner was deployed to Jebel Ali, United Arab Emirates and boarded M/S
Arktis Morning on May 14, 1999.
In a logbook entry dated June 18, 1999, chief engineer Normann Per
Nielsen expressed his dissatisfaction over petitioner's performance:
3rd Eng. Dante D. de la Cruz has[,] since he signed on[,] not been
able to live up to the company's SMS job describtion (sic) for
3rd Engineer[.] Today he has been informed that if he do[es] not
improve his Job/Working performance within [a] short time he will
be signed off according to CBA Article 1 (7).
Said Article 1 (7) of the collective bargaining agreement (CBA) between
respondent Elite Shipping A.S. and its employees reads:
(7) The first sixty (60) days of service is to be considered a
probationary period which entitles a shipowner or his
representative, i.e.[,] the master of the vessel[,] to terminate the
contract by giving fourteen (14) days of written notice.
This entry was followed by another one dated June 26, 1999 which was
similar in content.

Pls. be informed that you will be discharged according to CBA

article 1 (7) in first possible port. Reason for the decision is, as you
have been informed by chief engineer Per Nielsen on several
occasions, he [does] not find you qualified for the position as
3rd engineer onboard this vessel. The chief engineer has also made
2 entries in the engine logbook, regarding your insufficient
job/working, which you are well aware of.
Petitioner was then made to disembark at the port of Houston, Texas and
was repatriated to Manila on July 17, 1999.
Petitioner thereafter filed a complaint for illegal dismissal with claims for
the monetary equivalent of the unexpired portion of his contract, damages
and attorney's fees in the National Labor Relations Commission (NLRC) on
September 21, 1999.
The labor arbiter (LA) ruled that petitioner was dismissed without just
cause and due process as the logbook entry (which respondents claimed to
be the first notice to petitioner) was vague. It failed to expound on or state
the details of petitioner's shortcomings or infractions. As such, petitioner
was deprived of a real or meaningful opportunity to explain his side.
Hence, the LA ruled that petitioner was entitled to a monetary equivalent
of salaries for three months, moral and exemplary damages and attorney's
fees.
On appeal, the NLRC upheld the LA's finding of illegal dismissal but deleted
the award of moral and exemplary damages. Respondents moved for
reconsideration. It was denied.
Thereafter, respondents filed a petition for certiorari (under Rule 65) with
the CA. It granted the petition. It held that, although the findings of fact of
the LA and NLRC were entitled to great respect, this rule was inapplicable
because the NLRC committed grave abuse of discretion in upholding the
LA's decision. The findings were not only unsupported by substantial
evidence but were also based solely on the ground that the logbook entries
were vague and without concrete standards.
The CA deemed the logbook entries to be sufficient compliance with the
first notice requirement of the law. It was a written appraisal of petitioner's
poor job performance coupled with a warning that should he fail to improve
his performance, he would be signed off in accordance with the provisions

94

of the CBA. It reasoned that a probationary employee may be dismissed at

anytime during the probationary period for failure to live up to the
expectations of the employer.
Petitioner filed a motion for reconsideration of the CA decision. It was
denied. Hence, this petition.
The main issue raised before us is whether or not petitioner was illegally
dismissed by respondents.
Before addressing the merits of the controversy, we need to settle two
preliminary issues. First, respondents interposed in their comment that the
present petition should be dismissed outright as the motion for extension
of time to file this petition for review was filed late.
In his petition, petitioner indicated that he received a copy of the CA
resolution (dated March 9, 2006) denying his motion for reconsideration on
March 24, 2006. He, therefore, had until April 8, 2006 to appeal said
resolution to this Court or to file a motion for extension of time to file the
petition. However, as April 8, 2006 fell on a Saturday, petitioner deemed it
sufficient compliance to file his motion for extension on April 10, 2006, in
accordance with Section 1, Rule 22 of the Rules of Court:
SECTION 1. How to compute time. - xxx If the last day of the
period, as thus computed, falls on a Saturday, a Sunday, or a legal
holiday in the place where the court sits, the time shall not run
until the next working day.
Respondents countered that A.M. No. 00-2-14-SC dated February 29, 2000
(Re: Computation of Time When the Last Day Falls on Saturday, Sunday or
Legal Holiday and a Motion for Extension on Next Working Day is Granted)
clarified that the aforementioned rule is applicable only to the filing of
pleadings other than motions for extension of time, such that when a party
seeks an extension to file a desired pleading, the provision no longer
applies and the motion should be filed on the due date itself, regardless of
the fact that it falls on a Saturday, Sunday or legal holiday.
Respondents' contention is incorrect.
A.M. No. 00-2-14-SC provides:

case, the filing of the said pleading on the next working day is
deemed on time;
Whereas, the question has been raised if the period is
extended ipso jure to the next working day immediately following
where the last day of the period is a Saturday, Sunday or legal
holiday so that when a motion for extension of time is filed, the
period of extension is to be reckoned from the next working day
and not from the original expiration of the period.
NOW THEREFORE, the Court Resolves, for the guidance of the
Bench and the Bar, to declare that Section 1, Rule 22 speaks only
of "the last day of the period" so that when a party seeks an
extension and the same is granted, the due date ceases to be the
last day and hence, the provision no longer applies. Any
extension of time to file the required pleading should
therefore be counted from the expiration of the period
regardless of the fact that said due date is a Saturday,
Sunday or legal holiday. (emphasis supplied)
Section 1, Rule 22, as clarified by the circular, is clear. Should a party
desire to file any pleading, even a motion for extension of time to file a
pleading, and the last day falls on a Saturday, Sunday or a legal holiday, he
may do so on the next working day. This is what petitioner did in the case
at bar.
However, according to the same circular, the petition for review on
certiorari was indeed filed out of time. The provision states that in case a
motion for extension is granted, the due date for the extended period shall
be counted from the original due date, not from the next working day on
which the motion for extension was filed. In Luz v. National Amnesty
Commission,4 we had occasion to expound on the matter. In that case, we
held that the extension granted by the court should be tacked to the
original period and commences immediately after the expiration of such
period.
In the case at bar, although petitioner's filing of the motion for extension
was within the period provided by law, the filing of the petition itself was
not on time. Petitioner was granted an additional period of 30 days within
which to file the petition. Reckoned from the original period, he should
have filed it on May 8, 2006. Instead, he did so only on May 11, 2006, that
is, 3 days late.

xxx
Whereas, the aforecited provision [Section 1, Rule 22 of the Rules
of Court] applies in the matter of filing of pleadings in courts when
the due date falls on a Saturday, Sunday or legal holiday, in which

Nevertheless, we will gloss over this technicality and resolve the case on
its merits in the exercise of this Court's equity jurisdiction as we have done
in a number of cases.5

95

Well settled is the rule that litigations should, as much as possible, be

decided on their merits and not on technicalities. 6 In accordance with this
legal precept, this Court has ruled that being a few days late in the filing of
the petition for review does not automatically warrant the dismissal
thereof,7 specially where strong considerations of substantial justice are
manifest in the petition.8 Such is the case here.
The second preliminary issue we need to address is the matter of this
Court's jurisdiction in petitions for review on certiorari under Rule 45. It
should be noted that our jurisdiction in such cases is limited only to
questions of law. It does not extend to questions of fact. This doctrine
applies with greater force in labor cases. 9 As such, the findings of fact of
the CA are binding and conclusive upon this Court. However, this rule is not
absolute but admits of certain exceptions. Factual findings may be
reviewed in a case when the findings of fact of the LA and the NLRC are in
conflict with those of the CA. 10 In this case, the LA and the NLRC held that
respondents did not comply with the notice requirement; the CA found
otherwise. Thus, although the instant petition involves a question of fact,
that is, whether or not the notice requirement was met, we can still rule on
it.
Now, the merits of the instant controversy.
The CA committed an error in holding that petitioner was not illegally
dismissed. The contrary findings and conclusions made by the LA and the
NLRC were supported by jurisprudence and the evidence on record.
An employer has the burden of proving that an employee's dismissal was
for a just cause. Failure to show this necessarily means that the dismissal
was unjustified and therefore illegal. 11Furthermore, not only must the
dismissal be for a cause provided by law, it should also comply with the
rudimentary requirements of due process, that is, the opportunity to be
heard and to defend oneself.12
These requirements are of equal application to cases of Filipino seamen
recruited to work on board foreign vessels. Procedural due process requires
that a seaman must be given a written notice of the charges against him
and afforded a formal investigation where he can defend himself
personally or through a representative before he can be dismissed and
disembarked from the vessel.13 The employer is bound to furnish him two
notices: (1) the written charge and (2) the written notice of dismissal (in
case that is the penalty imposed).14 This is in accordance with the POEA
Revised Standard Employment Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA
Revised Standard Employment Terms and Conditions).

Section 17 of the POEA Revised Standard Employment Terms and

Conditions laid down the disciplinary procedures to be taken against erring
seafarers:
Section 17. DISCIPLINARY PROCEDURES
The Master shall comply with the following disciplinary procedures
against an erring seafarer:
A. The Master shall furnish the seafarer with a written notice
containing the following:
1. Grounds for the charges as listed in Section 31 of this
Contract.
2. Date, time and place for a formal investigation of the
charges against the seafarer concerned.
B. The Master or his authorized representative shall conduct the
investigation or hearing, giving the seafarer the opportunity to
explain or defend himself against the charges. An entry on the
investigation shall be entered into the ship's logbook.
C. If, after the investigation or hearing, the Master is convinced
that imposition of a penalty is justified, the Master shall issue a
written notice of penalty and the reasons for it to the seafarer, with
copies furnished to the Philippine agent.
xxx

xxx

xxx

Furthermore, the notice must state with particularity the acts or omissions
for which his dismissal is being sought.15
Contrary to respondents' claim, the logbook entries did not substantially
comply with the first notice, or the written notice of charge(s). It did not
state the particular acts or omissions for which petitioner was charged. The
statement therein that petitioner had "not been able to live up to the
company's SMS job description for 3 rd Engineer" and that he had "been
informed that if he [does] not improve his job/working performance within
[a] short time he will have to be signed off according to CBA Article 1 (7)"
was couched in terms too general for legal comfort.
The CA held that the logbook entries were sufficient to enable petitioner to
explain his side or to contest the negative assessment of his performance
and were clearly intended to inform him to improve the same. We cannot
fathom how the CA arrived at such a conclusion. The entries did not

96

contain any information at all as to why he was even being warned of

discharge in the first place. Even we were left to speculate as to what
really transpired, calling for such an extreme course of action from the
chief engineer. The entries raised more questions than answers.
How exactly was he unable to live up to the company's SMS job description
of a third engineer? Respondents should have indicated the grounds for the
threatened termination, the specific acts or omissions illustrating the
same, along with the date and the approximate time of their occurrence.
For how else could petitioner be expected to meet the charges against him
if all he was given as reason for his discharge was a vague and general
accusation such as that handed down by the chief engineer? Even if the
chief engineer verbally informed him of what his specific shortcomings
were, as insisted upon by respondents, the POEA Revised Standard
Employment Terms and Conditions and jurisprudence require that the
charges be put in writing.
The same thing may be said of the written notice of dismissal. It sorely
lacked the necessary details that should accompany it. Instead of delving
into the grounds for petitioner's discharge, it merely echoed the logbook
entries by nebulously justifying his dismissal on the ground that the chief
engineer "[did] not find [petitioner] qualified for the position as
3rd engineer." Much like the first notice, it barely made mention of the
grounds for his discharge. Again, we were left in the dark as to the nature
of the acts or omissions relied upon as basis for the termination of
petitioner's employment.
These ambiguities, attributable solely to respondents, should be resolved
against them.
Moreover, we observed that the records were devoid of any proof
indicating that petitioner was ever given an opportunity to present his side.
In their comment, respondents in fact admitted not having conducted any
formal investigation:
A formal investigation in this case was not necessary because the
findings against petitioner were not in the form of infractions that
ought to be investigated. The issue against petitioner was the
quality of his work as 3rd Engineer. Having been duly notified of his
shortcomings, it devolved upon the petitioner to improve the
quality of his work in order to pass his probationary period and be
a regular employee. But petitioner did not.
They also insisted that as petitioner was served notice of his termination,
the same constituted sufficient compliance with the requirement of notice
and due process as the notice gave him an opportunity to defend himself. 16

Clearly, respondents were unmindful of the requirements explicitly laid

down by law and jurisprudence. Anything short of complying with the same
amounts to a dismissal. Thus, no amount of justification from respondents
can move us now to declare the dismissal as being in accordance with the
procedural requirements provided for by law. It cannot be overemphasized
that sufficient notice should be given as part of due process because a
worker's employment is his property in the constitutional sense. 17
As to the substantive aspect of the requirement, suffice it to say that
respondents dismally failed to prove that petitioner's termination from
employment was for cause. As the logbook entries were too general and
vague, we cannot even reach any conclusion on whether or not
respondents had a valid cause to discharge petitioner. Not only was
petitioner's dismissal procedurally flawed, it was also without just cause.
Lastly, petitioner and respondents were at odds over the former's
employment status when he was discharged from the vessel. It was
petitioner's position that he was already a regular employee when his
services were terminated; respondents, on the other hand, insisted that he
was then still on probationary status. This, according to respondents,
entitled them to dismiss him in accordance with the provisions of Article 1
(7) of the CBA (which allows the master to terminate the contract of one
under probation by merely serving a written notice 14 days prior to the
contemplated discharge) and the requirements on the termination of a
probationary employee's employment as laid down in Manila Hotel
Corporation v. NLRC.18
It is well to remind both parties that, as early as Brent School, Inc. v.
Zamora,19 we already held that seafarers are not covered by the
term regular employment, as defined under Article 280 of the Labor Code.
This
was
reiterated
in Coyoca
v.
National
Labor
Relations
Commission.20 Instead, they are considered contractual employees whose
rights and obligations are governed primarily by the POEA Standard
Employment Contract for Filipino Seamen (POEA Standard Employment
Contract), the Rules and Regulations Governing Overseas Employment,
and, more importantly, by Republic Act No. 8042, otherwise known as The
Migrant Workers and Overseas Filipinos Act of 1995. 21 Even the POEA
Standard Employment Contract itself mandates that in no case shall a
contract of employment concerning seamen exceed 12 months.
It is an accepted maritime industry practice that the employment of
seafarers is for a fixed period only. The Court acknowledges this to be for
the mutual interest of both the seafarer and the employer. Seafarers
cannot stay for a long and indefinite period of time at sea as limited access
to shore activity during their employment has been shown to adversely
affect them. Furthermore, the diversity in nationality, culture and language
among the crew necessitates the limitation of the period of employment. 22

97

While we recognize that petitioner was a registered member of the

Associated Marine Officers and Seamen's Union of the Philippines which
had a CBA with respondent Elite Shipping A.S. providing for a probationary
period of employment, the CBA cannot override the provisions of the POEA
Standard Employment Contract. The law is read into, and forms part of,
contracts. And provisions in a contract are valid only if they are not
contrary to law, morals, good customs, public order or public policy. 23
In Millares v. NLRC,24 this Court had occasion to rule on the use of the
terms "permanent and probationary masters and employees" vis--vis
contracts of enlistment of seafarers. In that case, petitioners made much of
the fact that they were continually re-hired for 20 years by private
respondent Esso International. By such circumstances, they claimed to
have acquired regular status with all the rights and benefits appurtenant
thereto. The Court quoted with favor the NLRC's explanation that the
reference to permanent and probationary masters and employees was a
misnomer. It did not change the fact that the contract for employment was
for a definite period of time. In using the terms "probationary" and
"permanent" vis--vis seafarers, what was really meant was
"eligible for re-hire."
This is the only logical explanation possible as the parties cannot and
should not violate the POEA's directive that a contract of enlistment must
not exceed 12 months.
WHEREFORE, the petition is hereby GRANTED. The November 26, 2004
decision and March 9, 2006 resolution of the Court of Appeals in CA-G.R. SP
No. 74097 are REVERSED and SET ASIDE. The March 22, 2002 resolution
of the National Labor Relations Commission in NLRC NCR CA No. 029139-01
is REINSTATED.
SO ORDERED.

98

G.R. No. 209499, January 28, 2015

MA. CHARITO C. GADIA, ERNESTO M. PEAS, GEMMABELLE B.
REMO, LORENA S. QUESEA, MARIE JOY FRANCISCO, BEVERLY A.
CABINGAS, IVEE U. BALINGIT, ROMA ANGELICA O. BORJA, MARIE
JOAN RAMOS, KIM GUEVARRA, LYNN S. DE LOS SANTOS, CAREN C.
ENCANTO, EIDEN BALDOVINO, JACQUELINE B. CASTRENCE, MA.
ESTRELLA V. LAPUZ, JOSELITO L. LORD, RAYMOND G. SANTOS,
ABIGAIL M. VILORIA, ROMMEL C. ACOSTA, FRANCIS JAN S. BAYLON,
ERIC O. PADIERNOS, MA. LENELL P. AARON, CRISNELL P. AARON,
AND LAWRENCE CHRISTOPHER F. PAPA, Petitioners, v. SYKES ASIA,
INC./
CHUCK
SYKES/
MIKE
HINDS/
MICHAEL
HENDERSON, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated
April 29, 2013 and the Resolution 3 dated October 3, 2013 of the Court of
Appeals (CA) in CA-G.R. SP No. 120433, which annulled and set aside the
Decision4 dated November 15, 2010 and the Resolution5 dated May 10,
2011 of the National Labor Relations Commission (NLRC), in NLRC LAC No.
07-001583-10, and reinstated the Decision 6 dated June 23, 2010 of the
Labor Arbiter (LA), holding that herein petitioners Ma. Charito C.
Gadia7 (Gadia), Ernesto M. Peas, 8 Gemmabelle B. Remo (Remo), Lorena S.
Quesea (Quesea), Marie Joy Francisco, Beverly A. Cabingas, Ivee U.
Balingit9 (Balingit), Roma Angelica O. Borja, Marie Joan Ramos, Kim
Guevarra, Lynn S. De Los Santos, Caren C. Encanto, Eiden Baldovino,
Jacqueline B. Castrence (Castrence), Ma. Estrella V. Lapuz (Lapuz), Joselito
L. Lord (Lord), Raymond G. Santos, Abigail M. Viloria (Viloria), Rommel C.
Acosta10 (Acosta), Francis Jan S. Baylon, Eric O. Padiernos, Ma. Lenell P.
Aaron, Crisnell P. Aaron, and Lawrence Christopher F. Papa (petitioners) are
project employees of respondent Sykes Asia, Inc. (Sykes Asia), and thus,
were validly terminated from employment.
The Facts

Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO)

which provides support to its international clients from various sectors
(e.g., technology, telecommunications, retail services) by carrying on some
of their operations, governed by service contracts that it enters with
them.11 On September 2, 2003,12 Alltel Communications, Inc. (Alltel), a
United States-based telecommunications firm, contracted Sykes Asias
services to accommodate the needs and demands of Alltel clients for its

postpaid and prepaid services (Alltel Project). Thus, on different dates,

Sykes Asia hired petitioners as customer service representatives, team
leaders,
and
trainers
for
the
Alltel
Project. 13
Services for the said project went on smoothly until Alltel sent two (2)
letters to Sykes Asia dated August 7, 2009 14 and September 9,
200915 informing the latter that it was terminating all support services
provided by Sykes Asia related to the Alltel Project. In view of this
development, Sykes Asia sent each of the petitioners end-of-life
notices,16 informing them of their dismissal from employment due to the
termination of the Alltel Project. Aggrieved, petitioners filed separate
complaints17 for illegal dismissal against respondents Sykes Asia, Chuck
Sykes, the President and Chief Operating Officer of Sykes Enterprise, Inc.,
and Mike Hinds and Michael Henderson, the President and Operations
Director, respectively, of Sykes Asia (respondents), praying for
reinstatement, backwages, 13th month pay, service incentive leave pay,
night shift differential, moral and exemplary damages, and attorneys fees.
In their complaints, petitioners alleged that their dismissal from service
was unjust as the same was effected without substantive and procedural
due
process.18
In their defense,19 respondents averred that petitioners were not regular
employees but merely project-based employees, and as such, the
termination of the Alltel Project served as a valid ground for their
dismissal.20 In support of their position, respondents noted that it was
expressly indicated in petitioners respective employment contracts that
their positions are project-based and thus, co-terminus to the
project.21 Respondents further maintained that they complied with the
requirements of procedural due process in dismissing petitioners by
furnishing each of them their notices of termination at least thirty (30)
days prior to their respective dates of dismissal.22
The LA Ruling

In a Decision23 dated June 23, 2010 the LA ruled in favor of respondents,

and accordingly, dismissed petitioners complaints for lack of merit. 24 It
found that petitioners are merely project-based employees, as their
respective employment contracts indubitably provided for the duration and
term of their employment, as well as the specific project to which they
were assigned, i.e., the Alltel Project.25 Hence, the LA concluded that the
cessation of the Alltel Project naturally resulted in the termination of
petitioners
employment
in
Sykes
Asia. 26
Dissatisfied, petitioners appealed27 to the NLRC.
The NLRC Ruling

99

In a Decision28 dated November 15, 2010, the NLRC modified the LA

Decision, ruling that petitioners are regular employees but were validly
terminated due to redundancy.29 Accordingly, petitioners, except Viloria
and Acosta whose complaints were dismissed without prejudice for failure
to prosecute,30 were awarded their separation pay with interest of 12% per
annum reckoned from the date of their actual dismissal until full payment,
plus attorneys fees amounting to 10% of the total monetary award. In
addition, the NLRC awarded nominal damages in the amount of ?10,000.00
each to petitioners Gadia, Remo, Quesea, Balingit, Castrence, Lapuz, and
Lord for respondents failure to furnish them the required written notice of
termination
within
the
prescribed
period. 31

The primordial issue for the Courts resolution is whether or not the CA
correctly granted respondents petition for certiorari, thereby setting aside
the NLRCs decision holding that petitioners were regular employees and
reinstating the LA ruling that petitioners were merely project-based
employees, and thus, validly dismissed from service.

Contrary to the LAs finding, the NLRC found that petitioners could not be
properly characterized as project-based employees, ratiocinating that while
it was made known to petitioners that their employment would be coterminus to the Alltel Project, it was neither determined nor made known to
petitioners, at the time of hiring, when the said project would end, be
terminated, or be completed.32In this relation, the NLRC concluded that
inasmuch as petitioners had been engaged to perform activities which are
necessary or desirable in respondents usual business or trade of BPO,
petitioners should be deemed regular employees of Sykes Asia. 33 This
notwithstanding, and in view of the cessation of the Alltel Project, the NLRC
found petitioners employment with Sykes Asia to be redundant; hence,
declared that they were legally dismissed from service and were only
entitled
to
receive
their
respective
separation
pay. 34

At the outset, it must be stressed that to justify the grant of the

extraordinary remedy of certiorari, petitioners must satisfactorily show that
the court or quasi-judicial authority gravely abused the discretion conferred
upon it. Grave abuse of discretion connotes judgment exercised in a
capricious and whimsical manner that is tantamount to lack of jurisdiction.
To be considered grave, discretion must be exercised in a despotic
manner by reason of passion or personal hostility, and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined by or to act at all in contemplation of law. 45

Respondents moved for reconsideration, 35 which was, however, denied in a

Resolution36 dated May 10, 2011. Unconvinced, Sykes Asia 37 elevated the
case to the CA on certiorari.38
The CA Ruling

In a Decision39 dated April 29, 2013, the CA annulled and set aside the
ruling of the NLRC, and accordingly, reinstated that of the LA. 40 It held that
a perusal of petitioners respective employment contracts readily shows
that they were hired exclusively for the Alltel Project and that it was
specifically stated therein that their employment would be projectbased.41 The CA further held that petitioners employment contracts need
not state an actual date as to when their employment would end, opining
that
it
is
enough
that
such
date
is
determinable. 42
Petitioners moved for reconsideration, 43 which was, however, denied in a
Resolution44 dated October 3, 2013, hence, this petition.
The Issue Before the Court

The Courts Ruling

The

petition

is

without

merit.

In labor disputes, grave abuse of discretion may be ascribed to the NLRC

when, inter alia, its findings and the conclusions reached thereby are not
supported by substantial evidence. This requirement of substantial
evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court
which provides that in cases filed before administrative or quasi-judicial
bodies, a fact may be deemed established if it is supported by substantial
evidence, or that amount of relevant evidence which a reasonable mind
might
accept
as
adequate
to
justify
a
conclusion. 46
Tested against these considerations, the Court finds that the CA correctly
granted respondentscertiorari petition before it, since the NLRC gravely
abused its discretion in ruling that petitioners were regular employees of
Sykes Asia when the latter had established by substantial evidence that
they
were
merely
project-based.
Article 29447 of the Labor Code,48 as amended, distinguishes a projectbased employee from a regular employee as follows:
Art. 294. Regular and casual employment.The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a
specificproject or undertaking the completion or termination of
which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in

100

nature

and

the

employment

is

for

the

duration

of

the

season.

x x x x (Emphasis and underscoring supplied)

In Omni Hauling Services, Inc. v. Bon,49 the Court extensively discussed
how to determine whether an employee may be properly deemed projectbased or regular, to wit:
A project employee is assigned to a project which begins and ends
at determined or determinable times. Unlike regular employees who
may only be dismissed for just and/or authorized causes under the Labor
Code, the services of employees who are hired as project[-based]
employees may be lawfully terminated at the completion of the
project.
According to jurisprudence, the principal test for determining
whether particular employees are properly characterised as
project[-based] employees as distinguished from regular
employees, is whether or not the employees were assigned to
carry out a specific project or undertaking, the duration (and
scope) of which were specified at the time they were engaged for
that project. The project could either be (1) a particular job or
undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from
the other undertakings of the company; or (2) a particular job or
undertaking that is not within the regular business of the corporation. In
order to safeguard the rights of workers against the arbitrary use of the
word project to prevent employees from attaining a regular status,
employers claiming that their workers are project[-based] employees
should not only prove that the duration and scope of the employment was
specified at the time they were engaged, but also, that there was indeed a
project.50 (Emphases and underscoring supplied)
Verily, for an employee to be considered project-based, the employer must
show compliance with two (2) requisites, namely that: (a) the employee
was assigned to carry out a specific project or undertaking; and (b) the
duration and scope of which were specified at the time they were engaged
for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners
of their employment status at the time of their engagement, as evidenced
by the latters employment contracts which similarly provide that they
were hired in connection with the Alltel Project, and that their positions
were project-based and as such is co-terminus to the project. In this light,
the CA correctly ruled that petitioners were indeed project-based
employees, considering that: (a) they were hired to carry out a specific
undertaking, i.e., the Alltel Project; and (b) the duration and scope of such
project were made known to them at the time of their engagement, i.e.,
co-terminus with the project.

As regards the second requisite, the CA correctly stressed that [t]he law
and jurisprudence dictate that the duration of the undertaking begins and
ends at determined or determinable times while clarifying that [t]he
phrase determinable times simply means capable of being determined or
fixed.51 In this case, Sykes Asia substantially complied with this requisite
when it expressly indicated in petitioners employment contracts that their
positions were co-terminus with the project. To the mind of the Court,
this caveat sufficiently apprised petitioners that their security of tenure
with Sykes Asia would only last as long as the Alltel Project was subsisting.
In other words, when the Alltel Project was terminated, petitioners no
longer had any project to work on, and hence, Sykes Asia may validly
terminate them from employment.
Further, the Court likewise notes the fact that Sykes Asia duly submitted an
Establishment Employment Report52 and an Establishment Termination
Report53 to the Department of Labor and Employment Makati-Pasay Field
Office regarding the cessation of the Alltel Project and the list of employees
that would be affected by such cessation. As correctly pointed out by the
CA, case law deems such submission as an indication that the employment
was indeed project-based.54
In sum, respondents have shown by substantial evidence that petitioners
were merely project-based employees, and as such, their services were
lawfully terminated upon the cessation of the Alltel Project.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated
April 29, 2013 and the Resolution dated October 3, 2013 of the Court of
Appeals in CA-G.R. SP No. 120433 are herebyAFFIRMED. SO ORDERED.

101

WILFREDO
ARO,
RONILO
TIROL,
JOSE
PACALDO, PRIMITIVO CASQUEJO and MARCIAL
ABGO,
Petitioners,
-

versus

NATIONAL LABOR RELATIONS COMMISSION,

FOURTH DIVISIONand BENTHEL DEVELOPMENT
CORPORATION,
Respondents.

G.R. No. 174792

the NLRC Arbitration Branch No. VII in Cebu City and docketed as RAB Case
No.

Present:

07-09-1222-97/12-1609-97. Thereafter,

Labor

Arbiter

Ernesto

F.

Carreon rendered a decision finding private respondent guilty of illegal

dismissal and ordering it to pay its thirty-six (36) employees P446,940.00

VELASCO, JR., J., Chairperson
as separation pay.
PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.
The employees, including the petitioners herein, appealed from the said
Promulgated:

decision. The NLRC, in NLRC Case No. V-000399-98, affirmed the decision

March 7, 2012

of Labor Arbiter Carreon in its Decision dated January 12, 1999, with the
modification that private respondent pay backwages computed from the

x-----------------------------------------------------------------------------------------x

respective dates of dismissal until finality of the decision.

Private respondent, unsatisfied with the modification made by the NLRC,

DECISION

filed a motion for reconsideration with the contention that, since it has
been found by the Labor Arbiter and affirmed in the assailed decision that

PERALTA, J.:

the employees were project employees, the computation of backwages

For resolution of this Court is the Petition for Review on Certiorari under
Rule 45 of the Rules of Court, dated October 7, 2006, of petitioners
Wilfredo Aro, Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and Marcial
Abgo, seeking to reverse and set aside the Decision [1] dated March 7, 2006,

should be limited to the date of the completion of the project and not to
the finality of the decision. The NLRC, however, denied the motion ruling
that private respondent failed to establish the date of the completion of
the project.

and Resolution[2] dated July 27, 2006, of the Court of Appeals (CA) in CAG.R. CEB-SP No. 01012 which reversed the Decision and Resolution dated
June 25, 2004 and June 30, 2005, respectively, of the National Labor

Aggrieved, private respondent filed a Petition for Certiorari with the CA,
docketed as CA-G.R. SP No. UDK 3092 assailing the January 12, 1999
decision of the NLRC and the denial of its motion for reconsideration which

Relations Commission (NLRC).

was dismissed for non-payment of docket fees and insufficiency of form. It

The facts, as culled from the records, are the following:

filed a motion for reconsideration, but the latter was also denied.
Several

employees

of

private

respondent

Benthel

Development

Corporation, including the petitioners, filed a Complaint for illegal dismissal

with various money claims and prayer for damages against the latter, in

Thus, private respondent filed with this Court, docketed as G.R. No. 144433
a Petition for Review on Certiorari. In a Resolution dated September 20,

102

2000, this Court denied the petition for having been filed out of time and

project and not until the finality of the decision. Public respondent, in its

for non-payment of docket and other lawful fees.

Decision dated June 25, 2004, affirmed the Order of Labor Arbiter Bantug,
but reduced the total amount to P4,073,858.00, inclusive of attorney's

The employees, including the petitioners, upon the finality of this Court's

fees. Thereafter, private respondent filed a motion for reconsideration of

resolution, filed a Motion for Execution before the Labor Arbiter of the

the June 25, 2004 decision which was denied by the public respondent, but

January 12, 1999 decision.Thereafter, the Labor Arbiter ordered for the

not before the admittance of the affidavits of withdrawal, release/waiver

issuance of a writ of execution directing the computation of the awards.

and quitclaim executed by another group of fourteen (14) employees,

leaving unresolved only the claims of the petitioners herein. Thus, in the

Afterwards, private respondent filed an appeal from the said Order with an

resolution of the private respondent's motion for reconsideration, the

urgent prayer for the issuance of a temporary restraining order and/or

award was reduced to the sum of P1,374,339.00, inclusive of attorney's

preliminary injunction with public respondent NLRC. The said appeal was

fees.

denied. The NLRC held that the appeal was premature, there having been
no computation yet made by the Labor Arbiter as to the exact amount to

As a recourse, private respondent filed a petition for certiorari with the CA,

be paid to the employees. Public respondent remanded the case to the

alleging that public respondent committed grave abuse of discretion in

arbitration branch for appropriate action.

promulgating

its

assailed

decision

and

denying

its

motion

for

reconsideration. The CA granted the petition, therefore, annulling and

Labor Arbiter Carreon inhibited himself from further proceedings in the

setting aside the decision and resolution of the NLRC as to the award for

case upon motion of private respondent. In the meantime, fifteen (15)

backwages and remanded the case to the same public respondent for the

employees have executed Affidavits of Full Settlement after having settled

proper computation of the backwages due to each of the petitioners

amicably with the private respondent. Labor Arbiter Violeta Ortiz-Bantug

herein. The dispositive portion of the decision reads:

issued an Order dated July 31, 2003 for the issuance of a writ of execution
only for the payment of the claims of the twenty-one (21) remaining
employees in the total amount of P4,383,225.00, which included attorney's
fees equivalent to ten (10%) percent of the sum received as settlement by
the fifteen (15) employees who had earlier settled with the private
respondent.

Private respondent appealed to public respondent NLRC contending that

the computation for backwages must be only until the completion of the

WHEREFORE, in view of the foregoing premises, judgment

is hereby rendered by us GRANTING the petition filed in
this case. The assailed Decision and Resolution dated June
04, 2004 (sic) and June 30, 2005, respectively, issued by
the public respondent in NLRC Case No. V-000586-2003
are hereby ANNULLED and SET ASIDE as to the award for
backwages granted to the seven private respondents
named in the petition at bench.
The case is hereby remanded to the public respondent for
the proper computation of the backwages due to each of

103

the said seven private respondents, computed until March

18, 1997.
SO ORDERED.[3]

First of all, this Court has to address the nature of the petition filed by
petitioners. As pointed out by private respondent, and not disputed by
petitioners, the present petition was filed out of time. Petitioners received,
on August 4, 2006, a copy of the CA Resolution dated July 27, 2006. The

Hence, the present petition.

Petitioners assigned the following errors:

period within which to file a petition for review under Rule 45 is within
fifteen (15) days from notice of the judgment or final order or resolution

GROUND/ASSIGNMENT OF ERRORS

appealed from, or from the denial of the petitioners' motion for new trial or

THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF

DISCRETION WHEN IT OVERTURNED ITS OWN DECISION
AND THAT OF THE SUPREME COURT.

reconsideration filed in due time after notice of the judgment, or in this

THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF

DISCRETION IN DECLARING THAT PETITIONERS ARE
PROJECT EMPLOYEES, CONSIDERING THAT THE NLRC 4TH
DIVISION HAD LONG RULED THAT SAID EMPLOYEES ARE IN
FACT REGULAR EMPLOYEES AND WHICH RULING WAS
LONG CONFIRMED AND AFFIRMED NOT ONLY BY THE
COURT OF APPEALS BUT BY THE SUPREME COURT ITSELF.
THE RESPONDENT COURT ACTED WITH GRAVE ABUSE OF
DISCRETION WHEN IT REFUSED TO RULE ON THE
INVALIDITY OF THE RELEASE AND QUITCLAIMS EXECUTED
BY SOME OF THE EMPLOYEES WITHOUT THE ASSISTANCE
OF COUNSEL.[4]

case, not later than August 19, 2006. Under Rule 65, a petition
for certiorari may be filed not later than sixty (60) days from notice of the
judgment, order or resolution, or in this case, not later than October 3,
2006. However, the present petition is dated October 7, 2006 and as it
appears on the records, this Court received the said petition on October
17, 2006. Thus, on its face and in reality, the present petition was filed out
of time, whether it be under Rule 45 or Rule 65 of the Rules of
Court. Nevertheless, this Court did not dismiss the present petition and
required private respondent to file its Comment. Consequently, a Reply
from petitioners and eventually, both parties' respective memorandum
were filed. In view of that premise and in the interest of justice, this Court

In its Comment[5] dated January 24, 2007, private respondent stated the
following counter-arguments:
1. The issues presented in CA-G.R. SP No. UDK
3092 and SC G.R. No. 144433 are not the same issues
recently raised in the Petition for Certiorari before the
Court of Appeals.
2. There is no final and executory ruling that
herein petitioners were regular employees and not just
project employees.[6]

shall forego the technicalities and is constrained to resolve the present

petition as a petition for certiorari under Rule 65, since the main issue
raised by petitioners is whether or not the CA committed grave abuse of
discretion which amounted to lack or excess of its jurisdiction.

Petitioners argue that the CA should have dismissed private respondent's

petition, since there was already a finality of the judgment of the NLRC. It
is not disputed that on January 31, 2000, the CA, through its 17 th Division,
issued

Resolution

dismissing

private

respondent's

petition

for certiorari (docketed as CA-G.R. SP No. UDK 3092.Subsequently, the

104

same private respondent filed a motion for reconsideration, which was

bind the Court when supported by substantial evidence. [7] Section 5, Rule

denied

2000. Not

133 of the Rules of Court, defines substantial evidence as "that amount of

contented, private respondent filed a petition with this Court, which the

relevant evidence which a reasonable mind might accept as adequate to

latter denied, through its Second Division (G.R. No. 144433), in its

justify a conclusion." Consistent therewith is the doctrine that this Court is

Resolution dated September 20, 2000. Still aggrieved, private respondent

not a trier of facts, and this is strictly adhered to in labor cases. [8] We [this

filed a second motion for reconsideration, which was dismissed by this

Court] may take cognizance of and resolve factual issues, only when the

Court. Thus, according to petitioners, there was already a finality of

findings of fact and conclusions of law of the Labor Arbiter or the NLRC are

judgment.

inconsistent with those of the CA.[9] In the present case, the NLRC and the

by

the

CA

in

its

Resolution

dated

June

8,

CA have opposing views.

On the other hand, private respondent insists that the inequitable, nay
illegal, in a decision cannot lapse into finality, referring to the computation
of the backwages which is not commensurate to the factual findings of the

According to the CA, petitioners are project employees as found by Labor

Labor Arbiter and the NLRC. Basically, according to private respondent, the

Arbiter Ernesto Carreon in his Decision dated May 28, 1998, because they

CA merely sought to correct the NLRC's and the Labor Arbiter's one-sided

were hired for the construction of the Cordova Reef Village Resort in

and blind adherence to and/or misguided application of strict technical

Cordova, Cebu, which was later on affirmed by the NLRC in its January 12,

rules, and their overzealous partiality in favor of labor. Private respondent

1999 decision. The only discrepancy is the Order of the NLRC that

further claims that the issues presented in their earlier petitions with the

petitioners are entitled to backwages up to the finality of its decision, when

CA and this Court (CA-G.R. SP No. UDK 3092 and SC G.R. No. 144433,

as project employees, private respondents are only entitled to payment of

respectively)

petition

backwages until the date of the completion of the project. In a later

for certiorari later filed with the CA and the decision of which is now the

resolution on private respondent's motion for reconsideration of its January

subject of herein petition. Private respondent clarifies that there is no final

12, 1999 decision, the NLRC changed its findings by ruling that petitioners

and executory ruling that petitioners were regular and not just project

herein were regular employees and, therefore, entitled to full backwages,

employees, hence, there was a need to file a petition with the CA.

until finality of the decision, citing that petitioners repeated rehiring over a

are

not

the

same

issues

raised

in

the

long span of time made them regular employees.

The issue as to whether petitioners were project employees or regular

Article 280 of the Labor Code distinguishes a "project employee" from a

employees is factual in nature. It is well-settled in jurisprudence that

"regular employee," thus:

factual findings of administrative or quasi-judicial bodies, which are

deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality, and

Article 280. Regular and Casual Employment The

provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular

105

where the employee has been engaged to perform

activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall continue
while such activity exists.

In Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez, [10] this Court
extensively discussed the above distinction, thus:
x x x [T]he principal test for determining whether particular
employees are properly characterized as "project
employees" as distinguished from "regular employees" is
whether or not the project employees were assigned to
carry out a "specific project or undertaking," the duration
and scope of which were specified at the time the
employees were engaged for that project.[11]
In a number of cases,[12] the Court has held that the length
of service or the re-hiring of construction workers on a
project-to-project basis does not confer upon them regular
employment status, since their re-hiring is only a natural
consequence of the fact that experienced construction
workers are preferred. Employees who are hired for
carrying out a separate job, distinct from the other
undertakings of the company, the scope and duration of
which has been determined and made known to the
employees at the time of the employment , are properly
treated as projectemployees and their services may be
lawfully terminated upon the completion of a project.
[13]
Should the terms of their employment fail to comply

with
this
standard,
considered project employees.

they

cannot

be

In Abesco Construction and Development Corporation v.

Ramirez,[14] which also involved a construction company
and its workers, this Court considered it crucial that the
employees
were
informed
of
their
status
as project employees:
The principal test for determining whether
employees are "project employees" or
"regular employees" is whether they are
assigned to carry out a specific project or
undertaking, the duration and scope of
which are specified at the time they are
engaged for that project. Such duration, as
well as the particular work/service to be
performed, is defined in an employment
agreement and is made clear to the
employees at the time of hiring.
In this case, petitioners did not have that
kind of agreement with respondents.
Neither did they inform respondents of the
nature of the latters work at the time of
hiring. Hence, for failure of petitioners to
substantiate their claim that respondents
were project employees,
we
are
constrained to declare them as regular
employees.
In Caramol v. National Labor Relations Commission,[15] and
later reiterated in Salinas, Jr. v. National Labor Relations
Commission,[16] the
Court
markedly
stressed
the
importance of the employees' knowing consent to being
engaged as project employees when it clarified that "there
is no question that stipulation on employment contract
providing for a fixed period of employment such as projectto-project contract is valid provided the period was agreed
upon knowingly and voluntarily by the parties, without any
force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstances
vitiating his consent x x x."

106

Applying the above disquisition, this Court agrees with the findings of the
CA that petitioners were project employees. It is not disputed that
petitioners were hired for the construction of the Cordova Reef Village
Resort in Cordova, Cebu. By the nature of the contract alone, it is clear
that petitioners' employment was to carry out a specific project.Hence, the
CA did not commit grave abuse of discretion when it affirmed the findings
of the Labor Arbiter. The CA correctly ruled:
A review of the facts and the evidence in this case readily
shows that a finding had been made by Labor Arbiter
Ernesto Carreon, in his decision dated May 28, 1998, that
complainants, including private respondents, are project
employees. They were hired for the construction of the
Cordova Reef Village Resort in Cordova, Cebu. We note
that no appeal had been made by the complainants,
including herein private respondents, from the said
finding. Thus, that private respondents are project
employees has already been effectively established.
Likewise, a review of the public respondent's January 12,
1999 decision shows that it affirmed the labor arbiter's
finding of the private respondents' being project
employees.
We therefore cannot fathom how the public respondent
could have ordered backwages up to the finality of its
decision when, as project employees, private respondents
are only entitled to payment of the same until the date of
the completion of the project. It is settled that, without a
valid cause, the employment of project employees cannot
be terminated prior to expiration.Otherwise, they shall be
entitled to reinstatement with full backwages. However, if
the project or work is completed during the pendency of
the ensuing suit for illegal dismissal, the employees shall
be entitled only to full backwages from the date of the
termination of their employment until the actual
completion of the work.
While it may be true that in the proceedings below the
date of completion of the project for which the private
respondents were hired had not been clearly established,

it constitutes grave abuse of discretion on the part of the

public respondent for not determining for itself the date of
said completion instead of merely ordering payment of
backwages until finality of its decision.
xxxx
The decision of the labor arbiter, as affirmed by the public
respondent in its January 12, 1999 decision, clearly
established that private respondents were project
employees. Because there was no showing then that the
project for which their services were engaged had already
been completed, the public respondent likewise found
that private respondents were illegally dismissed and thus
entitled to backwages.
However, in utter disregard of the law and prevailing
jurisprudence, the public respondents capriciously and
arbitrarily ordered that the said backwages be computed
until the finality of its decision instead of only until the
date of the project completion. In grave abuse of its
discretion, the public respondent refused to consider the
evidence presented before it as to the date of completion
of the Cordova Reef Village Resort project. The records
show that affidavits have been executed by the
petitioner's manager, corporate architect and project
engineer as to the fact of the completion of the project in
October 1996. As these evidences [sic] were already a
matter of record, the public respondent should not have
closed its eyes and should have endeavored to render a
correct and just judgment.
xxxx
Furthermore, as earlier noted, private respondents did not
appeal from the Labor Arbiter's findings that they were
indubitably project employees. However, they were
entitled to the payment of separation pay only for the
reason that the date of the completion of the project for
which they were hired had not been clearly
established. Thus, in affirming the labor arbiter's decision,
the public respondent in effect sustained the finding that
private
respondents
are
project
employees. The
statement, therefore, contained in the resolution of the
petitioner's motion for reconsideration of its January 12,

107

1999 decision that repeated rehiring makes the worker a

regular employee, is at best an obiter, especially
considering that such conclusion had not been shown to
apply to the circumstances then obtaining with the private
respondents' employment with the petitioner.[17]

LYNVIL FISHING ENTERPRISES, INC.

and/or ROSENDO S. DE BORJA,
Petitioners,

Therefore, being project employees, petitioners are only entitled to full

backwages,

computed from the date of the termination of

-versus-

their

employment until the actual completion of the work. Illegally dismissed

workers are entitled to the payment of their salaries corresponding to the
unexpired portion of their employment where the employment is for a
definite period.[18] In this case, as found by the CA, the Cordova Reef

ANDRES
G.
ARIOLA,
JESSIE
D.
ALCOVENDAS, JIMMY B. CALINAO AND
LEOPOLDO G. SEBULLEN,
Respondents.

G.R. No. 181974

Present:
CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.
Promulgated:
February 1, 2012

Village Resort project had been completed in October 1996 and private
respondent herein had signified its willingness, by way of concession to
petitioners, to set the date of completion of the project as March 18, 1997;
hence, the latter date should be considered as the date of completion of
the project for purposes of computing the full backwages of petitioners.

x------------------------------------------------x

As to the issue that the CA committed grave abuse of discretion in refusing

DECISION

to rule on the invalidity of the release and quitclaims executed by some of

the employees other than the petitioners, such is inconsequential as those

PEREZ, J.:

employees are not parties in the present case.

Before the Court is a Petition for Review on Certiorari [1] of the
WHEREFORE, the

Petition

for

Review dated

October

7,

2006,

of

Decision[2] of the Fourteenth Division of the Court of Appeals in CA-G.R. SP

No. 95094 dated 10 September 2007, granting the Writ of Certiorari prayed

petitioners Wilfredo Aro, Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and

for under Rule 65 of the 1997 Revised Rules of Civil Procedure by herein

Marcial Abgo is herebyDENIED. Consequently, the Decision dated March 7,

respondents Andres G. Ariola, Jessie D. Alcovendas, Jimmy B. Calinao and

2006 and Resolution dated July 27, 2006 of the Court of Appeals are

Leopoldo Sebullen thereby reversing the Resolution of the National Labor

hereby AFFIRMED in toto.

SO ORDERED.

Relations Commission (NLRC). The dispositive portion of the assailed

decision reads:
WHEREFORE, premises considered, the Decision
dated March 31, 2004 rendered by the National Labor
Relations Commission is hereby REVERSED and SET

108

ASIDE. In lieu thereof, the Decision of the Labor Arbiter is

hereby REINSTATED, except as to the award of attorneys
fees, which is ordered DELETED.[3]

6. Lynvil, through De Borja, filed a criminal complaint against the

dismissed employees for violation of P.D. 532, or the Anti-Piracy and Anti-

The version of the petitioners follows:

Highway Robbery Law of 1974 before the Office of the City Prosecutor of
Malabon City.[8]

1. Lynvil Fishing Enterprises, Inc. (Lynvil) is a company engaged in

deep-sea fishing, operating along the shores of Palawan and other outlying
islands of the Philippines.

[4]

It is operated and managed by Rosendo S. de

Borja.

7. On 12 November 1998, First Assistant City Prosecutor Rosauro

Silverio found probable cause for the indictment of the dismissed
employees for the crime of qualified theft[9] under the Revised Penal Code.

2. On 1 August 1998, Lynvil received a report from Romanito

On the other hand, the story of the defense is:

Clarido, one of its employees, that on 31 July 1998, he witnessed that while
on board the company vessel Analyn VIII, Lynvil employees, namely:
Andres G. Ariola (Ariola), the captain; Jessie D. Alcovendas (Alcovendas),

1. The private respondents were crew members of Lynvils vessel

named Analyn VIII.[10]

Chief Mate; Jimmy B. Calinao (Calinao), Chief Engineer; Ismael G. Nubla

(Nubla), cook; Elorde Baez (Baez), oiler; and Leopoldo D. Sebullen

2. On 31 July 1998, they arrived at the Navotas Fishport on board

(Sebullen), bodegero, conspired with one another and stole eight (8) tubs

Analyn

of pampano andtangigue fish and delivered them to another vessel, to the

fishes. These baeras were delivered to a consignee named SAS and Royale.

prejudice of Lynvil.

[11]

[5]

VIII

loaded

with

1,241 baeras of

different

kinds

of

3. The said employees were engaged on a per trip basis or por

The following day, the private respondents reported back to Lynvil

viaje which terminates at the end of each trip. Ariola, Alcovendas and

office to inquire about their new job assignment but were told to wait for

Calinao were managerial field personnel while the rest of the crew were

further advice. They were not allowed to board any vessel.[12]

field personnel.[6]
3. On 5 August 1998, only Alcovendas and Baez received a
4. By reason of the report and after initial investigation, Lynvils

memorandum from De Borja ordering them to explain the incident that

General Manager Rosendo S. De Borja (De Borja) summoned respondents

happened on 31 July 1998. Upon being informed about this, Ariola, Calinao,

to explain within five (5) days why they should not be dismissed from

Nubla and Sebullen went to the Lynvil office. However, they were told that

service. However, except for Alcovendas and Baez,

their employments were already terminated.[13]

[7]

the respondents

refused to sign the receipt of the notice.

Aggrieved, the employees filed with the Arbitration Branch of the
5. Failing to explain as required, respondents employment was
terminated.

National Labor Relations Commission-National Capital Region on 25 August

1998 a complaint for illegal dismissal with claims for backwages, salary

109

Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)

differential reinstatement, service incentive leave, holiday pay and its

premium and 13th month pay from 1996 to1998. They also claimed for

Separation Pay 55,250.00

moral, exemplary damages and attorneys fees for their dismissal with bad
faith.[14]

13th Month Pay P6,500.00 P295,700.00

4) Leopoldo Sebullen
They added that the unwarranted accusation of theft stemmed
Backwages P154,440.00
(P4, 290.00 x 36 = P154,440.00)

from their oral demand of increase of salaries three months earlier and
their request that they should not be required to sign a blank payroll and

Separation Pay P44,073.00

vouchers.[15]

13th Month Pay 2,473.12

On 5 June 2002, Labor Arbiter Ramon Valentin C. Reyes found merit

Salary Differential 4,472.00

P208,455.12
5) Ismael Nubla

in complainants charge of illegal dismissal. [16] The dispositive portion reads:

WHEREFORE, premises considered, judgment is
hereby rendered finding that complainants were illegally
dismissed, ordering respondents to jointly and severally
pay complainants (a) separation pay at one half month pay
for every year of service; (b) backwages; (c) salary
differential; (d) 13th month pay; and (e) attorneys fees, as
follows:
1) Andres Ariola
Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)

Backwages P199,640.12
Separation Pay P58,149.00
13th Month Pay 2,473.12
Salary Differential P5,538.00
P265, 28.12
___________
TOTAL P 1, 341, 650.76
All other claims are dismissed for lack of merit. [17]

Separation Pay P74,650.00

13th Month Pay P6,500.00
P325,250.00

The Labor Arbiter found that there was no evidence showing that the
private respondents received the 41 baeras of pampano as alleged by De

2) Jessie Alcovendas
Backwages P195,328.00
(P5,148.00 x 36 = P195,328.00)
Separation Pay P44,304.00
13th Month Pay 5,538.00

Borja in his reply-affidavit; and that no proof was presented that the
8 baeras of pampano [and tangigue]

were

missing

at

the

place

of

destination.[18]
The Labor Arbiter disregarded the Resolution of Assistant City Prosecutor

Salary Differential 1,547.52

P246,717.52

Rosauro Silverio on the theft case. He reasoned out that the Labor Office is

3) Jimmy Calinao

dismissal of employees.[19]

governed by different rules for the determination of the validity of the

110

dismissal of the employees since there was no evidence to prove the

The Labor Arbiter also ruled that the contractual provision that the

actual quantities of the missing kinds of fish loaded to Analyn VIII. [25]It also

employment terminates upon the end of each trip does not make the

reversed the finding of the NLRC that the dismissed employees were

respondents dismissal legal. He pointed out that respondents and Lynvil

merely contractual employees and added that they were regular ones

did not negotiate on equal terms because of the moral dominance of the

performing activities which are usually necessary or desirable in the

employer.

business and trade of Lynvil. Finally, it ruled that the two-notice rule

[20]

The Labor Arbiter found that the procedural due process was not complied

provided by law and jurisprudence is mandatory and non-compliance

with and that the mere notice given to the private respondents fell short of

therewith rendered the dismissal of the employees illegal.

the requirement of ample opportunity to present the employees side.

[21]

The following are the assignment of errors presented before this

On appeal before the National Labor Relations Commission, petitioners

Court by Lynvil:

asserted that private respondents were only contractual employees; that

they were not illegally dismissed but were accorded procedural due

process and that De Borja did not commit bad faith in dismissing the
employees so as to warrant his joint liability with Lynvil.

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO

CONSIDER THE ESTABLISHED DOCTRINE LAID DOWN
IN NASIPIT LUMBER COMPANY V. NLRCHOLDING THAT THE
FILING OF A CRIMINAL CASE BEFORE THE PROSECUTORS
OFFICE CONSTITUTES SUFFICIENT BASIS FOR A VALID
TERMINATION OF EMPLOYMENT ON THE GROUNDS OF
SERIOUS MISCONDUCT AND/OR LOSS OF TRUST AND
CONFIDENCE.

[22]

On 31 March 2004, the NLRC reversed and set aside the Decision
of the Labor Arbiter. The dispositive portion reads:
WHEREFORE, judgment
is
hereby
rendered REVERSING AND SETTING ASIDE the Decision
of the Labor Arbiter a quo and a new one entered
DISMISSING the present complaints for utter lack of merit;

II
THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT THE TERMINATION OF RESPONDENTS EMPLOYMENT
WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

However as above discussed, an administrative fine

of PhP5,000.00 for each complainant, Andres Ariola, Jessie
Alcovendas, Jimmy Canilao, Leopoldo Sebullen and Ismael
Nobla or a total of PhP25,000.00 is hereby awarded.[23]
The

private respondents

except

Elorde

Baez

filed

III

Petition

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO

CONSIDER THAT THE RESPONDENTS EMPLOYMENT, IN ANY
EVENT, WERE CONTRACTUAL IN NATURE BEING ON A PER
VOYAGE BASIS. THUS, THEIR RESPECTIVE EMPLOYMENT
TERMINATED AFTER THE END OF EACH VOYAGE

for Certiorari[24] before the Court of Appeals alleging grave abuse of

discretion on the part of NLRC.
The Court of Appeals found merit in the petition and reinstated the

IV
THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT THE RESPONDENTS WERE NOT ACCORDED
PROCEDURAL DUE PROCESS.

Decision of the Labor Arbiter except as to the award of attorneys fees. The
appellate court held that the allegation of theft did not warrant the

111

THE HONORABLE COURT OF APPEALS ERRED IN RULING

THAT THE RESPONDENTS ARE ENTITLED TO THE PAYMENT
OF THEIR MONEY CLAIMS.
VI

The contrariety of the findings of the Labor Arbiter and the NLRC
prevents reliance on the principle of special administrative expertise and
provides the reason for judicial review, at first instance by the appellate
court, and on final study through the present petition.

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO

CONSIDER THAT PETITIONER ROSENDO S. DE BORJA IS NOT
JOINTLY AND SEVERALLY LIABLE FOR THE JUDGMENT WHEN
THERE WAS NO FINDING OF BAD FAITH.[26]

In the first assignment of error, Lynvil contends that the filing of a

criminal case before the Office of the Prosecutor is sufficient basis for a
valid termination of employment based on serious misconduct and/or loss

The Courts Ruling

The Supreme Court is not a trier of facts. Under Rule 45,[27] parties
may raise only questions of law. We are not duty-bound to analyze again
and weigh the evidence introduced in and considered by the tribunals
below. Generally when supported by substantial evidence, the findings of
fact of the CA are conclusive and binding on the parties and are not
reviewable by this Court, unless the case falls under any of the
following recognized exceptions:

of trust and confidence relying on Nasipit Lumber Company v. NLRC.[29]

Nasipit is about a security guard who was charged with qualified
theft which charge was dismissed by the Office of the Prosecutor. However,
despite the dismissal of the complaint, he was still terminated from his
employment on the ground of loss of confidence. We ruled that proof
beyond reasonable doubt of an employee's misconduct is not required
when loss of confidence is the ground for dismissal. It is sufficient if the
employer has "some basis" to lose confidence or that the employer has

(1) When the conclusion is a finding grounded entirely on

speculation, surmises and conjectures;
(2) When the inference made is manifestly mistaken,
absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of
facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary
to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial
court;
(8) When the findings of fact are conclusions without
citation of specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the
petitioners' main and reply briefs are not disputed by
the respondents; and
(10) When the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and
contradicted by the evidence on record. (Emphasis
supplied)[28]

reasonable ground to believe or to entertain the moral conviction that the

employee concerned is responsible for the misconduct and that the nature
of his participation therein rendered him absolutely unworthy of the trust
and confidence demanded by his position. [30] It added that the dropping of
the qualified theft charges against the respondent is not binding upon a
labor tribunal.[31]
In Nicolas v. National Labor Relations Commission,[32] we held that a
criminal conviction is not necessary to find just cause for employment
termination. Otherwise stated, an employees acquittal in a criminal case,
especially one that is grounded on the existence of reasonable doubt, will
not preclude a determination in a labor case that he is guilty of acts
inimical to the employers interests.[33] In the reverse, the finding of
probable cause is not followed by automatic adoption of such finding by
the labor tribunals.

112

In other words, whichever way the public prosecutor disposes of a

this trust is the essence of the offense for which an employee is penalized.
[36]

complaint, the finding does not bind the labor tribunal.

Breach of trust is present in this case.

Thus, Lynvil cannot argue that since the Office of the Prosecutor

We agree with the ruling of the Labor Arbiter and Court of Appeals

found probable cause for theft the Labor Arbiter must follow the finding as

that the quantity of tubs expected to be received was the same as that

a valid reason for the termination of respondents employment. The proof

which was loaded. However, what is material is the kind of fish loaded and

required for purposes that differ from one and the other are likewise
different.

We cannot close our eyes to the positive and clear narration of

facts of the three witnesses to the commission of qualified theft. Jonathan

Nonetheless, even without reliance on the prosecutors finding, we

find that there was valid cause for respondents dismissal.

that the termination was for a valid or authorized cause. [34]

cause

is

required

for

valid

dismissal. The

Distajo, a crew member of the Analyn VIII, stated in his letter addressed to
De Borja[37] dated 8 August 1998, that while the vessel was traversing San
Nicolas, Cavite, he saw a small boat approach them.When the boat was

In illegal dismissal cases, the employer bears the burden of proving

Just

then unloaded. Sameness is likewise needed.

next to their vessel, Alcovendas went inside the stockroom while Sebullen
pushed an estimated four tubs of fish away from it. Ariola, on the other
hand, served as the lookout and negotiator of the transaction. Finally, Baez

Labor

Code[35] provides that an employer may terminate an employment based

on fraud or willful breach of the trust reposed on the employee. Such
breach is considered willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based
on substantial evidence and not on the employers whims or caprices or
suspicions otherwise, the employee would eternally remain at the mercy of
the employer. Loss of confidence must not be indiscriminately used as a
shield by the employer against a claim that the dismissal of an employee
was arbitrary. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and shows that the employee
concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of responsibility,
trust and confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as the handling or care
and protection of the property and assets of the employer. The betrayal of

and Calinao helped in putting the tubs in the small boat. He further added
that he received P800.00 as his share for the transaction. Romanito
Clarido, who was also on board the vessel, corroborated the narration of
Distajo on all accounts in his 25 August 1998 affidavit. [38] He added that
Alcovendas told him to keep silent about what happened on that
day. Sealing
affidavit

[39]

tight

the

credibility

of

the

narration

of

theft

is

the

executed by Elorde Baez dated 3 May 1999. Baez was one of

the dismissed employees who actively participated in the taking of the

tubs. He clarified in the affidavit that the four tubs taken out of the
stockroom in fact contained fish taken from the eight tubs. He further
stated that Ariola told everyone in the vessel not to say anything and
instead file a labor case against the management.Clearly, we cannot fault
Lynvil and De Borja when it dismissed the employees.
The second to the fifth assignment of errors interconnect.
The nature of employment is defined in the Labor Code, thus:
Art. 280. Regular and casual employment. The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral
agreement of the parties, an employment shall be
deemed to be regular where the employee has

113

been engaged to perform activities which are

usually necessary or desirable in the usual
business or trade of the employer, except where
the employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at the
time of the engagement of the employee or where
the work or service to be performed is seasonal in
nature and the employment is for the duration of
the season.
An employment shall be deemed to be casual if it
is not covered by the preceding paragraph:
Provided, That any employee who has rendered at
least one year of service, whether such service is
continuous or broken, shall be considered a regular
employee with respect to the activity in which he is
employed and his employment shall continue while
such activity exists.

itself has singled out: agreements entered into precisely to

circumvent security of tenure. It should have no application
to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being
brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it
satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former
over the latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless
and arbitrary, unjust in its effects and apt to lead to absurd
and unintended consequences.
Contrarily, the private respondents contend that they became
regular employees by reason of their continuous hiring and performance of

Lynvil contends that it cannot be guilty of illegal dismissal because

tasks necessary and desirable in the usual trade and business of Lynvil.

the private respondents were employed under a fixed-term contract which

expired at the end of the voyage. The pertinent provisions of the contract
are:
xxxx
1.
NA ako ay sumasang-ayon na maglingkod at gumawa
ng mga gawain sang-ayon sa patakarang por viaje na
magmumula sa pagalis sa Navotas papunta sa
pangisdaan at pagbabalik sa pondohan ng lantsa sa
Navotas, Metro Manila;
xxxx
1.
NA ako ay nakipagkasundo na babayaran ang aking
paglilingkod sa paraang por viaje sa halagang
P__________ isang biyahe ng kabuuang araw xxxx. [40]

Jurisprudence,[42] laid two conditions for the validity of a fixedcontract agreement between the employer and employee:
First, the fixed period of employment was
knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper
pressure being brought to bear upon the employee
and absent any other circumstances vitiating his
consent; or
Second, it satisfactorily appears that the employer
and the employee dealt with each other on more or
less equal terms with no moral dominance
exercised by the former or the latter.[43]
Textually, the provision that: NA ako ay sumasang-ayon na maglingkod at
gumawa

Lynvil insists on the applicability of the case of Brent School,[41] to

wit:

ng

mga

gawain

sang-ayon

sa

patakarang

por

viaje

na

magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik

sa pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of

Accordingly, and since the entire purpose behind

the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of the
employee's right to be secure in his tenure, the clause in
said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of
regular employment as defined therein should be
construed to refer to the substantive evil that the Code

employment. In

the

context,

however,

of

the

facts

that: (1)

the

respondents were doing tasks necessarily to Lynvils fishing business with

positions ranging from captain of the vessel to bodegero; (2) after the end
of a trip, they will again be hired for another trip with new contracts; and
(3) this arrangement continued for more than ten years, the clear intention
is to go around the security of tenure of the respondents as regular

114

employees. And respondents are so by the express provisions of the

Upon the other hand, the requirement of hearing affords the employee an

second paragraph of Article 280, thus:

opportunity to answer his employer's charges against him and accordingly,

to defend himself therefrom before dismissal is effected. [44] Obviously, the

xxx Provided, That any employee who has rendered at

least one year of service, whether such service is
continuous or broken, shall be considered a regular
employee with respect to the activity in which he is
employed and his employment shall continue while such
activity exists.

second written notice, as indispensable as the first, is intended to ensure

the observance of due process.
Applying the rule to the facts at hand, we grant a monetary award
of P50,000.00 as nominal damages, this, pursuant to the fresh ruling of this

The same set of circumstances indicate clearly enough that it was the need
for a continued source of income that forced the employees acceptance of
the por viaje provision.

Court in Culili v. Eastern Communication Philippines, Inc. [45] Due to the

failure of Lynvil to follow the procedural requirement of two-notice rule,
nominal damages are due to respondents despite their dismissal for just
cause.

Having found that respondents are regular employees who may be,
however, dismissed for cause as we have so found in this case, there is a

Given the fact that their dismissal was for just cause, we cannot

need to look into the procedural requirement of due process in Section 2,

grant backwages and separation pay to respondents. However, following

Rule XXIII, Book V of the Rules Implementing the Labor Code. It is required

the findings of the Labor Arbiter who with the expertise presided over the

that the employer furnish the employee with two written notices: (1) a

proceedings below, which findings were affirmed by the Court of Appeals,

written notice served on the employee specifying the ground or grounds

we grant the 13th month pay and salary differential of the dismissed

for termination, and giving to said employee reasonable opportunity within

employees.

which to explain his side; and (2) a written notice of termination served on
the

employee

indicating

that

upon

due

consideration

of

all

the

Whether De Borja is jointly and severally liable with Lynvil

circumstances, grounds have been established to justify his termination.

From the records, there was only one written notice which required
respondents to explain within five (5) days why they should not be
dismissed from the service.Alcovendas was the only one who signed the
receipt of the notice. The others, as claimed by Lynvil, refused to sign. The
other employees argue that no notice was given to them.Despite the
inconsistencies, what is clear is that no final written notice or notices of

As to the last issue, this Court has ruled that in labor cases, the
corporate directors and officers are solidarily liable with the corporation for
the termination of employment of employees done with malice or in bad
faith.[46] Indeed, moral damages are recoverable when the dismissal of an
employee is attended by bad faith or fraud or constitutes an act oppressive
to labor, or is done in a manner contrary to good morals, good customs or
public policy.

termination were sent to the employees.

It has also been discussed in MAM Realty Development Corporation

The twin requirements of notice and hearing constitute the

elements of [due] process in cases of employee's dismissal.

The

requirement of notice is intended to inform the employee concerned of the

employer's intent to dismiss and the reason for the proposed dismissal.

v. NLRC

[47]

that:

x x x A corporation being a juridical entity, may act only

through its directors, officers and employees. Obligations
incurred by them, acting as such corporate agents, are not
theirs but the direct accountabilities of the corporation they

115

represent. True, solidary liabilities may at times be incurred

but only when exceptional circumstances warrant such as,
generally, in the following cases:
1. When directors and trustees or, in appropriate cases, the
officers of a corporation:
xxx
(b) act in bad faith or with gross negligence in directing the
corporate affairs;
x x x [48]
The term "bad faith" contemplates a "state of mind affirmatively operating
with furtive design or with some motive of self-interest or will or for ulterior
purpose."[49]
We agree with the ruling of both the NLRC and the Court of Appeals when
they pronounced that there was no evidence on record that indicates
commission of bad faith on the part of De Borja. He is the general manager
of Lynvil, the one tasked with the supervision by the employees and the
operation of the business. However, there is no proof that he imposed on
the respondents the por viaje provision for purpose of effecting their
summary dismissal.
WHEREFORE,

the

petition

is partially

GRANTED. The

10

September 2007 Decision of the Court of Appeals in CA-G.R. SP No. 95094

reversing the Resolution dated 31 March 2004 of the National Labor
Relations Commission is hereby MODIFIED. The Court hereby rules that
the employees were dismissed for just cause by Lynvil Fishing Enterprises,
Inc. and Rosendo S. De Borja, hence, the reversal of the award for
backwages and separation pay. However, we affirm the award for
13th month pay, salary differential and grant an additional P50,000.00 in
favor of the employees representing nominal damages for petitioners noncompliance with statutory due process. No cost.
SO ORDERED.

116

G.R. No. 192571

April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE,

EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C.
BERNARDO,
AND
ALLAN
G.
ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for
Reconsideration dated August 23, 2013 of the Court's Decision dated July
23, 2013 (Decision).1
At the outset, there appears to be no substantial argument in the said
motion sufficient for the Court to depart from the pronouncements made in
the initial ruling. But if only to address Akaraz's novel assertions, and to so
placate any doubt or misconception in the resolution of this case, the Court
proceeds to shed light on the matters indicated below.
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing
of evidence since a petition for review on certiorari under Rule 45 of the
Rules of Court (Rules) is limited to the review of questions of law. She
submits that since what was under review was a ruling of the Court of
Appeals (CA) rendered via a petition for certiorari under Rule 65 of the
Rules, the Court should only determine whether or not the CA properly
determined that the National Labor Relations Commission (NLRC)
committed a grave abuse of discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court
actually resolved the controversy under the above-stated framework of
analysis. Essentially, the Court found the CA to have committed an error in
holding that no grave abuse of discretion can be ascribed to the NLRC
since the latter arbitrarily disregarded the legal implication of the
attendant circumstances in this case which should have simply resulted in
the finding that Alcaraz was apprised of the performance standards for her

regularization and hence, was properly a probationary employee. As the

Court observed, an employees failure to perform the duties and
responsibilities which have been clearly made known to him constitutes a
justifiable basis for a probationary employees non-regularization. As
detailed in the Decision, Alcaraz was well-apprised of her duties and
responsibilities as well as the probationary status of her employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)]
caused the publication in a major broadsheet newspaper of its
need for a Regulatory Affairs Manager, indicating therein the job
description for as well as the duties and responsibilities attendant
to the aforesaid position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;
(b) In Abbotts December 7, 2004 offer sheet, it was stated that
Alcaraz was to be employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract
which specifically stated, inter alia, that she was to be placed on
probation for a period of six (6) months beginning February 15,
2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbotts employment offer,
Bernardo sent her copies of Abbotts organizational structure and
her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation
where [Allan G. Almazar] informed her that she had to implement
Abbotts Code of Conduct and office policies on human resources
and finance and that she would be reporting directly to [Kelly
Walsh];
(f) Alcaraz was also required to undergo a training program as part
of her orientation;
(g) Alcaraz received copies of Abbotts Code of Conduct and
Performance Modules from [Maria Olivia T. Yabut-Misa] who
explained to her the procedure for evaluating the performance of
probationary employees; she was further notified that Abbott had
only one evaluation system for all of its employees; and

117

(h) Moreover, Alcaraz had previously worked for another

pharmaceutical company and had admitted to have an "extensive
training and background" to acquire the necessary skills for her
job.2
Considering the foregoing incidents which were readily observable from the
records, the Court reached the conclusion that the NLRC committed grave
abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a
regular and not a probationary employee, the Court finds that the NLRC
committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise
that Alcarazs receipt of her job description and Abbotts Code of Conduct
and Performance Modules was not equivalent to being actually informed of
the performance standards upon which she should have been evaluated
on. It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein which should have warranted a contrary
finding that Alcaraz was indeed a probationary and not a regular employee
more particularly the fact that she was well-aware of her duties and
responsibilities and that her failure to adequately perform the same would
lead to her non-regularization and eventually, her termination. 3
Consequently, since the CA found that the NLRC did not commit grave
abuse of discretion and denied the certiorari petition before it, the reversal
of its ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their
nature, final and executory4 and, hence, not subject to appellate
review,5 the Court is not precluded from considering other questions of law
aside from the CAs finding on the NLRCs grave abuse of discretion. While
the focal point of analysis revolves on this issue, the Court may deal with
ancillary issues such as, in this case, the question of how a probationary
employee is deemed to have been informed of the standards of his
regularization if only to determine if the concepts and principles of labor
law were correctly applied or misapplied by the NLRC in its decision. In
other words, the Courts analysis of the NLRCs interpretation of the
environmental principles and concepts of labor law is not completely
prohibited in as it is complementary to a Rule 45 review of labor cases.

Finally, if only to put to rest Alcarazs misgivings on the manner in which

this case was reviewed, it bears pointing out that no "factual appellate
review" was conducted by the Court in the Decision. Rather, the Court
proceeded to interpret the relevant rules on probationary employment as
applied to settled factual findings. Besides, even on the assumption that a
scrutiny of facts was undertaken, the Court is not altogether barred from
conducting the same. This was explained in the case of Career Philippines
Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the
credibility of witnesses, or substitute the findings of fact of the NLRC, an
administrative body that has expertise in its specialized field. Nor do we
substitute our "own judgment for that of the tribunal in determining where
the weight of evidence lies or what evidence is credible." The factual
findings of the NLRC, when affirmed by the CA, are generally conclusive on
this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our
discretionary appellate jurisdiction may be urged to look into factual issues
raised in a Rule 45 petition. For instance, when the petitioner persuasively
alleges that there is insufficient or insubstantial evidence on record to
support the factual findings of the tribunal or court a quo, as Section 5,
Rule 133 of the Rules of Court states in express terms that in cases filed
before administrative or quasi-judicial bodies, a fact may be deemed
established only if supported by substantial evidence. 7 (Emphasis supplied)
B.
Standards
conceptual underpinnings.

for

regularization;

Alcaraz posits that, contrary to the Courts Decision, ones job description
cannot by and of itself be treated as a standard for regularization as a
standard denotes a measure of quantity or quality. By way of example,
Alcaraz cites the case of a probationary salesperson and asks how does
such employee achieve regular status if he does not know how much he
needs to sell to reach the same.
The argument is untenable.
First off, the Court must correct Alcarazs mistaken notion: it is not the
probationary employees job description but the adequate performance of
his duties and responsibilities which constitutes the inherent and implied
standard for regularization. To echo the fundamental point of the Decision,

118

if the probationary employee had been fully apprised by his employer of

these duties and responsibilities, then basic knowledge and common sense
dictate that he must adequately perform the same, else he fails to pass the
probationary trial and may therefore be subject to termination.8
The determination of "adequate performance" is not, in all cases,
measurable by quantitative specification, such as that of a sales quota in
Alcarazs example. It is also hinged on the qualitative assessment of the
employees work; by its nature, this largely rests on the reasonable
exercise of the employers management prerogative. While in some
instances the standards used in measuring the quality of work may be
conveyed such as workers who construct tangible products which follow
particular metrics, not all standards of quality measurement may be
reducible to hard figures or are readily articulable in specific preengagement descriptions. A good example would be the case of
probationary employees whose tasks involve the application of discretion
and intellect, such as to name a few lawyers, artists, and journalists. In
these kinds of occupation, the best that the employer can do at the time of
engagement is to inform the probationary employee of his duties and
responsibilities and to orient him on how to properly proceed with the
same. The employer cannot bear out in exacting detail at the beginning of
the engagement what he deems as "quality work" especially since the
probationary employee has yet to submit the required output. In the
ultimate analysis, the communication of performance standards should be
perceived within the context of the nature of the probationary employees
duties and responsibilities.
The same logic applies to a probationary managerial employee who is
tasked to supervise a particular department, as Alcaraz in this
case.1wphi1 It is hardly possible for the employer, at the time of the
employees engagement, to map into technical indicators, or convey in
precise detail the quality standards by which the latter should effectively
manage the department. Factors which gauge the ability of the managerial
employee to either deal with his subordinates (e.g., how to spur their
performance, or command respect and obedience from them), or to
organize office policies, are hardly conveyable at the outset of the
engagement since the employee has yet to be immersed into the work
itself. Given that a managerial role essentially connotes an exercise of
discretion, the quality of effective management can only be determined
through subsequent assessment. While at the time of engagement, reason
dictates that the employer can only inform the probationary managerial
employee of his duties and responsibilities as such and provide the
allowable parameters for the same. Verily, as stated in the Decision, the

adequate performance of such duties and responsibilities is, by and of

itself, an implied standard of regularization.
In this relation, it bears mentioning that the performance standard
contemplated by law should not, in all cases, be contained in a specialized
system of feedbacks or evaluation. The Court takes judicial notice of the
fact that not all employers, such as simple businesses or small-scale
enterprises, have a sophisticated form of human resource management, so
much so that the adoption of technical indicators as utilized through
"comment cards" or "appraisal" tools should not be treated as a
prerequisite for every case of probationary engagement. In fact, even if a
system of such kind is employed and the procedures for its implementation
are not followed, once an employer determines that the probationary
employee fails to meet the standards required for his regularization, the
former is not precluded from dismissing the latter. The rule is that when a
valid cause for termination exists, the procedural infirmity attending the
termination only warrants the payment of nominal damages. This was the
principle laid down in the landmark cases of Agabon v. NLRC 9 (Agabon) and
Jaka Food Processing Corporation v. Pacot 10 (Jaka). In the assailed Decision,
the Court actually extended the application of the Agabon and Jaka rulings
to breaches of company procedure, notwithstanding the employers
compliance with the statutory requirements under the Labor
Code.11 Hence, although Abbott did not comply with its own termination
procedure, its non-compliance thereof would not detract from the finding
that there subsists a valid cause to terminate Alcarazs employment.
Abbott, however, was penalized for its contractual breach and thereby
ordered to pay nominal damages.
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano 12 (Aliling)
since the same is not squarely applicable to the case at bar. The employee
in Aliling, a sales executive, was belatedly informed of his quota
requirement. Thus, considering the nature of his position, the fact that he
was not informed of his sales quota at the time of his engagement
changed the complexion of his employment. Contrarily, the nature of
Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates
the application of the foregoing. Records show that Alcaraz was terminated
because she (a) did not manage her time effectively; (b) failed to gain the
trust of her staff and to build an effective rapport with them; (c) failed to
train her staff effectively; and (d) was not able to obtain the knowledge
and ability to make sound judgments on case processing and article review
which were necessary for the proper performance of her duties. 13 Due to
the nature and variety of these managerial functions, the best that Abbott
could have done, at the time of Alcaraz's engagement, was to inform her of

119

her duties and responsibilities, the adequate performance of which, to

repeat, is an inherent and implied standard for regularization; this is unlike
the circumstance in Aliling where a quantitative regularization standard, in
the term of a sales quota, was readily articulable to the employee at the
outset. Hence, since the reasonableness of Alcaraz's assessment clearly
appears from the records, her termination was justified. Bear in mind that
the quantum of proof which the employer must discharge is only
substantial evidence which, as defined in case law, means that amount of
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise.14 To the Court's mind, this threshold of
evidence Abbott amply overcame in this case.
All told, the Court hereby denies the instant motion for reconsideration and
thereby upholds the Decision in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the
Court's Decision dated July 23, 2013 in this case is hereby DENIED.
SO ORDERED.

120

G.R. No. 183572

YOLANDA M. MERCADO,
CHARITO S. DE LEON, DIANA R. LACHICA,
Present:
MARGARITO M. ALBA, JR., and FELIX A.
TONOG,
CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,
Petitioners,
PEREZ, and
*
MENDOZA, JJ.
-

versus -

The background facts are not disputed and are summarized below.

AMACC is an educational institution engaged in computer-based

education in the country. One of AMACCs biggest schools in the country is
its branch at Paraaque City. The petitioners were faculty members who
started teaching at AMACC on May 25, 1998. The petitioner Mercado was
engaged as a Professor 3, while petitioner Tonog was engaged as an

AMA
COMPUTER
CITY, INC. ,

COLLEGE-PARAAQUE

Promulgated:

Assistant Professor 2. On the other hand, petitioners De Leon, Lachica and

April 13, 2010

Alba, Jr., were all engaged as Instructor 1. [5] The petitioners executed
individual Teachers Contracts for each of the trimesters that they were
engaged to teach, with the following common stipulation: [6]

Respondent.

1.

x-----------------------------------------------------------------------------------------x
DECISION

POSITION. The TEACHER has agreed to accept a nontenured appointment to work in the College of xxx
effective xxx to xxx or for the duration of the last
term that the TEACHER is given a teaching
load based on the assignment duly approved by the
DEAN/SAVP-COO. [Emphasis supplied]

BRION, J.:
For the school year 2000-2001, AMACC implemented new faculty
The petitioners Yolanda M. Mercado (Mercado), Charito S. De Leon
(De Leon), Diana R. Lachica (Lachica), Margarito M. Alba, Jr. (Alba, Jr.,), and
Felix A. Tonog (Tonog), all former faculty members of AMA Computer
College-Paraaque City, Inc. (AMACC) assail in this petition for review
on certiorari[1] the

Court

of

Appeals

(CA)

decision

of

November

29,2007[2] and its resolution of June 20, 2008 [3] that set aside the National
Labor Relations Commissions (NLRC) resolution dated July 18, 2005.[4]

THE FACTUAL ANTECEDENTS

screening guidelines, set forth in its Guidelines on the Implementation of

AMACC Faculty Plantilla.[7]Under the new screening guidelines, teachers
were to be hired or maintained based on extensive teaching experience,
capability,
background.

potential,
The

high

academic

qualifications

performance standards

under

and

research

the new

screening

guidelines were also used to determine the present faculty members

entitlement to salary increases.The petitioners failed to obtain a
passing rating based on the performance standards; hence AMACC
did not give them any salary increase.[8]

Because of AMACCs action on the salary increases, the petitioners

filed a complaint with the Arbitration Branch of the NLRC on July 25, 2000,

121

for underpayment of wages, non-payment of overtime and overload

three-year probationary period for teachers. Their contracts were not

compensation, 13 month pay, and for discriminatory practices.

renewed for the following term because they failed to pass the

th

[9]

Performance Appraisal System for Teachers (PAST) while others failed to

On September 7, 2000, the petitioners individually received a

comply with the other requirements for regularization, promotion, or

memorandum from AMACC, through Human Resources Supervisor Mary

increase in salary. This move, according to AMACC, was justified since the

Grace Beronia, informing them that with the expiration of their contract to

school has to maintain its high academic standards. [13]

teach,

their

contract

would

no

longer

be

renewed. [10] The

memorandum[11] entitled Notice of Non-Renewal of Contract states in full:

In view of the expiration of your contract to teach
with AMACC-Paranaque, We wish to inform you that your
contract shall no longer be renewed effective Thirty (30)
days upon receipt of this notice. We therefore would like to
thank you for your service and wish you good luck as you
pursue your career.
You are hereby instructed to report to the HRD for
further instruction. Please bear in mind that as per
company policy, you are required to accomplish your
clearance and turn-over all documents and accountabilities
to your immediate superior.

The Labor Arbiter Ruling

On March 15, 2002, Labor Arbiter (LA) Florentino R. Darlucio

declared in his decision[14] that the petitioners had been illegally dismissed,
and ordered AMACC to reinstate them to their former positions without loss
of seniority rights and to pay them full backwages, attorneys fees and
13th month pay. The LA ruled that Article 281 of the Labor Code on
probationary employment applied to the case; that AMACC allowed the
petitioners to teach for the first semester of school year 2000-200; that
AMACC did not specify who among the petitioners failed to pass the PAST

For your information and guidance

and who among them did not comply with the other requirements of
regularization, promotions or increase in salary; and that the petitioners

The petitioners amended their labor arbitration complaint to

dismissal could not be sustained on the basis of AMACCs vague and

include the charge of illegal dismissal against AMACC. In their Position

general allegations without substantial factual basis. [15] Significantly, the LA

Paper, the petitioners claimed that their dismissal was illegal because it

found no discrimination in the adjustments for the salary rate of the faculty

was made in retaliation for their complaint for monetary benefits and

members based on the performance and other qualification which is an

discriminatory practices against AMACC. The petitioners also contended

exercise of management prerogative.[16] On this basis, the LA paid no heed

that AMACC failed to give them adequate notice; hence, their dismissal

to the claims for salary increases.

was ineffectual.

[12]

The NLRC Ruling

AMACC contended in response that the petitioners worked under a
contracted term under a non-tenured appointment and were still within the

122

On appeal, the NLRC in a Resolution dated July 18, 2005 [17] denied

petitioners valid term of employment; (3) ruling that AMACC cannot apply

AMACCs appeal for lack of merit and affirmed in toto the LAs ruling. The

the performance standards generally applicable to all faculty members;

NLRC, however, observed that the applicable law is Section 92 of the

and (4) ordering the petitioners reinstatement and awarding them

Manual of Regulations for Private Schools (which mandates a probationary

backwages and attorneys fees.

period of nine consecutive trimesters of satisfactory service for academic

personnel in the tertiary level where collegiate courses are offered on a

The CA Ruling

trimester basis), not Article 281 of the Labor Code (which prescribes a
probationary period of

six months) as

the LA

ruled. Despite this

In a decision issued on November 29, 2007, [19] the CA granted

observation, the NLRC affirmed the LAs finding of illegal dismissal since the

AMACCs petition for certiorari and dismissed the petitioners complaint for

petitioners were terminated on the basis of standards that were only

illegal dismissal.

introduced near the end of their probationary period.

The CA ruled that under the Manual for Regulations for Private
The NLRC ruled that the new screening guidelines for the school

Schools, a teaching personnel in a private educational institution (1) must

year 2000-20001 cannot be imposed on the petitioners and their

be a full time teacher; (2) must have rendered three consecutive years of

employment contracts since the new guidelines were not imposed when

service; and (3) such service must be satisfactory before he or she can

the petitioners were first employed in 1998. According to the NLRC, the

acquire permanent status.

imposition of the new guidelines violates Section 6(d) of Rule I, Book VI of

the Implementing Rules of the Labor Code, which provides that in all cases

The CA noted that the petitioners had not completed three (3)

of probationary employment, the employer shall make known to the

consecutive years of service (i.e. six regular semesters or nine consecutive

employee the standards under which he will qualify as a regular employee

trimesters of satisfactory service) and were still within their probationary

at the time of his engagement. Citing our ruling in Orient Express

period; their teaching stints only covered a period of two (2) years and

Placement Philippines v. NLRC,

three (3) months when AMACC decided not to renew their contracts on

[18]

the NLRC stressed that the rudiments of

due process demand that employees should be informed beforehand of the

September 7, 2000.

conditions of their employment as well as the basis for their advancement.

The CA effectively found reasonable basis for AMACC not to renew
AMACC

elevated

the

case

to

the

CA via a

petition

the petitioners contracts. To the CA, the petitioners were not actually

for certiorari under Rule 65 of the Rules of Court. It charged that the NLRC

dismissed; their respective contracts merely expired and were no longer

committed grave abuse of discretion in: (1) ruling that the petitioners were

renewed by AMACC because they failed to satisfy the schools standards for

illegally dismissed; (2) refusing to recognize and give effect to the

the school year 2000-2001 that measured their fitness and aptitude to

123

teach as regular faculty members. The CA emphasized that in the absence

1)

of any evidence of bad faith on AMACCs part, the court would not disturb

The CA gravely erred in reversing the LA and NLRC illegal

dismissal rulings; and

or nullify its discretion to set standards and to select for regularization only

2)

the teachers who qualify, based on reasonable and non-discriminatory

The CA gravely erred in not ordering their reinstatement with

full, backwages.

guidelines.
The petitioners submit that the CA should not have disturbed the
The CA disagreed with the NLRCs ruling that the new guidelines for

findings of the LA and the NLRC that they were illegally dismissed; instead,

the school year 2000-20001 could not be imposed on the petitioners and

the CA should have accorded great respect, if not finality, to the findings of

their employment contracts.The appellate court opined that AMACC has

these specialized bodies as these findings were supported by evidence on

the inherent right to upgrade the quality of computer education it offers to

record. Citing our ruling in Soriano v. National Labor Relations Commission,

the public; part of this pursuit is the implementation of continuing

[22]

evaluation

academic

the Rules of Court, the CA does not assess and weigh the sufficiency of

excellence. The CA noted that the nature of education AMACC offers

evidence upon which the Labor Arbiter and the NLRC based their

demands that the school constantly adopt progressive performance

conclusions. They submit that the CA erred when it substituted its

standards for its faculty to ensure that they keep pace with the rapid

judgment for that of the Labor Arbiter and the NLRC who were the triers of

developments in the field of information technology.

facts who had the opportunity to review the evidence extensively.

and

screening

of

its

faculty

members

for

the petitioners contend that in certiorari proceedings under Rule 65 of

Finally, the CA found that the petitioners were hired on a non-

On the merits, the petitioners argue that the applicable law on

tenured basis and for a fixed and predetermined term based on the

probationary employment, as explained by the LA, is Article 281 of the

Teaching Contract exemplified by the contract between the petitioner

Labor Code which mandates a period of six (6) months as the maximum

Lachica and AMACC. The CA ruled that the non-renewal of the petitioners

duration of the probationary period unless there is a stipulation to the

teaching contracts is sanctioned by the doctrine laid down in Brent School,

contrary; that the CA should not have disturbed the LAs conclusion that

Inc. v. Zamora[20] where the Court recognized the validity of contracts

the AMACC failed to support its allegation that they did not qualify under

providing for fixed-period employment.

the new guidelines adopted for the school year 2000-2001; and that they

THE PETITION

The petitioners cite the following errors in the CA decision:[21]

were illegally dismissed; their employment was terminated based on

standards that were not made known to them at the time of their
engagement. On the whole, the petitioners argue that the LA and the NLRC
committed no grave abuse of discretion that the CA can validly cite.

124

THE CASE FOR THE RESPONDENT

In

their

Comment,[23] AMACC

notes

that

the

petitioners

raised

no

The CAs Review

of
Factual
Findings
under
Rule 65

substantial argument in support of their petition and that the CA correctly

found that the petitioners were hired on a non-tenured basis and for a fixed

We

agree

with

the

petitioners

that,

as

rule

or predetermined term. AMACC stresses that the CA was correct in

in certiorari proceedings under Rule 65 of the Rules of Court, the CA does

concluding that no actual dismissal transpired; it simply did not renew the

not assess and weigh each piece of evidence introduced in the case. The

petitioners respective employment contracts because of their poor

CA only examines the factual findings of the NLRC to determine whether or

performance and failure to satisfy the schools standards.

not the conclusions are supported by substantial evidence whose absence

AMACC also asserts that the petitioners knew very well that the
applicable standards would be revised and updated from time to time
given the nature of the teaching profession. The petitioners also knew at
the time of their engagement that they must comply with the schools
regularization policies as stated in the Faculty Manual. Specifically, they
must obtain a passing rating on the Performance Appraisal for
Teachers

(PAST)

the

primary

instrument

to

measure

the

performance of faculty members.

Since the petitioners were not actually dismissed, AMACC submits

that the CA correctly ruled that they are not entitled to reinstatement, full
backwages and attorneys fees.

points to grave abuse of discretion amounting to lack or excess of

jurisdiction.[24] In the recent case of Protacio v. Laya Mananghaya & Co.,
[25]

we emphasized that:
As a general rule, in certiorari proceedings under
Rule 65 of the Rules of Court, the appellate court does not
assess and weigh the sufficiency of evidence upon which
the Labor Arbiter and the NLRC based their conclusion. The
query in this proceeding is limited to the determination of
whether or not the NLRC acted without or in excess of its
jurisdiction or with grave abuse of discretion in rendering
its decision. However, as an exception, the appellate
court may examine and measure the factual findings
of the NLRC if the same are not supported by
substantial evidence. The Court has not hesitated to
affirm the appellate courts reversals of the decisions
of labor tribunals if they are not supported by
substantial evidence.[Emphasis supplied]

THE COURTS RULING

As discussed below, our review of the records and of the CA
We find the petition meritorious.

decision shows that the CA erred in recognizing that grave abuse of

discretion attended the NLRCs conclusion that the petitioners were illegally
dismissed. Consistent with this conclusion, the evidence on record show
that AMACC failed to discharge its burden of proving by substantial
evidence the just cause for the non-renewal of the petitioners contracts.

125

A reality we have to face in the consideration of employment on

In Montoya v. Transmed Manila Corporation,

we laid down our

probationary status of teaching personnel is that they are not governed

basic approach in the review of Rule 65 decisions of the CA in labor cases,

purely by the Labor Code. The Labor Code is supplemented with respect

as follows:

to the period of probation by special rules found in the Manual of

[26]

In a Rule 45 review, we consider the correctness

of the assailed CA decision, in contrast with the review
for jurisdictional error that we undertake under Rule
65. Furthermore, Rule 45 limits us to the review
of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view
the CA decision in the same context that the petition
forcertiorari it ruled upon was presented to it; we have to
examine the CA decision from the prism of whether
it correctly determined the presence or absence of
grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC
decision on the merits of the case was correct. In
other words, we have to be keenly aware that the CA
undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it. This is the approach
that should be basic in a Rule 45 review of a CA ruling in a
labor case. In question form, the question to ask is:
Did the CA correctly determine whether the NLRC
committed grave abuse of discretion in ruling on the
case?

Regulations for Private Schools.[27] On the matter of probationary period,

Section 92 of these regulations provides:
Section 92. Probationary Period. Subject in all instances
to compliance with the Department and school
requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive
years of satisfactory service for those in the elementary
and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the tertiary
level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary level
where collegiate courses are offered on a trimester
basis. [Emphasis supplied]

The CA pointed this out in its decision (as the NLRC also did), and
we confirm the correctness of this conclusion. Other than on the period,
the following quoted portion of Article 281 of the Labor Code still fully
applies:

Following this approach, our task is to determine whether the CA correctly

found that the NLRC committed grave abuse of discretion in ruling that the
petitioners were illegally dismissed.

Legal Environment in the Employment of Teachers

a. Rule on Employment on Probationary Status

x x x The services of an employee who has been engaged

on a probationary basis may be terminated for a just
cause when he fails to qualify as a regular employee in
accordance withreasonable standards made known by
the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular
employee. [Emphasis supplied]
b. Fixed-period Employment

126

The use of employment for fixed periods during the teachers

We have long settled the validity of a fixed-term contract in the case Brent

probationary period is likewise an accepted practice in the teaching

School, Inc. v. Zamora[29] that AMACC cited. Significantly, Brent happened

profession. We mentioned this in passing in Magis Young Achievers

in a school setting. Care should be taken, however, in reading Brent in the

Learning Center v. Adelaida P. Manalo,

albeit a case that involved

context of this case as Brent did not involve any probationary employment

elementary, not tertiary, education, and hence spoke of a school year

issue; it dealt purely and simply with the validity of a fixed-term

rather than a semester or a trimester. We noted in this case:

employment under the terms of the Labor Code, then newly issued and

[28]

The common practice is for the employer and

the teacher to enter into a contract, effective for
one school year. At the end of the school year, the
employer has the option not to renew the contract,
particularly considering the teachers performance. If the
contract is not renewed, the employment relationship
terminates. If the contract is renewed, usually for another
school
year,
the
probationary
employment
continues. Again, at the end of that period, the parties may
opt to renew or not to renew the contract. If renewed, this
second renewal of the contract for another school year
would then be the last year since it would be the third
school year of probationary employment. At the end of
this third year, the employer may now decide
whether to extend a permanent appointment to the
employee, primarily on the basis of the employee
having met the reasonable standards of competence
and efficiency set by the employer.For the entire
duration of this three-year period, the teacher
remains under probation. Upon the expiration of his
contract of employment, being simply on probation,
he cannot automatically claim security of tenure and
compel the employer to renew his employment
contract. It is when the yearly contract is renewed for the
third time that Section 93 of the Manual becomes
operative, and the teacher then is entitled to regular or
permanent employment status.
It is important that the contract of probationary
employment specify the period or term of its effectivity.
The failure to stipulate its precise duration could lead to
the inference that the contract is binding for the full threeyear probationary period.

which does not expressly contain a provision on fixed-term employment.

c.

Academic and Management Prerogative

Last but not the least factor in the academic world, is that a school
enjoys academic freedom a guarantee that enjoys protection from the
Constitution no less. Section 5(2) Article XIV of the Constitution guarantees
all institutions of higher learning academic freedom. [30]

The institutional academic freedom includes the right of the school

or college to decide and adopt its aims and objectives, and to determine
how these objections can best be attained, free from outside coercion or
interference, save possibly when the overriding public welfare calls for
some restraint. The essential freedoms subsumed in the term academic
freedom encompass the freedom of the school or college to determine for
itself: (1) who may teach; (2) who may be taught; (3) how lessons shall be
taught; and (4) who may be admitted to study.[31]

AMACCs right to academic freedom is particularly important in the

present case, because of the new screening guidelines for AMACC faculty
put in place for the school year 2000-2001. We agree with the CA that
AMACC has the inherent right to establish high standards of competency
and efficiency for its faculty members in order to achieve and maintain

127

academic excellence. The schools prerogative to provide standards for its

The

existence

of

the

term-to-term

contracts

covering

the

teachers and to determine whether or not these standards have been met

petitioners employment is not disputed, nor is it disputed that they were

is in accordance with academic freedom that gives the educational

on probationary status not permanent or regular status from the time they

institution the right to choose who should teach.

were employed on May 25, 1998 and until the expiration of their Teaching

[32]

In Pea v. National Labor

Relations Commission,[33] we emphasized:

Contracts on September 7, 2000. As the CA correctly found, their teaching

stints only covered a period of at least seven (7) consecutive trimesters or

It is the prerogative of the school to set high standards of

efficiency for its teachers since quality education is a
mandate of the Constitution. As long as the standards fixed
are reasonable and not arbitrary, courts are not at liberty
to set them aside. Schools cannot be required to adopt
standards which barely satisfy criteria set for government
recognition.

two (2) years and three (3) months of service. This case, however,
brings to the fore the essential question of which, between the
two factors affecting employment, should prevail given AMACCs
position that the teachers contracts expired and it had the right
not to renew them. In other words, should the teachers probationary

The same academic freedom grants the school the autonomy to

status be disregarded simply because the contracts were fixed-term?

decide for itself the terms and conditions for hiring its teacher, subject of
course to the overarching limitations under the Labor Code. Academic

The provision on employment on probationary status under the

freedom, too, is not the only legal basis for AMACCs issuance of screening

Labor Code[35] is a primary example of the fine balancing of interests

guidelines. The authority to hire is likewise covered and protected by its

between labor and management that the Code has institutionalized

management prerogative the right of an employer to regulate all aspects

pursuant to the underlying intent of the Constitution.[36]

of

employment,

such

as

hiring,

the

freedom

to

prescribe

work

regulation

On the one hand, employment on probationary status affords

regarding transfer of employees, supervision of their work, lay-off and

management the chance to fully scrutinize the true worth of hired

discipline, and dismissal and recall of workers. [34] Thus, AMACC has every

personnel before the full force of the security of tenure guarantee of the

right to determine for itself that it shall use fixed-term employment

Constitution comes into play.[37] Based on the standards set at the start of

contracts as its medium for hiring its teachers. It also acted within the

the probationary period, management is given the widest opportunity

terms of the Manual of Regulations for Private Schools when it recognized

during the probationary period to reject hirees who fail to meet its own

the petitioners to be merely on probationary status up to a maximum of

adopted but reasonable standards.[38] These standards, together with the

nine trimesters.

just[39] and authorized causes[40] for termination of employment the Labor

assignments,

working methods, process

The Conflict: Probationary Status

and Fixed-term Employment

to be followed,

Code expressly provides, are the grounds available to terminate the

employment of a teacher on probationary status. For example, the school
may impose reasonably stricter attendance or report compliance records

128

on teachers on probation, and reject a probationary teacher for failing in

When fixed-term employment is brought into play under the above

this regard, although the same attendance or compliance record may not

probationary period rules, the situation as in the present case may at first

be required for a teacher already on permanent status. At the same time,

blush look muddled as fixed-term employment is in itself a valid

the same just and authorizes causes for dismissal under the Labor Code

employment mode under Philippine law and jurisprudence. [45] The conflict,

apply to probationary teachers, so that they may be the first to be laid-off

however, is more apparent than real when the respective nature of fixed-

if the school does not have enough students for a given semester or

term employment and of employment on probationary status are closely

trimester. Termination of employment on this basis is an authorized cause

examined.

under the Labor Code.

[41]

The fixed-term character of employment essentially refers to the

Labor, for its part, is given the protection during the probationary

period agreed

upon

between

the

employer

and

the

employee;

period of knowing the company standards the new hires have to meet

employment exists only for the duration of the term and ends on its own

during the probationary period, and to be judged on the basis of these

when the term expires. In a sense, employment on probationary status also

standards, aside from the usual standards applicable to employees after

refers to a period because of the technical meaning probation carries in

they achieve permanent status. Under the terms of the Labor Code, these

Philippine labor law a maximum period of six months, or in the academe, a

standards should be made known to the teachers on probationary status at

period of three years for those engaged in teaching jobs. Their similarity

the start of their probationary period, or at the very least under the

ends there, however, because of the overriding meaning that being on

circumstances of the present case, at the start of the semester or the

probation connotes, i.e., a process of testing and observing the character

trimester during which the probationary standards are to be applied. Of

or abilities of a person who is new to a role or job. [46]

critical importance in invoking a failure to meet the probationary

standards, is that the school should show as a matter of due

Understood

the

above

sense,

probationary

status

for

the essentially

character

second notice in a dismissal situation that the law requires as a due

appreciated. But

process guarantee supporting the security of tenure provision, [42] and is in

countervailing but equally protective rule that the probationary period can

furtherance, too, of the basic rule in employee dismissal that the employer

only last for a specific maximum period and under reasonable, well-laid

carries

and properly communicated standards. Otherwise stated, within the period

justifying a dismissal. [43] These

rules ensure

the

this

probation,

same

any

protective

employer

management can

protective

process how these standards have been applied. This is effectively the

the burden of

of

in

character

on

the

rise

to

be
the

compliance with the limited security of tenure guarantee the law extends

of

to probationary employees.[44]

standards and affecting the continuity of the employment must strictly

conform to the probationary rules.

move based

gives

readily

probationary

129

Under the given facts where the school year is divided into
trimesters, the school apparently utilizes its fixed-term contracts as a

contracts are renewable unless the petitioners fail to pass the schools
standards.

convenient arrangement dictated by the trimestral system and not

because the workplace parties really intended to limit the period of their

To highlight what we mean by a fixed-term contract specifically

relationship to any fixed term and to finish this relationship at the end of

used for the fixed term it offers, a replacement teacher, for example, may

that term. If we pierce the veil, so to speak, of the parties so-called fixed-

be contracted for a period of one year to temporarily take the place of a

term employment contracts, what undeniably comes out at the core is a

permanent teacher on a one-year study leave. The expiration of the

fixed-term contract conveniently used by the school to define and regulate

replacement teachers contracted term, under the circumstances, leads to

its relations with its teachers during their probationary period.

no probationary status implications as she was never employed on

probationary basis; her employment is for a specific purpose with

To be sure, nothing is illegitimate in defining the school-teacher

relationship in this manner. The school, however, cannot forget that its

particular focus on the term and with every intent to end her teaching
relationship with the school upon expiration of this term.

system of fixed-term contract is a system that operates during the

probationary period and for this reason is subject to the terms of Article

If the school were to apply the probationary standards (as in fact it

281 of the Labor Code. Unless this reconciliation is made, the

says it did in the present case), these standards must not only be

requirements of this Article on probationary status would be fully

reasonable but must have also been communicated to the teachers at the

negated as the school may freely choose not to renew contracts

start of the probationary period, or at the very least, at the start of the

simply because their terms have expired.The inevitable effect of

period when they were to be applied. These terms, in addition to those

course is to wreck the scheme that the Constitution and the Labor

expressly provided by the Labor Code, would serve as the just cause for

Code established to balance relationships between labor and

the termination of the probationary contract. As explained above, the

management.

details of this finding of just cause must be communicated to the affected

teachers as a matter of due process.

Given the clear constitutional and statutory intents, we cannot but

conclude that in a situation where the probationary status overlaps with a

AMACC, by its submissions, admits that it did not renew the

fixed-term contract not specifically used for the fixed term it offers, Article

petitioners contracts because they failed to pass the Performance

281 should assume primacy and the fixed-period character of the contract

Appraisal System

must give way. This conclusion is immeasurably strengthened by the

regularization that the school undertakes to maintain its high academic

petitioners and the AMACCs hardly concealed expectation that the

standards.[47] The evidence is unclear on the exact terms of the standards,

employment on probation could lead to permanent status, and that the

although the school also admits that these were standards under the

for Teachers

(PAST) and other requirements

for

130

Guidelines on the Implementation of AMACC Faculty Plantilla put in place at

the start of school year 2000-2001.

WHEREFORE, premises considered, we hereby GRANT the petition,

and, consequently, REVERSE and SET ASIDE the Decision of the Court of

While we can grant that the standards were duly communicated to

Appeals dated November 29, 2007 and its Resolution dated June 20, 2008 in

the petitioners and could be applied beginning the 1 st trimester of the

CA-G.R. SP No. 96599. The Labor Arbiters decision of March 15, 2002,

school year 2000-2001, glaring and very basic gaps in the schools

subsequently affirmed as to the results by the National Labor Relations

evidence still exist. The exact terms of the standards were never

Commission,

introduced as evidence; neither does the evidence show how these

computation to take into account the date of the finality of this Decision.

stands

and

should

be

enforced

with

appropriate

re-

standards were applied to the petitioners. [48] Without these pieces of

evidence (effectively, the finding of just cause for the non-renewal of the
petitioners contracts), we have nothing to consider and pass upon as valid
or invalid for each of the petitioners. Inevitably, the non-renewal (or
effectively, the termination of employment of employees on probationary
status) lacks the supporting finding of just cause that the law requires and,
hence, is illegal.

In lieu of reinstatement, AMA Computer College-Paraaque City,

Inc. is hereby DIRECTED to pay separation pay computed on a trimestral
basis from the time of separation from service up to the end of the complete
trimester preceding the finality of this Decision. For greater certainty, the
petitioners are entitled to:
(a)

backwages and 13th month pay computed from

September 7, 2000 (the date AMA Computer CollegeParaaque City, Inc. illegally dismissed the petitioners)

In this light, the CA decision should be reversed. Thus, the LAs

up to the finality of this Decision;

decision, affirmed as to the results by the NLRC, should stand as the

decision to be enforced, appropriately re-computed to consider the period
of appeal and review of the case up to our level.

(b)

monthly honoraria (if applicable) computed

from September 7, 2000 (the time of separation from
service) up to the finality of this Decision; and

Given the period that has lapsed and the inevitable change of

(c) separation pay on a trimestral basis from September 7, 2000

circumstances that must have taken place in the interim in the academic

(the time of separation from service) up to the end of

world and at AMACC, which changes inevitably affect current school

the complete trimester preceding the finality of this

operations, we hold that - in lieu of reinstatement - the petitioners should

Decision.

be paid separation pay computed on a trimestral basis from the time of

separation from service up to the end of the complete trimester preceding
the finality of this Decision. [49] The separation pay shall be in addition to the
other awards, properly recomputed, that the LA originally decreed.

The labor arbiter is hereby ORDERED to make another recomputation according to the above directives. No costs.

131

SO ORDERED.

132

G.R. Nos. 196280 & 196286

April 2, 2014

UNIVERSIDAD
DE
STA.
vs.
MARVIN-JULIAN L. SAMBAJON, JR., Respondent.

ISABEL, Petitioner,

DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 urging this
Court to set aside the Decision 1 dated March 25, 2011 of the Court of
Appeals (CA) in CA-GR. SP Nos. 108103 and 108168 which affirmed with
modification the Decision2 dated August 1, 2008 of the National Labor
Relations Commission (NLRC). The NLRC affirmed the Decision 3 dated
August 22, 2006 of the Labor Arbiter in NLRC Sub-RAB V-05-04-00053-05)
declaring petitioner liable for illegal dismissal of respondent.
The Facts
Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious
educational institution in Naga City. Petitioner hired Marvin-Julian L.
Sambajon, Jr. (respondent) as a full-time college faculty member with the
rank of Assistant Professor on probationary status, as evidenced by an
Appointment Contract4 dated November 1, 2002, effective November 1,
2002 up to March 30, 2003.
After the aforesaid contract expired, petitioner continued to give teaching
loads to respondent who remained a full-time faculty member of the
Department of Religious Education for the two semesters of school-year
(SY) 2003-2004 (June 1, 2003 to March 31, 2004); and two semesters of SY
2004-2005 (June 2004 to March 31, 2005).5
Sometime in June 2003, after respondent completed his course in Master of
Arts in Education, major in Guidance and Counseling, he submitted the
corresponding Special Order from the Commission on Higher Education
(CHED), together with his credentials for the said masters degree, to the
Human Resources Department of petitioner for the purpose of salary
adjustment/increase. Subsequently, respondents salary was increased, as
reflected in his pay slips starting October 1-15, 2004. 6 He was likewise reranked from Assistant Professor to Associate Professor.
In a letter dated October 15, 2004 addressed to the President of petitioner,
Sr. Ma. Asuncion G. Evidente, D.C., respondent vigorously argued that his
salary increase should be made effective as of June 2003 and demanded

the payment of his salary differential. The school administration thru Sr.
Purita Gatongay, D.C., replied by explaining its policy on re-ranking of
faculty members7, viz:
xxxx
Please be informed that teachers in the Universidad are not re-ranked
during their probationary period. The Faculty Manual as revised for school
year 2002-2003 provides (page 38) "Re-ranking is done every two years,
hence the personnel hold their present rank for two years. Those
undergoing probationary period and those on part-time basis of
employment are not covered by this provision." This provision is found also
in the 2000-2001 Operations Manual.
Your personnel file shows that you were hired as a probationary teacher in
the second semester of school year 2002-2003. By October 2004, you will
be completing four (4) semesters (two school years) of service. Even
permanent teachers are re-ranked only every two years, and you are not
even a permanent teacher. I am informed that you have been told several
times and made to read the Provision in the Faculty Manual by the
personnel office that you cannot be re-ranked because you are still a
probationary teacher.
x x x x8
Respondent insisted on his demand for retroactive pay. In a letter dated
January 10, 2005, Sr. Evidente reiterated the school policy on re-ranking of
teachers, viz:
xxx
Under the Faculty Manual a permanent teacher is not entitled to re-ranking
oftener than once every two years. From this it should be obvious that,
with all the more reason, a probationary teacher would not be entitled to
"evaluation," which could result in re-ranking or "adjustment in salary"
oftener than once every two years.
Since you are a probationary teacher, the University is under no obligation
to re-rank you or adjust your salary after what you refer to as "evaluation."
Nevertheless, considering that in October 2004 you were completing two
years of service, the University adjusted your salary in the light of the
CHED Special Order you submitted showing that you had obtained the
degree of Master of Arts in Education. Instead of being grateful for the
adjustment, you insist that the adjustment be made retroactive to June
2003. Simply stated, you want your salary adjusted after one semester of
probationary service. We do not think a probationary teacher has better

133

rights than a permanent teacher in the matter of re-ranking or

"evaluation."9

On April 14, 2005, respondent filed a complaint for illegal dismissal against
the petitioner.

However, respondent found the above explanation insufficient and not

clear enough. In his letter dated January 12, 2005, he pointed out the case
of another faculty member -- whom he did not name -- also on
probationary status whose salary was supposedly adjusted by petitioner at
the start of school year (June) after he/she had completed his/her masters
degree in March. Respondent thus pleaded for the release of his salary
differential, or at the very least, that petitioner give him categorical
answers to his questions.10

In his Decision dated August 22, 2006, Labor Arbiter Jesus Orlando M.
Quinones ruled that there was no just or authorized cause in the
termination of respondents probationary employment. Consequently,
petitioner was found liable for illegal dismissal, thus:

Apparently, to resolve the issue, a dialogue was held between respondent

and Sr. Evidente. As to the outcome of this conversation, the parties gave
conflicting accounts. Respondent claimed that Sr. Evidente told him that
the school administration had decided to shorten his probationary period to
two years on the basis of his satisfactory performance. 11 This was
categorically denied by Sr. Evidente though the latter admitted having
informed respondent "that he was made Associate Professor on account of
his incessant requests for a salary increase which the Universidad de Santa
Isabel eventually accommodatedconsidering that [respondent] had
obtained a Masters Degree in June 2003." She further informed
respondent that "his appointment as Associate Professor did not affect his
status as a probationary employee" and that petitioner "was not and did
not exercise its prerogative to shorten his probationary period to only two
years." Sr. Stella O. Real, D.C., who issued a Certificate of Employment to
respondent, likewise denied that she confirmed to respondent that
petitioner has shortened his probationary employment.12

Accordingly, and consistent with Article 279 of the Labor Code, respondent
school is hereby directed to pay complainant full backwages covering the
period/duration of the 1st semester of academic year 2005-2006.
Reinstatement being rendered moot by the expiration of the probationary
period, respondent school is directed to pay complainant separation pay in
lieu of reinstatement computed at one (1) months pay for every year of
service. An award of 10% attorneys fees in favor of complainant is also
held in order.

WHEREFORE, in view of the foregoing, judgment is hereby rendered finding

respondent school UNIVERSIDAD DE SANTA ISABEL liable for the illegal
dismissal of complainant MARVIN-JULIAN L. SAMBAJON, JR.

(please see attached computation of monetary award as integral part of

this decision).
All other claims and charges are DISMISSED for lack of legal and factual
basis.
SO ORDERED.14

On February 26, 2005, respondent received his letter of termination which

stated:
Greetings of Peace in the Lord!
We regret to inform your good self that your full time probationary
appointment will not be renewed when it expires at the end of this coming
March 31, 2005.
Thank you so much for the services that you have rendered to USI and to
her clientele the past several semesters. We strongly and sincerely
encourage you to pursue your desire to complete your Post Graduate
studies in the University of your choice as soon as you are able.
God bless you in all your future endeavors.
Godspeed!13

Petitioner appealed to the NLRC raising the issue of the correct

interpretation of Section 92 of the Manual of Regulations for Private
Schools and DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, and
alleging grave abuse of discretion committed by the Labor Arbiter in ruling
on a cause of action/issue not raised by the complainant (respondent) in
his position paper.
On August 1, 2008, the NLRC rendered its Decision affirming the Labor
Arbiter and holding that respondent had acquired a permanent status
pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for
Private Schools, in relation to Article 281 of the Labor Code, as amended.
Thus:
In the instant case, the first contract (records, pp. 36; 92) executed by the
parties provides that he was hired on a probationary status effective
November 1, 2002 to March 30, 2003. While his employment continued
beyond the above-mentioned period and lasted for a total of five (5)
consecutive semesters, it appears that the only other contract he signed is

134

the one (records, p. 103) for the second semester of SY 2003-2004. A

portion of this contract reads:
"I am pleased to inform you that you are designated and commissioned to
be an Apostle of Love and Service, Unity and Peace as you dedicate and
commit yourself in the exercise of your duties and responsibilities as a:
FULL-TIME
FACULTY
MEMBER
of the Religious Education Department from November 1, 2003 to March
31, 2004.
Unless otherwise renewed in writing this designation automatically
terminates as of the date expiration above stated without further notice."
There is no showing that the complainant signed a contract for the first and
second semesters of SY 2004-2005.
Under the circumstances, it must be concluded that the complainant has
acquired permanent status. The last paragraph of Article 281 of the Labor
Code provides that "an employee who is allowed to work after a
probationary period shall be considered a regular employee." Based
thereon, the complainant required [sic] permanent status on the first day
of the first semester of SY 2003-2004.
As presently worded, Section 92 of the revised Manual of Regulations for
Private Schools merely provides for the maximum lengths of the
probationary periods of academic personnel of private schools in the three
(3) levels of education (elementary, secondary, tertiary). The periods
provided therein are not requirements for the acquisition, by them, of
permanent status.
WHEREFORE, the decision appealed from is hereby AFFIRMED.
SO ORDERED.15
Petitioner and respondent sought reconsideration of the above decision,
with the former contending that the NLRC resolved an issue not raised in
the appeal memorandum, while the latter asserted that the NLRC erred in
not awarding him full back wages so as to conform to the finding that he
had acquired a permanent status. Both motions were denied by the NLRC
which ruled that regardless of whether or not the parties were aware of the
rules for the acquisition of permanent status by private school teachers,
these rules applied to them and overrode their mistaken beliefs. As to
respondents plea for back wages, the NLRC said the award of back wages
was not done in this case because respondent did not appeal the Labor
Arbiters decision.

Both parties filed separate appeals before the CA. On motion by

respondent, the two cases were consolidated (CA-G.R. SP Nos. 108103 and
108168).16
By Decision dated March 25, 2011, the CA sustained the conclusion of the
NLRC that respondent had already acquired permanent status when he was
allowed to continue teaching after the expiration of his first appointmentcontract on March 30, 2003. However, the CA found it necessary to modify
the decision of the NLRC to include the award of back wages to
respondent. The dispositive portion of the said decision reads:
WHEREFORE, premises considered, the petition docketed as CA-G.R. SP No.
108103 is GRANTED. The challenged Decision of the NLRC dated August 1,
2008 in NLRC NCR CA No. 050481-06 (NLRC Sub-RAB V-05-04-00053-05) is
AFFIRMED with MODIFICATION in that Universidad de Sta. Isabel is directed
to reinstate Marvin-Julian L. Sambajon, Jr. to his former position without
loss of seniority rights and to pay him full backwages computed from the
time his compensation was withheld from him up to the time of his actual
reinstatement. All other aspects are AFFIRMED.
As regards CA-G.R. SP No. 108168, the petition is DENIED for lack of merit.
SO ORDERED.17
The Petition/Issues
Before this Court, petitioner ascribes grave error on the part of the CA in
sustaining the NLRC which ruled that respondent was dismissed without
just or authorized cause at the time he had already acquired permanent or
regular status since petitioner allowed him to continue teaching despite
the expiration of the first contract of probationary employment for the
second semester of SY 2002-2003. Petitioner at the outset underscores the
fact that the NLRC decided an issue which was not raised on appeal, i.e.,
whether respondent had attained regular status. It points out that the
Labor Arbiters finding that respondent was dismissed while still a
probationary employee was not appealed by him, and hence such finding
had already become final.
In fine, petitioner asks this Court to rule on the following issues: (1)
whether the NLRC correctly resolved an issue not raised in petitioners
appeal memorandum; and (2) whether respondents probationary
employment was validly terminated by petitioner.
Our Ruling
The petition is partly meritorious.

135

Issues on Appeal before the NLRC

Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC,
which was in force at the time petitioner appealed the Labor Arbiters
decision, expressly provided that, on appeal, the NLRC shall limit itself only
to the specific issues that were elevated for review, to wit:
Section 4. Requisites for perfection of appeal. x x x.

In reviewing the Labor Arbiters finding of illegal dismissal, the NLRC

concluded that respondent had already attained regular status after the
expiration of his first appointment contract as probationary employee.
Such conclusion was but a logical result of the NLRCs own interpretation of
the law. Since petitioner elevated the questions of the validity of
respondents dismissal and the applicable probationary period under the
aforesaid regulations, the NLRC did not gravely abuse its discretion in fully
resolving the said issues.
As the Court held in Roche (Phils.) v. NLRC 20:

xxxx
(d) Subject to the provisions of Article 218 of the Labor Code, once the
appeal is perfected in accordance with these Rules, the Commission shall
limit itself to reviewing and deciding only the specific issues that were
elevated on appeal.
We have clarified that the clear import of the aforementioned procedural
rule is that the NLRC shall, in cases of perfected appeals, limit itself to
reviewing those issues which are raised on appeal. As a consequence
thereof, any other issues which were not included in the appeal shall
become final and executory.18
In this case, petitioner sets forth the following issues in its appeal
memorandum:

Petitioners then suggest that the respondent Commission abused its

discretion in awarding reliefs in excess of those stated in the decision of
the labor arbiter despite the absence of an appeal by Villareal. To stress
this point, they cited Section 5(c) of the Rules of Procedure of the National
Labor Relations Commission which provides that the Commission shall, in
cases of perfected appeals, limits itself to reviewing those issues which
were raised on appeal. Consequently, those which were not raised on
appeal shall be final and executory.
There is no merit to this contention. The records show that the petitioners
elevated the issues regarding the correctness of the award of damages,
reinstatement with backpay, retirement benefits and the cost-saving bonus
to the respondent Commission in their appeal. This opened the said issues
for review and any action taken thereon by the Commission was well within
the parameters of its jurisdiction. (Emphasis supplied.)

5.01
Probationary Employment Period
WHETHER THE MARVIN JULIAN L. SAMBAJON, JR. WAS ILLEGALLY DISMISSED
FROM THE UNIVERSIDAD DE STA. ISABEL.
5.02
WHETHER THE UNIVERSIDAD DE STA. ISABEL SHORTENED
PROBATIONARY PERIOD OF MARVIN JULIAN L. SAMBAJON.

THE

A probationary employee is one who is on trial by the employer during

which the employer determines whether or not said employee is qualified
for permanent employment. A probationary appointment is made to afford
the employer an opportunity to observe the fitness of a probationary
employee while at work, and to ascertain whether he will become a proper
and efficient employee. The word probationary as used to describe the
period of employment implies the purpose of the term or period, but not its
length.21

5.03
WHETHER RESPONDENTS-APPELLANTS ARE ENTITLED TO DAMAGES. 19
Specifically, petitioner sought the correct interpretation of the Manual of
Regulations for Private School Teachers and DOLE-DECS-CHED-TESDA
Order No. 01, series of 1996, insofar as the probationary period for
teachers.

It is well settled that the employer has the right or is at liberty to choose
who will be hired and who will be denied employment. In that sense, it is
within the exercise of the right to select his employees that the employer
may set or fix a probationary period within which the latter may test and
observe the conduct of the former before hiring him permanently. 22 The
law, however, regulates the exercise of this prerogative to fix the period of
probationary employment. While there is no statutory cap on the minimum
term of probation, the law sets a maximum "trial period" during which the
employer may test the fitness and efficiency of the employee. 23

136

Article 281 of the Labor Code provides:

ART. 281. Probationary Employment.Probationary employment shall not
exceed six (6) months from the date the employee started working, unless
it is covered by an apprenticeship agreement stipulating a longer period.
The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a
regular employee.
The probationary employment of teachers in private schools is not
governed purely by the Labor Code. The Labor Code is supplemented with
respect to the period of probation by special rules found in the Manual of
Regulations for Private Schools.24 On the matter of probationary period,
Section 92 of the 1992 Manual of Regulations for Private Schools
regulations states:
Section 92. Probationary Period. Subject in all instances to compliance
with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of
satisfactory service for those in the elementary and secondary levels, six
(6) consecutive regular semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of satisfactory service for
those in the tertiary level where collegiate courses are offered on a
trimester basis. (Emphasis supplied.)
Thus, it is the Manual of Regulations for Private Schools, and not the Labor
Code, that determines whether or not a faculty member in an educational
institution has attained regular or permanent status. 25 Section 9326 of the
1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall
be considered regular or permanent.
In this case, the CA sustained the NLRCs ruling that respondent was
illegally dismissed considering that he had become a regular employee
when petitioner allowed him to work beyond the date specified in his first
probationary appointment contract which expired on March 30, 2003.
According to the CA:
As can be gleaned from Section 92 of the 1992 Manual of Regulations
for Private Schools, the probationary period applicable in this case is not
more than six (6) consecutive regular semesters of satisfactory service. In
other words, the probationary period for academic personnel in the tertiary
level runs from one (1) semester to six (6) consecutive regular semesters
of satisfactory service. In the instant case, records reveal that Sambajon, Jr.
only signed two appointment contracts. The first appointment-contract

which he signed was dated November 2002 for the period November 1,
2002 to March 30, 2003, as Assistant Professor 10 on probationary status.
x x x The second appointment-contract which Sambajon, Jr. executed was
dated February 26, 2004, for the period November 1, 2003 to March 31,
2004. x x x Compared with the first appointment-contract, it was not
indicated in the February 26, 2004 appointment-contract that Sambajon, Jr.
was hired on probationary status, which explains the NLRCs conclusion
that Sambajon, Jr. already attained permanent status. At this juncture, it is
worthy to emphasize that other than the period provided under Article 281
of the Labor Code, the following quoted portion of Article 281 of the Labor
Code still applies:
"ART. 281. PROBATIONARY EMPLOYMENT.
x x x x An employee who is allowed to work after a probationary period
shall be considered a regular employee."
Thus, We sustain the NLRCs conclusion that Sambajon, Jr. acquired
permanent status on the first day of the first semester of SY 2003-2004
when he was allowed to continue with his teaching stint after the
expiration of his first appointment-contract on March 30, 2003. 27
On record are five appointment contracts28 of respondent:
Date

Contract Period

November 1, 2002

November 1, 2002-March 30, 2003

September 28, 2003

June 1, 2003-October 31, 2003

February 26, 2004

November 1, 2003-March 31, 2004

September 30, 2004

June 1, 2004-October 31, 2004

October 28, 2004

November 3, 2004-March 31, 2005

Only the first and third contracts were signed by the respondent. However,
such lack of signature in the second contract appears not to be the crucial
element considered by the CA but the fact that the third contract dated
February 26, 2004, unlike the previous contracts, does not indicate the
nature of the appointment as probationary employment. According to the
CA, this implies, as concluded by the NLRC, that respondent was already a
regular employee.
We disagree.
The third appointment contract dated February 26, 2004 reads:

137

February 26, 2004

attainment of the Vision-Mission and the goals and objectives of the

University.

MR.
MARVIN
Religious Education Department

JULIAN

SAMBAJON
Received and Conforme:

Dear Mr. Sambajon,

(SGD.) MARVIN-JULIAN L. SAMBAJON, JR.29

I am pleased to inform you that you are designated and commissioned to

be an Apostle of Love and Service, Unity and Peace as you dedicate and
commit yourself in the exercise of your duties and responsibilities as a:

Since it was explicitly provided in the above contract that unless renewed
in writing respondents appointment automatically expires at the end of
the stipulated period of employment, the CA erred in concluding that
simply because the word "probationary" no longer appears below the
designation (Full-Time Faculty Member), respondent had already become a
permanent employee. Noteworthy is respondents admission of being still
under probationary period in his January 12, 2005 letter to Sr. Evidente
reiterating his demand for salary differential, which letter was sent almost
one year after he signed the February 26, 2004 appointment contract, to
wit:

FULL
TIME
FACULTY
MEMBER
of the Religious Education Department from November 1, 2003 to March
31, 2004.
Unless otherwise renewed in writing, this designation automatically
terminates as of the date expiration above states without further notice.
As a member of the academic/clinical community, you are expected to live
by and give your full support to the promotion and attainment of the
Vision-Mission, goals and objectives, the rules and regulations, the Core
Values which the University professes to believe and live by.
Congratulations and keep your work full in the spirit of the Lord for the
Charity of Christ urges us to live life to the fullest.
God bless
In Christ,
Sr.
Ma.
USI President

Asuncion

G.

Evidente,

D.C.

Witness:
Sr.
HR Officer

Stella

O.

Real,

The problem is that your good office has never categorically resolved
whether or not probationary teachers can also be evaluated for salary
adjustment. Nevertheless, inferring from your statement that evaluation
precedes re-ranking and in fact is the basis for re-ranking, may I
categorically ask: does it really mean that since, it precedes re-ranking,
evaluation should not take place among probationary teachers for they can
not yet be re-ranked? If so, then how pitiful are we, probationary teachers
for our credentials are never evaluated since we cannot yet be re-ranked.
Oh my goodness! Can your good office not give me a clearer and more
convincing argument shedding light on this matter?30
Respondent nonetheless claims that subsequently, the probationary period
of three years under the regulations was shortened by petitioner as
relayed to him by Sr. Evidente herself. However, the latter, together with
Sr. Real, categorically denied having informed respondent that his
probationary period was abbreviated, allegedly the reason his salary
adjustment was not made retroactive. Apart from his bare assertion,
respondent has not adduced proof of any decision of the school
administration to shorten his probationary period.

D.C.

I, ______________________ understand that unless renewed in writing, my

services as ________________ expires automatically on the specific date
above stated.
Furthermore, I fully accept this appointment to help build the Kingdom of
God here and now and to facilitate the living of the Core Values and the

In Rev. Fr. Labajo v. Alejandro,31 we held that:

The three (3)-year period of service mentioned in paragraph 75 [of the
Manual of Regulations for Private Schools] is of course the maximum
period or upper limit, so to speak, of probationary employment allowed in
the case of private school teachers. This necessarily implies that a regular
or permanent employment status may, under certain conditions, be
attained in less than three (3) years. By and large, however, whether or not

138

one has indeed attained permanent status in ones employment, before

the passage of three (3) years, is a matter of proof. (Emphasis supplied.)
There can be no dispute that the period of probation may be reduced if the
employer, convinced of the fitness and efficiency of a probationary
employee, voluntarily extends a permanent appointment even before the
three-year period ends. Conversely, if the purpose sought by the employer
is neither attained nor attainable within the said period, the law does not
preclude the employer from terminating the probationary employment on
justifiable ground; or, a shorter probationary period may be incorporated in
a collective bargaining agreement. But absent any circumstances which
unmistakably show that an abbreviated probationary period has been
agreed upon, the three-year probationary term governs.32
As to the Certificate of Employment 33 issued by Sr. Real on January 31,
2005, it simply stated that respondent "was a full time faculty member in
the Religious Education Department of this same institution" and that he
holds the rank of Associate Professor. There was no description or
qualification of respondents employment as regular or permanent. Neither
did the similar Certification34 also issued by Sr. Real on March 18, 2005
prove respondents status as a permanent faculty member of petitioner.
It bears stressing that full-time teaching primarily refers to the extent of
services rendered by the teacher to the employer school and not to the
nature of his appointment. Its significance lies in the rule that only full-time
teaching personnel can acquire regular or permanent status. The
provisions of DOLE-DECS-CHED-TESDA Order No. 01, series of 1996,
"Guidelines on Status of Employment of Teachers and of Academic
Personnel in Private Educational Institutions" are herein reproduced:
2. Subject in all instances to compliance with the concerned
agency and school requirements, the probationary period for
teaching or academic personnel shall not be more than three (3)
consecutive school years of satisfactory service for those in the
elementary and secondary levels; six (6) consecutive regular
semesters of satisfactory service for those in the tertiary and
graduate levels, and nine (9) consecutive trimesters of satisfactory
service for those in the tertiary level where collegiate courses are
offered on a trimester basis.
Unless otherwise provided by contract, school academic personnel
who are under probationary employment cannot be dismissed
during the applicable probationary period, unless dismissal is
compelled by a just cause or causes.
3. Teachers or academic personnel who have served the
probationary period as provided for in the immediately preceding
paragraph shall be made regular or permanent if allowed to work

after such probationary period. The educational institution,

however, may shorten the probationary period after taking into
account the qualifications and performance of the probationary
teachers and academic personnel.
Full-time teaching or academic personnel are those meeting all the
following requirements:
3.1. Who possess at least the minimum academic
qualifications prescribed by the Department of Education,
Culture and Sports for Basic Education, the Commission on
Higher Education for Tertiary Education, and the Technical
Education and Skills Development Authority for Technical
and Vocational Education under their respective Manual of
Regulations governing said personnel;
3.2 Who are paid monthly or hourly, based on the normal
or regular teaching loads as provided for in the policies,
rules and standards of the agency concerned;
3.3 Whose regular working day of not more than eight (8)
hours a day is devoted to the school;
3.4 Who have no other remunerative occupation elsewhere
requiring regular hours of work that will conflict with the
working hours in the school; and
3.5 Who are not teaching full-time in any other educational
institution.
All teaching or academic personnel who do not meet the foregoing
qualifications are considered part time.
4. Part-time teaching or academic personnel cannot acquire regular
or permanent employment status.
5. Teaching or academic personnel who do not meet the minimum
academic qualifications shall not acquire tenure or regular status.
The school may terminate their services when a qualified teacher
becomes available.35
In this case, petitioner applied the maximum three-year probationary
period equivalent to six consecutive semesters provided in the Manual
of Regulations. This can be gleaned from the letter dated March 24, 2004
of Sr. Grace Namocancat, D.C. addressed to respondent, informing the
latter of the result of evaluation of his performance for SY 2003-2004 and

139

stating that November 2004 marks his second year of full-time teaching,
which means he had one more year to become a permanent employee. 36
The circumstance that respondents services were hired on semester basis
did not negate the applicable probationary period, which is three school
years or six consecutive semesters. In Magis Young Achievers Learning
Center37 the Court explained the three years probationary period rule in
this wise:
The common practice is for the employer and the teacher to enter into a
contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering
the teachers performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another
school year, the probationary employment continues. Again, at the end of
that period, the parties may opt to renew or not to renew the contract. If
renewed, this second renewal of the contract for another school year would
then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may
now decide whether to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the reasonable
standards of competence and efficiency set by the employer. For the entire
duration of this three-year period, the teacher remains under probation.
Upon the expiration of his contract of employment, being simply on
probation, he cannot automatically claim security of tenure and compel the
employer to renew his employment contract. It is when the yearly contract
is renewed for the third time that Section 93 of the Manual becomes
operative, and the teacher then is entitled to regular or permanent
employment status.38 (Emphasis supplied.)
Petitioner argues that respondents probationary period expires after each
semester he was contracted to teach and hence it was not obligated to
renew his services at the end of the fifth semester (March 2005) of his
probationary employment. It asserts that the practice of issuing
appointment contracts for every semester was legal and therefore
respondent was not terminated when petitioner did not renew his contract
for another semester as his probationary contract merely expired. Plainly,
petitioner considered the subject appointment contracts as fixed-term
contracts such that it can validly dismiss respondent at the end of each
semester for the reason that his contract had expired.
The Court finds no merit in petitioners interpretation of the Manual of
Regulations, supplemented by DOLE-DECS-CHED-TESDA Order No. 01,
series of 1996. As we made clear in the afore-cited case of Magis Young
Achievers Learning Center, the teacher remains under probation for the
entire duration of the three-year period. Subsequently, in the case of
Mercado v. AMA Computer College-Paraaque City, Inc. 39 the Court,
speaking through Justice Arturo D. Brion, recognized the right of

respondent school to determine for itself that it shall use fixed-term

employment contracts as its medium for hiring its teachers. Nevertheless,
the Court held that the teachers probationary status should not be
disregarded simply because their contracts were fixed-term. Thus:
The
Conflict:
and Fixed-term Employment

Probationary

Status

The existence of the term-to-term contracts covering the petitioners

employment is not disputed, nor is it disputed that they were on
probationary status not permanent or regular status from the time they
were employed on May 25, 1998 and until the expiration of their Teaching
Contracts on September 7, 2000. As the CA correctly found, their teaching
stints only covered a period of at least seven (7) consecutive trimesters or
two (2) years and three (3) months of service. This case, however, brings
to the fore the essential question of which, between the two factors
affecting employment, should prevail given AMACCs position that the
teachers contracts expired and it had the right not to renew them. In other
words, should the teachers probationary status be disregarded simply
because the contracts were fixed-term?
The provision on employment on probationary status under the Labor Code
is a primary example of the fine balancing of interests between labor and
management that the Code has institutionalized pursuant to the
underlying intent of the Constitution.
On the one hand, employment on probationary status affords management
the chance to fully scrutinize the true worth of hired personnel before the
full force of the security of tenure guarantee of the Constitution comes into
play. Based on the standards set at the start of the probationary period,
management is given the widest opportunity during the probationary
period to reject hirees who fail to meet its own adopted but reasonable
standards. These standards, together with the just and authorized causes
for termination of employment the Labor Code expressly provides, are the
grounds available to terminate the employment of a teacher on
probationary status. For example, the school may impose reasonably
stricter attendance or report compliance records on teachers on probation,
and reject a probationary teacher for failing in this regard, although the
same attendance or compliance record may not be required for a teacher
already on permanent status. At the same time, the same just and
authorize[d] causes for dismissal under the Labor Code apply to
probationary teachers, so that they may be the first to be laid-off if the
school does not have enough students for a given semester or trimester.
Termination of employment on this basis is an authorized cause under the
Labor Code.
Labor, for its part, is given the protection during the probationary period of
knowing the company standards the new hires have to meet during the

140

probationary period, and to be judged on the basis of these standards,

aside from the usual standards applicable to employees after they achieve
permanent status. Under the terms of the Labor Code, these standards
should be made known to the teachers on probationary status at the start
of their probationary period, or at the very least under the circumstances
of the present case, at the start of the semester or the trimester during
which the probationary standards are to be applied. Of critical importance
in invoking a failure to meet the probationary standards, is that the school
should show as a matter of due process how these standards have been
applied. This is effectively the second notice in a dismissal situation that
the law requires as a due process guarantee supporting the security of
tenure provision, and is in furtherance, too, of the basic rule in employee
dismissal that the employer carries the burden of justifying a dismissal.
These rules ensure compliance with the limited security of tenure
guarantee the law extends to probationary employees.
When fixed-term employment is brought into play under the above
probationary period rules, the situation as in the present case may at
first blush look muddled as fixed-term employment is in itself a valid
employment mode under Philippine law and jurisprudence. The conflict,
however, is more apparent than real when the respective nature of fixedterm employment and of employment on probationary status are closely
examined.
The fixed-term character of employment essentially refers to the period
agreed upon between the employer and the employee; employment exists
only for the duration of the term and ends on its own when the term
expires. In a sense, employment on probationary status also refers to a
period because of the technical meaning "probation" carries in Philippine
labor law a maximum period of six months, or in the academe, a period
of three years for those engaged in teaching jobs. Their similarity ends
there, however, because of the overriding meaning that being "on
probation" connotes, i.e., a process of testing and observing the character
or abilities of a person who is new to a role or job.
Understood in the above sense, the essentially protective character of
probationary status for management can readily be appreciated. But this
same protective character gives rise to the countervailing but equally
protective rule that the probationary period can only last for a specific
maximum period and under reasonable, well-laid and properly
communicated standards. Otherwise stated, within the period of the
probation, any employer move based on the probationary standards and
affecting the continuity of the employment must strictly conform to the
probationary rules.
Under the given facts where the school year is divided into trimesters, the
school apparently utilizes its fixed-term contracts as a convenient
arrangement dictated by the trimestral system and not because the

workplace parties really intended to limit the period of their relationship to

any fixed term and to finish this relationship at the end of that term. If we
pierce the veil, so to speak, of the parties so-called fixed-term
employment contracts, what undeniably comes out at the core is a fixedterm contract conveniently used by the school to define and regulate its
relations with its teachers during their probationary period.
To be sure, nothing is illegitimate in defining the school-teacher
relationship in this manner. The school, however, cannot forget that its
system of fixed-term contract is a system that operates during the
probationary period and for this reason is subject to the terms of Article
281 of the Labor Code. Unless this reconciliation is made, the requirements
of this Article on probationary status would be fully negated as the school
may freely choose not to renew contracts simply because their terms have
expired. The inevitable effect of course is to wreck the scheme that the
Constitution and the Labor Code established to balance relationships
between labor and management.
Given the clear constitutional and statutory intents, we cannot but
conclude that in a situation where the probationary status overlaps with a
fixed-term contract not specifically used for the fixed term it offers, Article
281 should assume primacy and the fixed-period character of the contract
must give way. This conclusion is immeasurably strengthened by the
petitioners and the AMACCs hardly concealed expectation that the
employment on probation could lead to permanent status, and that the
contracts are renewable unless the petitioners fail to pass the schools
standards.40 (Additional emphasis supplied.)
Illegal Dismissal
Notwithstanding the limited engagement of probationary employees, they
are entitled to constitutional protection of security of tenure during and
before the end of the probationary period.41 The services of an employee
who has been engaged on probationary basis may be terminated for any of
the following: (a) a just or (b) an authorized cause; and (c) when he fails to
qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.42
Thus, while no vested right to a permanent appointment had as yet
accrued in favor of respondent since he had not completed the prerequisite
three-year period (six consecutive semesters) necessary for the acquisition
of permanent status as required by the Manual of Regulations for Private
Schools43 -- which has the force of law 44 -- he enjoys a limited tenure.
During the said probationary period, he cannot be terminated except for
just or authorized causes, or if he fails to qualify in accordance with
reasonable standards prescribed by petitioner for the acquisition of
permanent status of its teaching personnel.

141

In a letter dated February 26, 2005, petitioner terminated the services of

respondent stating that his probationary employment as teacher will no
longer be renewed upon its expiry on March 31, 2005, respondents fifth
semester of teaching. No just or authorized cause was given by petitioner.
Prior to this, respondent had consistently achieved above average rating
based on evaluation by petitioners officials and students. He had also
been promoted to the rank of Associate Professor after finishing his
masters degree course on his third semester of teaching. Clearly,
respondents termination after five semesters of satisfactory service was
illegal.
Respondent therefore is entitled to continue his three-year probationary
period, such that from March 31, 2005, his probationary employment is
deemed renewed for the following semester (1st semester of SY 20052006). However, given the discordant relations that had arisen from the
parties dispute, it can be inferred with certainty that petitioner had opted
not to retain respondent in its employ beyond the three-year period.
On the appropriate relief and damages, we adhere to our disposition in
Magis Young Achievers Learning Center45:
Finally,
we
rule
on
the
propriety
of
the
monetary
awards.1wphi1 Petitioner, as employer, is entitled to decide whether to
extend respondent a permanent status by renewing her contract beyond
the three-year period. Given the acrimony between the parties which must
have been generated by this controversy, it can be said unequivocally that
petitioner had opted not to extend respondent's employment beyond this
period. Therefore, the award of backwages as a consequence of the finding
of illegal dismissal in favor of respondent should be confined to the threeyear probationary period. Computing her monthly salary of F15,000.00 for
the next two school years (F15,000.00 x 10 months x 2), respondent
already having received her full salaries for the year 2002-2003, she is
entitled to a total amount of F300,000.00. Moreover, respondent is also
entitled to receive her 13th month pay correspondent to the said two
school years, computed as yearly salary, divided by 12 months in a year,
multiplied by 2, corresponding to the school years 2003-2004 and 20042005, or F150,000.00 I 12 months x 2 = F25,000.00. Thus, the NLRC was
correct in awarding respondent the amount of F325,000.00 as backwages,
inclusive of 13th month pay for the school years 2003-2004 and 20042005, and the amount of P3,750.00 as pro-rated 13th month pay.
WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The
Decision dated March 25, 2011 of the Court of Appeals in CA-G.R. SP Nos.
108103 & 108168 is hereby MODIFIED. Petitioner Universidad de Sta.
Isabel is hereby DIRECTED to PAY respondent Marvin-Julian L. Sambajon, Jr.
back wages corresponding to his full monthly salaries for one semester (1st
semester of SY 2005-2006) and pro-rated 13th month pay.

The case is REMANDED to the Labor Arbiter for a recomputation of the

amounts due to respondent in conformity with this Decision.
No pronouncement as to costs.
SO ORDERED.

142

CANDIDO ALFARO, petitioner, vs. COURT OF APPEALS, NATIONAL

LABOR
RELATIONS
COMMISSION
and
STAR
PAPER
CORPORATION, respondents.

private respondent. Before Christmas of 1993, petitioner sought private

respondent to pay his 13th month pay and [his] 15 days sick leave pay, but
he was told to come next year.

DECISION

On January 12, 1994, petitioner came to private respondent for his

aforestated money claims. During that occasion, private respondent
dangled to petitioner a check worth P3,000.00 which [would] be released
to him, only if he [signed] the documents, being forced upon him to sign on
December 7, 1993. Deperate for the money to support his subsistence, and
against his will, petitioner was constrained to sign the said documents
which contained no amount of money released to him. The actual sum of
money received by petitioner from private respondent amounted
to P3,000.00 in the form of check, while his claims for 15 days sick leave
pay was secured by him from the Social Security System.

PANGANIBAN, J.:
Generally, separation pay need not be paid to an employee who
voluntarily resigns. However, an employer who agrees to expend such
benefit as an incident of the resignation should not be allowed to renege in
the performance of such commitment.
The Case
Before us is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Court, seeking to set aside the Decision [2] of the Court of Appeals
(CA), which affirmed the June 16, 1998 Decision of the National Labor
Relations Commission (NLRC).[3]

The documents forced upon the petitioner to sign were a resignation letter,
and a Release and Quit Claim. Said resignation letter read, thus:
To the Personal Manager

The Facts

Mr. Michael Philip Elizalde

The facts as related by petitioner in his Memorandum [4] are hereunder

reproduced as follows:

Star Paper Corporation

Petitioner was employed as a helper/operator of private respondent since

November 8, 1990. From November 23, 1993 until December 5, 1993, he
took a sick leave. When he reported back to work on December 6, 1993, he
was surprised to find out that another worker was recruited to take his
place, and instead, he was transferred to [the] wrapping section where he
was required to work with overtime up to 9:30 PM, from his regular working
hours of from 7:00 a.m., to 4:00 p.m., despite the fact that he had just
recovered from illness. On December 7, 1993, he was given a new
assignment where the work was even more difficult[;] when he complained
o[f] what he felt was rude treatment or sort of punishment since he was
being exposed to hard labor notwithstanding his predicament of just
coming from sickness, petitioner was told to look for another job because
he was dismissed effective on said date, December 7, 1993, when
petitioner was seeking his 13th month pay and fifteen (15) days sick leave
pay [o]n the afternoon of the same day, he was ignored when he refused to
sign documents which indicated that he was renouncing claims against

46 Joy St., Grace Village, Q.C.

Dear Sir,
Ako po si Candido Alfaro ay nagbibigay ng aking resignation letter dahilan
po sa aking sakit. Umaasa po ako na mabigyan ng tulong.
Lubos na gumagalang
(sgd) Candido Alfaro
As submitted by private respondent in its pleadings on record, petitioner
allegedly tendered said resignation letter on January 12, 1994, on the basis
of which, the former maintains that the latter was not illegally dismissed,
was paid [his] separation pay of P8,455.50, and that he voluntarily
resigned from his job effective January 12, 1994.[5]

143

Private respondent, in its Memorandum [6], adopts Labor Arbiter Donato

Quintos findings of fact as follows:
Complainant alleges that he was hired by respondent corporation in
November 1990 [as] the latters machine tape operator. Thereafter, or in
the month[s] of September and October, 1993, he was suffered to do some
painting work on pallets guide using [a] spray gun. As a result, in the third
week of October, 1993 he felt general body weakness coupled with
constant coughing and fever.

complainant asked the respondent corporation that he be allowed to resign

with benefits. After getting a favorable reply, complainant submitted a
resignation letter to the respondent corporation on January 12, 1994.
Because of his request for help, separation benefits were likewise given to
complainant in the amount of P8,452.50 Complainant, upon receipt of said
benefits, executed a Release and Quitclaim in favor of respondent
corporation.
The CA Ruling

As a consequence of his illness, complainant alleges that he took a

vacation leave from November 22, 1993 to December 5, 1993. However,
upon reporting for work on December 6, 1993, complainant was surprised
to find out that somebody was already recruited to take his place. Instead,
he was transferred to the wrapping section.
On December 7, 1993, complainant complained of the work being given to
him for being difficult which was interpreted as some sort of a punishment
given to him by the respondent. As a result thereof, complainant alleges
that he was dismissed without valid cause and without due process of
law. He further alleges that he was not paid his 13th month pay and 15
days sick leave which he was claiming because he refused to sign a
document renouncing all his claim[s] against respondent corporation.
On January 12, 1994, complainant went to the respondent corporation to
claim his 13th month pay and his 15 days sick leave pay. He received the
amount of P3,000.00 but he was allegedly pressured to sign a Quitclaim
and Release with no amount or consideration written on said
document. Further, complainant also alleges that he was also made to sign
a prepared resignation letter in exchange for the P3,000.00 which he
received which [was] contrary to the claim of the respondent corporation
that he received P8,452.00.
On June 14, 1996, the complainant filed a case against the respondent
corporation for non-payment of separation pay. Said complaint was later
amended on August 1, 1996 by claiming illegal dismissal and damages in
lieu of separation pay, with a prayer for reinstatement with backwages and
attorneys fees.
On the other hand, respondent corporation maintains that complainant
while still under its employ contracted PTB Minimal Active for which reason
he applied for SSS benefits on November 25, 1993.Considering his illness,

In denying petitioners claims, the CA ruled as follows:

It is not easy to uphold petitioners submission. For, the Labor Arbiters
report to the National Labor Relations Commission shows that petitioner
resigned voluntarily. Thus, as written in the letter of resignation:
Ako po si candido Alfaro ay nagbibigay ng aking resignation dahilan po sa
aking sakit.
Umaasa po ako na mabigyan ng tulong.
The same report likewise mentioned the Quitclaim and Release (Annex 2,
of private respondents position paper) which further strengthened the fact
that petitioner resigned due to his ailment. If petitioners concatenation is
true that he was forced to sign the resignation letter against his better
judgment, then why should he also sign the quitclaim and release[?]
We find no reason to reverse and set aside the findings and
recommendation of the Labor Arbiter, and affirmed by the NLRC. As a
quasi-judicial body, the findings of the NLRC deserve respect, even finality
(M. Ramirez Industries vs. Secretary of Labor, 266 SCRA 111; Bataan
Shipyard and Engineering Corporation vs. NLRC, 269 SCRA 199; Naguiat vs.
NLRC, 269 SCRA 564; Conti vs. NLRC, 271 SCRA 114.)
Hence, this recourse.[7]
The Issues
Petitioner submits the following issues for the consideration of this
Court:

144

1.) Whether or not the Honorable Court of Appeals committed

grave abuse of discretion tantamount to lack or x x x excess
of jurisdiction and/or serious reversible error in holding that
petitioner was not illegally dismissed by private respondent;
2.) Whether or not the Honorable Court of Appeals committed
grave abuse of discretion tantamount to lack of or x x x
excess of jurisdiction, and/or serious reversible error in holding
that petitioner voluntarily resigned from employment
3.) Whether or not the Honorable Court of Appeals committed
grave abuse of discretion tantamount to lack of or x x x
excess of jurisdiction and/or reversible error in holding that
the finding of the NLRC, deserve respect and even finality
despite serious flaws in its appreciation of facts and evidence;
4.) Whether or not the Honorable Court of Appeals committed
grave abuse of discretion tantamount to lack of or x x x
excess of jurisdiction, and/or serious reversible error in
dismissing the petition for certiorari[8]
The Courts Ruling
The Petition has no merit.
Main Issue: Illegal Dismissal and Separation Pay
At the outset, it bears stressing that in a petition for review on
certiorari, the scope of the Supreme Courts judicial review of decisions of
the Court of Appeals is generally confined only to errors of law [9]; questions
of fact are not entertained. [10] Thus, only questions of law may be brought
by the parties and passed upon by this Court in the exercise of its power to
review.[11]
The Supreme Court is not a trier of facts, and this doctrine applies
with greater force in labor cases.[12] Factual questions are for the labor
tribunals to resolve.[13] In this case, the factual issues have already been
determined by the labor arbiter and the National Labor Relations
Commission. Their findings were affirmed by the CA. Judicial review by this
Court does not extend to a reevaluation of the sufficiency of the evidence
upon which the proper labor tribunal has based its determination. [14]

Indeed, factual findings of labor officials who are deemed to have

acquired expertise in matters within their respective jurisdictions are
generally accorded not only respect, but even finality, and are binding on
the Supreme Court.[15] Verily, their conclusions are accorded great weight
upon appeal, especially when supported by substantial evidence.
[16]
Consequently, the Supreme Court is not duty-bound to delve into the
accuracy of their factual findings, in the absence of a clear showing that
the same were arbitrary and bereft of any rational basis. [17]
The factual findings of the labor arbiter and the NLRC, as affirmed by
the CA, reveal that petitioner resigned from his work due to his illness, with
the understanding that private respondent would give him separation
pay. Unfortunately, it seems that private respondent did not keep its
promise to grant the separation pay, prompting petitioner to institute the
present action for illegal dismissal. It was only for this reason that the
Court gave due course to this Petition.
Generally, an employee who voluntarily resigns from employment is
not entitled to separation pay. [18] In the present case, however, upon the
request of petitioner, private respondent agreed to a scheme whereby the
former would receive separation pay despite having resigned
voluntarily. Thus, the terms and conditions they both agreed upon
constituted a contract freely entered into, which should be performed in
good faith, as it constituted the law between the parties.
Not all waivers and quitclaims are invalid as against public policy. If
the agreement was voluntarily entered into and represented a reasonable
settlement, it is binding on the parties and may not later be disowned,
simply because of a change of mind. [19] The position taken by petitioner on
the alleged illegal dismissal was vacillating and indecisive, as correctly
found by the labor arbiter who provided a ratiocination on the matter as
follows:
Thus, after a careful perusal of the evidence on hand, we are of the opinion
that the position taken by the respondent corporation is more credible than
that of complainant. This is evident from the fact that the complaint filed
by complainant on June 14, 1996, or more than two (2) years from his
alleged dismissal on December 7, 1993, was only payment of separation
pay. It was only on August 1, 1996 when complainant abandoned his claim
for separation pay and instead filed an amended complaint claiming that
he was, illegally dismissed.

145

To our mind, therefore, the foregoing coupled with the fact that there is
practically no evidence on record which shows that complainant was
pressured and made to sign a resignation letter and Release and Quitclaim
against his will [and] better judgment only shows that his claim of illegal
dismissal is unsubstantiated and is a mere afterthought.
Moreover, if indeed complainant was illegally dismissed, he should have
pursued his claim against the respondent corporation by immediately filing
a complaint for illegal dismissal. As it is, however, complainant filed a
complaint for separation pay against the respondent corporation only after
two (2) years from his alleged dismissal which complaint was amended for
the purpose of claiming illegal dismissal almost two (2) months thereafter.

facts and applicable law and doctrine. [22] An employee who resigns and
executes a quitclaim in favor of the employer isgenerally estopped from
filing any further money claims against the employer arising from the
employment.[23]
However, private respondent has not complied with its obligation to
give petitioners separation pay in the amount of P8,542.50. It was this
deliberate withholding of monetary benefits that necessitated the long,
litigious and lethargic proceedings in this case. Had private respondent
simply paid the measly amount of P8,452.50 as separation pay to
petitioner, this legal controversy could have been avoided and the court
dockets unclogged.

[20]

Voluntary resignation is defined as the act of an employee, who finds

himself in a situation in which he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service; thus, he has no other
choice but to disassociate himself from his employment. [21] As discussed
above, petitioner negotiated for a resignation with separation pay as the
manner in which his employment relations with private respondent would
end. He was already suffering from a lingering illness at the time he
tendered his resignation. His continued employment would have been
detrimental not only to his health, but also to his performance as an
employee of private respondent.
Hence, the termination of the employment relations of petitioner with
private respondent was ultimately, if not outrightly inevitable. Resignation
with separation pay was the best option for him under the
circumstances. Rightly so, this was the mode adopted and agreed upon by
the parties, as evidenced by the Release and Quitclaim petitioner executed
in connection with his resignation.
Clearly then, the claim of petitioner that he was illegally dismissed
cannot be sustained, considering that his voluntary resignation has been
indubitably established as a fact by the three tribunals below.Indeed, illegal
dismissal and voluntary resignation are adversely opposed modes of
terminating employment relations, in that the presence of one precludes
that of the other.
Although the Supreme Court has, more often than not, been inclined
towards the workers and has upheld their cause in their conflicts with the
employers, such inclination has not blinded it to the rule that justice is in
every case for the deserving, to be dispensed in the light of the established

WHEREFORE, the Petition is hereby DENIED and the assailed

Decision of the Court of Appeals AFFIRMED, with the modification that
private respondent is directed to pay petitioner P8,452.50 plus legal
interest thereon, computed from December 7, 1993, until fully paid,
representing the unpaid separation pay benefit agreed upon by the parties.
SO ORDERED.

146

G.R. No. 81087

June 19, 1991

INTERTROD
MARITIME,
INC.
and
TROODOS
SHIPPING
CO., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ERNESTO DE LA
CRUZ, respondents.
Del Rosario & Del Rosario for petitioners.

PADILLA, J.:
This petition seeks the annulment and/or modification of the resolution * of
the First Division of the National Labor Relations Commission promulgated
on 11 December 1987 in NSB Case No. 3997-82 entitled "Ernesto de la
Cruz vs. Intertrod Maritime, Inc. and Troodos Shipping Company," which
reversed the decision of then POEA Administrator Patricia Sto. Tomas dated
20 December 1983.
On 10 May 1982, private respondent Ernesto de la Cruz signed a shipboard
employment contract with petitioner Troodos Shipping Company as
principal and petitioner Intertrod Maritime, Inc., as agent to serve as Third
Engineer on board the M/T "BREEDEN" for a period of twelve (12) months
with a basic monthly salary of US$950.00.1
Private respondent eventually boarded a sister vessel, M/T "AFAMIS" and
proceeded to work as the vessel's Third Engineer under the same terms
and conditions of his employment contract previously referred to. 2
On 26 August 1982, while the ship (M/T "Afamis") was at Port Pylos,
Greece, private respondent requested for relief, due to "personal
reason."3 The Master of the ship approved his request but informed private
respondent that repatriation expenses were for his account and that he
had to give thirty (30) days notice in view of the Clause 5 of the
employment contract so that a replacement for him (private respondent)
could be arranged.4
On 30 August 1982, while the vessel was at Port Said in Egypt and despite
the fact that it was only four (4) days after private respondent's request for
relief, the Master "signed him off" and paid him in cash all amounts due
him less the amount of US$780.00 for his repatriation expenses, as
evidenced by the wages account signed by the private respondent. 5

On his return to the Philippines, private respondent filed a complaint with

the National Seamen Board (NSB)(now POEA) charging petitioners for
breach of employment contract and violation of NSB rules and
regulations.6 Private respondent alleged that his request for relief was
made in order to take care of a Filipino member of the crew of M/T
"AFAMIS" who was hospitalized on 25 August 1982 in Athens, Greece.
However, the Master of the ship refused to let him immediately disembark
in Greece so that the reason for his request for relief ceased to exist.
Hence, when the Master of the ship forced him to step out in Egypt despite
his protestations to the contrary, there being no more reason to request for
relief, an illegal dismissal occurred and he had no other recourse but to
return to the Philippines at his own expense.7
In its Answer to the complaint, petitioners denied the allegations of the
complainant and averred that the contract was cut short because of
private respondent's own request for relief so that it was only proper that
he should pay for his repatriation expenses in accordance with the
provisions of their employment contract.8
The sole issue to be resolved in this case is whether or not complainant's
termination is illegal.
POEA rendered a decision dismissing the complaint for lack of merit. 9 On
appeal to the NLRC, the decision was reversed.
The dispositive portion of the NLRC decision reads:
WHEREFORE, the appealed decision is hereby SET ASIDE and
another one entered, directing respondents-appellees to: (1) pay
complainant-appellant the amount of US$780.00 representing his
plane fare from Egypt to Manila; and (2) pay complainant-appellant
the amount of US$6,300.00 representing his unearned salary for
nine (9) months, the unexpired portion of the contract.
Foreign exchange conversions shall be paid in Philippine currency
at the rate of exchange at the actual payment thereof.
SO ORDERED.10
Hence, this petition.
Article 21(c) of the Labor Code requires that the Philippine Overseas
Employment Administration (formerly NSB) should approve and verify a
contract for overseas Employment.11 A contract, which is approved by the
National Seamen Board, such as the one in this case, is the law between

147

the contracting parties; and where there is nothing in it which is contrary

to law, morals, good customs, public policy or public order, the validity of
said contract must be sustained.12

of work would be involved by reason of the resignation. This practice has

been recognized because "every business enterprise endeavors to increase
its profits by adopting a device or means designed towards that goal." 17

In its resolution, the NLRC held that the immediate approval of private
respondent's request for relief should have resulted in his disembarkation
in Port Pylos, Greece; that failure of the Master to allow disembarkation in
Greece nullified the request for relief and its approval, such that private
respondent's subsequent disembarkation in Egypt is no longer his doing
but rather an illegal dismissal on the part of the Master. 13 We cannot
support such a ruling for it fails to consider the clear import of the
provisions of the employment contract between petitioners and private
respondent.

Resignations, once accepted and being the sole act of the employee, may
not be withdrawn without the consent of the employer. In the instant case,
the Master had already accepted the resignation and, although the private
respondent was being required to serve the thirty (30) days notice
provided in the contract, his resignation was already approved. Private
respondent cannot claim that his resignation ceased to be effective
because he was not immediately discharged in Port Pylos, Greece, for he
could no longer unilaterally withdraw such resignation. When he later
signified his intention of continuing his work, it was already up to the
petitioners to accept his withdrawal of his resignation. The mere fact that
they did not accept such withdrawal did not constitute illegal dismissal for
acceptance of the withdrawal of the resignation was their (petitioners') sole
prerogative.

Paragraph 5 of the Employment Contract between petitioners and private

respondent Ernesto de la Cruz provides as follows:
5. That, if the seaman decide to terminate his contract prior to the
expiration of the service period as stated and defined in paragraph
4 of this Employment Contract, without due cause, he will give the
Master thirty (30) days notice and agree to allow his repatriation
expenses to be deducted from wages due him.14
Clearly, therefore, private respondent Ernesto de la Cruz was required by
the employment contract not only to pay his own repatriation expenses but
also to give thirty (30) days notice should he decide to terminate his
employment prior to the expiration of the period provided in the contract.
When the Master approved his request for relief, the Master emphasized
that private respondent was required to give thirty (30) days notice and to
shoulder his own repatriation expenses. Approval of his request for relief,
therefore, did not constitute a waiver by petitioners of the provisions of the
contract, as private respondent would have us believe, for it was made
clear to him that the provisions of the contract, insofar as the thirty (30)
days notice and repatriation expenses were concerned, were to be
enforced.
Private respondent claims that his request for relief was only for the reason
of taking care of a fellow member of the crew so much so that when he
was not allowed to disembark in Port Pylos, Greece, the reason no longer
existed and, therefore, when he was forced to "sign off" at Port Said, Egypt
even when he signified intentions of continuing his work, he was illegally
dismissed.15 We sympathize with the private respondent; however, we
cannot sustain such contention. Resignation is the voluntary act of an
employee who "finds himself in a situation where he believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, then
he has no other choice but to disassociate himself from his
employment."16 The employer has no control over resignations and so, the
notification requirement was devised in order to ensure that no disruption

Once an employee resigns and his resignation is accepted, he no longer

has any right to the job. If the employee later changes his mind, he must
ask for approval of the withdrawal of his resignation from his employer, as
if he were re-applying for the job. It will then be up to the employer to
determine whether or not his service would be continued. If the employer
accepts said withdrawal, the employee retains his job. If the employer does
not, as in this case, the employee cannot claim illegal dismissal for the
employer has the right to determine who his employees will be. To say that
an employee who has resigned is illegally dismissed, is to encroach upon
the right of employers to hire persons who will be of service to them.
Furthermore, the employment contract also provides as follows:
4. That all terms and conditions agreed herein are for a service
period of twelve (12) months provided the vessel is in a convenient
port for his repatriation, otherwise at Master's discretion, on
vessel's arrival at the first port where repatriation is practicable
provided that such continued service shall not exceed three
months.18
Under the terms of the employment contract, it is the ship's Master who
determines where a seaman requesting relief may be "signed off." It is,
therefore, erroneous for private respondent to claim that his resignation
was effective only in Greece and that because he was not immediately
allowed to disembark in Greece (as the employer wanted compliance with
the contractual conditions for termination on the part of the employee), the
resignation was to be deemed automatically withdrawn.
The decision of the NLRC is therefore set aside. To sustain it would be to
authorize undue oppression of the employer.1wphi1 After all, "the law, in

148

protecting the rights of the laborer, authorizes neither oppression nor selfdestruction of the employer."19
WHEREFORE, the petition is GRANTED. The questioned resolution of the
National Labor Relations Commission dated 11 December 1987 is hereby
REVERSED and SET ASIDE and the decision of then POEA Administrator
Patricia Sto. Tomas dated 20 December 1983 is REVIVED. No
pronouncement as to costs.
SO ORDERED.

149

G.R. No. 161196

July 28, 2008

BLUE ANGEL MANPOWER AND SECURITY SERVICES, INC., Petitioner,

vs.
HON. COURT OF APPEALS, ROMEL CASTILLO, WILSON CIRIACO,
GARY GARCES, and CHESTERFIELD MERCADER, Respondents.
DECISION
VELASCO, JR., J.:
In this petition for review under Rule 45, petitioner Blue Angel Manpower
and Security Services, Inc. (Blue Angel) assails and seeks to reverse the
Decision1 dated February 26, 2003 of the Court of Appeals (CA) in CA-G.R.
SP No. 67478, in part setting aside the Decision dated May 9, 2001 of the
National Labor Relations Commission (NLRC).
The facts are as found by the CA.
Blue Angel, a messengerial and security agency, hired private respondents
Romel Castillo, Wilson Ciriaco, Gary Garces, and Chesterfield Mercader as
security guards and detailed them at the National College of Business and
Arts (NCBA) in Cubao, Quezon City.
On April 20, 1999, Castillo and Mercader, later joined by Ciriaco and
Garces, filed a complaint for illegal deductions and other money claims
against Blue Angel. Eventually, they amended their complaint to include
illegal dismissal. According to the four guards, they were required, while
still with Blue Angel, to work from 7:00 a.m. to 7:00 p.m. without overtime
and premium holiday pay, among other benefits. They also alleged
receiving only PhP 5,000 a month or PhP 166 per day and, from this
amount, Blue Angel deducted PhP 100 as cash bond. They further averred
that Blue Angel, when apprised of their original complaint, illegally
terminated Garces and Ciriaco on April 11 and 12, 1999, respectively, and
Castillo and Mercader on April 28, 1999. The four guards prayed for (1)
payment of backwages, wage differentials, premium and overtime pay for
holidays, and 13th month pay; (2) reimbursement of their cash bond; (3)
reinstatement or separation pay; and (4) damages.
Blue Angel, for its part, denied the charges of illegal dismissal. It alleged
that, on two occasions, the officer-in-charge (OIC) of the Security Force of
NCBA, Reynaldo Dayag, reported that the four complaining guards had,
while on guard duty detail with the school, committed several infractions,
among them: insubordination, sleeping while on duty, and absence without
leave (AWOL). When summoned to explain their side on the derogatory
report, only Castillo, Ciriaco, and Garces, according to Blue Angel, showed

up, but not Mercader who had since stopped reporting for work and thus
considered on AWOL. Continuing, Blue Angel alleged that when told that
they would be subjected to an investigation, Castillo, Ciriaco, and Garces
pleaded that they be allowed to resign instead. The three, so Blue Angel
claimed, then tendered their pro-forma letters of resignation followed by
handwritten resignation letters in the nature of quitclaims. To refute the
guards claims of non-payment of what was due them, Blue Angel
presented the payrolls and vouchers from July 1997 to April 1999 that
showed the four guards respective gross salaries and deductions.
In a Decision2 dated May 31, 2000, the labor arbiter, in part, found for the
guards, Blue Angel being ordered to immediately reinstate them with
backwages. The dispositive portion of the labor arbiters decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
Blue Angel Security and Manpower Services, Inc. to immediately reinstate
the complainants to their former positions pursuant to the ruling in the
Pioneer Texturing case that an order of reinstatement is self-executory
even pending appeal.
Respondent is hereby ordered to pay the backwages of the complainants
tentatively computed as follows:
Rommel Castillo --------

Php 82,971.00

Wilson Ciriaco ----------

Php 86,139.00

Gary Garces -------------

Php 86,337.00

Chesterfield Mercader

Php 82,971.00

SO ORDERED.
Dissatisfied, Blue Angel, on one hand, and Castillo, et al., on the other,
interposed separate appeals to the NLRC, the former faulting the labor
arbiter mainly for his finding that the four guards in question were illegally
dismissed. The guards, for their part, took exception to the arbiters
holding that some items of their money claim had already been paid.
By the Decision dated May 9, 2001, the NLRC affirmed with modification
that of the labor arbiter. The NLRC predicated its modificatory action on the
finding that Castillo, Ciriaco, and Garces were not terminated from the
service as they had indeed voluntarily resigned, and that only Mercader
was illegally dismissed. In net effect, the NLRC ruled that, of the four
complaining guards, only Mercader deserved to be reinstated with

150

backwages as he was the only one dismissed illegally. The dispositive

portion of the NLRC Decision reads:

x x x HOLDING THAT PRIVATE RESPONDENTS WERE ILLEGALLY

DISMISSED.

WHEREFORE, in light of the foregoing, the appealed Decision is hereby

AFFIRMED with the modification only in so far as the dismissal of the
complaints filed by Romel Castillo, [Wilson] Ciriaco and Gary Garces; the
judgment arrived at in the case of complainant Chesterfield Mercader is
hereby Affirmed.

II.
x x x IN NOT HOLDING THAT PRIVATE RESPONDENTS ARE NOT
ENTITLED TO THEIR CLAIMS FOR BACKWAGES OR ANY OTHER
MONETARY BENEFIT AS THEY HAVE ALREADY RECEIVED ALL THE
SALARIES AND BENEFITS THAT THEY ARE ENTITLED TO.

All other reliefs herein sought and prayed for are DENIED for lack of merit.
SO ORDERED.3
According to the NLRC, the two sets of letters of resignation, the pro-forma
resignations and the handwritten resignations, were never disputed.
Besides, the NLRC reasoned, the fact that the later resignation letters were
handwritten in Pilipino, a dialect known to them, militated against the
claims of Castillo, Ciriaco, and Garces that they were coerced and
pressured to writing the letters.
On certiorari before the CA, the CA first noted that Blue Angel did not
appeal the portion of the NLRC Decision affirming the labor arbiters ruling
that Mercader was illegally dismissed; hence, said portion of the decision
of the labor arbiter became final and binding on Blue Angel.
Now to the case of Castillo, Ciriaco, and Garces. In its February 26, 2003
Decision, the CA found incredulous the claim of Blue Angel that the guards
pleaded that they be allowed to resign and had voluntarily resigned after
they were told that an investigation would ensue. The CA concluded that
Blue Angel had illegally terminated Castillo, Ciriaco, and Garces. The fallo
of its Decision reads:
WHEREFORE, THE PETITION is hereby GRANTED. The decision of the
National Labor Relations Commission dated May 9, 2001 is ANNULLED AND
SET ASIDE except insofar as it sustained the labor arbiters ruling that
petitioner Chesterfield Mercader was illegally dismissed, with the result
that the decision of the labor arbiter dated May 31, 2000 is reinstated.
SO ORDERED.
Now before us, petitioner Blue Angel raises that the CA committed
palpable and reversible error of law in:
I.

It is to be stressed, as a preliminary consideration, that the illegality of

Mercaders dismissal and his entitlement to reinstatement with backwages
is now a settled issue, the NLRCs holding on that regard being conclusive
on Blue Angel when it failed, as the CA aptly observed, to appeal that
portion of the NLRCs decision. It is a settled rule that no questions will be
entertained on appeal unless they have been raised below. 4 Accordingly,
any disposition henceforth made herein bearing on the illegality of
dismissal shall be limited only to the case of private respondents Castillo,
Ciriaco, and Garces. When mention, therefore, is hereinafter made of
private respondents or respondents-guards, the reference is to Castillo,
Ciriaco and Garces only, unless the context indicates that it shall include
Mercader.
The question of whether or not private respondents were illegally
dismissed hinges on the determination of whether or not they freely and
voluntarily resigned as shown by the two sets of resignation letters.
We rule that the resignations were involuntary and the termination of
private respondents was illegal.
Blue Angel insists that the guards had pleaded to be allowed to resign
when they were told of the pending investigation, and that they eventually
tendered their pro-forma resignation letters followed by their own
handwritten resignation letters. Our review of the circumstances
surrounding these resignation letters does not support Blue Angels
contentions that these letters are indications that private respondents had
voluntarily resigned. We agree with the labor arbiter when he pointed out
that the undated, similarly worded resignation letters tended to show that
the guards were made to copy the pro-forma letters, in their own hand, to
make them appear more convincing that the guards had voluntarily
resigned. As the labor arbiter noted, the element of voluntariness of the
resignations is even more suspect considering that the second set of
resignation letters were pre-drafted, similarly worded, and with blank
spaces filled in with the effectivity dates of the resignations. 5 In their
Comment, private respondents claimed being forced to sign and copy the
pro-forma resignation letters and quitclaims on pain that they would not
get their remaining compensations.6

151

We are more inclined to believe the dismissed guards. Other circumstances

have been aptly pointed out by respondents-guards in their Comment that
we are wont to agree that they were forced into a situation where to refuse
to sign the resignation letters and quitclaims meant loss of money for the
immediate and urgent basic needs of their family. To buttress the
conclusion that the resignation letters were involuntary on the part of the
guards, we find convincing the circumstances mentioned in the Comment
of respondents-guards. For one, it seemed unlikely and improbable that
Garces and Ciriaco would voluntarily resign on April 26, 1999 when they
had 15 and 12 days earlier, or on April 11 and 12, 1999, already been
terminated. Then again, it was likewise inconsistent and implausible that
Castillo would voluntarily tender his resignation and sign a quitclaim on
April 28, 1999, when Mercader and he had in fact already filed a complaint
against Blue Angel with the NLRC regarding illegal deductions of their
salary eight days earlier, or on April 20, 1999. 7 Lastly, there is nothing on
record showing that Blue Angel provided any proof that Castillo, Ciriaco,
and Garces had indeed committed the infractions attributed to them. Blue
Angel merely enumerated the offenses without providing particulars as to
the date and place these infractions were committed. Neither did Blue
Angel present written notices, warnings, and affidavits of the OIC to
support its allegations against the guards.
We are not unaware that the execution of the resignation letters was
undisputed, but the aforementioned circumstances of this case and the
fact that private respondents filed a complaint for illegal dismissal from
employment against Blue Angel completely negate the claim that private
respondents voluntarily resigned. 8 Well-entrenched is the rule that
resignation is inconsistent with the filing of a complaint for illegal
dismissal.9 To constitute resignation, the resignation must be unconditional
with the intent to operate as such. There must be clear intention to
relinquish the position. In this case, private respondents actively pursued
their illegal dismissal case against Blue Angel such that they cannot be
said to have voluntarily resigned from their jobs.
With the finding that private respondents were illegally dismissed, they are
entitled to reinstatement to their positions without loss of their seniority
rights and with full backwages, inclusive of allowances, and to other
benefits or their monetary equivalent computed from the time private
respondents compensation was withheld from them up to the time of their
actual reinstatement as provided for in Article 279 of the Labor Code.
As the law now stands, illegally dismissed employees are entitled to two
reliefs, namely: backwages and reinstatement.lawph!l They are entitled to
reinstatement, if viable, or separation pay, if reinstatement is no longer
feasible, and backwages.10 The award of one does not preclude the other
as the Court had, in proper cases, ordered the payment of both. 11 Where an
employee would have been entitled to reinstatement with full backwages,
but circumstances, i.e., strained relationships, make reinstatement
impossible, the more equitable disposition would be to award separation

pay equivalent to at least one month pay, or one month pay for every year
of service, whichever is higher, in addition to full backwages, inclusive of
allowances, and benefits or their monetary equivalent, computed from the
time the employees compensation was withheld up to the time of the
employees actual reinstatement.12
As to the other money claims of private respondents, the
vouchers,13 payrolls,14 and other documentary evidence15 show that the
other monetary benefits being claimed by private respondents have
already been duly paid.
WHEREFORE, the petition is DISMISSED for lack of merit. The Decision of
the CA in CA-G.R. SP No. 67478 reinstating the Decision dated May 31,
2000 of the labor arbiter is AFFIRMED with the MODIFICATION that
petitioner Blue Angel Security and Manpower Services, Inc. is ordered to
reinstate complainants Romel Castillo, Wilson Ciriaco, and Gary Garces to
their former positions without loss of seniority rights and other privileges
and with full backwages, inclusive of allowances and other benefits or their
monetary equivalent computed from the time their compensations were
withheld from them up to the time of their actual reinstatements. In the
event reinstatement is not feasible, they shall be paid separation pay in
the amount equivalent to at least one month pay or one month pay for
every year of service whichever is higher.
With respect to Chesterfield Mercader, the NLRC Decision dated May 9,
2001, affirming the labor arbiters Decision dated May 31, 2000 which
ordered petitioner to reinstate him to his former position and pay him
backwages of PhP 82,971, had become final on November 2, 2001, in the
absence of an appeal thereon to the CA.
SO ORDERED.

152

MA. FININA E. VICENTE, G.R. No. 175988

Petitioner,
Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,

declared that petitioner was not constructively dismissed but voluntarily

resigned from her employment.
The antecedent facts are as follows:
Chico-Nazario,
Nachura, and
Petitioner Finina E. Vicente was employed by respondent Cinderella

Reyes, JJ.

Marketing Corporation (Cinderella) as Management Coordinator in January

THE HON. COURT OF APPEALS,
Former Seventeenth Division and
CINDERELLA MARKETING Promulgated:
CORPORATION,

1990. Prior to her resignation in February 2000, she held the position of
Consignment Operations Manager with a salary of P27,000.00 a month.
[5]

She was tasked with the oversight, supervision and management of the

Consignment Department dealing directly with Cinderellas consignors. [6]

Respondents. August 24, 2007

Petitioner alleged that it has been a practice among the employees
x ---------------------------------------------------------------------------------------- x

of Cinderella to obtain cash advances by charging the amount from the net
sales of Cinderellas suppliers/consignors. Mr. Miguel Tecson (AVP-Finance)

DECISION

approves the requests for cash advances, Mr. Arthur Coronel (AVPMerchandising) issues the memos instructing the accounting department

YNARES-SANTIAGO, J.:

to issue the corporate checks and finally, Ms. Theresa Santos (General
Manager) rediscounts them by issuing her personal checks. [7]

This Petition for Review on Certiorari assails the Decision and

After some time, one of Cinderellas suppliers complained about the

Resolution of the Court of Appeals dated August 18, 2006 [1] and December

unauthorized deductions from the net sales due them. Accordingly, an

13, 2006,[2] respectively, in CA-G.R. SP No. 88140 which reversed and set

investigation was conducted and upon initial review of respondents

aside the Decision of the National Labor Relations Commission (NLRC)

business records, it appears that petitioner was among those involved in

dated June 21, 2004[3] and its Resolution dated October 14, 2004, [4] and

the irregular and fraudulent preparation and encashment of respondents

corporate checks amounting to at least P500,000.00.[8]

153

the resignation was fabricated and without evidentiary weight since it does
Petitioner alleged that Mr. Tecson demanded her resignation on
several occasions. On February 15, 2000, Mr. Tecson allegedly told her
MAG-RESIGN KANA AGAD KASI MAIIPIT KAMI, in the presence of Lizz
Villafuerte, the Accounting Manager.[9] As a result of this alleged force and
intimidation, petitioner tendered her resignation letter.

not bear petitioners signature; that there was no basis to terminate

petitioner on the ground of loss of confidence since her involvement in the
fraudulent transactions was doubtful as shown by the Confidential Memo
clearing her of any liability. The dispositive portion of the Labor Arbiters
decision reads:
WHEREFORE, premises all considered, judgment is hereby
rendered ordering respondent Cinderella Marketing
Corporation to:

On January 13, 2003, or three years after her resignation,

petitioner filed a complaint against Cinderella alleging that her severance
from employment was involuntary amounting to constructive dismissal.

[10]

Cinderella denied the charge of constructive dismissal. It claimed

that petitioner voluntarily resigned from office before the internal audit was

1. pay complainant separation pay in lieu of reinstatement

computed at one (1) month for every year of service in the
amount of P270,000.00; and

2. pay complainant full backwages from the time she filed

this complaint in the amount of P270,000.00.

completed and before any formal investigation was initiated. She tendered
her resignation on February 7, 2000, then submitted another resignation

SO ORDERED.[13]

letter on February 15, 2000 where she confirmed the first resignation
letter. Respondent alleged that the complaint for constructive dismissal
was a mere afterthought demonstrated by the long delay of filing the
same.[11]

On appeal, the NLRC affirmed the decision of the Labor Arbiter. It

held that the statement of Mr. Tecson informing petitioner, to wit: MAGRESIGN KANA AGAD KASI MAIIPIT KAMI, was the proximate cause for
petitioners decision to resign. Thus, the resignation cannot be deemed

On
Decision

[12]

October
finding

21,

that

2003,

petitioner

the
was

Labor

Arbiter

constructively

rendered
and

illegally

dismissed. The Labor Arbiter ruled that Cinderella was not able to
controvert petitioners assertion that she was forced to resign; that the
resignation letter relied upon by respondent to show the voluntariness of

voluntary notwithstanding the execution of the two resignation letters.

154

Respondent companys motion for reconsideration was denied

hence, it filed a Petition for Certiorari under Rule 65 with the Court of

Petitioners motion for reconsideration was denied hence, the

present petition for review on certiorari raising the following issues:

Appeals.
I.
On August 18, 2006, the Court of Appeals rendered its decision
finding that the totality of evidence on record showed that petitioner

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR

IN REVERSING THE FACTUAL FINDINGS OF THE LABOR
ARBITER AND THE NLRC.

voluntarily resigned from her employment; that the subsequent acts of

petitioner belie the claim of constructive dismissal; that after the alleged
forced resignation, petitioner attended the meetings concerning her
involvement in the anomalous transactions and even arranged for the
settlement of her consequent liabilities as may be determined during the

II.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN RULING THAT PETITIONER VOLUNTARILY RESIGNED
FROM PRIVATE RESPONDENT.[15]

investigation; that the belated filing of the complaint militates against

petitioner because it is hardly expected from an aggrieved employee to
wait three years before instituting the case.

Petitioner asserts the following: (1) The factual findings of the

Labor Arbiter and the NLRC are not correctible by certiorari and are binding
on the Supreme Court in the absence of any showing that they are

The dispositive portion of the Decision provides:

completely without any support in the evidence on record. (2) In

termination cases, the employer has the burden of proof that the

WHEREFORE, the foregoing considered, the petition

is GRANTED and the assailed Decision REVERSED and SET
ASIDE. Private respondents complaint a quo is hereby
dismissed.No costs.

resignation is voluntary and not the product of coercion, intimidation or

other factors that vitiate the free will. (3) The NLRC correctly gave
credence

to

petitioners

allegation

that

Mr.

Tecson

demanded

her

resignation. (4) The delay in filing the complaint for illegal dismissal cannot
be taken against her as the same was filed within the prescriptive period

SO ORDERED.

[14]

allowed by law to file such actions.

The petition lacks merit.

155

general rule on the conclusiveness of the factual findings of the Court of

The primary issue in the case at bar is factual: whether petitioner
was constructively dismissed. Petitioner claims that her separation from
employment was a case of constructive dismissal. On the other hand,
respondent argues that petitioner voluntarily resigned.

Petitioner faults the Court of Appeals for reversing the factual

findings of the Labor Arbiter as affirmed by the NLRC that she was
constructively

dismissed

relying

on

the

principle

of

finality

and

conclusiveness of the decisions of the labor tribunals. However, it is wellsettled that for want of substantial basis, in fact or in law, factual findings
of an administrative agency, such as the NLRC, cannot be given the stamp
of finality and conclusiveness normally accorded to it, as even decisions of
administrative agencies which are declared final by law are not exempt
from the judicial review when so warranted.[16]

In administrative proceedings, the quantum of proof required is

substantial evidence, which is more than a mere scintilla of evidence, but
such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion.[17] The Court of Appeals may review the
factual findings of the NLRC and reverse its ruling if it finds that the
decision of the NLRC lacks substantial basis.

Appeals is also subject to well-recognized exceptions such as where the

Court of Appeals findings of facts contradict those of the lower court, or the
administrative bodies, as in this case.[18] All these considered, we are
compelled to make a further calibration of the evidence at hand.

Petitioner argues that the employer bears the burden of proof that
the

resignation is

voluntary and not the product

of

coercion or

intimidation. We agree that in termination cases, burden of proof rests

upon the employer to show that the dismissal is for a just and valid cause
and failure to do so would necessarily mean that the dismissal was illegal.
[19]

In Mobile Protective & Detective Agency v. Ompad,[20] the Court ruled

that should an employer interpose the defense of resignation, as in the

present case, it is still incumbent upon respondent company to prove that
the employee voluntarily resigned.

From

the

totality

of

evidence

on

record,

it

was

clearly

demonstrated that respondent Cinderella has sufficiently discharged its

burden to prove that petitioners resignation was voluntary. In voluntary
resignation,

the

employee

is

compelled

by

personal

reason(s)

to

disassociate himself from employment. It is done with the intention of

relinquishing an office, accompanied by the act of abandonment. [21] To
determine whether the employee indeed intended to relinquish such
employment, the act of the employee before and after the alleged
resignation must be considered.[22]

In the same vein, factual findings of the Court of Appeals are

generally not subject to this Courts review under Rule 45. However, the

156

Petitioner relinquished her position when she submitted the letters

Hence, petitioner cannot take refuge in the argument that it is the

of resignation. The resignation letter submitted on February 15, 2000

employer who bears the burden of proof that the resignation is voluntary

confirmed the earlier resignation letter she submitted on February 7, 2000.

and not the product of coercion or intimidation. Having submitted a

The resignation letter contained words of gratitude which can hardly come

resignation letter, it is then incumbent upon her to prove that the

from an employee forced to resign.[23]

resignation was not voluntary but was actually a case of constructive

dismissal[25] with clear, positive, and convincing evidence. [26] Petitioner
failed to substantiate her claim of constructive dismissal.

The NLRC cannot disregard the resignation letter dated February

15, 2000 on the allegation that its submission was a product of an
unintelligent and confused decision due to the disdain shown by Mr. Tecson

Petitioner contends there was an orchestrated plan to intimidate

absent any sufficient proof of force or intimidation. Likewise, it was

her into resigning to exculpate other officers of the company from the

erroneous for the Labor Arbiter not to give evidentiary weight on the

anomaly; and that in the course of the internal investigation, Mr. Tecson

resignation letter on the ground that it was fabricated as it was not signed

forced her to resign by saying, Mag-resign ka na. Maiipit kami. Allegedly,

by petitioner. A careful scrutiny of the said letter shows that it bears the

this caused confusion and fear which led to her uninformed decision of

signature of petitioner. More importantly, petitioner admitted having

tendering the resignation letter on February 15, 2000.

submitted the said letter, albeit, due to an alleged intimidation.

We agree with the Court of Appeals that it was grave error on the
Subsequently, petitioner stopped reporting for work although she

part of the NLRC to rely on the allegation that Mr. Tecson threatened and

met with the officers of the corporation to settle her accountabilities but

forced petitioner to resign.Other than being unsubstantiated and self-

never raised the alleged intimidation employed on her. Also, though the

serving, the allegation does not suffice to support the finding of force,

complaint was filed within the 4-year prescriptive period, its belated filing

intimidation, and ultimately constructive dismissal.

supports the contention of respondent that it was a mere afterthought.

[24]

Taken

together,

these

circumstances

petitioners resignation was voluntary.

are

substantial

proof

that
Bare allegations of constructive dismissal, when uncorroborated by
the evidence on record, cannot be given credence. [27] In St. Michael
Academy v. National Labor Relations Commission,[28] we ruled that mere
allegations of threat or force do not constitute substantial evidence to

157

support a finding of forced resignation. We enumerated the requisites for

Appeals that petitioner voluntarily resigned and was not constructively

intimidation to vitiate consent as follows:

dismissed by respondent.

(1) that the intimidation caused the consent to be given;

(2) that the threatened act be unjust or unlawful; (3) that
the threat be real or serious, there being evident
disproportion between the evil and the resistance which all
men can offer, leading to the choice of doing the act which
is forced on the person to do as the lesser evil; and (4) that
it produces a well-grounded fear from the fact that the
person from whom it comes has the necessary means or
ability to inflict the threatened injury to his person or
property. x x x[29]

WHEREFORE, the petition is DENIED. The Decision of the Court of

Appeals dated August 18, 2006 in CA-G.R. SP No. 88140 which reversed
and set aside the Decision of the NLRC and declared that petitioner
voluntarily resigned and was not constructively dismissed from her
employment, and consequently ordered the dismissal of the complaint for
constructive dismissal, as well as the Resolution dated December 13, 2006
denying the motion for reconsideration, are AFFIRMED.

None of the above requisites was established by petitioner. Other

than the allegation that Mr. Tecson intimidated petitioner into resigning,
there were no other proofs presented to support a finding of forced
resignation to stand against respondents denial and proof against
dismissal. Neither can we consider the conduct of audits and other internal
investigations

as

form

of

harassment

against

petitioner. Said

investigation was legitimate and justified, conducted in view of the

discovery of the anomalous transaction involving the employees of the
respondent including petitioner.

Moreover, we note that petitioner is holding a managerial position

with a salary of P27,000.00 a month. Hence, she is not an ordinary
employee with limited understanding such that she would be easily
maneuvered or coerced to resign against her will.[30] Thus, we find no
compelling reason to disturb the findings and conclusions of the Court of

SO ORDERED.

158

G.R. No. 157633, September 10, 2014

NORTHWEST AIRLINES, INC., Petitioner, v. MA. CONCEPCION M. DEL
ROSARIO, Respondent.
DECISION
BERSAMIN, J.:
Under review is the decision promulgated on June 21, 2002, 1 whereby the
Court of Appeals (CA) dismissed the petition for certiorari filed by
Northwest Airlines, Inc. to assail on the ground of grave abuse of discretion
amounting to lack or excess of jurisdiction the adverse decision of the
National Labor Relations Commission (NLRC).
Antecedents
Petitioner Northwest Airlines, Inc. employed respondent Ma. Concepcion M.
Del Rosario on December 10, 1994 as one of its Manila-based flight
attendants. On May 18, 1998, Del Rosario was assigned at the Business
Class Section of Northwest Flight NW 26 bound for Japan. During the
boarding preparations, Kathleen Gamboa, another flight attendant
assigned at the First Class Section of Flight NW 26, needed to borrow a
wine bottle opener from her fellow attendants because her wine bottle
opener was dull. Vivien Francisco, Gamboas runner, went to the Business
Class Section to borrow a wine bottle opener from Del Rosario, but the
latter remarked that any flight attendant who could not bring a wine bottle
opener had no business working in the First Class Section. Upon hearing
this, Aliza Ann Escao, another flight attendant, offered her wine bottle
opener to Francisco. Apparently, Gamboa overheard Del Rosarios remarks,
and later on verbally confronted her. Their confrontation escalated into a
heated argument. Escao intervened but the two ignored her, prompting
her to rush outside the aircraft to get Maria Rosario D. Morales, the
Assistant
Base
Manager,
to
pacify
them.
The parties differed on what happened thereafter. Del Rosario claimed that
only an animated discussion had transpired between her and Gamboa, but
Morales insisted that it was more than an animated discussion, recalling
that Del Rosario had even challenged Gamboa to a brawl (sabunutan).
Morales asserted that she had tried to pacify Del Rosario and Gamboa, but
the two did not stop; that because the two were still arguing although the
Business Class passengers were already boarding, she ordered them out of
the plane and transfer to another nearby Northwest aircraft; that she
inquired from them about what had happened, and even asked if they were
willing to fly on the condition that they would have to stay away from each
other during the entire flight; that because Del Rosario was not willing to
commit herself to do so, she decided not to allow both of them on Flight

NW 26, and furnished them a Notice of Removal from Service (effectively

informing Del Rosario of her dismissal from the service pending an
investigation of the fighting incident between her and Gamboa).
On May 19, 1998, Morales sent a letter to Del Rosario telling her that
Northwest would conduct an investigation of the incident involving her and
Gamboa. The investigation was held on May 28, 1998 before Atty. Ceazar
Veneracion III, Northwests Legal Counsel and Head of its Human Resources
Department.
All
the
parties
attended
the
investigation
On June 19, 1998, Del Rosario was informed of her termination from the
service. Northwest stated that based on the results of the investigation,
Del Rosario and Gamboa had engaged in a fight on board the aircraft, even
if there had been no actual physical contact between them; and that
because fighting was strictly prohibited by Northwest to the point that
fighting could entail dismissal from the service even if committed for the
first time, Northwest considered her dismissal from the service justified
and in accordance with the Rules of Conduct for Employees, as follows:
Section

1,

General

x x x. Rule infractions will be dealt with according to the seriousness of the

offense and violators will be subjected to appropriate disciplinary action up
to and including discharge. Some acts of misconduct, even if committed
for the first time, are so serious that, standing alone, they justify
immediate discharge. Some examples of these offenses are violations of
rules regarding theft, alcohol and drugs, insubordination, dishonesty,
fighting, falsification of records, sleeping on the job, failure to cooperate or
lying in a Company investigation, intentional destruction or abuse of
property, threatening, intimidating or interfering with other employees,
abuse of nonrevenue and reduced rate travel privileges and unauthorized
use
of
Company
communications
systems.
x
Section

x
24

(c),

Disturbing

x
Others,

which

x
states

that:

Harassing, threatening, intimidating, assaulting, fighting or provoking a

fight or similar interference with other employees at any time, on or off
duty is prohibited. (Italics supplied)
Del Rosario subsequently filed her complaint for illegal dismissal against
Northwest.2
Decision of the Labor Arbiter
In her decision dated January 18, 1999, 3 Labor Arbiter Teresita D. CastillonLora ruled in favor of Northwest, holding that the dismissal of Del Rosario

159

had been justified and valid upon taking into account that Northwest had
been engaged in the airline business in which a good public image had
been demanded, and in which flight attendants had been expected to
maintain an image of sweetness and amiability; that fighting among its
employees even in the form of heated arguments or discussions were very
contradictory to that expected image;4 and that it could validly dismiss its
employees like the respondent because it had been entitled to protect its
business interests by putting up an impeccable image to the public.
Ruling of the NLRC
Upon appeal, the NLRC reversed the decision of the Labor Arbiter, and
ruled in favor of Del Rosario, declaring that the incident between her and
Gamboa could not be considered as synonymous with fighting as the
activity prohibited by Northwests Rules of Conduct; that based on Blacks
Law Dictionary, fight referred to a hostile encounter, affray, or altercation;
a physical or verbal struggle for victory, pugilistic combat; that according
to Bouviers Law Dictionary, fighting did not necessarily imply that both
parties should exchange blows, for it was sufficient that they voluntarily
put their bodies in position with that intent; 5 and that the incident between
Del Rosario and Gamboa could not be held similar to the fight that
Northwest
penalized
under
its
Rules
of
Conduct.

Aggrieved, Northwest elevated the adverse decision of the NLRC to the CA

on certiorari, averring that the NLRC thereby committed grave abuse of
discretion in reversing the decision of the Labor Arbiter, and submitting
that Del Rosarios dismissal from the service had been for a just cause,
with the evidence presented against her being more than sufficient to
substantiate its position that there had really been a fight between her and
Gamboa; and that the NLRC likewise gravely abused its discretion in
ordering the reinstatement of Del Rosario and the payment of her
backwages
and
attorneys
fees.
As stated, the CA sustained the NLRC through its decision promulgated on
June 21, 2002, observing that Northwest did not discharge its burden to
prove not merely reversible error but grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of the NLRC; and that, indeed,
the NLRC had correctly held that Del Rosarios conduct did not constitute
serious misconduct, because the NLRC, in determining the usual, ordinary
and commonly understood meaning of the word fighting, had resorted to
authoritative lexicons that supported its conclusion that the exchange of
words between Del Rosario and Gamboa did not come within the definition
of
the
word fighting. 7
The CA disposed thusly:

The NLRC further ratiocinated as follows:

Evident in the definition of fighting is the existence of an underlying
hostility between the parties which is so intense that there is an imminent
danger of a physical conflict (if there is none yet). In other words, when we
say two people are fighting, at the very least, they should project a general
appearance of wanting to physically strike each other. Was this the image
that appellant and FA Gamboa projected when they were facing each other
during the incident of May 18, 1998[?] We do not think so.
x x x Almost unanimously, the witnesses of NWA refer to the incident as
arguing or a serious or animated discussion. An argument is an effort
to establish belief by a course of reasoning (Bouvier's Law Dictionary). In
ordinary parlance, arguing is merely talking or debating about a certain
issue. There are no underpinnings of animosity in the discussion nor (sic)
between the parties. These witnesses never saw any hostility between the
appellant and FA Gamboa. Neither did they see these two ladies wanting to
strike each other. What they saw were two FAs engaged in an animated
verbal exchange, arguing but not fighting. 6

WHEREFORE,
for
lack
of
merit,
the
instant
petition
is DISMISSED. Accordingly, the decision of the NLRC dated January 11,
2000, is hereby AFFIRMED with theMODIFICATION that in lieu of
reinstatement, petitioner is ordered to pay private respondent separation
pay equivalent to one month's salary for every year of service plus full
backwages without deduction or qualification, counted from the date of
dismissal until finality of this decision including other benefits to which she
is entitled under the law. Petitioner is likewise ordered to pay respondent
Del Rosario attorneys fees consisting of five (5%) per cent of the adjudged
relief.
SO ORDERED.

Issues
The issues are the following, namely: (1) Was Del Rosarios dismissal from
the service valid?; and (2) Were the monetary awards appropriate?
Ruling

The NLRC ordered the reinstatement of Del Rosario to her former position
without loss of seniority rights and with payment of backwages, per diems,
other lost income and benefits from June 19, 1998; as well as the payment
of attorneys fees equivalent to 10% of the monetary award.
Decision of the CA

The

Court AFFIRMS the

decision

of

the

CA.

As provided in Article 282 of the Labor Code, an employer may terminate

an employee for a just cause, to wit:

160

Art.

282. TERMINATION

BY

EMPLOYER

not just a merely verbal tussle but a physical combat between two
opposing parties, to wit:

An employer may terminate an employee 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;
and

Well into their second bottle of gin, at about eleven o'clock that morning,
Fernando Aquino and Peregrino had a verbal tussle. Fernando Aquino
declared that he was going to run for councilor of Alcala, Pangasinan.
Peregrino countered by saying: If you will run for that post, cousin, I
will fight you. After a brief exchange of words, Fernando Aquino, laughing,
went to sit beside Abagat. As Aquino continued with his mirth, Abagat
stared
at
Peregrino
with
contempt.
xxx. A few minutes later, he heard a commotion in the plantation some two
hundred meters away. He claims to have seen several people fighting each
other with pieces of wood but did not go to the field to check what was
happening.13 (Italics supplied.)

(e) Other causes analogous to the foregoing.

Northwest argues that Del Rosario was dismissed on the grounds of serious
misconduct and willful disobedience. Misconduct refers to the improper or
wrong conduct that transgresses 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. But misconduct or
improper behavior, to be a just cause for termination of employment,
must: (a) be serious; (b) relate to the performance of the employees
duties; and (c) show that the employee has become unfit to continue
working
for
the
employer. 9
There is no doubt that the last two elements of misconduct were present in
the case of Del Rosario. The cause of her dismissal related to the
performance of her duties as a flight attendant, and she became unfit to
continue working for Northwest. Remaining to be determined is, therefore,
whether the misconduct was serious as to merit Del Rosarios dismissal. In
that respect, the fight between her and Gamboa should be so serious that
it entailed the termination of her employment even if it was her first
offense. Northwest insists that what transpired on May 18, 1998 between
her and Gamboa was obviously a form of fight that it strictly prohibited,
but Del Rosario disputes this by contending that it was only an animated
discussion between her and Gamboa. She argues that as settled in
American jurisprudence fight pertained to combat or battle, like the hostile
encounter or engagement between opposing forces, suggesting primarily
the notion of a brawl or unpremeditated encounter, or of a pugilistic
combat;10 while argument was a connected discourse based upon reason,
or a course of reasoning tending and intended to establish a position and
to
induce
belief.11
In several rulings where the meaning of fight was decisive, the Court has
observed that the termfight was considered to be different from the term
argument. In People v. Asto,12 for instance, the Court characterized fight as

Similarly, in Pilares, Sr. v. People,14fight was held to be more than just an

exchange of words that usually succeeded the provocation by either party,
thus:
When the petitioner was about to hand over the bottles of beer to the
private complainant, the latter called him coward and dared him to get
out for a fight.Insulted, the petitioner went out of his store and chased the
private complainant. (Italics supplied.)
Based on the foregoing, the incident involving Del Rosario and Gamboa
could not be justly considered as akin to the fight contemplated by
Northwest. In the eyes of the NLRC, Del Rosario and Gamboa were arguing
but not fighting. The understanding of fight as one that required physical
combat was absent during the incident of May 18, 1998. Moreover, the
claim of Morales that Del Rosario challenged Gamboa to a brawl
(sabunutan) could not be given credence by virtue of its being self-serving
in favor of Northwest, and of its being an apparent afterthought on the part
of Morales during the investigation of the incident, without Del Rosario
having the opportunity to contest Morales statement. In that context, the
investigation then served only as Northwests means to establish that the
grounds of a valid dismissal based on serious misconduct really existed.
Moreover, even assuming arguendo that the incident was the kind
of fight prohibited by Northwests Rules of Conduct, the same could not be
considered as of such seriousness as to warrant Del Rosarios dismissal
from the service. The gravity of the fight, which was not more than a
verbal argument between them, was not enough to tarnish or diminish
Northwests
public
image.
Under the circumstances, therefore, the CA properly ruled that the NLRC
did not gravely abuse its discretion amounting to lack or excess of

161

jurisdiction by declaring Del Rosarios dismissal unjustified. Northwest as

the petitioner for certiorari must demonstrate grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the NLRC. Grave
abuse of discretion, according to De los Santos v. Metropolitan Bank and
Trust Company,15 must be grave, which means either that the judicial or
quasi-judicial power was exercised in an arbitrary or despotic manner by
reason of passion or personal hostility, or that the respondent judge,
tribunal or board evaded a positive duty, or virtually refused to perform the
duty enjoined or to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi-judicial powers acted in a
capricious or whimsical manner as to be equivalent to lack of jurisdiction.
Alas, Northwest did not show how the NLRC could have abused its
discretion, let alone gravely, in ruling adversely against it.
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals
promulgated on June 21, 2002; and ORDERS the petitioner to pay the
costs
of
suit.
SO ORDERED

162

[G.R. No. 137795. March 26, 2003]

COLEGIO DE SAN JUAN DE LETRAN CALAMBA, petitioner, vs. BELEN
P. VILLAS, respondent.
DECISION
CORONA, J.:
This is a petition for review on certiorari of the decision[1] of the former
Eleventh Division[2] of the Court of Appeals affirming the decision [3] of
Voluntary Arbitrator (VA) Apolonio S. Mayuga that respondent Belen P.
Villas was illegally dismissed by petitioner Colegio de San Juan de Letran
(School) and thus, entitled to reinstatement and full backwages.
The antecedent facts show that respondent Belen Villas was employed
by the petitioner School as high school teacher in September 1985. On
May 15, 1995, she applied for a study leave for six months, from June to
December 31, 1995. In a letter dated June 2, 1995, Mrs. Angelina
Quiatchon, principal of the high school department, told Villas that her
request for study leave was granted for one school year subject to the
following conditions:
1. The requested study leave takes effect on June 5, 1995 and
ends on March 31, 1996;
2. The requested study leave involves no remuneration on the
part of the School;
3. The documents that justify the requested study leave should
be submitted upon return on April 1, 1996;
4. Faculty Manual Section 40 Special Provisions on the Granting of
Leave of Absence should be observed:
a. Once proven beyond reasonable doubt during the period
of the approved leave of absence that the faculty
member shall engage himself in employment outside the
institution, the administration shall regard the faculty
member on leave as resigned;

b. The maximum length of leave of absence that may be

applied for by the faculty member and granted by
administration is twelve (12) months. If, at the lapse of
the period, the faculty member fails to return for work,
the administration shall regard the faculty member as
resigned.[4]
Respondent alleged that she intended to utilize the first semester of
her study leave to finish her masteral degree at the Philippine Womens
University (PWU). Unfortunately, it did not push through so she took up an
Old Testament course in a school of religion and at the same time utilized
her free hours selling insurance and cookware to augment her familys
income. However, during the second semester of her study leave, she
studied and passed 12 units of education subjects at the Golden Gate
Colleges in Batangas City. In response to the letters sent her by petitioner
to justify her study leave, she submitted a certification from Golden Gate
Colleges and a letter explaining why she took up an Old Testament course
instead of enrolling in her masteral class during the first semester.
On June 3, 1996, the President and Rector of the School, Fr.
Ramonclaro G. Mendez, O. P., wrote her, stating that her failure to enroll
during the first semester was a violation of the conditions of the study
leave and that the reasons she advanced for failure to enroll during the
first semester were not acceptable, thus:
In the first place, prudence dictates that you should have ascertained first
that you are still eligible to study at PWU to finish your masteral degree
before applying and securing the approval of your leave by the School. In
the second place, you should have informed the School at once that you
could not enroll in the first semester so that your leave could have been
adjusted for only one-half (1/2) year. Thirdly, your engaging in some parttime business instead of studying in the first semester of your leave is
sufficient justification for the School to consider you as resigned under the
Faculty Manual. And lastly, your failure to study in the first semester of
your study leave without informing the School beforehand constitutes
deception, to say the least, which is not a good example to the other
teachers.[5]
Her case was subsequently referred to the grievance committee, as
provided for in the collective bargaining agreement, and the report was
submitted on July 12, 1996, both to the union and the School. However,

163

since the grievance committee could not reach a decision, the case was
referred for voluntary arbitration.

In the case at bar, the requirements for both substantive and

procedural aspects were not satisfied.

Respondent then filed a case for illegal dismissal and the case was
assigned to VA Mayuga who found that respondent was illegally dismissed,
thus:

According to petitioner, respondent violated the following conditions

of her study leave: (a) she failed to report for work on April 1, 1996, the
day after the lapse of her leave period, which was violative of Section 40 of
the Faculty Manual; (b) she failed to submit proof of her studies during the
first semester of her leave period, suggesting that she was not enrolled
during this period; and (c) she engaged in employment outside the School.
In sum, petitioner School argues that the conduct of respondent breached
not only the provisions of the study grant (which was a contractual
obligation) but also the Faculty Manual. Respondent was thus guilty of
serious misconduct which was a ground for termination.

WHEREFORE premises considered, we rule that complainant Mrs. BELEN P.

VILLAS was illegally dismissed from her employment by respondent, and as
prayed for, respondent COLEGIO DE SAN JUAN DE LETRAN-CALAMBA is
hereby ordered to reinstate Mrs. Belen P. Villas to her former position or job
in said school without loss of seniority and with full backwages and other
monetary benefits effective the start of school year 1996-1997 up to the
time she is reinstated.[6]
Upon denial of its motion for reconsideration, petitioner filed a petition
for review with the Court of Appeals. This was denied. Thus, this petition
for review. The sole issue is whether or not respondents alleged violation of
the conditions of the study grant constituted serious misconduct which
justified her termination from petitioner School.
Petitioner alleges that the dismissal of respondent was lawful
inasmuch as (a) the requirements of due process were followed and (b) she
not only violated several lawful regulations but also breached her
contractual obligations to the School. All this constituted a valid ground for
her dismissal. In assailing the decision of the Court of Appeals, petitioner
School basically questions the court a quos findings of fact on respondents
alleged violation of petitioner Schools policy on study leave grants.
The petition has no merit.
Under the Labor Code, there are twin requirements to justify a valid
dismissal from employment: (a) the dismissal must be for any of the
causes provided in Article 282 of the Labor Code (substantive aspect) and
(b) the employee must be given an opportunity to be heard and to defend
himself (procedural aspect).[7] The procedural aspect requires that the
employee be given two written notices before she is terminated consisting
of a notice which apprises the employee of the particular acts/omissions
for which the dismissal is sought and the subsequent notice which informs
the employee of the employers decision to dismiss him. [8]

We affirm the findings of the Court of Appeals that there was no

violation of the conditions of the study leave grant. Thus, respondent could
not be charged with serious misconduct warranting her dismissal as a
teacher in petitioner School. Petitioner has failed to convince us that the
three alleged violations of the study leave grant constituted serious
misconduct which justified the termination of respondents employment.
Misconduct is improper or wrongful conduct. It is the transgression of
some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error
of judgment.[9] Under Article 282 of the Labor Code, the misconduct, to be
a just cause for termination, must be serious. This implies that it must be
of such grave and aggravated character and not merely trivial or
unimportant.[10] Examples of serious misconduct justifying termination, as
held in some of our decisions, include: sexual harassment (the managers
act of fondling the hands, massaging the shoulder and caressing the nape
of a secretary);[11] fighting within company premises;[12] uttering obscene,
insulting or offensive words against a superior; [13] misrepresenting that a
student is his nephew and pressuring and intimidating a co-teacher to
change that students failing grade to passing.[14]
In this light, the alleged infractions of the respondent could hardly be
considered serious misconduct.
With regard to respondents alleged failure to report for work on April
1, 1996 and failure to enroll during the first semester, the Court of Appeals
and the Voluntary Arbitrator found that she did in fact report for work on
April 1, 1996 and that she was in fact enrolled during the first
semester. Wellsettled is the rule that the factual findings of the Court of

164

Appeals are conclusive on the parties and are not reviewable by the
Supreme Court. And they carry even more weight when the Court of
Appeals affirms the factual findings of a lower fact-finding body, in this
case the Voluntary Arbitrator.[15] Likewise, findings of fact of administrative
agencies and quasi-judicial bodies which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not
only great respect but even finality. They are binding upon this Court
unless there is a showing of grave abuse of discretion or where it is clearly
shown that they were arrived at arbitrarily or in utter disregard of the
evidence on record.[16]
Assuming arguendo that she did fail to report for work on April 1, 1996
and enroll during the first semester, the most respondent could be charged
with was simple misconduct. In both instances, there was evidence of
substantial compliance by respondent.
Her alleged failure to report for work exactly on April 1, 1996 is not
equivalent to failure to return for work, a sanctionable offense under the
Faculty Manual. As correctly pointed out by the VA, petitioner failed to
establish that there was a distinct and definite assignment that needed to
be done personally by respondent, and specifically on April 1, 1996, which
she failed to do on said date. Although we give credence to
petitioners argument that a private high school teacher still has work at
the end of the schoolyear to assist in the graduation preparations and in
the beginning of the school year to assist in the enrollment such tasks
cannot be considered a teachers main duties, the failure to perform which
would be tantamount to dereliction of duty or abandonment. Besides, there
is no disagreement that respondent reported for work on May 15, 1996 at
which time petitioner School could have asked her to assist in the
enrollment period. At most, respondent failed to help out during the
preparations for graduation and this, to us, was not a significant reason for
terminating or dismissing her from her job.
With regard to her alleged failure to enroll during the first semester,
although we agree with the President and Rector, Fr. Mendez, that
respondent should have first ascertained whether she was still eligible to
study at the PWU before applying for a study leave, [17] such lapse was more
of an error in judgment rather than an act of serious misconduct. If
respondent intended to use her study leave for other unauthorized
purposes, as petitioner would like us to believe, she would not have
enrolled at the Golden Gate Colleges during the second semester. Yet she
did, as borne out by the certification [18] prepared by the Registrar of Golden
Gate Colleges.

Furthermore, we find that respondent did not violate the prohibition on

engaging in employment outside the school as specified in her study leave
grant and as provided in the Faculty Manual. Section 40 (a) of the
Manual[19] states:
a. Once proven beyond reasonable doubt during the period of the
approved leave of absence that the faculty member shall engage himself
in employment outside the institution, the administration shall regard
the faculty member on leave resigned. (Emphasis supplied)
We find the provision of the Faculty Manual ambiguous as the term
employment connotes a number of meanings. Employment in its general
sense connotes any work or service rendered in exchange for money. The
loose connotation of employment may therefore cover jobs without an
employer-employee relationship. However, inasmuch as in this case,
petitioner School drafted the said policy, the term employment should be
strictly construed against it. [20] Moreover, it is a settled rule that in
controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writings
should be resolved in the formers favor. [21] The act of respondent in selling
insurance and cookware was not the employment prohibited by the Faculty
Manual. The prohibition against outside employment was enacted to
prevent the teacher from using the study leave period for unsanctioned
purposes since the School pays the teacher while pursuing further studies.
That rationale was not violated by respondent for the reason that her parttime activity of selling insurance and cookware could not have prevented
her in any way from studying and, more importantly, she was not being
paid by the School while on leave. How did the school expect her and her
family to survive without any income for one whole year?
Petitioner also failed to comply with the procedural requirements for a
valid dismissal. As earlier noted, the law requires the employer to give the
worker to be dismissed two written notices before terminating his
employment. Considering that these notices are mandatory, the absence
of one renders any management decision to terminate null and
void. Petitioner failed to give respondent the first notice which should have
informed the latter of the formers intention to dismiss her. Petitioner
argues that it complied with this requirement as there were several
exchanges of communication between the School and respondent
regarding the cause of her termination. However, we find that these letters
did not apprise respondent that her dismissal was being sought by
petitioner School as said letters only required respondent to submit proof

165

of enrollment. The letter of Principal Angelina Q. Quiatchon dated April 17,

1996[22] was worded as follows:
In accordance with the terms of your study leave from June 5, 1995 to
March 31, 1996, you must submit credentials/proofs of your study to justify
the approved leave.
To this date, April 17, this office has not received your credentials. Please
do so within the next three days from receipt hereof so that this office can
act accordingly.
Similarly, the May 10, 1996 letter [23] of the Academic Affairs Director, Dr.
Rhodora G. Odejar, was worded thus:
The Academic Affairs Office has received your certification of graduate
studies completed in the second semester of Schoolyear 1995-1996.
However, there is no report as to how you utilized your leave in the first
semester. You are therefore instructed to submit your report on the matter
within three days from receipt hereof.
The next letter from the petitioner, dated June 3, 1996, already informed
respondent that she was considered resigned effective schoolyear 19961997.
These letters did not comply with the requirements of the law that the
first written notice must apprise the employee that his termination is being
considered due to a certain act or omission. These letters merely required
petitioner to submit proof of her studies and respondent could not have
reasonably inferred from them that her dismissal was being considered by
the petitioner. The fact that there was a hearing conducted by the
grievance committee pursuant to the collective bargaining agreement did
not work in petitioners favor because this was done after petitioner had
informed respondent that she was already considered resigned from her
teaching job. Besides, the rights of an employee to be informed of his
proposed dismissal are personal to him[24] and, therefore, the notice to the
union was not notice to the employee.
With regard to the respondents claim for the six-month study leave
and vacation pay, we affirm the decision [25] of the Voluntary Arbitrator that
respondent is not entitled to such benefits:

While it is true that the collective bargaining agreement between

respondent and complainants union provides for six months pay for
qualified teachers who will go on sabbatical or study leave, the same was
expressly waived by complainant when she signed conforme to the letter
dated June 2, 1995 approving her study leave which states among others,
to wit: 2. The requested study leave involves no remuneration on the part
of the school. And considering that her leave of absence for the whole
school year 1995-1996 was presumed to be a leave of absence without
pay, then she did not earn her vacation leave incentive for the next coming
summer. We find it just, fair and reasonable to grant vacation pay on April
and May of every calendar as additional incentive only to those teachers
who rendered continuous service to the Collegio the preceding school year.
We similarly affirm the Voluntary Arbitrators decision that respondent
is not entitled to moral and exemplary damages and attorneys fees
because there is no evidence showing that bad faith or malice attended
the dismissal of respondent. Moral damages are recoverable only where
the dismissal is attended by bad faith or fraud, or constitutes an act
oppressive to labor, or is done in a manner contrary to morals, good
customs or public policy. A dismissal may be contrary to law but, by itself
alone, it does not necessarily establish bad faith. [26]
WHEREFORE, the petition is DENIED.
SO ORDERED.

166

G.R. No. 187226, January 28, 2015

CHERYLL SANTOS LEUS, Petitioner, v. ST. SCHOLASTICAS COLLEGE
WESTGROVE AND/OR SR. EDNA QUIAMBAO, OSB, Respondents.
DECISION
REYES, J.:
Cheryll Santos Leus (petitioner) was hired by St. Scholasticas College
Westgrove (SSCW), a Catholic educational institution, as a non-teaching
personnel, engaged in pre-marital sexual relations, got pregnant out of
wedlock, married the father of her child, and was dismissed by SSCW, in
that order. The question that has to be resolved is whether the petitioners
conduct
constitutes
a
ground
for
her
dismissal.
Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to annul and set aside the Decision 1 dated
September 24, 2008 and Resolution 2 dated March 2, 2009 issued by the
Court of Appeals (CA) in CA-G.R. SP No. 100188, which affirmed the
Resolutions dated February 28, 20073 and May 21, 20074 of the National
Labor Relations Commission (NLRC) in NLRC CA No. 049222-06.
The Facts
SSCW is a catholic and sectarian educational institution in Silang, Cavite. In
May 2001, SSCW hired the petitioner as an Assistant to SSCWs Director of
the
Lay
Apostolate
and
Community
Outreach
Directorate.
Sometime in 2003, the petitioner and her boyfriend conceived a child out
of wedlock. When SSCW learned of the petitioners pregnancy, Sr. Edna
Quiambao (Sr. Quiambao), SSCWs Directress, advised her to file a
resignation letter effective June 1, 2003. In response, the petitioner
informed Sr. Quiambao that she would not resign from her employment
just because she got pregnant without the benefit of marriage. 5
On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain
in writing why she should not be dismissed for engaging in pre-marital
sexual relations and getting pregnant as a result thereof, which amounts to
serious misconduct and conduct unbecoming of an employee of a Catholic
school.6
In a letter7 dated May 31, 2003, the petitioner explained that her
pregnancy out of wedlock does not amount to serious misconduct or
conduct unbecoming of an employee. She averred that she is unaware of
any school policy stating that being pregnant out of wedlock is considered
as a serious misconduct and, thus, a ground for dismissal. Further, the

petitioner requested a copy of SSCWs policy and guidelines so that she

may
better
respond
to
the
charge
against
her.
On June 2, 2003, Sr. Quiambao informed the petitioner that, pending the
promulgation of a Support Staff Handbook, SSCW follows the 1992
Manual of Regulations for Private Schools (1992 MRPS) on the causes for
termination of employments; that Section 94(e) of the 1992 MRPS cites
disgraceful or immoral conduct as a ground for dismissal in addition to
the just causes for termination of employment provided under Article 282
of
the
Labor
Code.8
On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a
letter,9 which, in part, reads:
To us, pre-marital sex between two consenting adults without legal
impediment to marry each other who later on married each other does not
fall within the contemplation of disgraceful or immoral conduct and
serious misconduct of the Manual of Regulations for Private Schools and
the
Labor
Code
of
the
Philippines.
Your argument that what happened to our client would set a bad example
to the students and other employees of your school is speculative and is
more imaginary than real. To dismiss her on that sole ground constitutes
grave
abuse
of
management
prerogatives.
Considering her untarnished service for two years, dismissing her with her
present condition would also mean depriving her to be more secure in
terms of financial capacity to sustain maternal needs. 10
In a letter11 dated June 6, 2003, SSCW, through counsel, maintained that
pre-marital sexual relations, even if between two consenting adults without
legal impediment to marry, is considered a disgraceful and immoral
conduct or a serious misconduct, which are grounds for the termination of
employment under the 1992 MRPS and the Labor Code. That SSCW, as a
Catholic institution of learning, has the right to uphold the teaching of the
Catholic Church and expect its employees to abide by the same. They
further asserted that the petitioners indiscretion is further aggravated by
the fact that she is the Assistant to the Director of the Lay Apostolate and
Community Outreach Directorate, a position of responsibility that the
students look up to as role model. The petitioner was again directed to
submit a written explanation on why she should not be dismissed.
On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her
counsels letter dated June 4, 2003 as her written explanation. 12
Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informed
the petitioner that her employment with SSCW is terminated on the ground
of serious misconduct. She stressed that pre-marital sexual relations

167

between two consenting adults with no impediment to marry, even if they

subsequently married, amounts to immoral conduct. She further pointed
out that SSCW finds unacceptable the scandal brought about by the
petitioners pregnancy out of wedlock as it ran counter to the moral
principles that SSCW stands for and teaches its students.
Thereupon, the petitioner filed a complaint for illegal dismissal with the
Regional Arbitration Branch of the NLRC in Quezon City against SSCW and
Sr. Quiambao (respondents). In her position paper, 14 the petitioner claimed
that SSCW gravely abused its management prerogative as there was no
just cause for her dismissal. She maintained that her pregnancy out of
wedlock cannot be considered as serious misconduct since the same is a
purely private affair and not connected in any way with her duties as an
employee of SSCW. Further, the petitioner averred that she and her
boyfriend eventually got married even prior to her dismissal.
For their part, SSCW claimed that there was just cause to terminate the
petitioners employment with SSCW and that the same is a valid exercise
of SSCWs management prerogative. They maintained that engaging in
pre-marital sex, and getting pregnant as a result thereof, amounts to a
disgraceful or immoral conduct, which is a ground for the dismissal of an
employee
under
the
1992
MRPS.
They pointed out that SSCW is a Catholic educational institution, which
caters exclusively to young girls; that SSCW would lose its credibility if it
would maintain employees who do not live up to the values and teachings
it inculcates to its students. SSCW further asserted that the petitioner,
being an employee of a Catholic educational institution, should have
strived to maintain the honor, dignity and reputation of SSCW as a Catholic
school.15

adherence to the same is called for and where the reputation of the school
is at stake. x x x.17
The LA further held that teachers and school employees, both in their
official and personal conduct, must display exemplary behavior and act in
a
manner
that
is
beyond
reproach.
The petitioner appealed to the NLRC, insisting that there was no valid
ground for the termination of her employment. She maintained that her
pregnancy out of wedlock cannot be considered as serious misconduct
under Article 282 of the Labor Code since the same was not of such a
grave and aggravated character. She asserted that SSCW did not present
any evidence to establish that her pregnancy out of wedlock indeed eroded
the moral principles that it teaches its students.18
The Ruling of the NLRC
On February 28, 2007, the NLRC issued a Resolution, 19 which affirmed the
LA Decision dated February 28, 2006. The NLRC pointed out that the
termination of the employment of the personnel of private schools is
governed by the 1992 MRPS; that Section 94(e) thereof cites disgraceful
or immoral conduct as a just cause for dismissal, in addition to the
grounds for termination of employment provided for under Article 282 of
the Labor Code. The NLRC held that the petitioners pregnancy out of
wedlock is a disgraceful or immoral conduct within the contemplation of
Section 94(e) of the 1992 MRPS and, thus, SSCW had a valid reason to
terminate
her
employment.
The petitioner sought reconsideration 20 of the Resolution dated February
28, 2007 but it was denied by the NLRC in its Resolution 21 dated May 21,
2007.

The Ruling of the Labor Arbiter

On February 28, 2006, the Labor Arbiter (LA) rendered a Decision, in
NLRC Case No. 6-17657-03-C which dismissed the complaint filed by the
petitioner. The LA found that there was a valid ground for the petitioners
dismissal; that her pregnancy out of wedlock is considered as a
disgraceful and immoral conduct. The LA pointed out that, as an
employee of a Catholic educational institution, the petitioner is expected to
live up to the Catholic values taught by SSCW to its students. Likewise, the
LA opined that:
16

Further, a deep analysis of the facts would lead us to disagree with the
complainant that she was dismissed simply because she violate[d] a
Catholic [teaching]. It should not be taken in isolation but rather it should
be analyzed in the light of the surrounding circumstances as a whole. We
must also take into [consideration] the nature of her work and the nature
of her employer-school. For us, it is not just an ordinary violation. It was
committed by the complainant in an environment where her strict

Unperturbed, the petitioner filed a petition 22 for certiorari with the CA,
alleging that the NLRC gravely abused its discretion in ruling that there was
a valid ground for her dismissal. She maintained that pregnancy out of
wedlock cannot be considered as a disgraceful or immoral conduct; that
SSCW failed to prove that its students were indeed gravely scandalized by
her pregnancy out of wedlock. She likewise asserted that the NLRC erred in
applying Section 94(e) of the 1992 MRPS.
The Ruling of the CA
On September 24, 2008, the CA rendered the herein assailed
Decision,23 which denied the petition forcertiorari filed by the petitioner.
The CA held that it is the provisions of the 1992 MRPS and not the Labor
Code which governs the termination of employment of teaching and nonteaching personnel of private schools, explaining that:

168

It is a principle of statutory construction that where there are two statutes

that apply to a particular case, that which was specially intended for the
said case must prevail. Petitioner was employed by respondent private
Catholic institution which undeniably follows the precepts or norms of
conduct set forth by the Catholic Church. Accordingly, the Manual of
Regulations for Private Schools followed by it must prevail over the Labor
Code, a general statute. The Manual constitutes the private schools
Implementing Rules and Regulations of Batas Pambansa Blg. 232 or the
Education Act of 1982. x x x.24
The CA further held that the petitioners dismissal was a valid exercise of
SSCWs management prerogative to discipline and impose penalties on
erring employees pursuant to its policies, rules and regulations. The CA
upheld the NLRCs conclusion that the petitioners pregnancy out of
wedlock is considered as a disgraceful and immoral conduct and, thus, a
ground for dismissal under Section 94(e) of the 1992 MRPS. The CA
likewise opined that the petitioners pregnancy out of wedlock is
scandalous per se given the work environment and social milieu that she
was in, viz:
Under Section 94 (e) of the [MRPS], and even under Article 282 (serious
misconduct) of the Labor Code, disgraceful and immoral conduct is a
basis
for
termination
of
employment.
x

Petitioner contends that her pre-marital sexual relations with her boyfriend
and her pregnancy prior to marriage was not disgraceful or immoral
conduct sufficient for her dismissal because she was not a member of the
schools faculty and there is no evidence that her pregnancy scandalized
the
school
community.
We are not persuaded. Petitioners pregnancy prior to marriage is
scandalous in itself given the work environment and social milieu she was
in. Respondent school for young ladies precisely seeks to prevent its
students from situations like this, inculcating in them strict moral values
and standards. Being part of the institution, petitioners private and public
life could not be separated. Her admitted pre-marital sexual relations was a
violation of private respondents prescribed standards of conduct that
views pre-marital sex as immoral because sex between a man and a
woman must only take place within the bounds of marriage.
Finally, petitioners dismissal is a valid exercise of the employer-schools
management prerogative to discipline and impose penalties on erring
employees pursuant to its policies, rules and regulations. x x x. 25 (Citations
omitted)
The petitioner moved for reconsideration26 but it was denied by the CA in
its
Resolution27 dated
March
2,
2009.

Hence, the instant petition.

Issues
Essentially, the issues set forth by the petitioner for this Courts decision
are the following: first,whether the CA committed reversible error in ruling
that it is the 1992 MRPS and not the Labor Code that governs the
termination of employment of teaching and non-teaching personnel of
private schools; and second, whether the petitioners pregnancy out of
wedlock constitutes a valid ground to terminate her employment.
The Ruling of the Court
The Court grants the petition.
First Issue: Applicability of the 1992 MRPS
The petitioner contends that the CA, in ruling that there was a valid ground
to dismiss her, erred in applying Section 94 of the 1992 MRPS. Essentially,
she claims that the 1992 MRPS was issued by the Secretary of Education
as the revised implementing rules and regulations of Batas Pambansa
Bilang 232 (BP 232) or the Education Act of 1982. That there is no
provision in BP 232, which provides for the grounds for the termination of
employment of teaching and non-teaching personnel of private schools.
Thus, Section 94 of the 1992 MRPS, which provides for the causes of
terminating an employment, is invalid as it widened the scope and
coverage
of
BP
232.
The

Court

does

not

agree.

The Court notes that the argument against the validity of the 1992 MRPS,
specifically Section 94 thereof, is raised by the petitioner for the first time
in the instant petition for review. Nowhere in the proceedings before the
LA, the NLRC or the CA did the petitioner assail the validity of the
provisions
of
the
1992
MRPS.
It is well established that issues raised for the first time on appeal and not
raised in the proceedings in the lower court are barred by estoppel. Points
of law, theories, issues, and arguments not brought to the attention of the
trial court ought not to be considered by a reviewing court, as these cannot
be raised for the first time on appeal. To consider the alleged facts and
arguments belatedly raised would amount to trampling on the basic
principles
of
fair
play,
justice,
and
due
process. 28
In any case, even if the Court were to disregard the petitioners belated
claim of the invalidity of the 1992 MRPS, the Court still finds the same
untenable.

169

The 1992 MRPS, the regulation in force at the time of the instant
controversy, was issued by the Secretary of Education pursuant to BP 232.
Section 7029 of BP 232 vests the Secretary of Education with the authority
to issue rules and regulations to implement the provisions of BP 232.
Concomitantly, Section 5730 specifically empowers the Department of
Education to promulgate rules and regulations necessary for the
administration, supervision and regulation of the educational system in
accordance
with
the
declared
policy
of
BP
232.
The qualifications of teaching and non-teaching personnel of private
schools, as well as the causes for the termination of their employment, are
an integral aspect of the educational system of private schools.
Indubitably, ensuring that the teaching and non-teaching personnel of
private schools are not only qualified, but competent and efficient as well
goes hand in hand with the declared objective of BP 232 establishing and
maintaining relevant quality education. 31 It is thus within the authority of
the Secretary of Education to issue a rule, which provides for the dismissal
of teaching and non-teaching personnel of private schools based on their
incompetence,
inefficiency,
or
some
other
disqualification.
Moreover, Section 69 of BP 232 specifically authorizes the Secretary of
Education to prescribe and impose such administrative sanction as he
may deem reasonable and appropriate in the implementing rules and
regulations for the [g]ross inefficiency of the teaching or non-teaching
personnel of private schools. 32 Accordingly, contrary to the petitioners
claim, the Court sees no reason to invalidate the provisions of the 1992
MRPS, specifically Section 94 thereof.
Second Issue: Validity of the Petitioners Dismissal
The validity of the petitioners dismissal hinges on the determination of
whether pregnancy out of wedlock by an employee of a catholic
educational institution is a cause for the termination of her employment.
In resolving the foregoing question, the Court will assess the matter from a
strictly neutral and secular point of view the relationship between SSCW
as employer and the petitioner as an employee, the causes provided for by
law in the termination of such relationship, and the evidence on record.
The ground cited for the petitioners dismissal, i.e., pre-marital sexual
relations and, consequently, pregnancy out of wedlock, will be assessed as
to whether the same constitutes a valid ground for dismissal pursuant to
Section 94(e) of the 1992 MRPS.

correctness, the Court has to view the CA decision in the same context that
the petition forcertiorari it ruled upon was presented to it; the Court has to
examine the CA decision from the prism of whether it correctly determined
the presence or absence of grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC decision on the merits of
the case was correct.33
The phrase grave abuse of discretion is well-defined in the Courts
jurisprudence. It exists where an act of a court or tribunal is performed with
a capricious or whimsical exercise of judgment equivalent to lack of
jurisdiction.34 The determination of the presence or absence of grave abuse
of discretion does not include an inquiry into the correctness of the
evaluation of evidence, which was the basis of the labor agency in
reaching its conclusion.35
Nevertheless, while a certiorari proceeding does not strictly include an
inquiry as to the correctness of the evaluation of evidence (that was the
basis of the labor tribunals in determining their conclusion), the
incorrectness of its evidentiary evaluation should not result in negating the
requirement of substantial evidence. Indeed, when there is a showing
that the findings or conclusions, drawn from the same pieces of
evidence, were arrived at arbitrarily or in disregard of the
evidence on record, they may be reviewed by the courts. In
particular, the CA can grant the petition for certiorari if it finds that the
NLRC, in its assailed decision or resolution, made a factual finding not
supported by substantial evidence. A decision that is not supported by
substantial evidence is definitely a decision tainted with grave abuse of
discretion.36
The labor tribunals respective
conclusions that the petitioners pregnancy
is a disgraceful or immoral conduct
were arrived at arbitrarily.
The CA and the labor tribunals affirmed the validity of the petitioners
dismissal pursuant to Section 94(e) of the 1992 MRPS, which provides that:
Sec. 94. Causes of Terminating Employment In addition to the just causes
enumerated in the Labor Code, the employment of school personnel,
including faculty, may be terminated for any of the following causes:
xxxx
e. Disgraceful or immoral conduct;

The standard of review in a Rule 45

petition from the CA decision in labor
cases.
In a petition for review under Rule 45 of the Rules of Court, such as the
instant petition, where the CAs disposition in a labor case is sought to be
calibrated, the Courts review is quite limited. In ruling for legal

xxxx
The labor tribunals concluded that the petitioners pregnancy out of
wedlock, per se, is disgraceful and immoral considering that she is
employed in a Catholic educational institution. In arriving at such
conclusion, the labor tribunals merely assessed the fact of the petitioners

170

pregnancy vis--vis the totality of the circumstances surrounding the same.

However, the Court finds no substantial evidence to support the
aforementioned conclusion arrived at by the labor tribunals. The fact of the
petitioners pregnancy out of wedlock, without more, is not enough to
characterize the petitioners conduct as disgraceful or immoral. There must
be substantial evidence to establish that pre-marital sexual relations and,
consequently, pregnancy out of wedlock, are indeed considered disgraceful
or immoral.
The totality of the circumstances
surrounding the conduct alleged to be
disgraceful or immoral must be assessed
against the prevailing norms of conduct.
In Chua-Qua v. Clave,37 the Court stressed that to constitute immorality,
the circumstances of each particular case must be holistically considered
and evaluated in light of the prevailing norms of conduct and
applicable laws.38 Otherwise stated, it is not the totality of the
circumstances surrounding the conduct per se that determines whether the
same is disgraceful or immoral, but the conduct that is generally accepted
by society as respectable or moral. If the conduct does not conform to
what society generally views as respectable or moral, then the conduct is
considered as disgraceful or immoral. Tersely put, substantial evidence
must be presented, which would establish that a particular conduct,
viewed in light of the prevailing norms of conduct, is considered disgraceful
or immoral.
Thus, the determination of whether a conduct is disgraceful or immoral
involves a two-step process:first, a consideration of the totality of the
circumstances surrounding the conduct; and second, an assessment of the
said circumstances vis--vis the prevailing norms of conduct, i.e., what the
society generally considers moral and respectable.
That the petitioner was employed by a Catholic educational institution per
se does not absolutely determine whether her pregnancy out of wedlock is
disgraceful or immoral. There is still a necessity to determine whether the
petitioners pregnancy out of wedlock is considered disgraceful or immoral
in accordance with the prevailing norms of conduct.
Public and secular morality should
determine the prevailing norms of conduct,
not religious morality.
However, determining what the prevailing norms of conduct are considered
disgraceful or immoral is not an easy task. An individuals perception of
what is moral or respectable is a confluence of a myriad of influences, such
as religion, family, social status, and a cacophony of others. In this regard,
the Courts ratiocination in Estrada v. Escritor39 is instructive.

In Estrada, an administrative case against a court interpreter charged with

disgraceful and immoral conduct, the Court stressed that in determining
whether a particular conduct can be considered as disgraceful and
immoral, the distinction between public and secular morality on the one
hand, and religious morality, on the other, should be kept in mind. 40 That
the distinction between public and secular morality and religious morality
is important because the jurisdiction of the Court extends only to public
and secular morality.41 The Court further explained that:
The morality referred to in the law is public and necessarily
secular, not religious x x x. Religious teachings as expressed in public
debate may influence the civil public order but public moral disputes may
be resolved only on grounds articulable in secular terms. Otherwise, if
government relies upon religious beliefs in formulating public
policies and morals, the resulting policies and morals would
require conformity to what some might regard as religious
programs or agenda. The non-believers would therefore be compelled to
conform to a standard of conduct buttressed by a religious belief, i.e., to a
compelled religion, anathema to religious freedom. Likewise, if
government based its actions upon religious beliefs, it would tacitly
approve or endorse that belief and thereby also tacitly disapprove contrary
religious or non-religious views that would not support the policy. As a
result, government will not provide full religious freedom for all its citizens,
or even make it appear that those whose beliefs are disapproved are
second-class citizens. Expansive religious freedom therefore requires that
government be neutral in matters of religion; governmental reliance upon
religious justification is inconsistent with this policy of neutrality.
In other words, government action, including its proscription of
immorality as expressed in criminal law like concubinage, must
have a secular purpose. That is, the government proscribes this
conduct because it is detrimental (or dangerous) to those
conditions upon which depend the existence and progress of
human society and not because the conduct is proscribed by the
beliefs of one religion or the other. Although admittedly, moral
judgments based on religion might have a compelling influence on those
engaged in public deliberations over what actions would be considered a
moral disapprobation punishable by law. After all, they might also be
adherents of a religion and thus have religious opinions and moral codes
with a compelling influence on them; the human mind endeavors to
regulate the temporal and spiritual institutions of society in a uniform
manner, harmonizing earth with heaven. Succinctly put, a law could be
religious or Kantian or Aquinian or utilitarian in its deepest roots,
but it must have an articulable and discernible secular purpose
and justification to pass scrutiny of the religion clauses. x x
x.42(Citations omitted and emphases ours)
Accordingly, when the law speaks of immoral or, necessarily, disgraceful
conduct, it pertains to public and secular morality; it refers to those
conducts which are proscribed because they are detrimental to

171

conditions upon which depend the existence and progress of

human society. Thus, inAnonymous v. Radam,43 an administrative case
involving a court utility worker likewise charged with disgraceful and
immoral conduct, applying the doctrines laid down in Estrada, the Court
held that:
For a particular conduct to constitute disgraceful and immoral
behavior under civil service laws, it must be regulated on account
of the concerns of public and secular morality. It cannot be judged
based on personal bias, specifically those colored by particular
mores. Nor should it be grounded on cultural values not
convincingly demonstrated to have been recognized in the realm
of public policy expressed in the Constitution and the laws. At the
same time, the constitutionally guaranteed rights (such as the right to
privacy) should be observed to the extent that they protect behavior that
may
be
frowned
upon
by
the
majority.
Under these tests, two things may be concluded from the fact that an
unmarried woman gives birth out of wedlock:
(1) if the father of the child is himself unmarried, the woman is not
ordinarily administratively liable for disgraceful and immoral
conduct. It may be a not-so-ideal situation and may cause
complications for both mother and child but it does not give cause for
administrative sanction. There is no law which penalizes an
unmarried mother under those circumstances by reason of her
sexual conduct or proscribes the consensual sexual activity
between two unmarried persons. Neither does the situation
contravene any fundamental state policy as expressed in the
Constitution, a document that accommodates various belief
systems irrespective of dogmatic origins.
(2) if the father of the child born out of wedlock is himself married
to a woman other than the mother, then there is a cause for
administrative sanction against either the father or the mother.
In such a case, the disgraceful and immoral conduct consists
of having extramarital relations with a married person. The
sanctity of marriage is constitutionally recognized and likewise affirmed
by our statutes as a special contract of permanent union. Accordingly,
judicial employees have been sanctioned for their dalliances with
married persons or for their own betrayals of the marital vow of fidelity.
In this case, it was not disputed that, like respondent, the father of her
child was unmarried. Therefore, respondent cannot be held liable for
disgraceful and immoral conduct simply because she gave birth to the
child Christian Jeon out of wedlock.44(Citations omitted and emphases ours)
Both Estrada and Radam are administrative cases against employees in
the civil service. The Court, however, sees no reason not to apply the
doctrines
enunciated
in Estrada and Radam in
the
instant

case. Estrada and Radam also required the Court to delineate what
conducts are considered disgraceful and/or immoral as would constitute a
ground for dismissal. More importantly, as in the said administrative cases,
the instant case involves an employees security of tenure; this case
likewise concerns employment, which is not merely a specie of property
right, but also the means by which the employee and those who depend on
him
live.45
It bears stressing that the right of an employee to security of tenure is
protected by the Constitution. Perfunctorily, a regular employee may not
be dismissed unless for cause provided under the Labor Code and other
relevant laws, in this case, the 1992 MRPS. As stated above, when the law
refers to morality, it necessarily pertains to public and secular morality and
not religious morality. Thus, the proscription against disgraceful or
immoral conduct under Section 94(e) of the 1992 MRPS, which is made as
a cause for dismissal, must necessarily refer to public and secular morality.
Accordingly, in order for a conduct to be considered as disgraceful or
immoral, it must be detrimental (or dangerous) to those conditions upon
which depend the existence and progress of human society and not
because the conduct is proscribed by the beliefs of one religion or the
other.
Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher who
had an extra-marital affair with his co-teacher, who is likewise married, on
the ground of disgraceful and immoral conduct under Section 94(e) of the
1992 MRPS. The Court pointed out that extra-marital affair is considered as
a disgraceful and immoral conduct is an afront to the sanctity of marriage,
which is a basic institution of society, viz:
We cannot overemphasize that having an extra-marital affair is an afront to
the sanctity of marriage, which is a basic institution of society. Even our
Family Code provides that husband and wife must live together, observe
mutual love, respect and fidelity. This is rooted in the fact that both our
Constitution and our laws cherish the validity of marriage and unity of the
family. Our laws, in implementing this constitutional edict on marriage and
the family underscore their permanence, inviolability and solidarity. 47
The petitioners pregnancy out of
wedlock is not a disgraceful or immoral
conduct since she and the father of her
child have no impediment to marry each
other.
In stark contrast to Santos, the Court does not find any circumstance in
this case which would lead the Court to conclude that the petitioner
committed a disgraceful or immoral conduct. It bears stressing that the
petitioner and her boyfriend, at the time they conceived a child, had no
legal impediment to marry. Indeed, even prior to her dismissal, the
petitioner married her boyfriend, the father of her child. As the Court held
in Radam, there is no law which penalizes an unmarried mother by reason

172

of her sexual conduct or proscribes the consensual sexual activity between

two unmarried persons; that neither does such situation contravene any
fundamental state policy enshrined in the Constitution.
Admittedly, the petitioner is employed in an educational institution where
the teachings and doctrines of the Catholic Church, including that on premarital sexual relations, is strictly upheld and taught to the students. That
her indiscretion, which resulted in her pregnancy out of wedlock, is
anathema to the doctrines of the Catholic Church. However, viewed
against the prevailing norms of conduct, the petitioners conduct cannot be
considered as disgraceful or immoral; such conduct is not denounced by
public and secular morality. It may be an unusual arrangement, but it
certainly is not disgraceful or immoral within the contemplation of the law.
To stress, pre-marital sexual relations between two consenting adults who
have no impediment to marry each other, and, consequently, conceiving a
child out of wedlock, gauged from a purely public and secular view of
morality, does not amount to a disgraceful or immoral conduct under
Section 94(e) of the 1992 MRPS.
Accordingly, the labor tribunals erred in upholding the validity of the
petitioners dismissal. The labor tribunals arbitrarily relied solely on the
circumstances surrounding the petitioners pregnancy and its supposed
effect on SSCW and its students without evaluating whether the
petitioners conduct is indeed considered disgraceful or immoral in view of
the prevailing norms of conduct. In this regard, the labor tribunals
respective haphazard evaluation of the evidence amounts to grave abuse
of discretion, which the Court will rectify.
The labor tribunals finding that the petitioners pregnancy out of wedlock
despite the absence of substantial evidence is not only arbitrary, but a
grave abuse of discretion, which should have been set right by the CA.
There is no substantial evidence to
prove that the petitioners pregnancy out of
wedlock caused grave scandal to SSCW
and its students.
SSCW claimed that the petitioner was primarily dismissed because her
pregnancy out of wedlock caused grave scandal to SSCW and its students.
That the scandal brought about by the petitioners indiscretion prompted
them to dismiss her. The LA upheld the respondents claim, stating that:
In this particular case, an objective and rational evaluation of the facts
and circumstances obtaining in this case would lead us to focus our
attention x x x on the impact of the act committed by the
complainant. The act of the complainant x x xeroded the moral
principles being taught and project[ed] by the respondent
[C]atholic school to their young lady students.48 (Emphasis in the
original)

On the other hand, the NLRC opined that:

In the instant case, when the complainant-appellant was already
conceiving a child even before she got married, such is considered a
shameful and scandalous behavior, inimical to public welfare and policy. It
eroded the moral doctrines which the respondent Catholic school,
an exclusive school for girls, is teaching the young girls. Thus,
when the respondent-appellee school terminated complainantappellants services, it was a valid exercise of its management
prerogative. Whether or not she was a teacher is of no moment. There is
no separate set of rules for non-teaching personnel. Respondentsappellees uphold the teachings of the Catholic Church on pre-marital sex
and that the complainant-appellant as an employee of the school was
expected to abide by this basic principle and to live up with the standards
of their purely Catholic values. Her subsequent marriage did not take away
the fact that she had engaged in pre-marital sex which the respondentappellee school denounces as the same is opposed to the teachings and
doctrines it espouses.49 (Emphasis ours)
Contrary to the labor tribunals declarations, the Court finds that SSCW
failed to adduce substantial evidence to prove that the petitioners
indiscretion indeed caused grave scandal to SSCW and its students. Other
than the SSCWs bare allegation, the records are bereft of any evidence
that would convincingly prove that the petitioners conduct indeed
adversely affected SSCWs integrity in teaching the moral doctrines, which
it stands for. The petitioner is only a non-teaching personnel; her
interaction with SSCWs students is very limited. It is thus quite impossible
that her pregnancy out of wedlock caused such a grave scandal, as
claimed by SSCW, as to warrant her dismissal.
Settled is the rule that in termination cases, the burden of proving that the
dismissal of the employees was for a valid and authorized cause rests on
the employer. It is incumbent upon the employer to show by substantial
evidence that the termination of the employment of the employees was
validly made and failure to discharge that duty would mean that the
dismissal is not justified and therefore illegal. 50 Substantial evidence is
more than a mere scintilla of evidence. It means such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion, even
if other minds equally reasonable might conceivably opine otherwise. 51
Indubitably, bare allegations do not amount to substantial evidence.
Considering that the respondents failed to adduce substantial evidence to
prove their asserted cause for the petitioners dismissal, the labor tribunals
should not have upheld their allegations hook, line and sinker. The labor
tribunals respective findings, which were arrived at sans any substantial
evidence, amounts to a grave abuse of discretion, which the CA should
have rectified. Security of tenure is a right which may not be denied on
mere speculation of any unclear and nebulous basis. 52

173

The petitioners dismissal is not a

valid exercise of SSCWs management
prerogative.
The CA belabored the management prerogative of SSCW to discipline its
employees. The CA opined that the petitioners dismissal is a valid exercise
of management prerogative to impose penalties on erring employees
pursuant to its policies, rules and regulations.
The Court does not agree.
The Court has held that management is free to regulate, according to its
own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers and discipline,
dismissal and recall of workers. The exercise of management prerogative,
however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor. Management cannot exercise its prerogative
in a cruel, repressive, or despotic manner.53
SSCW, as employer, undeniably has the right to discipline its employees
and, if need be, dismiss them if there is a valid cause to do so. However, as
already explained, there is no cause to dismiss the petitioner. Her conduct
is not considered by law as disgraceful or immoral. Further, the
respondents themselves have admitted that SSCW, at the time of the
controversy, does not have any policy or rule against an employee who
engages in pre-marital sexual relations and conceives a child as a result
thereof. There being no valid basis in law or even in SSCWs policy and
rules, SSCWs dismissal of the petitioner is despotic and arbitrary and,
thus, not a valid exercise of management prerogative.
In sum, the Court finds that the petitioner was illegally dismissed as there
was no just cause for the termination of her employment. SSCW failed to
adduce substantial evidence to establish that the petitioners conduct, i.e.,
engaging in pre-marital sexual relations and conceiving a child out of
wedlock, assessed in light of the prevailing norms of conduct, is considered
disgraceful or immoral. The labor tribunals gravely abused their discretion
in upholding the validity of the petitioners dismissal as the charge against
the petitioner lay not on substantial evidence, but on the bare allegations
of SSCW. In turn, the CA committed reversible error in upholding the
validity of the petitioners dismissal, failing to recognize that the labor
tribunals gravely abused their discretion in ruling for the respondents.
The petitioner is entitled to
separation pay, in lieu of actual
reinstatement, full backwages and
attorneys fees, but not to moral
and exemplary damages.

Having established that the petitioner was illegally dismissed, the Court
now determines the reliefs that she is entitled to and their extent. Under
the law and prevailing jurisprudence, an illegally dismissed employee is
entitled to reinstatement as a matter of right.54 Aside from the instances
provided under Articles 28355 and 28456 of the Labor Code, separation pay
is, however, granted when reinstatement is no longer feasible because of
strained relations between the employer and the employee. In cases of
illegal dismissal, the accepted doctrine is that separation pay is available in
lieu of reinstatement when the latter recourse is no longer practical or in
the best interest of the parties.57
In Divine Word High School v. NLRC,58 the Court ordered the employer
Catholic school to pay the illegally dismissed high school teacher
separation pay in lieu of actual reinstatement since her continued presence
as a teacher in the school may well be met with antipathy and
antagonism by some sectors in the school community. 59
In view of the particular circumstances of this case, it would be more
prudent to direct SSCW to pay the petitioner separation pay in lieu of
actual reinstatement. The continued employment of the petitioner with
SSCW would only serve to intensify the atmosphere of antipathy and
antagonism between the parties. Consequently, the Court awards
separation pay to the petitioner equivalent to one (1) month pay for every
year of service, with a fraction of at least six (6) months considered as one
(1) whole year, from the time of her illegal dismissal up to the finality of
this judgment, as an alternative to reinstatement.
Also, employees who are illegally dismissed are entitled to full backwages,
inclusive of allowances and other benefits or their monetary equivalent,
computed from the time their actual compensation was withheld from
them up to the time of their actual reinstatement but if reinstatement is no
longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. 60 Accordingly, the
petitioner is entitled to an award of full backwages from the time she was
illegally dismissed up to the finality of this decision.
Nevertheless, the petitioner is not entitled to moral and exemplary
damages. A dismissed employee is entitled to moral damages when the
dismissal is attended by bad faith or fraud or constitutes an act oppressive
to labor, or is done in a manner contrary to good morals, good customs or
public policy. Exemplary damages may be awarded if the dismissal is
effected in a wanton, oppressive or malevolent manner. 61
Bad faith, under the law, does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, or a breach of a known duty through some
motive or interest or ill will that partakes of the nature of fraud. 62
It must be noted that the burden of proving bad faith rests on the one
alleging it63 since basic is the principle that good faith is presumed and he

174

who alleges bad faith has the duty to prove the same. 64Allegations of bad
faith and fraud must be proved by clear and convincing evidence.65
The records of this case are bereft of any clear and convincing evidence
showing that the respondents acted in bad faith or in a wanton or
fraudulent manner in dismissing the petitioner. That the petitioner was
illegally dismissed is insufficient to prove bad faith. A dismissal may be
contrary to law but by itself alone, it does not establish bad faith to entitle
the dismissed employee to moral damages. The award of moral and
exemplary damages cannot be justified solely upon the premise that the
employer dismissed his employee without cause. 66
However, the petitioner is entitled to attorneys fees in the amount of 10%
of the total monetary award pursuant to Article 11167 of the Labor Code. It
is settled that where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorneys fees is
legally and morally justifiable.68
Finally, legal interest shall be imposed on the monetary awards herein
granted at the rate of six percent (6%) per annum from the finality of this
judgment until fully paid.69
WHEREFORE, in consideration of the foregoing disquisitions, the petition
is GRANTED. The Decision dated September 24, 2008 and Resolution
dated March 2, 2009 of the Court of Appeals in CA-G.R. SP No. 100188 are
hereby REVERSED and SET ASIDE.
The respondent, St. Scholasticas College Westgrove, is hereby declared
guilty of illegal dismissal and is hereby ORDERED to pay the petitioner,
Cheryll Santos Leus, the following: (a) separation pay in lieu of actual
reinstatement equivalent to one (1) month pay for every year of service,
with a fraction of at least six (6) months considered as one (1) whole year
from the time of her dismissal up to the finality of this Decision; (b) full
backwages from the time of her illegal dismissal up to the finality of this
Decision; and (c) attorneys fees equivalent to ten percent (10%) of the
total monetary award. The monetary awards herein granted shall earn
legal interest at the rate of six percent (6%) per annum from the date of
the finality of this Decision until fully paid. The case is REMANDED to the
Labor Arbiter for the computation of petitioners monetary awards.
SO ORDERED.

175

G.R. No. 208163, April 20, 2015

connection

ROQUE B. BENITEZ AND SANTA FE LABOR UNION-FEDERATION OF

FREE WORKERS,Petitioners, v. SANTA FE MOVING AND RELOCATION
SERVICES/VEDIT KURANGIL, Respondent.

The company and Kurangil denied liability. They maintained that the
company has developed a world-renowned reputation for unsurpassed
customer service and quality in its line of business. They averred that
during the Christmas Party on December 18, 2010, Benitez berated and
maligned Kurangil by throwing foul and offensive words at him, such as
"putang ina mo ka VK, gago ka!" Benitez's tirade, they added, included the
company and it officers. Moreover, the incident happened in front of the
company's employees, their families, as well as company clients and
guests.

DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 which seeks to
annul the November 7, 2012 decision 2 and July 10, 2013 resolution 3 of the
Court of Appeals in CA-G.R. SP No. 126213.
The Antecedents
On February 8, 2011, petitioners Roque V. Benitez (Benitez) and Santa Fe
Labor Union (union) filed a complaint for unfair labor practice and illegal
dismissal, with money claims,4 against respondents Santa Fe Moving and
Relocation Services (company) and its Managing Director, Vedit Kurangil
(Kurangil), an Australian citizen. The company is engaged in providing
relocation and moving services, including visa, immigration and real estate
services. Benitez (the union's Vice-President at the time), was its former
packing and moving operator (crew leader) since June 2001.5
Benitez alleged that on December 20, 2010, the company served him a
memorandum6 advising him not to report for work effective immediately,
thereby terminating his employment, supposedly on grounds of serious
misconduct or willful disobedience. He allegedly uttered abusive words
against Kurangil during the company's Christmas Party on December 18,
2010. He bewailed that he was not given the opportunity to defend
himself.
Benitez claimed that during the party, he noticed that the raffle committee
members were putting back the names of those who were already drawn,
giving them more chances of winning. He appealed to the committee to
put a stop to what they were doing, but they replied they would not "in the
spirit of Christmas." He denied having verbally abused Kurangil. He
presented the affidavits of co-employees Jhun Bulan, Romualdo Elib,
Carlos Morata and Raul Ramirez,7 attesting that Benitez, who was with
them at one table, did not commit the offense which led to his dismissal.
Benitez argued that his dismissal constituted an unfair labor practice as he
was a union officer and that it was undertaken to derail the conclusion of a
collective bargaining agreement with the company. He further argued that
the penalty of dismissal is disproportionate to his alleged offense,
considering that it was committed during a casual gathering and had no

to

his

work.

The company confirmed Benitez's claim that the incident involved the
conduct of the Christmas raffle. However, they differed on what triggered
his unruly behavior. It alleged that while the raffle was going on, Benitez
climbed up the stage and questioned the management's decision to allow
contractual employees to join the raffle. This resulted in only 80% of the
employees winning raffle prizes. Benitez then started hurling invectives
and foul language while still on stage, mostly directed at Kurangil.
The company further alleged that even when Benitez stormed out of the
stage, he kept on berating Kurangil, such that people he passed by
overheard him cursing Kurangil and the company and that he even
attempted to a throw a beer bottle at Kurangil, but he was restrained by
other
employees.
The
respondents
presented
in
evidence
the
affidavits
of
Kurangil,8 Reynaldo Delavin (Delavin),9 a company driver, and Diana Claros
Urmeneta10 (Urmeneta),11 a guest at the party. Their statements were
corroborated by the depositions 12 of company employees Jim Robert Afos
(Afos) and Marciano Atienza, Jr. (Atienza). The two disputed the
statements13 of Bulan, Elib, Morata and Ramirez witnesses for Benitez
that they were seated together with Benitez at one table and that he
caused no disturbance during the Christmas Party. Afos and Atienza stated
that they were the ones who were seated with Benitez, not Bulan, Elib,
Morata and Ramirez who were at a separate table with another group of
employees.
Afos and Atienza added that Benitez's tirade started when the raffle for the
grand prize was being conducted. All of a sudden, Benitez, who had not yet
won a prize at that time, stood up and proceeded to the stage, fuming mad
and
complaining
about
the
conduct
of
the
raffle. 14
The company required Benitez to explain in writing why he should not be
disciplined for serious misconduct and willful disobedience of its lawful
orders in connection with the incident. Benitez failed to comply and neither
did
he
show
remorse
for
what
he
did.

176

In view of Benitez's failure to explain his side, the company issued a

memorandum15 dated December 20, 2010 to Benitez (signed by Kurangil),
terminating his employment effective on the same day, for clear violation
of "Santa Fe Policy and Procedure under Conduct and Behavior as well
as Labor Code of the Philippines under Art. 282 - Serious misconduct or
willful disobedience by the employee of the lawful orders of his employer x
x x."
The Compulsory Arbitration Rulings
In her decision16 of September 14, 2011, Labor Arbiter Fatima JambaroFranco (LA Franco) dismissed the complaint for lack of merit. LA Franco
found that Benitez, who was holding a position of trust and confidence as
packing and moving operator, committed a serious misconduct at the
company's Christmas Party on December 18, 2010 by "hurling obscene,
insulting or offensive language against a superior,"17 thereby losing the
trust
and
confidence
of
his
employer.

expenses. They submit in the main that the CA committed grave and
palpable error in misappreciating the facts and applicable jurisprudence in
this
case,
especially
the Samson
v.
NLRC24 ruling.
They contend that contrary to the appellate court's opinion, Benitez was
not liable for serious misconduct. They insist that Benitez did not malign
Kurangil, during the Christmas Party and that if he indeed became unruly
on that day, the company guards should have restrained him and made a
report about it, but there was no such intervention from the guards.
At any rate, they argue, Benitez should not have been dismissed for the
serious misconduct he allegedly committed since it was not in connection
with his work as moving and relocation operator. Moreover, for misconduct
to be serious, it must be of such a grave and aggravated character and not
merely trivial and unimportant as the Court declared in Samson which,
they claim, has factual similarities with the present case.
The Respondents' Case

Benitez and the union appealed, reiterating that his dismissal is illegal.
Moreover, they claimed, he was denied due process as he was not given
the
opportunity
to
explain
his
side.
The National Labor Relations Commission (NLRC) dismissed the appeal,
likewise for lack of merit, in its decision 18 of March 15, 2012. It sustained LA
Franco's finding that Benitez was validly dismissed for serious misconduct.
However, it noted "that the respondents failed to comply with the twonotice requirement as mandated by the Labor Code in validly dismissing an
employee."19 Accordingly, it affirmed LA Franco's ruling with modification
by awarding Benitez nominal damages of P50,000.00 for the violation of
his
right
to
procedural
due
process.
Benitez and the union moved for reconsideration, to no avail. The NLRC
denied the motion,20prompting them to file a petition for certiorari21 with
the CA.

In their Comment (on the Petition), 25 the respondents pray that the petition
be dismissed and the assailed CA rulings modified through a deletion of the
award of nominal damages to Benitez and the reinstatement of LA Franco's
September 14, 2011 decision. In the alternative, they ask that the nominal
damages
award
be
tempered.
They argue that the petitioners have not made out a case showing that
there are special and compelling reasons requiring the exercise by this
Court of its discretionary power of judicial review. They submit that the
petition virtually raises the same arguments that had already been duly
resolved, based on evidence supporting Benitez's dismissal for cause.
Thus, the petition should be rejected outright for it raises only questions of
facts and not of law.
The Court's Ruling

The CA Decision

The procedural question

In its decision22 under review, the CA found no grave abuse of discretion in

the NLRC's affirmation of LA Franco's ruling that Benitez was validly
dismissed. It stressed that "the findings of the NLRC which adopted those
of the Labor Arbiter were in accord with the evidence on record." 23 It
dismissed the petition and denied Benitez's subsequent motion for
reconsideration.

Are the questions raised by the petitioners factual in nature, or are they of
law? The respondents contend that they are questions of fact and are
therefore not allowed in a petition for review oncertiorari under Rule 45,
Section 1 of the Rules of Court. Thus, they ask for an outright dismissal of
the petition as the Court is not a trier of facts.26

The Petition
Benitez and the union now ask the Court to reverse his dismissal and order
his reinstatement with full backwages, grant his money claims, award him
moral and exemplary damages, attorney's fees, as well as litigation

The respondents' arguments failed to persuade us. The labor arbiter,

the NLRC and the CA uniformly ruled that there is substantial evidence to
warrant Benitez's dismissal for serious misconduct. Although up to this
stage of the proceedings Benitez insists that he did not commit a serious
misconduct, he argues lengthily that the penalty of dismissal is not
commensurate to the offense as defined by law.

177

regarding the incident.

As we see matters, the question before us is what the law is on the offense
Benitez committed based on the facts of the case, which we find to be
clearly a question of law.27 It does not involve the probative value of the
evidence adduced, which is a question of fact.28 We thus find no procedural
infirmity in the petition.

Again, we find this argument unpersuasive. There was no need for the
guards to intervene because Benitez was restrained by people near the
stage and who escorted him outside the premises where the party was
going on as attested to by Kurangil himself,37 as well as by Afos and
Atienza.38

The substantive aspect of the case

Serious misconduct is a just cause for termination of employment under
the law.29 Article 282 of the Labor Code provides: "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, x x x."
Benitez and his union stand firm on their position that he was not liable for
serious misconduct on account of his display of unruly behavior during the
company's Christmas Party on December 18, 2010 for reasons earlier
discussed. On the other hand, the respondents maintain that he committed
a serious misconduct that warranted his dismissal.

Under the circumstances, we believe that Benitez's tirade against Kurangil,

the company and other company officers indeed happened. Significantly,
the Christmas Party was attended not only by company officers and
employees and their families, but also by company clients and guests. With
such a big audience in front of him, we cannot imagine how Benitez could
get away with his claim that he did not malign and disrespect Kurangil and
the others.
The petitioners assert that even if Benitez committed the offense for which
he was charged, it was not a serious misconduct that would warrant his
dismissal under the law. They cite Samson v. NLRC39as authority for their
submission that "misconduct, however serious, must nevertheless be in
connection with the employee's work to constitute just cause for his
separation.40

We find the petition unmeritorious.

They further cite the following excerpt in the Samson case:
Despite his denial, there is substantial evidence that Benitez maligned the
company's managing director and the company itself during their
Christmas Party on December 18, 2010. Substantial evidence is such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise.30
Benitez presented the affidavits31 of four company employees Bulan,
Elib, Morata and Ramirez who stated under oath that Benitez was seated
with them at one table and that he did not cause any disturbance during
the party. The testimony of these four employees were belied by their coemployees Afos and Atienza who executed a joint affidavit, 32 stating that
Benitez was seated with them at a different table and that they witnessed
him going to the stage where he lost his temper and verbally abused
Kurangil in connection with the conduct of the Christmas raffle.
Delavin,33 a company employee and guest Urmeneta34 corroborated
Kurangil's statement35regarding Benitez's outburst on the stage,
particularly the invectives he threw at him "Putang ina mo ka VK, gago ka."
Urmeneta, for instance, deposed that when Benitez left the stage angrily
and walked past her and others sitting at the table, she heard him
say "Putang-ina mo ka VK, gago ka.36
Benitez further contends that the company guards could have noticed the
incident and therefore could have stepped in to maintain order, but
nothing of this sort took place as there was even no report from the guards

xxxx
1. On or about 17 December 1993, during the Sales and Marketing
Christmas gathering, you made utterances of obscene, insulting,
and offensive words, referring to or directed against SPC's
Management Committee, in the presence of several co-employees.
2. On that same occasion, and again in the presence of several coemployees,you uttered obscene, insulting and offensive words,
and made malicious and lewd gestures, all of which referred to or
were directed against Mr. Epitacio D. Titong, Jr., President and
General
Manager
of
SPC.
3. Also on that occasion, you repeated your malicious utterances
and threatened to disrupt or otherwise create violence during
SPC's forthcoming National Sales Conference, and enjoined your
co- employees not to prepare for the said conference.
4. Subsequently, on or about 3 January 1994, you repeated your
threats to some co-employees, advising them to watch out for
some disruptive actions to happen during the National Sales
Conference. (Emphasis ours.)
xxxx

178

The petitioners submit that the C A misappreciated the facts of Samson

and the present case when it ruled that "[In the case of Samson v. NLRC] x
x x the alleged offensive words were not uttered by petitioner in the
presence of respondent company's president and general manager. In
contrast, petitioner was with Mr. Kurangil when he uttered the foul words in
the presence of the employees, their families and guests."41
We disagree. The CA committed no reversible error in not applying
the Samson ruling in this case. Samson's outburst occurred during an
informal Christmas gathering of company sales officials and staff and his
maligned
superior
was
not
present
during
the
gathering.
On the other hand, Benitez went up the stage and confronted his superior
with a verbal abuse. Also, the petitioners cited Samson selectively and
concealed its real thrust, thus:
The instant case should be distinguished from the previous cases
where we held that the use of insulting and offensive language
constituted gross misconduct justifying an employee's dismissal.
In De la Cruz vs. NLRC, the dismissed employee shouted "saying
ang pagka-professional mo!" and "putang ina mo" at the company
physician when the latter refused to give him a referral slip.
In Autobus Workers' Union (AWU) v. NLRC, the dismissed employee
called his supervisor "gago ka" and taunted the latter by saying
"bakit anong gusto mo tang ina mo." In these cases, the dismissed
employees personally subjected their respective superiors to the
foregoing verbal abuses. The utter lack of respect for their
superiors was patent. In contrast, when petitioner was heard to
have uttered the alleged offensive words against respondent
company's president and general manager, the latter was not
around. (Emphases and underscoring ours.)42
Further, it appears that in Samson, the company was ambivalent for a
while on what to do with Samson's offense as it took several weeks after
the last incident on January 3, 1994 before it asked him to explain.
Moreover, the company official maligned merely admonished Samson
during a meeting on January 4, 1994.
In contrast, the company acted swiftly and decisively in Benitez's case,
obviously and understandably, because of the gravity and high visibility of
his offense, which not only constituted a frontal verbal, and nearly physical
(the attempted beer bottle throwing), assault against Kurangil. Needless to
say, Benitez's outburst also caused grave embarrassment for the audience
who witnessed the incident, including company officials whom he likewise
maligned, as well as company clients and guests.
Under the foregoing circumstances, we are convinced - as the Labor
Arbiter, the NLRC and the CA had been - that Benitez's offense
constituted a serious misconduct as defined by law. His display of insolent

and disrespectful behavior, in utter disregard of the time and place of its
occurrence, had very much to do with his work. He set a bad example as a
union officer and as a crew leader of a vital division of the company. His
actuations during the company's Christmas Party on December 18, 2010,
to our mind, could have had negative repercussions for his employer had
he been allowed to stay on the job. His standing before those clients who
witnessed the incident and those who would hear of it would surely be
diminished, to the detriment of the company.
Finally, we agree with the NLRC ruling that the company failed to observe
the two-notice requirement in employee dismissals as Benitez was
dismissed on the same day that the memorandum was served on him. The
verbal directive for him to explain why he should not be dismissed,
assuming that there was indeed such a directive, clearly was not in
compliance with the law. Nonetheless, considering the gravity of Benitez's
offense, we deem it reasonable to award him P30,000.00 in nominal
damages for violation of his right to procedural due process.
WHEREFORE, premises considered, the petition is DISMISSED for lack of
merit. The assailed decision and resolution of the Court of Appeals
are AFFIRMED, with modification. The award of nominal damages to
Benitez is reduced from P50,000.00 to P30,000.00. The complaint is
DISMISSED.
SO ORDERED.
G.R. No. 208908, March 11, 2015
THE COFFEE BEAN AND TEA LEAF PHILIPPINES, INC. AND WALDEN
CHU, Petitioners, v. ROLLY P. ARENAS, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the
Court of Appeals (CA) decision 2 dated March 26, 2013 and
resolution3 dated August 30, 2013 in CA-G.R. SP No. 117822. These
assailed CA rulings affirmed the National Labor Relations Commissions
(NLRC) decision4 dated August 13, 2010, which also affirmed the Labor
Arbiters (LA) February 28, 2010 decision.
The Antecedent Facts
On April 1, 2008, the 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.5 Upon signing the
employment contract,6 Arenas was informed of CBTLs existing

179

employment

policies.

To ensure the quality of its crews services, CBTL regularly employs a

mystery guest shopper who poses as a customer, for the purpose of
covertly
inspecting
the
baristas
job
performance. 7
In April 2009, a mystery guest shopper at the Paseo Center Branch
submitted a report stating that on March 30, 2009, Arenas was seen eating
non-CBTL products at CBTLs al fresco dining area while on duty. As a
result, the counter was left empty without anyone to take and prepare the
customers
orders.8
On another occasion, or on April 28, 2009, Katrina Basallo (Basallo), the
duty manager of CBTL, conducted a routine inspection of the Paseo Center
Branch. While inspecting the stores 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. 9
After inspection, Basallo prepared a store managers report which listed
Arenas recent infractions, as follows:
1.

Leaving the counter unattended and eating

unauthorized area while on duty (March 30, 2009);

chips

in

an

2.

Reporting late for work on several occasions (April 1, 3 and 22);

and

3.

Placing an iced tea bottle in the ice bin despite having knowledge
of company policy prohibiting the same (April 28, 2009). 10

Based on the mystery guest shopper and duty managers reports, Arenas
was required to explain his alleged violations. However, CBTL found
Arenas written explanation unsatisfactory, hence CBTL terminated his
employment.11
Arenas filed a complaint for illegal dismissal. After due proceedings, the LA
ruled in his favor, declaring that he had been illegally dismissed. On
appeal,
the
NLRC
affirmed
the
LAs
decision.
CBTL filed a petition for certiorari under Rule 65 before the CA. CBTL
insisted that Arenas infractions amounted to serious misconduct or willful
disobedience, gross and habitual neglect of duties, and breach of trust and
confidence. To support these allegations, CBTL presented Arenas
letter12 where he admitted his commission of the imputed violations.

On March 26, 2013, the CA issued its decision dismissing the petition. 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 CBTLs motion for reconsideration opening the way
for this present appeal via a petition for review on certiorari.
The main issue before us is whether CBTL illegally dismissed Arenas from
employment.
The Petition
CBTL argues that under the terms and conditions of the employment
contract, Arenas agreed to abide and comply with CBTLs policies,
procedures, rules and regulations, as provided for under CBTLs table
of
offenses
and
penalties and/or employee handbook. 13 CBTL
cites serious misconduct as the primary reason for terminating Arenas
employment. CBTL also imputes dishonesty on the part of Arenas for not
immediately admitting that he indeed left his bottled iced tea inside the ice
bin.
Our Ruling
We

DENY

the

petition.

As a rule, in certiorari proceedings under Rule 65 of the Rules of Court, the

CA does not assess and weigh each piece of evidence introduced in the
case. The CA only examines the factual findings of the NLRC to determine
whether its conclusions are supported by substantial evidence, whose
absence points to grave abuse of discretion amounting to lack or excess of
jurisdiction.14 In the case ofMercado v. AMA Computer College,15 we
emphasized that:
As a general rule, in certiorari proceedings under Rule 65 of the Rules of
Court, the appellate court does not assess and weigh the sufficiency of
evidence upon which the Labor Arbiter and the NLRC based their
conclusion. The query in this proceeding is limited to the determination of
whether or not the NLRC acted without or in excess of its jurisdiction or
with grave abuse of discretion in rendering its decision. x x x 16 [Italics
supplied]
Our review of the records shows that the CA did not err in affirming the LA
and the NLRCs rulings. No grave abuse of discretion tainted these rulings,
thus, the CAs decision also warrants this Courts affirmation. The
infractions which Arenas committed do not justify the application of the
severe
penalty
of
termination
from
service.
First, Arenas was found eating non-CBTL products inside the stores
premises while on duty. Allegedly, he left the counter unattended without

180

anyone to entertain the incoming customers. Second, he chilled his bottled

iced tea inside the ice bin, in violation of CBTLs sanitation and hygiene
policy. CBTL argues that these violations constitute willful disobedience,
thus
meriting
dismissal
from
employment.
We

disagree

with

CBTL.

For willful disobedience to be a valid cause for dismissal, these two

elements must concur: (1) the employees 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.17
Tested against these standards, it is clear that Arenas alleged infractions
do not amount to such a wrongful and perverse attitude. Though Arenas
may have admitted these wrongdoings, these do not amount to a wanton
disregard of CBTLs company policies. As Arenas mentioned in his written
explanation, he was on a scheduled break when he was caught eating at
CBTLs al fresco dining area. During that time, the other service crews were
the one in charge of manning the counter. Notably, CBTLs employee
handbook imposes only the penalty of written warning for the offense of
eating
non-CBTL
products
inside
the
stores
premises.

continue

working

for

the

employer. 22

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
Courts
respect.

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

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. The LA and the NLRC ruled for their solidary liability but the CA
failed
to
dispose
this
issue
in
its
decision.

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.18 There is habitual neglect if based on the circumstances, there is a
repeated failure to perform ones duties for a period of time. 19

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.23 Thus, as a general rule, an officer may not be held
liable for the corporations labor obligations unless he acted with evident
malice
and/or
bad
faith
in
dismissing
an
employee. 24

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

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

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 CBTLs employee handbook, dishonesty, even at the first
instance, warrants the penalty of termination from service. 21

WHEREFORE, in light of these considerations, we hereby DENY the

petition for lack of merit. The Court of Appeals committed no grave abuse
of discretion in its decision of March 26, 2013 and its resolution of August
30, 2013 in CA-G.R. SP No. 117822, except with respect to the liability of
petitioner Walden Chu. We thus absolve petitioner Walden Chu from
paying in his personal capacity the monetary awards of respondent Rolly P.
Arenas.
No
costs.
SO ORDERED.

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 employees
duties; and (c) it must show that the employee has become unfit to

181

G.R. No. 212054, March 11, 2015

ST. LUKES MEDICAL CENTER, INC., Petitioner, v. MARIA THERESA V.
SANCHEZ, Respondent.
DECISION

po. Taos-puso po akong humihingi ng tawad sa aking pagkakasala, Alam

ko po na ako ay nagkamali. Hindi ko po dapat dinala yung mga gamit sa
hospital. Hindi ko po alam kung [paano] ako magsisimulang humingi ng
patawad. Kahit alam kong bawal ay nagawa kong makapag uwi ng gamit.
Marami pang gamit dahil sa naipon po. Paisa-isa nagagawa kong
makakuha pag nakakalimutan kong isoli. Hindi ko na po naiwan sa nurse
station dahil naisip kong magagamit ko rin po pag minsang
nagkakaubusan
ng
stocks
at
talagang
may
kailangan.

PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated
November 21, 2013 and the Resolution 3 dated April 4, 2014 of the Court of
Appeals (CA) in CA-G.R. SP No. 129108 which affirmed the Decision 4 dated
November 19, 2012 and the Resolution 5 dated January 14, 2013 of the
National Labor Relations Commission (NLRC) in NLRC LAC No. 06-00185812, declaring the dismissal of respondent Maria Theresa V. Sanchez
(Sanchez) illegal.
The Facts
On June 29, 2009, Sanchez was hired by petitioner St. Lukes Medical
Center, Inc. (SLMC) as a Staff Nurse, and was eventually assigned at SLMC,
Quezon Citys Pediatric Unit until her termination on July 6, 2011 for her
purported violation of SLMCs Code of Discipline, particularly Section 1,
Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft, Pilferage, and
Misappropriation
of
Funds. 6
Records reveal that at the end of her shift on May 29, 2011, Sanchez
passed through the SLMC Centralization Entrance/Exit where she was
subjected to the standard inspection procedure by the security personnel.
In the course thereof, the Security Guard on-duty, Jaime Manzanade (SG
Manzanade), noticed a pouch in her bag and asked her to open the
same.7 When opened, said pouch contained the following assortment of
medical stocks which were subsequently confiscated: (a) Syringe 10cl [4
pieces]; (b) Syringe 5cl [3 pieces]; (c) Syringe 3cl [3 pieces]; (d) Micropore
[1 piece]; (e) Cotton Balls [1 pack]; (f) Neoflon g26 [1 piece]; (g) Venofix 25
[2 pieces]; and (h) Gloves [4 pieces] (questioned items). 8 Sanchez asked
SG Manzanade if she could just return the pouch inside the treatment
room; however, she was not allowed to do so. 9 Instead, she was brought to
the SLMC In-House Security Department (IHSD) where she was directed to
write an Incident Report explaining why she had the questioned items in
her possession.10 She complied11 with the directive and also submitted an
undated handwritten letter of apology 12 (handwritten letter) which reads as
follows:
To

In-House

Security,

I am very sorry for bringing things from [SLMC] inside my bag. Pasensya na

Humihingi po ako ng tawad sa aking ginawa. Isinakripisyo ko ang hindi

pagiging toxic sa pagkuha ng gamit para sa bagay na alam kong mali.
Inaamin ko na akoy naging madamot, pasuway at makasalanan. Inuna ko
ang comfort ko keysa gumawa ng tama. Manikluhod po akong humihingi
ng
tawad.
Sorry po. Sorry po. Sorry po talaga.13
In a memorandum14 of even date, the IHSD, Customer Affairs Division,
through Duty Officer Hernani R. Janayon, apprised SLMC of the incident,
highlighting that Sanchez expressly admitted that she intentionally brought
out
the
questioned
items.
An initial investigation was also conducted by the SLMC Division of
Nursing15 which thereafter served Sanchez a notice to explain. 16
On May 31, 2011, Sanchez submitted an Incident Report Addendum 17 (May
31, 2011 letter), explaining that the questioned items came from the
medication drawers of patients who had already been discharged, and, as
similarly practiced by the other staff members, she started saving these
items as excess stocks in her pouch, along with other basic items that she
uses during her shift.18She then put the pouch inside the lowest drawer of
the bedside table in the treatment room for use in immediate procedures
in case replenishment of stocks gets delayed. However, on the day of the
incident, she failed to return the pouch inside the medication drawer upon
getting her tri-colored pen and calculator and, instead, placed it inside her
bag. Eventually, she forgot about the same as she got caught up in work,
until it was noticed by the guard on duty on her way out of SMLCs
premises.
Consequently, Sanchez was placed under preventive suspension effective
June 3, 2011 until the conclusion of the investigation by SLMCs Employee
and Labor Relations Department (ELRD) 19 which, thereafter, required her to
explain why she should not be terminated from service for acts of
dishonesty due to her possession of the questioned items in violation of
Section 1, Rule I of the SLMC Code of Discipline. 20 In response, she
submitted a letter21 dated June 13, 2011, which merely reiterated her
claims in her previous May 31, 2011 letter. She likewise requested for a
case conference,22 which SLMC granted.23 After hearing her side, SLMC, on

182

July 4, 2011, informed Sanchez of its decision to terminate her employment

effective closing hours of July 6, 2011. 24 This prompted her to file a
complaint for illegal dismissal before the NLRC, docketed as NLRC NCR
Case
No.
07-11042-11.

The NLRC Ruling

In her position paper,25 Sanchez maintained her innocence, claiming that

she had no intention of bringing outside the SLMCs premises the
questioned items since she merely inadvertently left the pouch containing
them in her bag as she got caught up in work that day. She further
asserted that she could not be found guilty of pilferage since the
questioned items found in her possession were neither SLMCs nor its
employees property. She also stressed the fact that SLMC did not file any
criminal charges against her. Anent her supposed admission in her
handwritten letter, she claimed that she was unassisted by counsel when
she executed the same and, thus, was inadmissible for being
unconstitutional.26

The NLRC declared that the alleged violation of Sanchez was a unique
case, considering that keeping excess hospital stocks or hoarding was an
admitted practice amongst nurses in the Pediatric Unit which had been
tolerated by SLMC management for a long time. 40 The NLRC held that while
Sanchez expressed remorse for her misconduct in her handwritten letter,
she manifested that she only hoarded the questioned items for future
use in case their medical supplies are depleted, and not for her personal
benefit.41 It further held that SLMC failed to establish that Sanchez was
motivated by ill-will when she brought out the questioned items, noting: (a)
the testimony of SG Manzanade during the conference before the ELRD of
Sanchezs demeanor when she was apprehended, i.e., [d]i naman siya
masyado nataranta,42 and her consequent offer to return the pouch; 43 and
(b) that the said pouch was not hidden underneath the bag. 44 Finally, the
NLRC concluded that the punishment of dismissal was too harsh and the
one (1) month preventive suspension already imposed on and served by
Sanchez was the appropriate penalty. 45 Accordingly, the NLRC ordered her
reinstatement, and the payment of backwages, other benefits, and
attorneys
fees.46

For its part,27 SLMC contended that Sanchez was validly dismissed for just
cause as she had committed theft in violation of Section 1, 28 Rule I of the
SLMC Code of Discipline, 29 which punishes acts of dishonesty, i.e., robbery,
theft, pilferage, and misappropriation of funds, with termination from
service.
The LA Ruling
In a Decision dated May 27, 2012, the Labor Arbiter (LA) ruled that
Sanchez was validly dismissed 31 for intentionally taking the property of
SLMCs clients for her own personal benefit, 32which constitutes an act of
dishonesty
as
provided
under
SLMCs
Code
of
Discipline.
30

According to the LA, Sanchezs act of theft was evinced by her attempt to
bring the questioned items that did not belong to her out of SLMCs
premises; this was found to be analogous to serious misconduct which is a
just cause to dismiss her. 33 The fact that the items she took were neither
SLMCs nor her co-employees property was not found by the LA to be
material since the SLMC Code of Discipline clearly provides that acts of
dishonesty committed to SLMC, its doctors, its employees, as well as its
customers, are punishable by a penalty of termination from service. 34 To
this, the LA opined that [i]t is rather illogical to distinguish the persons
with whom the [said] acts may be committed as SLMC is also answerable
to the properties of its patients. 35 Moreover, the LA observed that Sanchez
was aware of SLMCs strict policy regarding the taking of hospital/medical
items as evidenced by her handwritten letter, 36 but nonetheless committed
the said misconduct. Finally, the LA pointed out that SLMCs non-filing of a
criminal case against Sanchez did not preclude a determination of her
serious misconduct, considering that the filing of a criminal case is entirely
separate and distinct from the determination of just cause for termination
of
employment.37
Aggrieved, Sanchez appealed38 to the NLRC.

In a Decision39 dated November 19, 2012, the NLRC reversed and set aside
the LA ruling, and held that Sanchez was illegally dismissed.

Unconvinced, SLMC moved for reconsideration 47 which was, however,

denied in a Resolution48 dated January 14, 2013. Thus, it filed a petition
for certiorari49 before the CA.
The CA Ruling
In a Decision50 dated November 21, 2013, the CA upheld the NLRC, ruling
that the latter did not gravely abuse its discretion in finding that Sanchez
was
illegally
dismissed.
It ruled that Sanchezs offense did not qualify as serious misconduct, given
that: (a) the questioned items found in her possession were not SLMC
property since said items were paid for by discharged patients, thus
discounting any material or economic damage on SLMCs part; (b) the
retention of excess medical supplies was an admitted practice amongst
nurses in the Pediatric Unit which was tolerated by SLMC; (c) it was illogical
for Sanchez to leave the pouch in her bag since she would be subjected to
a routine inspection; (d) Sanchezs lack of intention to bring out the pouch
was manifested by her composed demeanor upon apprehension and offer
to return the pouch to the treatment room; and (e) had SLMC honestly
believed that Sanchez committed theft or pilferage, it should have filed the
appropriate criminal case, but failed to do so. 51 Moreover, while the CA
recognized that SLMC had the management prerogative to discipline its
erring employees, it, however, declared that such right must be exercised
humanely. As such, SLMC should only impose penalties commensurate with
the degree of infraction. Considering that there was no indication that

183

Sanchezs actions were perpetrated for self-interest or for an unlawful

objective, the penalty of dismissal imposed on her was grossly oppressive
and
disproportionate
to
her
offense. 52
Dissatisfied, SLMC sought for reconsideration,53 but was denied in a
Resolution54 dated April 4, 2014, hence, this petition.
The Issue Before the Court
The core issue to be resolved is whether or not Sanchez was illegally
dismissed by SLMC.
The Courts Ruling
The petition is meritorious.
The right of an employer to regulate all aspects of employment, aptly
called management prerogative, gives employers the freedom to
regulate, according to their discretion and best judgment, all aspects of
employment, including work assignment, working methods, processes to
be followed, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of
workers.55 In this light, courts often decline to interfere in legitimate
business decisions of employers. In fact, labor laws discourage
interference in employers judgment concerning the conduct of their
business.56
Among the employers management prerogatives is the right to prescribe
reasonable rules and regulations necessary or proper for the conduct of its
business or concern, to provide certain disciplinary measures to implement
said rules and to assure that the same would be complied with. At the
same time, the employee has the corollary duty to obey all reasonable
rules, orders, and instructions of the employer; and willful or intentional
disobedience thereto, as a general rule, justifies termination of the
contract of service and the dismissal of the employee. 57 Article 296
(formerly Article 282) of the Labor Code provides:58
Article 296. 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 his representative in connection
with
his
work;ChanRoblesVirtualawlibrary
xxxx
Note that for an employee to be validly dismissed on this ground, the
employers orders, regulations, or instructions must be: (1) reasonable
and lawful, (2) sufficiently known to the employee, and (3) in

connection with the duties which the employee has been engaged
to
discharge.59
Tested against the foregoing, the Court finds that Sanchez was validly
dismissed by SLMC for her willful disregard and disobedience of Section 1,
Rule I of the SLMC Code of Discipline, which reasonably punishes acts of
dishonesty, i.e., theft, pilferage of hospital or co-employee property, x x x
or its attempt in any form or manner from the hospital, co-employees,
doctors, visitors, [and] customers (external and internal) with termination
from employment.60 Such act is obviously connected with Sanchezs work,
who, as a staff nurse, is tasked with the proper stewardship of medical
supplies. Significantly, records show that Sanchez made a categorical
admission61 in her handwritten letter62 i.e., [k]ahit alam kong bawal ay
nagawa kong [makapag-uwi] ng gamit63 that despite her knowledge of
its express prohibition under the SLMC Code of Discipline, she still
knowingly brought out the subject medical items with her. It is apt to clarify
that SLMC cannot be faulted in construing the taking of the questioned
items as an act of dishonesty (particularly, as theft, pilferage, or its
attempt in any form or manner) considering that the intent to gain may be
reasonably presumed from the furtive taking of useful property
appertaining to another.64 Note that Section 1, Rule 1 of the SLMC Code of
Discipline is further supplemented by the company policy requiring the
turn-over of excess medical supplies/items for proper handling 65 and
providing a restriction on taking and bringing such items out of the SLMC
premises without the proper authorization or pass from the official
concerned,66 which Sanchez was equally aware thereof.67Nevertheless,
Sanchez failed to turn-over the questioned items and, instead, hoarded
them, as purportedly practiced by the other staff members in the Pediatric
Unit. As it is clear that the company policies subject of this case are
reasonable and lawful, sufficiently known to the employee, and evidently
connected with the latters work, the Court concludes that SLMC dismissed
Sanchez
for
a
just
cause.
On a related point, the Court observes that there lies no competent basis
to support the common observation of the NLRC and the CA that the
retention of excess medical supplies was a tolerated practice among the
nurses at the Pediatric Unit. While there were previous incidents of
hoarding, it appears that such acts were in similar fashion furtively
made and the items secretly kept, as any excess items found in the
concerned nurses possession would have to be confiscated. 68 Hence, the
fact that no one was caught and/or sanctioned for transgressing the
prohibition therefor does not mean that the so-called hoarding practice
was tolerated by SLMC. Besides, whatever maybe the justification behind
the violation of the company rules regarding excess medical supplies is
immaterial since it has been established that an infraction was deliberately
committed.69 Doubtless, the deliberate disregard or disobedience of rules
by the employee cannot be countenanced as it may encourage him or her
to do even worse and will render a mockery of the rules of discipline that
employees
are
required
to
observe. 70

184

Finally, the Court finds it inconsequential that SLMC has not suffered any
actual damage. While damage aggravates the charge, its absence does not
mitigate nor negate the employees liability. 71Neither is SLMCs non-filing of
the appropriate criminal charges relevant to this analysis. An employees
guilt or innocence in a criminal case is not determinative of the existence
of a just or authorized cause for his or her dismissal. 72 It is well-settled that
conviction in a criminal case is not necessary to find just cause for
termination of employment,73 as in this case. Criminal and labor cases
involving an employee arising from the same infraction are separate and
distinct proceedings which should not arrest any judgment from one to the
other.
As it stands, the Court thus holds that the dismissal of Sanchez was for a
just cause, supported by substantial evidence, and is therefore in order. By
declaring otherwise, bereft of any substantial bases, the NLRC issued a
patently and grossly erroneous ruling tantamount to grave abuse of
discretion, which, in turn, means that the CA erred when it affirmed the
same. In consequence, the grant of the present petition is warranted.
WHEREFORE, the petition is GRANTED. The Decision dated November
21, 2013 and the Resolution dated April 4, 2014 of the Court of Appeals in
CA-G.R. SP No. 129108 are REVERSED and SET ASIDE. The Labor
Arbiters Decision dated May 27, 2012 in NLRC Case No. NCR 07-11042-11
finding respondent Maria Theresa V. Sanchez to have been validly
dismissed
by
petitioner
St.
Lukes
Medical
Center,
Inc.
is
hereby REINSTATED.
SO ORDERED

185

MANSION
PRINTING
CLEMENT CHENG,
Petitioners,

CENTER

-versus-

DIOSDADO BITARA, JR.

Respondent.

and

G.R. No. 168120

Reconsideration of the Decision. The assailed decision of the Court of

Appeals

reversed

the

findings

of

the

National

Labor

Relations

Present:

Commission3 and the Labor Arbiter4 that respondent was validly dismissed

CARPIO, J.
Chairperson,
PEREZ,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.*

from the service.

Promulgated:
January 25, 2012

The Antecedents

Petitioner Mansion Printing Center is a single proprietorship

registered under the name of its president and co-petitioner Clement
Cheng. It is engaged in the printing of quality self-adhesive labels,
brochures, posters, stickers, packaging and the like. 5

Sometime in August 1998, petitioners engaged the services of

respondent as a helper (kargador). Respondent was later promoted as the
companys sole driver tasked to pick-up raw materials for the printing
business, collect account receivables and deliver the products to the
x-----------------------------------------------------------------------------------------x

2. D E C I S I O N

clients within the delivery schedules.6

Petitioners aver that the timely delivery of the products to the

clients is one of the foremost considerations material to the operation of

PEREZ, J.:

the business.7 It being so, they closely monitored the attendance of

respondent. They noted his habitual tardiness and absenteeism.

Before us is a petition for review on certiorari seeking to reverse

and set aside the issuances of the Court of Appeals in CA-GR. SP No.
70965, to wit: (a) the Decision1 dated 18 March 2004 granting the petition
for certiorari under Rule 65 of herein respondent Diosdado Bitara, Jr.; and
(b) the Resolution2 dated 10 May 2005 denying the petitioners Motion for

Thus,

as

early

as

23

June

1999,

petitioners

issued

Memorandum8 requiring respondent to submit a written explanation why

no administrative sanction should be imposed on him for his habitual
tardiness.

186

Several months after, respondents attention on the matter was

again called to which he replied:

Explain to respondent but the latter, after reading the directive, refused to
acknowledge receipt thereof.13 He did not submit any explanation and,
thereafter, never reported for work.

29 NOV. 1999
MR. CLEMENT CHENG

On 21 March 2000, Davis Cheng personally served another

SIR:

Memorandum14 (Notice of Termination) upon him informing him that the

I UNDERSTAND MY TARDINESS WHATEVER REASON I HAVE

AFFECTS SOMEHOW THE DELIVERY SCHEDULE OF THE
COMPANY, THUS DISCIPLINARY ACTION WERE IMPOSED TO
ME BY THE MANAGEMENT. AND ON THIS END, ACCEPT MY
APOLOGIES AND REST ASSURED THAT I WILL COME ON TIME
(ON OR BEFORE 8:30 AM) AND WILLINGNESS TO EXTEND MY
SERVICE AS A COMPANY DRIVER. WHATEVER HELP NEEDED.
(sic)
RESPECTFULLY YOURS,
(SGD.) DIOSDADO BITARA, JR.9

company found him grossly negligent of his duties, for which reason, his
services were terminated effective 1 April 2000.

On even date, respondent met with the management requesting

for reconsideration of his termination from the service. However, after
hearing his position, the management decided to implement the 21 March
2000 Memorandum. Nevertheless, the management, out of generosity,

Despite respondents undertaking to report on time, however, he

offered respondent financial assistance in the amount of P6,110.00

continued to disregard attendance policies. His weekly time record for the

equivalent to his one month salary. Respondent demanded that he be

first quarter of the year 200010revealed that he came late nineteen (19)

given the amount equivalent to two (2) months salary but the

times out of the forty-seven (47) times he reported for work. He also

management declined as it believed it would, in effect, reward respondent

incurred nineteen (19) absences out of the sixty-six (66) working days

for being negligent of his duties.15

during the quarter. His absences without prior notice and approval from
March 11-16, 2000 were considered to be the most serious infraction of

On 27 April 2000, respondent filed a complaint 16 for illegal

dismissal against the petitioners before the Labor Arbiter. He prayed for his

all11 because of its adverse effect on business operations.

reinstatement and for the payment of full backwages, legal holiday pay,
Consequently, Davis Cheng, General Manager of the company and
son

of

petitioner

Cheng,

issued

on

17

March

2000

service incentive leave pay, damages and attorneys fees. 17

another

Memorandum12 (Notice to Explain) requiring respondent to explain why his

In his Position Paper18 filed with the Labor Arbiter, respondent

services should not be terminated. He personally handed the Notice to

claimed that he took a leave of absence from March 17-23, 2000 19 due to
an urgent family problem. He returned to work on 24 March 2000 20 but

187

Davis Cheng allegedly refused him admission because of his unauthorized

WHEREFORE, finding no cogent reason to modify,

alter, much less reverse the decision appealed from, the
same is AFFIRMED en toto and the instant appeal
DISMISSED for lack of merit.26

absences.21 On 1 April 2000, respondent was summoned by Davis Cheng

who introduced him to a lawyer, who, in turn, informed him that he will no
longer be admitted to work because of his 5-day unauthorized absences.
Respondent explained that he was compelled to immediately leave for the
province on 17 March 200022 due to the urgency of the matter and his wife

It likewise denied respondents

Motion

for

Reconsideration

of

the

Resolution on 21 February 2002.27

informed the office that he will be absent for a week. The management
Before the Court of Appeals, respondent sought the annulment of

found his explanation unacceptable and offered him an amount equivalent

to his one (1) month salary as separation pay but respondent refused the
offer because he wanted to keep the job. 23 In his Reply to Respondents
Position Paper,24 however, respondent averred that he rejected the offer

the Commissions Resolution dated 29 June 2001 and Order dated 21

February 2002 on the ground that they were rendered with grave abuse of
discretion and/or without or in excess of jurisdiction. 28

because he wanted an amount equivalent to one and a half months pay.

The Court of Appeals found for the respondent and reversed the
On 21 December 2000, the Labor Arbiter dismissed the complaint
for lack of merit.25

findings of the Commission. The dispositive portion of its Decision dated 18

March 2004 reads:
WHEREFORE, the petition is GRANTED. In lieu of the
assailed Resolution and Order of the respondent NLRC, a
NEW DECISION is hereby rendered declaring petitioner
Diosdado Bitara, Jr. to have been Illegally Dismissed and,
thus, entitled to the following:

On appeal to the National Labor Relations Commission (hereinafter referred

to as the Commission), the findings of the Labor Arbiter was AFFIRMED en
toto. Thus, in its Resolution of 29 June 2001 in NLRC NCR CA No. 027871-

1.

Reinstatement or if no longer feasible, Separation Pay to be

computed from the commencement of his employment in
August 1988 up to the time of his termination on April 1,
2000, including his imputed service from April 1, 2000 until
the finality of this decision, based on the salary rate
prevailing at the said finality;

2.

Backwages, inclusive of allowances and other benefits,

computed from April 1, 2000 up to the finality of this
decision, without qualification or deduction; and

3.

5-day Service Incentive Leave Pay for every year of service

from the commencement of his employment in August 1988
up to its termination on April 1, 2000.29

01, the Commission declared:

Upon Our review of the record of the case, We
perceive no abuse of discretion as to compel a reversal.
Appellant failed to adduce convincing evidence to show that
the Labor Arbiter in rendering the assailed decision has
acted in a manner inconsistent with the criteria set forth in
the foregoing pronouncement.
Neither are we persuaded to disturb the factual
findings of the Labor Arbiter a quo. The material facts as
found are all in accordance with the evidence presented
during the hearing as shown by the record.

188

xxx [J]udicial review does not go as far as to

evaluate the sufficiency of evidence upon which the Labor
Arbiter and NLRC based their determinations, the inquiry
being limited essentially to whether or not said public
respondents had acted without or in excess of its
jurisdiction or with grave abuse of discretion. 34 The said
rule directs us to merely determine whether there is basis
established on record to support the findings of a tribunal
and such findings meet the required quantum of proof,
which in this case, is substantial evidence. Our deference
to the expertise acquired by quasi-judicial agencies and the
limited scope granted to us in the exercise of
certiorari jurisdiction restrain us from going so far as to
probe into the correctness of a tribunals evaluation of
evidence, unless there is palpable mistake and complete
disregard thereof in which case certiorari would be
proper.35

On 10 May 2005, the Court of Appeals denied respondents Motion

for Reconsideration of the decision for lack of merit. 30
Hence, the instant petition.31
Issue

The core issue in this case is whether or not the Court of Appeals
correctly found that the Commission acted without and/or in excess of
jurisdiction and with grave abuse of discretion amounting to lack or excess
of jurisdiction (a) in upholding the termination of respondents employment
and (b) in affirming the denial of his claim for non-payment of holiday pay,
service incentive leave pay, moral and exemplary damages.

It is on the alleged lack of substantial evidence that the Court of

Appeals found for the respondents, thereby reversing the decision of the
Commission.

Our Ruling
We hold otherwise.
The petition is meritorious.
Upon examination of the documents presented by the parties, we
The special civil action for certiorari seeks to correct errors of
jurisdiction and not errors of judgment.

32

xxx The raison detre for the rule is when a court

exercises its jurisdiction, an error committed while so
engaged does not deprive it of the jurisdiction being
exercised when the error is committed. If it did, every
error committed by a court would deprive it of its
jurisdiction and every erroneous judgment would be a void
judgment. xxx Hence, where the issue or question
involved affects the wisdom or legal soundness of
the decision not the jurisdiction of the court to
render said decision the same is beyond the
province of a special civil action for certiorari. xxx33

are convinced that the finding of facts on which the conclusions of the
Commission and the Labor Arbiter were based was actually supported
by substantial evidence that amount of relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even
if other minds, equally reasonable, might conceivably opine
otherwise.36 (Emphasis supplied.)

189

In order to validly dismiss an employee, the employer is required to

Necessarily, he was considered for termination of employment

observe both substantive and procedural aspects the termination of

because of his previous infractions capped by his recent unauthorized

employment must be based on a just or authorized cause of dismissal and

absences from March 11-16, 2000.

the dismissal must be effected after due notice and hearing. 37

That the recent absences were unauthorized were satisfactorily
Substantive Due Process

established by petitioners. Two (2) employees of the company belied the

claim of respondents wife Mary Ann Bitara that she called the office on 11

We cannot agree with the Court of Appeals that the sole basis of
the termination of respondents employment was his absences from March
11-16, 2000.
Indeed, the Notice to Explain

March 2000, and, through a certain Delia, as allegedly later identified by

respondent, informed petitioners that her husband would take a leave of
absence for a week because he went to the province.39

38

clearly stated:

We are seriously considering your termination

from service, and for this reason you are directed to
submit a written explanation, within seventy-two hours
from your receipt of this notice, why you should not be
terminated from service for failure to report for work
without verbal or written notice or permission on March 11,
13, 14, 15 and 16, 2000. xxx (Emphasis supplied.)

Delia Abalos, a binder/finisher of the company, stated in her

Affidavit that she never received a call from respondent nor his wife
regarding his absences from March 11-16 and 17-23 during the month of
March 2000.40 On the other hand, Ritchie Distor, a messenger of the
company,

To give full meaning and substance to the Notice to Explain, however, the
paragraph should be read together with its preceding paragraph, to wit:

narrated

in

his

Affidavit

that,

upon

instruction

of

the

Management, he went to respondents house on 13 March 2000 to require

him to report for work. Instead of relaying the message to him, as
respondent would have it, the wife informed him that respondent had

We have time and again, verbally and

formally, called your attention to your negligence
from your tardiness and your frequent absences
without any notice but still, you remain to ignore our
reminder. As you know, we are in need of a regular driver
and your action greatly affected the operation of our
company. (Emphasis supplied.)

already left the house but that she did not know where he was going. 41

The Court of Appeals relied heavily on our ruling in Stellar

Industrial Services, Inc. vs. NLRC,42 which is not on all fours with the
present case. In that case, the employer dismissed respondent for nonobservance of company rules and regulations. On the basis of the facts
presented, this Court honored the questioned medical certificate justifying
the absences he incurred. It further ratiocinated:

190

xxx [P]rivate respondents absences, as already

discussed, were incurred with due notice and compliance
with company rules and he had not thereby committed a
similar offense as those he had committed in the past [to
wit: gambling, for which he was preventively suspended;
habitual tardiness for which he received several warnings;
and violation of company rules for carrying three sacks of
rice, for which he was required to explain.] xxx To refer to
those earlier violations as added grounds for dismissing him
is doubly unfair to private respondent. 43 (Emphasis
supplied.)

xxx It bears stressing that petitioners absences and

tardiness were not isolated incidents but manifested a
pattern of habituality. xxx The totality of infractions or the
number of violations committed during the period of
employment shall be considered in determining the penalty
to be imposed upon an erring employee. The offenses
committed by him should not be taken singly and
separately but in their totality. Fitness for continued
employment cannot be compartmentalized into tight little
cubicles of aspects of character, conduct, and ability
separate and independent of each other.46

In the present case, however, petitioners have repeatedly called

There is likewise no merit in the observation of the Court of

the attention of respondent concerning his habitual tardiness. The

Appeals that the petitioners themselves are not certain of the official time

Memorandum dated 23 June 1999 of petitioner Cheng required him to

of their employees after pointing out the seeming inconsistencies between

explain his tardiness. Also in connection with a similar infraction,

the statement of the petitioners that there is no need for written rules

respondent even wrote petitioner Cheng a letter dated 29 November 1999

since even the [respondent] is aware that his job starts from 8 am to 5

where he admitted that his tardiness has affected the delivery schedules of

pm47 and its Memorandum of 23 June 1999, where it was mentioned that

the company, offered an apology, and undertook to henceforth report for

respondents official time was from 8:30 a.m. to 5:30 p.m. On the contrary,

duty on time. Despite this undertaking, he continued to either absent

it was clearly stated in the Memorandum that the Management adjusted

himself from work or report late during the first quarter of 2000.

his official time from 8:00 a.m. to 5:00 p.m. to 8:30 a.m. to 5:30 p.m. to
hopefully solve the problem on his tardiness.48

We, therefore, agree with the Labor Arbiters findings, to wit:

Neither is there basis to hold that the company tolerates the
The imputed absence and tardiness of the
complainant are documented. He faltered on his
attendance 38 times of the 66 working days. His last
absences on 11, 13, 14, 15 and 16 March 2000 were
undertaken
without
even
notice/permission
from
management. These attendance delinquencies may be
characterized as habitual and are sufficient justifications to
terminate the complainants employment.44

offsetting of undertime with overtime services. The Weekly Time Record

relied upon by respondent does not conclusively confirm the alleged
practice.

In Valiao,49 we defined gross negligence as want of care in the

On this score, Valiao v. Court of Appeals45 is instructive:

performance of ones duties50 and habitual neglect as repeated failure

to perform ones duties for a period of time, depending upon the

191

circumstances.51 These are not overly technical terms, which, in the first
place, are expressly sanctioned by the Labor Code of the Philippines, to
wit:
ART. 282. Termination by employer. - An employer may
terminate an employment for any of the following causes:
(a) xxx
(b) Gross and habitual neglect by the employee of
his duties;
xxx

Clearly, even in the absence of a written company rule defining gross and

While it is true that compassion and human

consideration should guide the disposition of cases involving
termination of employment since it affects one's source or
means of livelihood, it should not be overlooked that the
benefits accorded to labor do not include compelling an
employer to retain the services of an employee who has
been shown to be a gross liability to the employer. The law
in protecting the rights of the employees authorizes neither
oppression nor self-destruction of the employer. 54 It should
be made clear that when the law tilts the scale of justice in
favor of labor, it is but a recognition of the inherent
economic inequality between labor and management. The
intent is to balance the scale of justice; to put the two
parties on relatively equal positions. There may be cases
where the circumstances warrant favoring labor over the
interests of management but never should the scale be so
tilted if the result is an injustice to the employer.Justitia
nemini neganda est (Justice is to be denied to none).55

habitual neglect of duties, respondents omissions qualify as such

warranting his dismissal from the service.

Procedural Due Process

Procedural due process entails compliance with the two-notice rule

We cannot simply tolerate injustice to employers if only to protect

the welfare of undeserving employees. As aptly put by then Associate
Justice Leonardo A. Quisumbing:
Needless to say, so irresponsible an employee like
petitioner does not deserve a place in the workplace, and it
is within the managements prerogative xxx to terminate his
employment. Even as the law is solicitous of the welfare of
employees, it must also protect the rights of an employer to
exercise what are clearly management prerogatives. As long
as the companys exercise of those rights and prerogative is
in good faith to advance its interest and not for the purpose
of defeating or circumventing the rights of employees under
the laws or valid agreements, such exercise will be upheld. 52

And, in the words of then Associate Justice Ma. Alicia AustriaMartinez in Philippine Long Distance and Telephone Company, Inc. v.
Balbastro:

53

in dismissing an employee, to wit: (1) the employer must inform the

employee of the specific acts or omissions for which his dismissal is
sought; and (2) after the employee has been given the opportunity to be
heard, the employer must inform him of the decision to terminate his
employment.56
Respondent claimed that he was denied due process because the
company did not observe the two-notice rule. He maintained that the
Notice of Explanation and the Notice of Termination, both of which he
allegedly refused to sign, were never served upon him. 57

The Court of Appeals favored respondent and ruled in this wise:

Furthermore, We believe that private respondents
failed to afford petitioner due process. The allegation of
private respondents that petitioner refused to sign the
memoranda dated March 17 and 21, 2000 despite receipt
thereof is not only lame but also implausible. First, the said

192

allegation is self-serving and unsubstantiated. Second, a

prudent employer would simply not accept such mere
refusal, but would exert effort to observe the mandatory
requirement of due process. We cannot accept the selfserving claim of respondents that petitioner refused to sign
both memoranda. Otherwise, We would be allowing
employers to do away with the mandatory twin-notice rule in
the termination of employees. We find more credible the
claim of petitioner that he was illegally dismissed on April 1,
2000 when the lawyer of the company informed him,
without prior notice and in derogation of his right to due
process, of his termination by offering him a 1-month salary
as separation pay. The petitioners immediate filing of a
complaint for illegal dismissal on April 27, 2000 reinforced
Our belief that petitioner was illegally dismissed and was
denied due process.58 (Emphasis in the original.)

July 2000 stating that: (1) he is the General Manager of the company; (2)
he personally served each notice upon respondent, when respondent went
to the office/factory on 17 March 2000 and 21 March 2000, respectively;
and (3) on both occasions, after reading the contents of the memoranda,
respondent refused to acknowledge receipt thereof. We are, thus,
convinced that the notices have been validly served.
Premises considered, we find that respondent was accorded both
substantive and procedural due process.

II
We rule otherwise.
In Bughaw v. Treasure Island Industrial Corporation,59 this Court, in

As to respondents monetary claims, petitioners did not deny

verifying the veracity of the allegation that respondent refused to receive

respondents entitlement to service incentive leave pay as, indeed, it is

the Notice of Termination, essentially looked for the following: (1) affidavit

indisputable that he is entitled thereto. InFernandez v. NLRC,62 this Court

of service stating the reason for failure to serve the notice upon the

elucidated:

recipient; and (2) a notation to that effect, which shall be written on the
notice itself.60 Thus:
xxx Bare and vague allegations as to the manner of
service and the circumstances surrounding the same would
not suffice. A mere copy of the notice of termination
allegedly sent by respondent to petitioner, without proof of
receipt, or in the very least, actual service thereof upon
petitioner, does not constitute substantial evidence. It was
unilaterally prepared by the petitioner and, thus, evidently
self-serving and insufficient to convince even an
unreasonable mind.61

Davis Cheng, on the other hand, did both. First, he indicated in the
notices the notation that respondent refused to sign together with the
corresponding dates of service. Second,he executed an Affidavit dated 29

The clear policy of the Labor Code is to grant

service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2,
Rule V, Book III of the Implementing Rules and
Regulations63 provides that [e]very employee who has
rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.
Service incentive leave is a right which accrues to every
employee who has served within 12 months, whether
continuous or broken reckoned from the date the employee
started working, including authorized absences and paid
regular holidays unless the working days in the
establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12
months, in which case said period shall be considered as
one year.64 It is also commutable to its money equivalent
if not used or exhausted at the end of the year. 65 In other
words, an employee who has served for one year is entitled
to it. He may use it as leave days or he may collect its
monetary value. xxx66 (Emphasis supplied.)

193

pay for every year of service from the commencement of his employment
Be that as it may, petitioners failed to establish by evidence that
respondent had already used the service incentive leave when he incurred

in August 1988 up to its termination on 1 April 2000. The Labor Arbiter

shall compute the corresponding amount.

numerous absences notwithstanding that employers have complete control

over the records of the company so much so that they could easily show

WHEREFORE, the Resolution dated 29 June 2001 and the Order

payment of monetary claims against them by merely presenting vouchers

dated 21 February 2002 of the National Labor Relations Commission in

or payrolls,67 or any document showing the off-setting of the payment of

NLRC

service incentive leave with the absences, as acknowledged by the

the MODIFICATION that petitioners are ORDERED to pay respondent the

absentee, if such is the company policy. Petitioners presented none.

money equivalent of the five-day service incentive leave for every year of

NCR

CASE

No.

027871-01are

hereby REINSTATED with

service covering his employment period from August 1988 to 1 April 2000.
We thus quote with approval the findings of the Court of Appeals
on the following:
[P]rivate respondents bear the burden to prove that
employees have received these benefits in accordance with
law. It is incumbent upon the employer to present the
necessary documents to prove such claim. Although private
respondents labored to show that they paid petitioner his
holiday pay, no similar effort was shown with regard to his
service incentive leave pay. We do not agree with the Labor
Arbiters conclusion that petitioners service incentive leave
pay has been used up by his numerous absences, there
being no proof to that effect.68

As to the payment of holiday pay, we are convinced that

respondent had already received the same based on the cash vouchers on
record.

Accordingly, we affirm the ruling of the National Labor Relations

Commission that the dismissal was valid. However, respondent shall be
entitled to the money equivalent of the five-day service incentive leave

This case is hereby REMANDED to the Labor Arbiter for the computation
of respondents service incentive leave pay.

SO ORDERED.

194

ARMANDO ALILING,
Petitioner,

G.R. No. 185829

Present:

- versus JOSE B. FELICIANO, MANUELBERSAMIN, JJ.

F. SAN MATEO III, JOSEPH R.
LARIOSA, and WIDE WIDEPromulgated:
WORLD EXPRESS CORPORATION,
Respondents.

allowance of PhP 3,000, clothing allowance of PhP 800, cost of living

allowance of PhP 500, each payable on a per month basis and a 14 th month

VELASCO, JR., J., Chairperson

pay depending on the profitability and availability of financial resources of
PERALTA,
the company. The offer came with a six (6)-month probation period
ABAD,
MENDOZA, and
condition with this express caveat: Performance during [sic] probationary
PERLAS-BERNABE, JJ.
period shall be made as basis for confirmation to Regular or Permanent
Promulgated:

Status.

April 25, 2012

x-----------------------------------------------------------------------------------------x

On

DECISION

Contract

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 assails and

June
[7]

11,

2004,

Aliling

and

WWWEC

inked

an Employment

under the following terms, among others:

Conversion to regular status shall be determined on the basis
of work performance; and
Employment services may, at any time, be terminated for just
cause or in accordance with the standards defined at the time
of engagement.[8]

seeks to set aside the July 3, 2008 Decision [1] and December 15, 2008
Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No. 101309,
entitled Armando Aliling v. National Labor Relations Commission, Wide
Wide World Express Corporation, Jose B. Feliciano, Manuel F. San Mateo III
and Joseph R. Lariosa. The assailed issuances modified the Resolutions
dated May 31, 2007[3] and August 31, 2007[4] rendered by the National

Training then started. However, instead of a Seafreight Sale

assignment, WWWEC asked Aliling to handle Ground Express (GX), a new
company product launched on June 18, 2004 involving domestic cargo
forwarding service for Luzon. Marketing this product and finding daily
contracts for it formed the core of Alilings new assignment.

Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-10-111662004, affirming the Decision dated April 25, 2006[5] of the Labor Arbiter.
The Facts

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC
Sales and Marketing Director, emailed Aliling [9] to express dissatisfaction
with the latters performance, thus:

Via a letter dated June 2, 2004,[6] respondent Wide Wide World Express

Armand,

Corporation (WWWEC) offered to employ petitioner Armando Aliling

My expectations is [sic] that GX Shuttles should be 80% full

by the 3rd week (August 5) after launch (July 15). Pls. make
that happen. It has been more than a month since you
came in. I am expecting sales to be pumping in by now.
Thanks.

(Aliling) as Account Executive (Seafreight Sales), with the following

compensation package: a monthly salary of PhP 13,000, transportation

195

PhP 6,975.46 Total

Nonong
Earlier, however, or on October 4, 2004, Aliling filed a Complaint [17] for
Thereafter, in a letter of September 25, 2004, [10] Joseph R. Lariosa (Lariosa),
Human Resources Manager of WWWEC, asked Aliling to report to the
Human Resources Department to explain his absence taken without leave
from September 20, 2004.

illegal dismissal due to forced resignation, nonpayment of salaries as well

as damages with the NLRC against WWWEC. Appended to the complaint
was Alilings Affidavit dated November 12, 2004, [18] in which he stated: 5. At
the time of my engagement, respondents did not make known to me the
standards under which I will qualify as a regular employee.

Aliling responded two days later. He denied being absent on the days in
question, attaching to his reply-letter [11] a copy of his timesheet[12] which
showed that he worked from September 20 to 24, 2004. Alilings
explanation came with a query regarding the withholding of his salary
corresponding to September 11 to 25, 2004.

Refuting Alilings basic posture, WWWEC stated in its Position Paper

dated November 22, 2004[19] that, in addition to the letter-offer and
employment contract adverted to, WWWEC and Aliling have signed a letter
of appointment[20] on June 11, 2004 containing the following terms of
engagement:

In a separate letter dated September 27, 2004, [13] Aliling wrote San
Mateo stating: Pursuant to your instruction on September 20, 2004, I
hereby tender my resignation effective October 15, 2004. While WWWEC
took no action on his tender, Aliling nonetheless demanded reinstatement
and a written apology, claiming in a subsequent letter dated October 1,
2004[14] to management that San Mateo had forced him to resign.

Lariosas response-letter of October 1, 2004, [15] informed Aliling that his

Additionally, upon the effectivity of your probation,

you and your immediate superior are required to
jointly define your objectives compared with the job
requirements of the position. Based on the pre-agreed
objectives, your performance shall be reviewed on
the 3rd month to assess your competence and work
attitude. The 5th month Performance Appraisal shall
be the basis in elevating or confirming your
employment status from Probationary to Regular.
Failure to meet the job requirements during the probation
stage means that your services may be terminated without
prior notice and without recourse to separation pay.

case was still in the process of being evaluated. On October 6, 2004,

[16]

Lariosa again wrote, this time to advise Aliling of the termination of his

services

effective

as

of

that

date

owing

to

his non-satisfactory

performance during his probationary period. Records show that Aliling, for
the period indicated, was paid his outstanding salary which consisted of:

WWWEC also attached to its Position Paper a memo dated September 20,
2004[21] in which San Mateo asked Aliling to explain why he should not be
terminated for failure to meet the expected job performance, considering
that the load factor for the GX Shuttles for the period July to September
was only 0.18% as opposed to the allegedly agreed upon load of 80%

PhP 4,988.18 (salary for the September 25, 2004 payroll)

1,987.28 (salary for 4 days in October 2004)
-------------

targeted for August 5, 2004. According to WWWEC, Aliling, instead of

explaining himself, simply submitted a resignation letter.

196

In a Reply-Affidavit dated December 13, 2004, [22] Aliling denied having

received a copy of San Mateos September 20, 2004 letter.

Issues having been joined, the Labor Arbiter issued on April 25, 2006

[23]

Decision declaring Alilings termination as unjustified. In its pertinent parts,

the decision reads:
The grounds upon which complainants dismissal was based
did not conform not only the standard but also the
compliance required under Article 281 of the Labor Code,
Necessarily, complainants termination is not justified for
failure to comply with the mandate the law requires.
Respondents should be ordered to pay salaries
corresponding to the unexpired portion of the
contract of employment and all other benefits
amounting to a total of THIRTY FIVE THOUSAND EIGHT
HUNDRED ELEVEN PESOS (P35,811.00) covering the period
from October 6 to December 7, 2004, computed as follows:
Unexpired Portion of the Contract:

WHEREFORE, judgment is hereby rendered ordering

respondent company to pay complainant Armando Aliling
the sum of THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) representing his salaries and
other benefits as discussed above.
Respondent company is likewise ordered to pay said
complainant the amount of TEN THOUSAND SEVEN
HUNDRED SIXTY SIX PESOS AND 85/100 ONLY (10.766.85)
representing his proportionate 13 th month pay for 2004
plus 10% of the total judgment as and by way of attorneys
fees.
Other claims are hereby denied for lack of merit. (Emphasis
supplied.)
The labor arbiter gave credence to Alilings allegation about not receiving
and, therefore, not bound by, San Mateos purported September 20, 2004
memo. The memo, to reiterate, supposedly apprised Aliling of the sales
quota he was, but failed, to meet. Pushing the point, the labor arbiter
explained that Aliling cannot be validly terminated for non-compliance with
the quota threshold absent a prior advisory of the reasonable standards
upon which his performance would be evaluated.

Basic Salary P13,000.00

Transportation 3,000.00
Clothing Allowance 800.00
ECOLA 500.00
-------------P17,300.00

Both parties appealed the above decision to the NLRC, which affirmed the
Decision in toto in its Resolution dated May 31, 2007. The separate
motions for reconsideration were also denied by the NLRC in its Resolution

10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00

dated August 31, 2007.

Complainants 13th month pay proportionately for 2004 was

not shown to have been paid to complainant, respondent
be made liable to him therefore computed at SIX
THOUSAND FIVE HUNDRED THIRTY TWO PESOS AND
50/100 (P6,532.50).

Therefrom, Aliling went on certiorari to the CA, which eventually rendered

For engaging the services of counsel to protect his interest,

complainant is likewise entitled to a 10% attorneys fees of
the judgment amount. Such other claims for lack of basis
sufficient to support for their grant are unwarranted.

the assailed Decision, the dispositive portion of which reads:

WHEREFORE, the petition is PARTLY GRANTED. The assailed
Resolutions of respondent (Third Division) National Labor
Relations Commission are AFFIRMED, with the following
MODIFICATION/CLARIFICATION: Respondents Wide Wide
World Express Corp. and its officers, Jose B. Feliciano,
Manuel F. San Mateo III and Joseph R. Lariosa, are jointly
and severally liable to pay petitioner Armando Aliling:
(A) the sum of Forty Two Thousand Three Hundred Thirty

197

Three & 50/100 (P42,333.50) as the total money judgment,

(B) the sum of Four Thousand Two Hundred Thirty Three &
35/100 (P4,233.35) as attorneys fees, and (C) the
additional sum equivalent to one-half (1/2) month of
petitioners salary as separation pay.

petitioner was dismissed to prevent the acquisition of his

regular status) is contrary to law and applicable
jurisprudence.[25]

In their Comment,[26] respondents reiterated their position that

SO ORDERED.[24] (Emphasis supplied.)

WWWEC hired petitioner on a probationary basis and fired him before he

The CA anchored its assailed action on the strength of the following
premises: (a) respondents failed to prove that Alilings dismal performance
constituted gross and habitual neglect necessary to justify his dismissal;
(b) not having been informed at the time of his engagement of the
reasonable standards under which he will qualify as a regular employee,
Aliling was deemed to have been hired from day one as a regular

became a regular employee.

The Courts Ruling

The petition is partly meritorious.

Petitioner is a regular employee

employee; and (c) the strained relationship existing between the parties
On a procedural matter, petitioner Aliling argues that WWWEC, not

argues against the propriety of reinstatement.

having appealed from the judgment of CA which declared Aliling as a

Alilings motion for reconsideration was rejected by the CA through the
assailed Resolution dated December 15, 2008.

regular employee from the time he signed the employment contract, is

now precluded from questioning the appellate courts determination as to
the nature of his employment.

Hence, the instant petition.

Petitioner errs. The Court has, when a case is on appeal, the
The Issues

authority to review matters not specifically raised or assigned as error if

their consideration is necessary in reaching a just conclusion of the

Aliling raises the following issues for consideration:

case. We said as much in Sociedad Europea de Financiacion, SA v. Court of

Appeals,[27] It is axiomatic that an appeal, once accepted by this Court,

A. The failure of the Court of Appeals to order

reinstatement (despite its finding that petitioner was
illegally dismissed from employment) is contrary to law
and applicable jurisprudence.

throws the entire case open to review, and that this Court has the authority

B. The failure of the Court of Appeals to award

backwages (even if it did not order reinstatement) is
contrary to law and applicable jurisprudence.
C. The failure of the Court of Appeals to award
moral and exemplary damages (despite its finding that

case.

to review matters not specifically raised or assigned as error by the parties,

if their consideration is necessary in arriving at a just resolution of the

198

The issue of whether or not petitioner was, during the period

material, a probationary or regular employee is of pivotal import. Its
resolution is doubtless necessary at arriving at a fair and just disposition of
the controversy.

Petitioner was regularized from the time of the

execution of the employment contract on June 11, 2004,
although respondent company had arbitrarily shortened his
tenure. As pointed out, respondent company did not
make known the reasonable standards under which
he will qualify as a regular employee at the time of
his engagement. Hence, he was deemed to have
been hired from day one as a regular employee.
[30]
(Emphasis supplied.)

The Labor Arbiter cryptically held in his decision dated April 25,
2006 that:

WWWEC, however, excepts on the argument that it put Aliling on

Be that as it may, there appears no showing that

indeed the said September 20, 2004 Memorandum
addressed to complainant was received by him. Moreover,
complainants tasked where he was assigned was a new
developed service. In this regard, it is noted:
Due process dictates that an employee be
apprised beforehand of the conditions of his
employment and of the terms of advancement
therein. Precisely, implicit in Article 281 of the
Labor Code is the requirement that reasonable
standards be previously made known by the
employer to the employee at the time of his
engagement (Ibid, citing Sameer Overseas
Placement Agency, Inc. vs. NLRC, G.R. No. 132564,
October 20, 1999).[28]

From our review, it appears that the labor arbiter, and later the
NLRC, considered Aliling a probationary employee despite finding that he
was not informed of the reasonable standards by which his probationary
employment was to be judged.

The CA, on the other hand, citing Cielo v. National Labor Relations
Commission,[29] ruled that petitioner was a regular employee from the
outset inasmuch as he was not informed of the standards by which his
probationary employment would be measured. The CA wrote:

notice that he would be evaluated on the 3 rd and 5th months of his

probationary employment. To WWWEC, its efforts translate to sufficient
compliance with the requirement that a probationary worker be apprised of
the reasonable standards for his regularization. WWWEC invokes the
ensuing holding in Alcira v. National Labor Relations Commission [31] to
support its case:
Conversely,
an
employer
is
deemed
to
substantially comply with the rule on notification of
standards if he apprises the employee that he will be
subjected to a performance evaluation on a particular date
after his hiring. We agree with the labor arbiter when he
ruled that:
In the instant case, petitioner cannot
successfully say that he was never informed by
private respondent of the standards that he must
satisfy in order to be converted into regular
status. This
rans
(sic)
counter
to
the
agreement between the parties that after
five months of service the petitioners
performance would be evaluated. It is only but
natural that the evaluation should be made vis--vis
the performance standards for the job. Private
respondent Trifona Mamaradlo speaks of such
standard in her affidavit referring to the fact that
petitioner did not perform well in his assigned work
and his attitude was below par compared to the
companys standard required of him. (Emphasis
supplied.)

WWWECs contention is untenable.

199

Article 281 of the Labor Code

Alcira is cast under a different factual setting. There, the labor
arbiter, the NLRC, the CA, and even finally this Court were one in their
findings that the employee concerned knew, having been duly informed
during his engagement, of the standards for becoming a regular employee.
This is in stark contrast to the instant case where the element of being
informed

of

the

regularizing

standards

does

not

obtain.

As

such, Alcira cannot be made to apply to the instant case.

To note, the June 2, 2004 letter-offer itself states that the

regularization standards or the performance norms to be used are still to
be agreed upon by Aliling and his supervisor. WWWEC has failed to
prove that an agreement as regards thereto has been reached. Clearly
then, there were actually no performance standards to speak of. And lest it
be overlooked, Aliling was assigned to GX trucking sales, an activity
entirely different to the Seafreight Sales he was originally hired and trained
for. Thus, at the time of his engagement, the standards relative to his
assignment with GX sales could not have plausibly been communicated to
him as he was under Seafreight Sales. Even for this reason alone, the
conclusion reached in Alcira is of little relevant to the instant case.

ART. 281. Probationary employment. - Probationary

employment shall not exceed six (6) months from the date
the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in
accordance with reasonable standards made known
by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular
employee. (Emphasis supplied.)
Section 6(d) of the Implementing Rules of Book VI,
Rule VIII-A of the Labor Code
Sec. 6. Probationary employment. There is
probationary employment where the employee, upon his
engagement, is made to undergo a trial period where the
employee determines his fitness to qualify for regular
employment, based on reasonable standards made known
to him at the time of engagement.
Probationary employment shall be governed by the
following rules:
xxxx
(d) In all cases of probationary employment, the
employer shall make known to the employee the
standards under which he will qualify as a regular
employee at the time of his engagement. Where no
standards are made known to the employee at that
time,
he shall
be deemed
a
regular
employee. (Emphasis supplied.)

Based on the facts established in this case in light of extant

jurisprudence, the CAs holding as to the kind of employment petitioner

To repeat, the labor arbiter, NLRC and the CA are agreed, on the

enjoyed is correct. So was the NLRC ruling, affirmatory of that of the labor

basis of documentary evidence adduced, that respondent WWWEC did not

arbiter. In the final analysis, one common thread runs through the holding

inform petitioner Aliling of the reasonable standards by which his probation

of the labor arbiter, the NLRC and the CA, i.e., petitioner Aliling, albeit hired

would be measured against at the time of his engagement. The Court is

from managements standpoint as a probationary employee, was deemed a

loathed to interfere with this factual determination. As We have held:

regular employee by force of the following self-explanatory provisions:

Settled is the rule that the findings of the
Labor Arbiter, when affirmed by the NLRC and the

200

Court of Appeals, are binding on the Supreme Court,

unless patently erroneous.It is not the function of the
Supreme Court to analyze or weigh all over again the
evidence already considered in the proceedings below. The
jurisdiction of this Court in a petition for review on
certiorari is limited to reviewing only errors of law, not of
fact, unless the factual findings being assailed are not
supported by evidence on record or the impugned
judgment is based on a misapprehension of facts. [32]

Respondents further allege that San Mateos email dated July 16,
2004 shows that the standards for his regularization were made known to
petitioner Aliling at the time of his engagement. To recall, in that email
message, San Mateo reminded Aliling of the sales quota he ought to meet
as a condition for his continued employment, i.e., that the GX trucks should

The more recent Peafrancia Tours and Travel Transport, Inc., v.

Sarmiento[33] has reaffirmed the above ruling, to wit:
Finally, the CA affirmed the ruling of the NLRC and
adopted as its own the latter's factual findings. Longestablished is the doctrine that findings of fact of quasijudicial bodies x x x are accorded respect, even finality, if
supported by substantial evidence. When passed upon and
upheld by the CA, they are binding and conclusive upon
this Court and will not normally be disturbed. Though this
doctrine is not without exceptions, the Court finds that
none are applicable to the present case.

already be 80% full by August 5, 2004. Contrary to respondents

contention, San Mateos email cannot support their allegation on Aliling
being informed of the standards for his continued employment, such as the
sales quota, at the time of his engagement. As it were, the email
message was sent to Aliling more than a month after he signed his
employment contract with WWWEC. The aforequoted Section 6 of the
Implementing Rules of Book VI, Rule VIII-A of the Code specifically requires
the employer to inform the probationary employee of such reasonable
standards at the time of his engagement, not at any time later; else,

WWWEC also cannot validly argue that the factual findings

the latter shall be considered a regular employee. Thus, pursuant to the

being assailed are not supported by evidence on record or the

explicit provision of Article 281 of the Labor Code, Section 6(d) of the

impugned judgment is based on a misapprehension of facts. Its

Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled

very own letter-offer of employment argues against its above posture.

jurisprudence, petitioner Aliling is deemed a regular employee as of June

Excerpts of the letter-offer:

11, 2004, the date of his employment contract.

Additionally, upon the effectivity of your

probation, you and your immediate superior are
required to jointly define your objectives compared
with the job requirements of the position. Based on
the pre-agreed objectives, your performance shall be
reviewed on the 3rd month to assess your competence and
work attitude. The 5th month Performance Appraisal shall
be the basis in elevating or confirming your employment
status from Probationary to Regular.
Failure to meet the job requirements during the
probation stage means that your services may be
terminated without prior notice and without recourse to
separation pay. (Emphasis supplied.)

Petitioner was illegally dismissed

To justify fully the dismissal of an employee, the employer must, as

a rule, prove that the dismissal was for a just cause and that the employee
was afforded due process prior to dismissal. As a complementary principle,

201

the employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.

[34]

Article 282 of the Labor Code considers any of the following acts or
omission on the part of the employee as just cause or ground for
terminating employment:

WWWEC had failed to discharge its twin burden in the instant case.

First off, the attendant circumstances in the instant case aptly

show that the issue of petitioners alleged failure to achieve his quota, as a
ground for terminating employment, strikes the Court as a mere
afterthought on the part of WWWEC. Consider: Lariosas letter of

(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
employee of his duties;

habitual

neglect

by

the

(c) Fraud or willful breach by the employee of the

trust reposed in him by his employer or duly authorized
representative;

September 25, 2004 already betrayed managements intention to dismiss

the petitioner for alleged unauthorized absences. Aliling was in fact made
to explain and he did so satisfactorily. But, lo and behold, WWWEC
nonetheless proceeded with its plan to dismiss the petitioner for nonsatisfactory performance, although the corresponding termination letter

(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
representatives; and
(e)
Other
causes
foregoing. (Emphasis supplied)

analogous

to

the

dated October 6, 2004 did not even specifically state Alilings nonsatisfactory performance, or that Alilings termination was by reason of his
failure to achieve his set quota.

In Lim

v.

National

Labor

Relations

Commission,[35] the

considered inefficiency as an analogous just cause for termination of

employment under Article 282 of the Labor Code:

What WWWEC considered as the evidence purportedly showing it

gave Aliling the chance to explain his inability to reach his quota was a
purported September 20, 2004 memo of San Mateo addressed to the latter.
However, Aliling denies having received such letter and WWWEC has failed
to refute his contention of non-receipt. In net effect, WWWEC was at a loss
to explain the exact just reason for dismissing Aliling.

At any event, assuming for argument that the petitioner indeed

failed to achieve his sales quota, his termination from employment on that
ground would still be unjustified.

Court

We cannot but agree with PEPSI that gross

inefficiency falls within the purview of other causes
analogous to the foregoing, this constitutes,
therefore, just cause to terminate an employee
under Article 282 of the Labor Code. One is analogous
to another if it is susceptible of comparison with the latter
either in general or in some specific detail; or has a close
relationship with the latter. Gross inefficiency is closely
related to gross neglect, for both involve specific acts of
omission on the part of the employee resulting in damage
to the employer or to his business. In Buiser vs. Leogardo,
this Court ruled that failure to observed prescribed
standards to inefficiency may constitute just cause for
dismissal. (Emphasis supplied.)

202

It

did

so

anew

in Leonardo

v.

National

Labor

Relations

Commission
on the following rationale:
An employer is entitled to impose productivity
standards for its workers, and in fact, non-compliance may
be visited with a penalty even more severe than demotion.
Thus,
[36]

[t]he practice of a company in laying off

workers because they failed to make the
work quota has been recognized in this
jurisdiction. (Philippine American Embroideries
vs. Embroidery and Garment Workers, 26 SCRA
634, 639). In the case at bar, the petitioners'
failure to meet the sales quota assigned to each of
them constitute a just cause of their dismissal,
regardless of the permanent or probationary status
of
their
employment. Failure
to
observe
prescribed
standards
of
work,
or
to
fulfill reasonable work assignments due to
inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to
mean failure to attain work goals or work quotas,
either by failing to complete the same within the
allotted reasonable period, or by producing
unsatisfactory
results. This
management
prerogative of requiring standards may be
availed of so long as they are exercised
in good faith for the advancement of the
employer's interest. (Emphasis supplied.)

matter is that the alleged imposition of the quota was a desperate attempt
to lend a semblance of validity to Alilings illegal dismissal. It must be
stressed that even WWWECs sales manager, Eve Amador (Amador), in an
internal e-mail to San Mateo, hedged on whether petitioner performed
below or above expectation:
Could not quantify level of performance as he as was
tasked to handle a new product (GX). Revenue report is not
yet administered by IT on a month-to-month basis.
Moreover, this in a way is an experimental activity.
Practically you have a close monitoring with Armand with
regards to his performance. Your assessment of him would
be more accurate.

Being an experimental activity and having been launched for the

first time, the sales of GX services could not be reasonably quantified. This
would explain why Amador implied in her email that other bases besides
sales figures will be used to determine Alilings performance. And yet,
despite such a neutral observation, Aliling was still dismissed for his dismal
sales of GX services. In any event, WWWEC failed to demonstrate the
reasonableness and the bona fides on the quota imposition.

In fine, an employees failure to meet sales or work quotas falls

Employees must be reminded that while probationary employees

under the concept of gross inefficiency, which in turn is analogous to gross

do not enjoy permanent status, they enjoy the constitutional protection of

neglect of duty that is a just cause for dismissal under Article 282 of the

security of tenure. They can only be terminated for cause or when they

Code. However, in order for the quota imposed to be considered a valid

otherwise fail to meet the reasonable standards made known to them by

productivity standard and thereby validate a dismissal, managements

the employer at the time of their engagement. [37] Respondent WWWEC

prerogative of fixing the quota must be exercised in good faith for the

miserably failed to prove the termination of petitioner was for a just cause

advancement of its interest. The duty to prove good faith, however, rests

nor was there substantial evidence to demonstrate the standards were

with WWWEC as part of its burden to show that the dismissal was for a just

made known to the latter at the time of his engagement. Hence,

cause. WWWEC must show that such quota was imposed in good faith. This

petitioners right to security of tenure was breached.

WWWEC failed to do, perceptibly because it could not. The fact of the

203

Alilings right to procedural due process was violated

which includes the two-notice rule, x x x one, of the intention to dismiss,

indicating therein his acts or omissions complained against, and two,

As earlier stated, to effect a legal dismissal, the employer must

show not only a valid ground therefor, but also that procedural due process

notice of the decision to dismiss; and an opportunity to answer and rebut

the charges against him, in between such notices.

has properly been observed. When the Labor Code speaks of procedural
due process, the reference is usually to the two (2)-written notice rule

King of Kings Transport, Inc. v. Mamac[39] expounded on this procedural

envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules

requirement in this manner:

Implementing the Labor Code, which provides:

Section 2. Standard of due process: requirements
of notice. In all cases of termination of employment, the
following standards of due process shall be substantially
observed.
I. For termination of employment based on just
causes as defined in Article 282 of the Code:
(a) A written notice served on the
employee specifying the ground or grounds for
termination, and giving to said employee
reasonable opportunity within which to explain his
side;
(b) A hearing or conference during which
the employee concerned, with the assistance of
counsel if the employee so desires, is given
opportunity to respond to the charge, present his
evidence or rebut the evidence presented against
him; and
(c) A written notice [of] termination served
on the employee indicating that upon due
consideration of all the circumstance, grounds have
been established to justify his termination.
In case of termination, the foregoing notices shall
be served on the employees last known address.

MGG Marine Services, Inc. v. NLRC

[38]

tersely described the

mechanics of what may be considered a two-part due process requirement

(1) The first written notice to be served on the

employees should contain the specific causes or grounds
for termination against them, and a directive that the
employees are given the opportunity to submit their
written explanation within a reasonable period. Reasonable
opportunity under the Omnibus Rules means every kind of
assistance that management must accord to the
employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least
five calendar days from receipt of the notice xxxx
Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the
employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the
grounds under Art. 288 [of the Labor Code] is being
charged against the employees
(2) After serving the first notice, the employees
should
schedule
and
conduct
a hearing or conference wherein the employees will be
given the opportunity to (1) explain and clarify their
defenses to the charge against them; (2) present evidence
in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the
hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a
representative or counsel of their choice x x x.
(3) After determining that termination is justified,
the employer shall serve the employees a written notice
of termination indicating that: (1) all the circumstances
involving the charge against the employees have been
considered; and (2) grounds have been established to

204

justify the severance of their employment. (Emphasis in

the original.)

As may be noted, the CA found Alilings dismissal as having been

illegally effected, but nonetheless concluded that his employment ceased

Here, the first and second notice requirements have not been
properly observed, thus tainting petitioners dismissal with illegality.

at the end of the probationary period. Thus, the appellate court merely
affirmed the monetary award made by the NLRC, which consisted of the
payment of that amount corresponding to the unserved portion of the

The adverted memo dated September 20, 2004 of WWWEC

contract of employment.

supposedly informing Aliling of the likelihood of his termination and

directing him to account for his failure to meet the expected job

The case disposition on the award is erroneous.

performance would have had constituted the charge sheet, sufficient to

answer for the first notice requirement, but for the fact that there is no

As earlier explained, Aliling cannot be rightfully considered as a

proof such letter had been sent to and received by him. In fact, in his

mere probationary employee. Accordingly, the probationary period set in

December 13, 2004 Complainants Reply Affidavit, Aliling goes on to tag

the contract of employment dated June 11, 2004 was of no moment. In net

such letter/memorandum as fabrication. WWWEC did not adduce proof to

effect, as of that date June 11, 2004, Aliling became part of the WWWEC

show that a copy of the letter was duly served upon Aliling. Clearly enough,

organization as a regular employee of the company without a fixed term of

WWWEC did not comply with the first notice requirement.

employment. Thus, he is entitled to backwages reckoned from the time he

was illegally dismissed on October 6, 2004, with a PhP 17,300.00 monthly

Neither was there compliance with the imperatives of a hearing or

conference. The Court need not dwell at length on this particular breach of
the due procedural requirement. Suffice it to point out that the record is
devoid of any showing of a hearing or conference having been conducted.
On the contrary, in its October 1, 2004 letter to Aliling, or barely five (5)
days after it served the notice of termination, WWWEC acknowledged that
it was still evaluating his case. And the written notice of termination itself
did not indicate all the circumstances involving the charge to justify
severance of employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement

salary, until the finality of this Decision. This disposition hews with the
Courts ensuing holding in Javellana v. Belen:[40]
Article 279 of the Labor Code, as amended by
Section 34 of Republic Act 6715 instructs:
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 or 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. (Emphasis supplied)

205

Clearly, the law intends the award of backwages

and similar benefits to accumulate past the date of the
Labor Arbiters decision until the dismissed employee is
actually reinstated. But if, as in this case, reinstatement is
no longer possible, this Court has consistently ruled
that backwages shall be computed from the time of
illegal dismissal until the date the decisionbecomes
final. (Emphasis supplied.)

Additionally, Aliling is entitled to separation pay in lieu of

reinstatement on the ground of strained relationship.

In Golden Ace Builders v. Talde,[41] the Court ruled:

The basis for the payment of backwages is
different from that for the award of separation pay.
Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the
employee and the employer. Backwages represent
compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for
computing backwages is usually the length of the
employee's service while that for separation pay is the
actual period when the employee was unlawfully prevented
from working.
As
to
how
computed, Macasero
v.
Philippines instructs:

both
awards
should
be
Southern
Industrial
Gases

[T]he award of separation pay is

inconsistent with a finding that there was no illegal
dismissal, for under Article 279 of the Labor Code
and as held in a catena of cases, 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:
Thus, an illegally dismissed
employee is entitled to two reliefs:
backwages and reinstatement. The
two reliefs provided are separate and
distinct.
In
instances
where
reinstatement is no longer feasible
because of strained relations between
the employee and the employer,

separation pay is granted. In effect,

an illegally dismissed employee is
entitled to either reinstatement, if
viable,
or
separation
pay
if
reinstatement is no longer viable, and
backwages.
The
normal
consequences
of
respondents illegal dismissal, then, are
reinstatement without loss of seniority
rights, and payment of backwages
computed from the time compensation was
withheld up to the date of actual
reinstatement. Where reinstatement is no
longer viable as an option, separation pay
equivalent to one (1) month salary for
every year of service should be awarded as
an alternative. The payment of separation
pay is in addition to payment of
backwages. x x x
Velasco
v.
National
Labor
Relations
Commission emphasizes:
The accepted doctrine is that separation
pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best
interest of the parties. Separation pay in lieu of
reinstatement may likewise be awarded if the
employee decides not to be reinstated. (emphasis
in the original; italics supplied)
Under the doctrine of strained relations, the
payment of separation pay is considered an
acceptable alternative to reinstatement when the
latter option is no longer desirable or viable. On one
hand, such payment liberates the employee from what
could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a
worker it could no longer trust.
Strained relations must be demonstrated as
a fact, however, to be adequately supported by evidence
substantial evidence to show that the relationship between
the employer and the employee is indeed strained as a
necessary consequence of the judicial controversy.
In the present case, the Labor Arbiter found
that actual animosity existed between petitioner
Azul and respondent as a result of the filing of the

206

illegal dismissal case. Such finding, especially when

affirmed by the appellate court as in the case at bar,
is binding upon the Court, consistent with the
prevailing rules that this Court will not try facts
anew and that findings of facts of quasi-judicial
bodies
are
accorded
great
respect,
even
finality. (Emphasis supplied.)

Finally, Aliling is entitled to an award of PhP 30,000 as nominal

damages in consonance with prevailing jurisprudence [44] for violation of due
process.

Petitioner is not entitled to moral and exemplary damages

As the CA correctly observed, To reinstate petitioner [Aliling] would
only create an atmosphere of antagonism and distrust, more so that he
had only a short stint with respondent company. [42] The Court need not
belabor the fact that the patent animosity that had developed between
employer and employee generated what may be considered as the
arbitrary dismissal of the petitioner.

Following the pronouncements of this Court Sagales v. Rustans

Commercial Corporation,[43] the computation of separation pay in lieu of
reinstatement includes the period for which backwages were awarded:
Thus, in lieu of reinstatement, it is but proper to
award petitioner separation pay computed at onemonth salary for every year of service, a fraction of
at least six (6) months considered as one whole
year. In the computation of separation pay, the
period where backwages are awarded must be
included. (Emphasis supplied.)

Thus, Aliling is entitled to both backwages and separation pay (in

lieu of reinstatement) in the amount of one (1) months salary for every
year of service, that is, from June 11, 2004 (date of employment contract)
until the finality of this decision with a fraction of a year of at least six (6)
months to be considered as one (1) whole year. As determined by the labor
arbiter, the basis for the computation of backwages and separation pay will
be Alilings monthly salary at PhP 17,300.

In Nazareno v. City of Dumaguete,[45] the Court expounded on the

requisite elements for a litigants entitlement to moral damages, thus:
Moral damages are awarded if the following
elements exist in the case: (1) an injury clearly sustained
by the claimant; (2) a culpable act or omission factually
established; (3) a wrongful act or omission by the
defendant as the proximate cause of the injury sustained
by the claimant; and (4) the award of damages predicated
on any of the cases stated Article 2219 of the Civil Code. In
addition, the person claiming moral damages must prove
the existence of bad faith by clear and convincing evidence
for the law always presumes good faith. It is not enough
that one merely suffered sleepless nights, mental anguish,
and serious anxiety as the result of the actuations of the
other party. Invariably such action must be shown to have
been willfully done in bad faith or with ill motive. Bad
faith, under the law, does not simply connote bad
judgment or negligence. It imports a dishonest
purpose or some moral obliquity and conscious
doing of a wrong, a breach of a known duty through
some motive or interest or ill will that partakes of
the nature of fraud. (Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden
of proof to present evidence in support of his claim, as ruled in Culili v.
Eastern Telecommunications Philippines, Inc.:[46]
According to jurisprudence, basic is the principle
that good faith is presumed and he who alleges bad faith
has the duty to prove the same. By imputing bad faith to
the actuations of ETPI, Culili has the burden of proof to
present substantial evidence to support the allegation of

207

unfair labor practice. Culili failed to discharge this burden

and his bare allegations deserve no credit.

The CA held the president of WWWEC, Jose B. Feliciano, San

Mateo and Lariosa jointly and severally liable for the monetary awards of

This was reiterated in United Claimants Association of NEA

(UNICAN) v. National Electrification Administration (NEA),[47] in this wise:

Aliling on the ground that the officers are considered employers acting in
the interest of the corporation. The CA cited NYK International Knitwear
Corporation Philippines (NYK) v. National Labor Relations Commission [50] in

It must be noted that the burden of proving bad

faith rests on the one alleging it. As the Court ruled in Culili
v.
Eastern
Telecommunications,
Inc., According
to
jurisprudence, basic is the principle that good faith is
presumed and he who alleges bad faith has the duty to
prove the same. Moreover, in Spouses Palada v. Solidbank
Corporation, the Court stated, Allegations of bad faith and
fraud must be proved by clear and convincing evidence.

Similarly, Aliling has failed to overcome such burden to prove bad

faith on the part of WWWEC. Aliling has not presented any clear and
convincing evidence to show bad faith. The fact that he was illegally
dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled
that [t]here was no sufficient showing of bad faith or abuse of
management prerogatives in the personal action taken against petitioner.
[48]

In Lambert Pawnbrokers and Jewelry Corporation v. Binamira,[49] the

Court ruled:
A dismissal may be contrary to law but by itself
alone, it does not establish bad faith to entitle the
dismissed employee to moral damages. The award of
moral and exemplary damages cannot be justified solely
upon the premise that the employer dismissed his
employee without authorized cause and due process.

support of its argument. Notably, NYK in turn cited A.C. Ransom Labor
Union-CCLU v. NLRC.[51]

Such ruling has been reversed by the Court in Alba v. Yupangco,

[52]

where the Court ruled:

By Order of September 5, 2007, the Labor Arbiter
denied respondents motion to quash the 3rd alias writ.
Brushing aside respondents contention that his liability is
merely joint, the Labor Arbiter ruled:
Such issue regarding the personal liability of the
officers of a corporation for the payment of wages and
money claims to its employees, as in the instant case, has
long been resolved by the Supreme Court in a long list of
cases [A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA
269) and reiterated in the cases of Chua vs. NLRC (182
SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the
aforementioned cases, the Supreme Court has expressly
held that the irresponsible officer of the corporation (e.g.
President) is liable for the corporations obligations to its
workers. Thus, respondent Yupangco, being the president
of the respondent YL Land and Ultra Motors Corp., is
properly jointly and severally liable with the defendant
corporations for the labor claims of Complainants Alba and
De Guzman. x x x
xxxx
As reflected above, the Labor Arbiter held that
respondents liability is solidary.

The officers of WWWEC cannot be held

jointly and severally liable with the company

There is solidary liability when the obligation

expressly so states, when the law so provides, or when the
nature of the obligation so requires. MAM Realty
Development Corporation v. NLRC, on solidary liability of
corporate officers in labor disputes, enlightens:

208

x x x A corporation being a juridical entity,

may act only through its directors, officers and
employees. Obligations incurred by them, acting as
such corporate agents are not theirs but the direct
accountabilities of the corporation they represent.
True solidary liabilities may at times be incurred
but only when exceptional circumstances warrant
such as, generally, in the following cases:

the

Labor

Code

and

following

Construction Corporation v. Biscocho,

our
[53]

ruling

in Exodus

International

to wit:

1. When directors and trustees or,

in appropriate cases, the officers of a
corporation:

In Rutaquio v. National Labor Relations Commission, this

Court held that:
It is settled 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 attorneys fees is legally and
morally justifiable.

(a) vote for or assent to patently

unlawful acts of the corporation;

In Producers Bank of the Philippines v. Court of

Appeals this Court ruled that:

(b) act in bad faith or with gross

negligence in directing the corporate
affairs;

Attorneys fees may be awarded when a party is

compelled to litigate or to incur expenses to
protect his interest by reason of an unjustified act
of the other party.

xxxx
In labor cases, for instance, the Court has held
corporate directors and officers solidarily liable with the
corporation for the termination of employment of
employees done with malice or in bad faith.

A review of the facts of the case does not reveal ample and
satisfactory proof that respondent officers of WWEC acted in bad faith or
with malice in effecting the termination of petitioner Aliling. Even
assuming arguendo that the actions of WWWEC are ill-conceived and

While in Lambert Pawnbrokers and Jewelry Corporation,[54] the

Court specifically ruled:
However, the award of attorneys fee is warranted
pursuant to Article 111 of the Labor Code. Ten (10%)
percent of the total award is usually the reasonable
amount of attorneys fees awarded. It is settled that where
an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of
attorneys fees is legally and morally justifiable.

erroneous, respondent officers cannot be held jointly and solidarily with

it. Hence, the ruling on the joint and solidary liability of individual
respondents must be recalled.

Finally, legal interest shall be imposed on the monetary awards

herein granted at the rate of 6% per annum from October 6, 2004 (date of
termination) until fully paid.

Aliling is entitled to Attorneys Fees and Legal Interest

WHEREFORE, the petition is PARTIALLY GRANTED. The July 3,
Petitioner Aliling is also entitled to attorneys fees in the amount of
ten percent (10%) of his total monetary award, having been forced to
litigate in order to seek redress of his grievances, pursuant to Article 111 of

2008 Decision of the Court of Appeals in CA-G.R. SP No. 101309 is

hereby MODIFIED to read:

209

WHEREFORE, the
petition
is PARTIALLY
GRANTED. The assailed Resolutions of respondent (Third
Division)
National
Labor
Relations
Commission
are AFFIRMED,
with
the
following MODIFICATION/CLARIFICATION:
Respondent
Wide Wide World Express Corp. is liable to pay Armando
Aliling the following: (a) backwages reckoned from October
6, 2004 up to the finality of this Decision based on a salary
of PhP 17,300 a month, with interest at 6% per annum on
the principal amount from October 6, 2004 until fully paid;
(b) the additional sum equivalent to one (1) month salary
for every year of service, with a fraction of at least six (6)
months considered as one whole year based on the period
from June 11, 2004 (date of employment contract) until the
finality of this Decision, as separation pay; (c) PhP 30,000
as nominal damages; and (d) Attorneys Fees equivalent to
10% of the total award.
SO ORDERED.

210

G.R. No. 174893

July 11, 2012

FLORDELIZA
MARIA
REYES-RAYEL, Petitioner,
vs.
PHILIPPINE
LUEN
THAI
HOLDINGS,
CORPORATION/L&T
INTERNATIONAL GROUP PHILIPPINES, INC.,Respondents.
DECISION

The most deleterious to the Company has been your pronouncements

against the Human Resource Information System (HRIS) or HR2 Program, a
corporate initiative that is at the core and is crucial to the enhancement of
personnel management for the global operations of the Company. On
numerous occasions, in the presence of colleagues and subordinates, you
made statements that serve to undermine the Companys efforts at
pursuing the HR2 Program. You ought to have realized that when leveled
by an officer of your rank, no less than a Director of the Corporate Human
Resources Division, such remarks are highly inflammatory and their
negative impact is magnified.

DEL CASTILLO, J.:

The law is fair and just to both labor and management. Thus, while the
Constitution accords an employee security or tenure, it abhors oppression
to an employer who cannot be compelled to retain an employee whose
continued employment would he patently inimical to its interest.
This Petition for Review on Certiorari 1 assails the July IR, 2006 Decision 2 or
the Court of Appeals (CA) in CJ\-G.R. SP No. 86937, which (I) reversed the
National Labor Relations Commission (NLRC) March 23, 2004
Resolution3 and in effect, its July 21, 2004 4 Resolution as well, (2) declared
petitioner Flordeliza Maria Reyes-Rayels (petitioner) dismissal from
employment valid, and (3) ordered respondents Philippine Luen Thai
Holdings, Corp. (PLTHC)/L&T International Group Phils., Inc. (L&T)
(respondents) to pay petitioner an amount equivalent to three months
salary pursuant to the termination provision of the employment contract.
Factual Antecedents
In February 2000, PLTHC hired petitioner as Corporate Human Resources
(CHR) Director for Manufacturing for its subsidiary/affiliate company, L&T.
In the employment contract, 5 petitioner was tasked to perform functions in
relation to administration, recruitment, benefits, audit/compliance, policy
development/ structure, project plan, and such other works as may be
assigned by her immediate superior, Frank Sauceda (Sauceda), PLTHCs
Corporate Director for Human Resources.
On September 6, 2001, petitioner received a Prerequisite Notice 6 from
Sauceda and the Corporate Legal Counsel of PLTHC, Ma. Lorelie T. Edles
(Edles), which reads:
This has reference to your failure to perform in accordance with
management directives in various instances, which collectively have
resulted in loss of confidence in your capability to promote the interests of
the Company.

Just as flagrant is your inability to incite collaboration and harmony within

the Corporate Human Resources Division. Instead, colleagues and
subordinates complain of your negative attitude towards the Company, its
officers and people. You have established notoriety for your temper and
have alienated most members of your division. You ought to have realized
that when exhibited by an officer of your rank, no less than a Director of
the Corporate Human Resources Division, poor interpersonal skills and the
lack of moral suasion are extremely damaging.
The foregoing have, in fact, manifested in your own unsatisfactory
performance rating, and in the departure of promising employees who
could not work with you.
In view of the above, we afford you the opportunity to submit your written
reply to this memorandum within forty-eight (48) hours from its receipt.
Failure to so submit shall be construed as waiver of your right to be heard.
Consequently, the Company shall immediately decide on this matter.
xxx

In petitioners written response 8 dated September 10, 2001, she explained

that her alleged failure to perform management directives could be
attributed to the lack of effective communication with her superiors due to
malfunctioning email system. This caused her to miss certain directives
coming from her superiors and likewise, for her superiors to overlook the
reports she was submitting. She denied uttering negative comments about
the HR2 Program and instead claimed to have intimated her support for it.
She further denied causing disharmony in her division. Petitioner
emphasized that in June 2001, she received a relatively good rating of
80.2% in her overall performance appraisal 9 which meant that she
displayed dependable work level performance as well as good corporate
relationship with her superiors and subordinates.
In a Termination Notice 10 dated September 12, 2001, respondents, through
Sauceda and Edles, dismissed petitioner from the service for loss of

211

confidence on her ability to promote the interests of the company. This led
petitioner to file a Complaint 11 for illegal dismissal, payment of separation
pay, 13th month pay, moral and exemplary damages, attorneys fees, and
other unpaid company benefits against respondents and its officers,
namely, Sauceda, Edles and Willie
Tan (Tan), the Executive Vice-President of PLTHC.
Proceedings before the Labor Arbiter
In her Position Paper, 12 petitioner argued that her dismissal was without
valid or just cause and was effected without due process. According to her,
the causes for her dismissal as stated in the Prerequisite Notice and Notice
of Termination are not proper grounds for termination under the Labor
Code and the same do not even pertain to any willful violation of the
companys code of discipline or any other company policy. Even the
alleged loss of confidence was not supported by any evidence of
wrongdoing on her part. She likewise claimed that due process was not
observed since she was not afforded a hearing, investigation and right to
appeal as per company procedure for disciplining employees. Furthermore,
respondents were guilty of violating the termination provision under the
employment contract which stipulated that employment after probationary
period shall be terminated by giving the employee a three-month notice in
writing or by paying three months salary in lieu of notice. Petitioner also
accused respondents of having acted in bad faith by subjecting her to
public humiliation and embarrassment when she was ordered to
immediately turn over the company car, vacate her office and remove all
her belongings on the same day she received the termination notice, in full
view of all the other employees.
Respondents, on the other hand, claimed that they have a wide discretion
in dismissing petitioner as she was occupying a managerial position. They
claimed in their Position Paper 13 that petitioners inefficiency and
lackadaisical attitude in performing her work were just and valid grounds
for termination. In the same token, her gross and habitual neglect of duties
were enough bases for respondents to lose all their confidence in
petitioners ability to perform her job satisfactorily. Also, petitioner was
accorded due process as she was furnished with two notices - the first
requiring her to explain why she should not be terminated, and the second
apprising her of the managements decision to terminate her from
employment.
Further in their Reply 14 to petitioners position paper, respondents
enumerated the various instances which manifested petitioners poor work
attitude and dismal performance, to wit: 1) her failure to perform in
accordance with management directives such as when she unreasonably
delayed the hiring of a Human Rights and Compliance Manager; failed to
establish communication with superiors and co-workers; failed to regularly

update Sauceda of the progress of her work; requested for reimbursement

of unauthorized expenditures; and, gave orders contrary to policy on the
computation of legal and holiday pay; 2) her negative pronouncements
against the companys program in the presence of colleagues and
subordinates; 3) her inability to incite collaboration and harmony within her
department; 4) her negative attitude towards the company, its officers and
employees; and 5) her low performance appraisal rating which is
unacceptable for a top level personnel like herself. Exchange of emails,
affidavits and other documents were presented to provide proof of
incidents which gave rise to these allegations. Respondents also asserted
that the procedure laid down in the companys code of discipline, which
provided for the mandatory requirements of notice, hearing/investigation
and right to appeal, only applies to rank and file, supervisory, junior
managerial and department managerial employees and not to petitioner, a
CHR Director, who plays a key role in these termination proceedings.
Further, the three-month notice for termination, as written in the
employment contract, is only necessary when there is no just cause for the
employees dismissal and, therefore, not applicable to petitioner.
Respondents then disputed petitioners money claims and also sought the
dropping of Sauceda, Edles and Tan from the complaint for not being real
parties in interest.
In her rejoinder, 15 petitioner stood firm on her conviction that she was
dismissed without valid cause by presenting documentary evidence of her
good performance. Further, she insisted that she was dismissed for reasons
different from those mentioned in the Prerequisite Notice and Notice of
Termination, both of which did not state gross and habitual neglect of
duties as a ground. She also construed respondents act of offering her a
settlement or compensation right after her termination as their
acknowledgement of the illegal act they committed against her. Moreover,
petitioner argued that the company policies on procedural due process
apply to all its employees, whether rank and file or managerial.
In a Decision 16 dated October 21, 2002, the Labor Arbiter declared
petitioner to have been illegally dismissed. It was held that petitioner
cannot be charged with undermining the HR2 Program of the company
since evidence was presented to show that she was already divested of
duties relative to this program. Also, respondents accusation that
petitioner caused disharmony among colleagues and subordinates has no
merit as there was ample proof that petitioner was in constant
communication with her co-workers through official channels and email.
Further, the Labor Arbiter theorized that petitioners performance rating
demonstrated a passing or satisfactory grade and therefore could not be a
sufficient and legitimate basis to terminate her for loss of trust and
confidence. Moreover, petitioner cannot be dismissed based merely on
these vague offenses but only for specific offenses which, under the
companys code of conduct, merit the penalty of outright dismissal. The
dispositive portion of the Decision reads:

212

WHEREFORE, premises considered, judgment is hereby rendered declaring

that complainant was illegally dismissed by respondent corporation, and
the latter is hereby directed to reinstate complainant to her former position
and pay her full backwages and benefits computed below, as follows:
A. Backwages September 12, 2001 to October 21, 2002

IN LIGHT OF THE FOREGOING PREMISES, the decision appealed

from is hereby MODIFIED, to declare the dismissal of complainant
legal but to order respondents to pay complainant the sum of
P240,000.00 representing three months salary as expressed in
complainants contract of employment. All other claims are
DISMISSED for lack of merit.

1.

SO ORDERED.

2.
3.

Salaries
and
P80,000 x 13.30 months =
13th
month
P1,064,000.00 / 12 =
VL
P80,000 / 26 x 10 days =

B. Attorneys Fees (10%)

Wages
P1,064,000.00
pay
88,666.67
34,102.56

P1,186,769.23
118,676.92
P1,305,446.15

SO ORDERED,

17

Proceedings before the National Labor Relations Commission

Respondents appealed to the NLRC.18 For her part, petitioner filed before
the Labor Arbiter a Motion for Recomputation 19 of the awards. This motion
was, however, denied in an Order 20 dated March 17, 2003 on the ground
that petitioner could challenge any disposition made only by way of an
appeal within the reglementary period and not through a motion.
In a Decision 21 dated August 20, 2003, the NLRC found merit in
respondents appeal. To the NLRC, respondents have sufficiently
established the validity of petitioners dismissal on the ground of loss of
trust and confidence through the various emails, affidavits and other
documents attached to the records. Specifically, respondents have proven
that petitioner failed to recruit a Human Rights and Compliance Manager,
ignored company policies, failed to effectively communicate with her
superiors and subordinates, and displayed ineptitude in her work as a
director and in her relationship with her co-workers. These showed that
there exist enough bases for respondents to lose the trust they had
reposed on petitioner, who, as a managerial employee, was expected to
possess exemplary work attitude. The NLRC, however, noted that the
employment contract specifically provided for payment of three months
salary in lieu of the stipulated three-month notice in case of termination,
thus:

22

Petitioner filed a Motion for Reconsideration 23 which was granted by the

NLRC. In a Resolution 24 dated March 23, 2004, the NLRC concluded that
petitioner was not afforded due process as she was not given the
opportunity to refute the charges against her through an investigation and
an appeal at the company level. Thus, respondents failed to establish the
truthfulness of the allegations against her as to support the validity of the
dismissal. The NLRC also agreed with petitioners claim that she was
subjected to humiliation on the day of her termination. Consequently, the
NLRC declared petitioners dismissal as illegal and thus reinstated the
Labor Arbiters Decision with modification that respondents be ordered to
pay petitioner separation pay in lieu of reinstatement due to the strained
relation between the parties.
In a Resolution 25 dated July 21, 2004, the NLRC resolved to dismiss
respondents motion for reconsideration.
Proceedings before the Court of Appeals
Respondents thus filed with the CA a Petition for Certiorari with Urgent
Motion for Issuance of Temporary Restraining Order (TRO) or Writ of
Preliminary Injunction.26 Petitioner then filed her Comment27 thereto.
Subsequently, the CA denied respondents prayer for TRO in a
Resolution28 dated February 15, 2005.
On July 18, 2006, the CA rendered a Decision 29 finding merit in the petition.
The CA found sufficient evidence to support the dismissal of petitioner on
the ground of loss of trust and confidence. It regarded petitioners 80.2%
performance rating as below par and hence, declared that she cannot
merely rely on the same in holding on to her position as CHR Director, a
highly sensitive and demanding post. Also, despite the opportunity to
improve, petitioner continued to display poor work attitude, dismal
performance and rancorous and abusive behavior towards co-workers as
gleaned from the various emails and affidavits of her superiors and other
employees. These circumstances, taken together, constitute sufficient
cause for respondents to lose confidence in petitioners ability to continue
in her job and to promote the interest of the company.

213

Moreover, the CA did not subscribe to petitioners allegation that she was
denied due process.1wphi1 On the contrary, said court found that she
was adequately notified of the charges against her through the show cause
notice which clearly stated the instances that served as sufficient bases for
the loss of trust and confidence, to wit: her failure to perform in
accordance with management directives and her actions of undermining
company goals and causing disharmony among her co-workers. After
finding her written response to be unsatisfactory, petitioner was likewise
properly notified of the companys decision to terminate her services.
Clearly, respondents observed the requirements of procedural due process.
Nevertheless, respondents, in effecting the dismissal, should have paid
petitioner her salary for three months as provided for in the employment
contract. For its failure to do so, the CA ordered respondents to pay
petitioner three months salary in accordance with their contractual
undertaking. The dispositive portion of the CA Decision states:

ALLEGATIONS
AGAINST
PETITIONER
IN
RESPONDENTS OWN COMPANY POLICIES.33

VIOLATION

OF

Petitioner posits that there is no substantial evidence to establish valid

grounds for her dismissal since various emails from her superiors
illustrating her accomplishments and commendations, as well as her
"good" overall performance rating negate loss of trust and confidence. She
also insists that she was not afforded due process at the company level.
She claims that she was not properly informed of the offenses charged
against her due to the vagueness of the terms written in the termination
notices and that no investigation and hearing was conducted as required
by company policy.
Our Ruling

WHEREFORE, the Resolution of the National Labor Relations Commission

dated March 23, 2004 is REVERSED. [Respondents] are hereby ordered to
pay petitioner the amount corresponding to three [months] salary pursuant
to the termination provision of the employment contract.

The petition is devoid of merit. The Court finds no cogent reason to depart
from the ruling of the CA that petitioner was validly dismissed.

SO ORDERED.30

Jurisprudence provides that an employer has a distinct prerogative and

wider latitude of discretion in dismissing a managerial personnel who
performs functions which by their nature require the employers full trust
and confidence.34 As distinguished from a rank and file personnel, mere
existence of a basis for believing that a managerial employee has
breached the trust of the employer justifies dismissal. 35 "[L]oss of
confidence as a ground for dismissal does not require proof beyond
reasonable doubt as the law requires only that there be at least some basis
to justify it."36

Petitioners Motion for Reconsideration31 was

Resolution32 dated October 4, 2006.

denied

in

the

CA

Issues
Hence, the present petition raising the following issues:
THAT PETITIONER WAS ILLEGALLY DISMISSED FROM HER
EMPLOYMENT BY RESPONDENTS.I. WHETHER X X X THE COURT OF
APPEALS COMMITTED AN ERROR WHEN IT REVERSED THE
DECISION OF THE NLRC ON CERTIORARI DESPITE THE FACT THAT
THE NLRC DID NOT COMMIT GRAVE ABUSE OF DISCRETION WHEN
IT AFFIRMED THE FACTUAL FINDINGS OF THE LABOR ARBITER
II. WHETHER X X X THE ALLEGED VALID OR JUST CAUSE FOR
TERMINATION OF PETITIONER FROM HER EMPLOYMENT WAS
PROVEN AND ESTABLISHED BY SUBSTANTIAL EVIDENCE ON
RECORD.
III. WHETHER X X X RESPONDENTS DEPRIVED PETITIONER OF HER
RIGHT TO DUE PROCESS WHEN RESPONDENTS DISMISSED
PETITIONER WITHOUT CONDUCTING ANY INVESTIGATION TO
DETERMINE THE VERACITY AND TRUTHFULNESS OF THE

There exists a valid ground for petitioners termination from employment.

Petitioner, in the present case, was L&Ts CHR Director for Manufacturing.
As such, she was directly responsible for managing her own departmental
staff. It is therefore without question that the CHR Director for
Manufacturing is a managerial position saddled with great responsibility.
Because of this, petitioner must enjoy the full trust and confidence of her
superiors. Not only that, she ought to know that she is "bound by more
exacting work ethics"37and should live up to thishigh standard of
responsibility. However, petitioner delivered dismal performance and
displayed poor work attitude which constitute sufficient reasons for an
employer to terminate an employee on the ground of loss of trust and
confidence. Respondents also impute upon petitioner gross negligence and
incompetence which are likewise justifiable grounds for dismissal. 38 The
burden of proving that the termination was for a valid cause lies on the
employer.39 Here, respondents were able to overcome this burden as the
evidence presented clearly support the validity of petitioners dismissal.

214

First, records show that petitioner indeed unreasonably failed to effectively

communicate with her immediate superior. There was an apparent neglect
in her obligation to maintain constant communication with Sauceda in
order to ensure that her work is up to par. This is evident from the various
emails40 showing that she failed to update Sauceda on the progress of her
important assignments on several occasions. While petitioner explained in
her written reply to the Prerequisite Notice that such failure to
communicate was due to the companys computer system breakdown,
respondents however were able to negate this as they have shown that the
computer virus which affected the companys system only damaged some
email addresses of certain employees which did not include that of
Saucedas. On the other hand, petitioner failed to present any concrete
proof that the said computer virus also damaged Saucedas email account
as to effectively disrupt their regular communication. Moreover, we agree
with respondents stance that petitioner could still reach Sauceda through
other means of communication and should not completely rely on the web.
Second, the affidavits of petitioners co-workers revealed her negative
attitude and unprofessional behavior towards them and the company. In
her affidavit,41 Agnes Suzette Pasustento, L&Ts Manager for the Corporate
Communications Department, attested to petitioners "badmouthing" of
Sauceda in one of their meetings abroad and of discussing with her about
filing a labor case against the company. Also, in the affidavits of Rizza S.
Esplana42 (Saucedas Executive Assistant), Cynthia Yiguez 43 (Corporate
Human Resources Manager of an affiliate of L&T), and Ana Wilma
Arreza44 (Human Resources and Administration Division Manager of an
affiliate of L&T), they narrated several instances which demonstrated
petitioners notoriously bad temper. They all described her to have an
"irrational" behavior and "superior and condescending" attitude in the
workplace. Unfortunately for petitioner, these sworn statements which
notably remain uncontroverted and unrefuted, militate against her
innocence and strengthen the adverse averments against her. 45 It is well to
state that as a CHR Director tasked to efficiently manage the companys
human resource team and practically being considered the "face" of the
Human Resource, petitioner should exhibit utmost concern for her
employers interest. She should likewise establish not only credibility but
also respect from co-workers which can only be attained if she
demonstrates maturity and professionalism in the discharge of her duties.
She is also expected to act as a role model who displays uprightness both
in her own behavior and in her dealings with others.
The third and most important is petitioners display of inefficiency and
ineptitude in her job as a CHR Director. In the affidavit 46 of Ornida B. Calma,
Chief Accountant of L&Ts affiliate company, petitioner, on two occasions,
gave wrong information regarding issues on leave and holiday pay which
generated confusion among employees in the computation of salaries and
wages. Due to the nature of her functions, petitioner is expected to have
strong working knowledge of labor laws and regulations to help shed light

on issues and questions regarding the same instead of complicating them.

Petitioner obviously failed in this respect.
No wonder she received a less than par performance in her performance
evaluation conducted in June 2001, contrary to her assertion that an 80.2%
rating illustrates good and dependable work performance. As can be
gleaned in the performance appraisal form, petitioner received deficient
marks and low ratings on areas of problem solving and decision making,
interpersonal
relationships,
planning
and
organization,
project
management and integrity notwithstanding an overall passing grade. As
aptly remarked by the CA, these low marks revealed the "degree of
[petitioners] work handicap" and should have served as a notice for her to
improve on her job. However, she appeared complacent and remained lax
in her duties and this naturally resulted to respondents loss of confidence
in her managerial abilities.
Taking all these circumstances collectively, the Court is convinced that
respondents have sufficient and valid reasons in terminating the services
of petitioner as her continued employment would be patently inimical to
respondents interest. An employer "has the right to regulate, according to
its discretion and best judgment, all aspects of employment, including
work assignment, working methods, processes to be followed, working
regulations, transfer of employees, work supervision, lay-off of workers and
the discipline, dismissal and recall of workers." 47 "[S]o long as they are
exercised in good faith for the advancement of the employers interest and
not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements," 48 the exercise of
this management prerogative must be upheld.
Anent petitioners imputation of bad faith upon respondents, the same
deserves no credence. That she was publicly embarrassed when she was
coerced by Sauceda and Edles to vacate her office, return the company car
and take all her personal belongings on the day she was dismissed, are all
mere allegations not substantiated by proof. And since it is hornbook rule
that he who alleges must prove, we could not therefore conclude that her
termination was tainted with any malice or bad faith without any sufficient
basis to substantiate this bare allegation. Moreover, we are more inclined
to believe that respondents offer of settlement immediately after
petitioners termination was more of a generous offer of financial
assistance rather than an indication of ill-motive on respondents part.
Petitioner was accorded due process.
Petitioner insists that she was not properly apprised of the specific grounds
for her termination as to give her a reasonable opportunity to explain. This
is because the Prerequisite Notice and Notice of Termination did not
mention any valid or authorized cause for dismissal but rather merely
contained general allegations and vague terms.

215

We have examined the Prerequisite Notice and contrary to petitioners

assertion, find the same to be free from any ambiguity. The said notice
properly advised petitioner to explain through a written response her
failure to perform in accordance with management directives, which
deficiency resulted in the companys loss of confidence in her capability to
promote its interest. As correctly explained by the CA, the notice cited
specific incidents from various instances which showed petitioners
"repeated failure to comply with work directives, her inclination to make
negative remarks about company goals and her difficult personality," that
have collectively contributed to the companys loss of trust and confidence
in her. Indeed, these specified acts, in addition to her low performance
rating, demonstrated petitioners neglect of duty and incompetence which
support the termination for loss of trust and confidence.

the charges against him and submit evidence in support of his

defense, whether in a hearing, conference or some other fair, just
and reasonable way.

Neither can there be any denial of due process due to the absence of a
hearing or investigation at the company level. It has been held in a
plethora of cases that due process requirement is met when there is simply
an opportunity to be heard and to explain ones side even if no hearing is
conducted.49 In the case of Perez v. Philippine Telegraph and Telephone
Company,50 this Court pronounced that an employee may be afforded
ample opportunity to be heard by means of any method, verbal or written,
whether in a hearing, conference or some other fair, just and reasonable
way, in that:

In this case, petitioner's written response to the Prerequisite Notice

provided her with an avenue to explain and defend her side and thus
served the purpose of due process. That there was no hearing.
investigation or right to appeal. which petitioner opined to be violation of
company policies, is of no moment since the records is bereft of any
showing that there is an existing company policy that requires these
procedures with respect to the termination of a CHR Director like petitioner
or that company practice calls for the same. There was also no request for
a formal hearing on the part of petitioner.

xxxx

As she was served with a notice apprising her of the changes against her
and also a subsequent notice informing her of the management's decision
to terminate her services alter respondents found her written response to
the first notice unsatisfactory, petitioner was clearly afforded her right to
due process.

After receiving the first notice apprising him of the charges against him,
the employee may submit a written explanation (which may be in the form
of a letter, memorandum, affidavit or position paper) and offer evidence in
support thereof, like relevant company records (such as his 201 file and
daily time records) and the sworn statements of his witnesses. For this
purpose, he may prepare his explanation personally or with the assistance
of a representative or counsel. He may also ask the employer to provide
him copy of records material to his defense. His written explanation may
also include a request that a formal hearing or conference be held. In such
a case, the conduct of a formal hearing or conference becomes mandatory,
just as it is where there exist substantial evidentiary disputes or where
company rules or practice requires an actual hearing as part of
employment pretermination procedure. To this extent, we refine the
decisions we have rendered so far on this point of law.
xxxx
In sum, the following are the guiding principles in connection with the
hearing requirement in dismissal cases:
(a) ample opportunity to be heard means any meaningful
opportunity (verbal or written) given to the employee to answer

(b) a formal hearing or conference becomes mandatory only when

requested by the employee in writing or substantial evidentiary
disputes exist or a company rule or practice requires it, or when
similar circumstances justify it.
(c) the ample opportunity to be heard standard in the Labor Code
prevails over the hearing or conference requirement in the
implementing rules and regulations.51

WHEREFORE, the petition is DENIED. The assailed Decision dated July 18,
2006 of the Court of Appeals in CA-GR. SP No. 86937 is AFFIRMED.
SO ORDERED.

216

G.R. No. 176893

VICENTE VILLANUEVA, JR.,
Petitioner,

Present:

Since 1990, Villanueva had been employed with Meralco as bill collector,
teller and branch representative. Sometime in June 2002, Francisco

PERALTA, J., Acting Chairperson,

Collantes, Manager of Meralco Branch Office, Novaliches, Quezon City,
ABAD,
referred to the companys Investigation Office a report dated June 10,
PEREZ,* *
MENDOZA, and
2002 regarding unusual contract modifications in the transactions handled
PERLAS-BERNABE, JJ.
by Villanueva. The report claimed that there were customers who were

- versus -

issued Contracts for Electric Service by Villanueva which indicated their

THE NATIONAL LABOR
RELATIONS COMMISSION
THIRD DIVISION, MANILA
ELECTRIC COMPANY,
MANUEL LOPEZ, Chairman and CEO,
and FRANCISCO COLLANTES, Manager,
Respondents.

payment of 930.00 (service deposit of 520.00 and meter deposit of

410.00) as deposit payment when they actually gave him a total amount
of 1,240.00. The discrepancy amounting to 310.00 was not covered by

Promulgated:
June 13, 2012

any receipt. Pursuant to the complaints, a field investigation was

conducted by the company-designated investigator who was able to obtain
sworn statements from nine (9) out of twenty four (24) complaining

x
-------------------------------------------------------------------------------------------------------x

customers.[4] The said complainants identified Villanueva as the person

they have transacted with, from a line-up of pictures of several
individuals. Further, the complaints were corroborated by the sworn

DECISION

statements of Ben-Hur C. Nepomuceno (Nepomunceno) and Merle S.

MENDOZA, J.:

Santos (Santos), office team leader and assistant office team leader of the

This petition for review on certiorari assails the December 13, 2006

Novaliches branch, respectively.

Decision[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 95826 which
dismissed the petition challenging the November 30, 2004 [2] and June 20,
2006[3] Resolutions

of

Commission (NLRC) holding

the

National
that

Labor
petitioner

Relations
Vicente

Villanueva(Villanueva) was validly dismissed by respondent company

Manila Electric Company (Meralco) on account of serious misconduct and
loss of trust and confidence.
The Facts

Nepomuceno stated that in the course of the routine checking of his men
for March 2002, he found the unusual additional deposit payments
accepted by Villanueva. When he made further verification on the
collection reports of the latter, he also discovered additional deposits he
received from other customers. Upon confirming Villanuevas act of
contract modification with a customer named Sherwin Borja, Nepomuceno

217

requested the Customer Process Management to suspend Villanuevas CMS-

in the preparation of the contract, this would have to be balanced at the

User ID. Corporate Audit was also asked to investigate his irregular

end of the day. He claimed that there were instances when initial entries of

transactions. In his statement, Nepomuceno described the additional

applied loads were erroneous prompting him to modify the contract in

payments as irregular because customers normally paid for deposit

order that the customers deposit payment could be entered. In cases when

payments on a one-time basis. With Villanuevas transactions, however,

the customer was no longer in the office premises, he would just record

customers who paid 1,240.00 complained of getting receipts reflecting

them as pre-payment so as to reflect the same in their billing upon

only 930.00 as the amount paid, constraining Villanueva to issue another

installation of the electric meter.

receipt for an additional deposit of 310.00. Nepomuceno clarified that

additional deposits were meant to increase the contracted capacity of

In a letter[7] dated August 28, 2002, Meralco denied the request of

customers after a considerable period of time from their initial electric

Villanuevas

service application.

customers) who were not Meralco employees. Management maintained

counsel

to

cross-examine

the

witnesses

(complaining

that it was not the proper place to grill a witness on cross-examination

For her part, Santos, whose duties included the preparation of summary

which should be done in an appropriate proceeding. Villanueva was then

reports in overages of tellers and branch representatives, stated that the

advised that the case would be considered submitted for decision as the

existing practice was for the personnel concerned to report excess

issues had already been joined with the submission of his counter-affidavit.

collections on the same day they were collected. Santos claimed that
Villanueva had never reported a case of overage in his collections since

On January 9, 2003, Villanueva received the Notice of Termination [8] which

2001.

reads:

In a letter[5] dated August 1, 2002, Villanueva was informed of the

investigation to be conducted by the company. On the date of the
scheduled hearing indicated in the letter, Villanueva appeared with counsel
who requested for time within which to submit a responsive paper. In his
counter-affidavit,[6] he denied demanding payment in excess of the
minimum

deposit

charged

from

applicants

for

electric

Formal administrative investigation duly conducted by

Legal established that on several occasions in the year
2002, you, as Branch Representative of Novaliches Branch,
misappropriated for your own personal purposes and
benefits the excess service and meter deposits you
charged and exacted from several electric service
applicants in the aggregate amount of ONE THOUSAND SIX
HUNDRED PESOS (1,600.00), to the damage and
prejudice of the said customers and the Company.

service

connection. He admitted that there were times that Modification of

Contract was done because of the recommendations of a Meralco fieldman
who, upon inspection, approved a higher load of electricity than that
applied for. Villanueva explained that if ever there was error or discrepancy

Your aforesaid act constitute willful and gross

violations of Section 6, par. 11 of the Company Code
on Employee Discipline which penalizes (a)ll other
acts of dishonesty which cause or tend to cause
prejudice to the Company, subject to disciplinary
action depending upon the gravity of the offense.

218

Under the Labor Code of the Philippines, Article 282

thereof, the termination of your employment in Meralco is
justified on the following grounds: (a) Serious misconduct x
x x by the employee x x x in connection with his work; (c)
Fraud x x x or willful breach by the employee of the trust
reposed in him by his employer or representative; (e) Other
causes analogous to the foregoing.
Based on the foregoing, Management is constrained to
dismiss you for cause from the service and employ of the
Company effective January 10, 2003 with forfeiture of
rights and privileges. [Emphasis supplied]

grievous error for not giving him a chance to confront the customers who
stood as witnesses against him. There being no financial report relied on
during the investigation save for mere affidavits executed by said
customers, the investigative process was a sham, entitling him not only to
backwages but also moral and exemplary damages.

For its part, Meralco defended Villanuevas dismissal as valid and for
a just cause. The evidence consisting of sworn statements of the customers,
corporate

audits,

field

reports,

and

affidavits

of

Nepomuceno

On January 21, 2003, Villanueva filed a complaint [9] for illegal

and Santos sufficiently substantiated the case against him. After evaluating

dismissal before the Regional Arbitration Branch. He alleged that he was

the pieces of evidence and the merits of Villanuevas defense, the assigned

denied both substantive and procedural due process because there was no

investigator arrived at the recommended penalty of dismissal which was

formal charge yet when Meralco effected his termination. He argued that

approved

the proceeding taken by the company was akin to a preliminary

Villanuevas modus

investigation subject to further evaluation by the legal division and only

applications. Clearly, the issuance of receipts for purported additional

upon findings of probable cause would it ripen to an administrative

deposits was Villanuevas way to thwart the suspicion of customers

charge. He thus waited for the formal charge against him as signed by the

regarding excessive payments they had made. Having defrauded customers

Chairman.

and tarnished Meralcos good name, Villanueva was justly terminated from

by

management. The
operandi in

evidence
the

presented

processing

of

exposed
customer

employment.
Anent the charge of misappropriation of company funds, Villanueva
claimed that the amount was intact with the office and it was only during

Ruling of the Labor Arbiter

the preparation of forms that sometimes confusion would occur, but this
was promptly corrected upon discovery to reflect the correct amount for the

On June 30, 2004, the Labor Arbiter (LA) rendered a decision[10] in

kind of service paid for. He further claimed that even assuming that the

favor of Villanueva ordering his reinstatement with backwages. The LA

error was committed, the offense could not have warranted a penalty of

found no violation of procedural due process despite the denial of

dismissal because the Company Code of Employee Discipline failed to make

Villanuevas request to confront the affiants because he was already given

mention of his case in a specific manner. At most, his case was one of

ample opportunity to be heard by way of his counter-affidavit. On the matter

simple

of substantive due process, however, the LA explained thus:

negligence

because

the

company

was

not

prejudiced

financially. Lastly, Villanueva asserted that themanagement committed a

219

x x x although there is substantial evidence to

show that complainant committed the acts as charge[d] in
the notice dated August 1, 2002 but the extreme penalty of
dismissal given to him should not be meted under the
penalty for violation of Section 7, par. 11 of the Company
Code subject to disciplinary action depending upon the
gravity of the offense considering the following mitigating
factors, such as:

stand against substantial evidence on record pointing to his guilt. Absent

any suspicion of ill motive against Villanueva, the sworn statements of the
customers had bearing that could not be ignored. Worse, Villanueva never
presented

amount

involved

that

he

indeed

reported

his

overages

to

his

superiors. Santoslikewise discredited him for this.

a) first offender in his 13 years of service

with the company;
b)
the
minimal
(1,600.00)

proof

With respect to the propriety of the penalty of dismissal, the NLRC

refused to appreciate the mitigating circumstances outlined by the LA in
Villanuevas favor. Instead, it found Villanueva liable for dishonesty,
warranting his dismissal on the ground of serious misconduct and loss of

c) failure
of
the
company
to
reasonably establish that the act of
the employee is inimical to its interest
or has caused undue prejudice to its
operation.

trust and confidence. The dispositive portion of the NLRC Resolution reads:
WHEREFORE, the appealed Decision of Labor
Arbiter a quo dated June 30, 2004 is hereby ordered
VACATED and SET ASIDE, and a new one entered declaring
complainants dismissal from service as VALID and
JUSTIFIED.

xxx

All other claims are hereby DENIED for lack of

WHEREFORE, premises considered, respondent
Manila Electric Company is hereby ordered to take back
within ten (10) days from receipt hereof, herein
complainant Vicente Villanueva, Jr. to any substantially
equivalent position not dependent on the use of CMS, or
by payroll reinstatement, at the option of the former,
without loss of seniority rights but without backwages.
Complainants prayer for damages is hereby
dismissed for lack of merit.[11] [Emphasis supplied]

merit.[13]

Ruling of the Court of Appeals

After having filed his Motion for Reconsideration, [14] Villanueva

moved for the execution of the LAs decision alleging that while he had
been reinstated in the payroll of Meralco effective July 16, 2004, he was
not given the full benefits to which he was entitled prior to his dismissal,
like

Ruling of the NLRC

one

(1)

sack

of

rice

per

month

and

bonuses

for

two

(2)

months. Consequently, the LA ordered the issuance of a Writ of Execution

and Alias Writ of Execution on February 15, 2005.[15] On June 20, 2006, the
In its Resolution

[12]

dated November 30, 2004, the NLRC Third

Division reversed the ruling of the LA and declared Villanuevas dismissal as

valid. It held that Villanuevas vehement denial of the offense could not

NLRC denied Villanuevas motion for reconsideration rendering its decision

as final.[16]

220

Hence, this petition.

On appeal to the CA, Villanuevas petition was dismissed. The CA

ruled that Meralco had established just cause for the dismissal of

GROUNDS

Villanueva by substantial evidence of his fraudulent and dishonest acts

resulting in the loss of trust and confidence that Meralco had reposed on
him. The CA said:
There can be no dispute that as Branch Representative
petitioner occupies a position of trust and confidence. He
transacts daily with applicants for new and reactivated
electric service connections and directly receives from
them amounts intended for the required deposit charges.
Indeed utmost honesty is expected of petitioner in the
discharge of his functions not only because of his duty to
handle funds belonging to the company but also for the
reason that as front line personnel for MERALCOs
customers, he carries the image of the company and his
interactions with them leave a lasting impression on the
consuming public.

I.
THE HONORABLE COURT OF APPEALS ERRED IN NOT
FINDING GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION ON THE PART
OF THE PUBLIC RESPONDENTS ACT OF REVERSING
THE DECISION OF THE LABOR ARBITER A QUO, AND
DECLARING PETITIONERS DISMISSAL AS VALID AND
JUSTIFIED,
AND
SUBSEQUENTLY
DENYING
PETITIONERS MOTION FOR RECONSIDERATION.

II.

xxx
xxx in this case, the amount of discrepancy or money
misappropriated by petitioner may be minimal, even
inconsequential (1,600.00). But what is reprehensible is
petitioners irregular and anomalous practice of requiring
applicants for electric service connection to pay amounts in
excess of the minimum deposit charge but indicating only
the said minimum charge in the Contract of Electric
Service, making it appear later that the omission was only
a mistake if the customer comes back to the office and
asks about the discrepancy and substituting another
contract with the full payment tendered already reflected
therein, and not reporting any overage at all to the branch
supervisor with respect to those excess payments which
were no longer questioned by the customers.

THE HONORABLE COURT OF APPEALS ERRED IN NOT

FINDING THAT PUBLIC RESPONDENT COMMITTED
GRAVE ABUSE OF DISCRETION IN NOT ACTING UPON
THE MOTION FOR ISSUANCE OF WRIT OF EXECUTION
FOR THE CONTINUATION OF THE PAYMENT OF
SALARIES BY WAY OF PAYROLL REINSTATEMENT,
DURING THE PENDENCY OF PETITIONERS MOTION
FOR RECONSIDERATION, AND UNTIL ITS RESOLUTION
MORE THAN ONE (1) YEAR AND A HALF THEREAFTER
AND UNTIL THE FINALITY OF THE DECISION. [18]
The Courts Ruling

The petition is without merit.

xxx
WHEREFORE, premises considered, the present
petition is hereby DENIED DUE COURSE and accordingly
DISMISSED for lack of merit. The challenged Resolutions
dated November 30, 2004 and June 20, 2006 of the
National Labor Relations Commission in NLRC-NCR CA No.
040992-04 (NLRC-NCR Case No. 00-01-00977-03) are
hereby AFFIRMED.[17]

Dismissal from employment has two aspects: 1) the legality of the

act of dismissal per se, which constitutes substantive due process, and 2)
the legality of the manner of dismissal, which constitutes procedural due
process.

221

Art. 282. Termination by Employer. An employer

may terminate an employment for any of the following
causes:

confidence as a just cause for termination of employment is

premised on the fact that the employee concerned holds
a position of responsibility, trust and confidence or that the
employee concerned is entrusted with confidence with
respect to delicate matters, such as handling or case and
protection of the property and assets of the employer. The
betrayal of this trust is the essence of the offense for which
an employee is penalized.[20] [Underscoring supplied]

(a) Serious misconduct or willful disobedience by

the employee of the lawful orders of his employer or
representative in connection with his work;

As a safeguard against employers who indiscriminately use loss of

As to the first, the legal provision in point is Article 282 of the

Labor Code which provides:

(b) Gross and habitual neglect by the employee of

his duties;

trust and confidence to justify arbitrary dismissal of employees, the Court,

(c) Fraud or willful breach by the employee of the

trust reposed in him by his employer or duly authorized
representative;

for the application of the doctrine: (1) loss of confidence should not be

(d) Commission of a crime or offense by the

employee against the person of his employer or any
immediate member of his family or his duly authorized
representative; and

in addition to the above elements, came up with the following guidelines

simulated; (2) it should not be used as a 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 an earlier action taken in bad faith. [21]

(e) Other causes analogous to the foregoing.

In this case, the above requisites have been met. Meralcos loss of
In the case of Cruz v. Court of Appeals,[19] the Court had the

trust and confidence arising out of Villanuevas act of misappropriation of

occasion to enumerate the essential elements for willful breach by the

company funds in the course of processing customer applications has been

employee of the trust reposed in him by his employer:

proven by substantial evidence, thus, justified. Verily, the issuance of

additional receipts for excessive payments exacted from customers is a

Xxx the loss of trust and confidence must be based

on willful breach of the trust reposed in the employee by his
employer. 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. Moreover, it must be based
onsubstantial evidence and not on the employers whims or
caprices or suspicions otherwise, the employee would
eternally remain at the mercy of the employer. Loss of
confidence must not be indiscriminately used as a shield by
the employer against a claim that the dismissal of an
employee was arbitrary. And, in order to constitute a just
cause for dismissal, the act complained of must be workrelated and shows that the employee concerned is unfit to
continue working for the employer. In addition, loss of

willful breach of the trust reposed in him by the company.

One. Villanueva worked for Meralco as a Branch Representative

whose tasks included the issuance of Contracts for Electric Service after
receipt

of

the

amount

due

for

service

connection

from

customers. Obviously, he was entrusted not only with the responsibility of

handling company funds but also to cater to customers who intended to
avail of Meralcos services. This is nothing but an indication that trust and
confidence were reposed in him by the company, although his position was

222

not strictly managerial by nature.Loss of confidence generally applies only

even inconsequential to an established company such as Meralco, it is the

to: (1) cases involving employees occupying positions of trust and

anomalous practice of requiring applicants for electric service connection to

confidence; or (2) situations where the employee is routinely charged with

pay amounts higher than required that is the crux of Villanuevas

the care and custody of the employers money or property. To the first class

offense. The conscious design of issuing another receipt to make it appear

belong managerial employees, that is, those vested with the powers and

that there was a mistake in the initial transaction with the customers

prerogatives to lay down management polices and/or to hire, transfer,

exhibits a culpable act bordering on dishonesty and deceit. If not for

suspend, lay-off, recall, discharge, assign or discipline employees, or

personal gain, why did Villanueva exact from customers amounts in excess

effectively recommend such managerial actions. To the second class

of what was required by the company? What would have Villanueva done

belong cashiers, auditors, property custodians, or those who, in the normal

had the customers failed to discover the discrepancy between the amount

and routine exercise of their functions, regularly handle significant

they paid and that appearing in the receipts issued to them? Why were

amounts of money or property.[22] Villanueva falls in the latter category.

there no overages reported to his branch supervisor with respect to excess

payments which were no longer questioned by the customers? These

Two. Villanuevas acts of issuing contracts indicating therein an

questions arise out of the practice which unfortunately corrupted an

amount less than the actual payment made by the customers and,

employee like Villanueva. These doubts sway the Court away from

thereafter, issuing a receipt in an attempt to document the discrepancy are

Villanuevas claim that his errors were promptly corrected upon discovery.

certainly work-related. This is, in fact, the core of his position as a Branch
Representative.

Villanuevas insistence, that the act which triggered his dismissal

did not justify his separation from the service because the Company Code

Three. Meralcos charge against Villanueva was adequately proven

of Employee Discipline failed to make mention of his case in a specific

by substantial evidence. The records provide an extensive showing of

manner, fails to persuade the Court. The established facts do not

evidence against Villanueva. The affidavits of co-employees and, more

constitute a mere case of simple negligence. The acts performed were

especially those of the customers themselves, bear weight in establishing

without the slightest connotation of inadvertence which Villanueva could

the

have demonstrated during the proceedings a quo.

specific

acts

constituting

the

charge

against

him. In

fact,

no

inconsistencies among these statements were found. Villanueva likewise

failed to pose a plausible defense

Besides, the Court is not unmindful of the prerogatives available to

Meralco as an employer. The company has the right to regulate, according

Four. The breach of the companys trust in Villanueva was shown to

to its discretion and best judgment, all aspects of employment, including

have been committed knowingly and willfully. Although the amount of

work assignment, working methods, processes to be followed, working

discrepancy or money misappropriated may be considered minimal and

regulations, transfer of employees, work supervision, lay-off of workers and

223

the discipline, dismissal and recall of workers. Management has the

required notices. More importantly, he was actually given the opportunity

prerogative to discipline its employees and to impose appropriate penalties

to be heard. On the date of the scheduled hearing, Villanueva was assisted

on erring workers pursuant to company rules and regulations. [23] So long as

by counsel who requested for time within which to submit a counter-

they are exercised in good faith for the advancement of the employers

affidavit. He was able to submit it, where he denied the charges against

interest and not for the purpose of defeating or circumventing the rights of

him. Undoubtedly, Villanueva was afforded procedural due process even if

the employees under special laws or under valid agreements, the

the

employers exercise of its management prerogative must be upheld. [24]The

Meralco. Where a party is given the opportunity to explain his side of the

law imposes many obligations on the employer such as providing just

case, the right to due process is deemed recognized for what is frowned

compensation to workers and observance of the procedural requirements

upon is the denial of the right to be heard.

cross-examination

of

the

witnesses

was

not

permitted

by

of notice and hearing in the termination of employment. On the other

hand, the law also recognizes the right of the employer to expect from its

The Court commiserates with the heirs of Villanueva for his death

workers not only good performance, adequate work and diligence, but also

last 2007. The Court, as dispenser of justice, however, has to apply the law

good conduct and loyalty. The employer may not be compelled to continue

based on the facts of the case. Considering that the employer has proved a

to employ such persons whose continuance in the service will patently be

just and valid cause for Villanuevas termination, the Court has no option

inimical to its interests.

but to dismiss the case.

[25]

In his case, no indication of bad faith can be attributed to Meralco

WHEREFORE, the petition is DENIED.

as there was no dispute that it had lost trust and confidence in Villanueva
and his abilities to perform his tasks with utmost efficiency and honesty
expected of an employee trusted to handle customers and funds. With
substantial evidence presented and Villanuevas failure to proffer plausible
explanation denying the charges against him, there can be no other
conclusion for the Court but to affirm his dismissal.

Lastly, Villanueva argued that management committed a grievous

error for not giving him a chance to confront the customers who stood as
witnesses against him. To this, the Court disagrees. As the NLRC and the
CA found, Villanueva was afforded due process when he was given the

SO ORDERED.

224

G.R. No. 192826

February 27, 2013

PHILIPPINE
PLAZA
HOLDINGS,
vs.
MA. FLORA M. EPISCOPE, Respondent.

INC., Petitioner,

DECISION
PERLAS-BERNABE, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing
the
March
26,
2010
Decision 1 and
July
5,
2010
2
Resolution rendered by the Court of Appeals (CA) in CA-G.R. SP No.
102188. The CA reversed and set aside the Resolutions 3 of the National
Labor Relations Commission (NLRC) dared May 30, 2007 and November 14,
2007 in NLRC NCR CA No. 047187-06/NLRC NCR-12-13621-04 and thereby
declared respondent to have been illegally dismissed.
Petitioner Philippine Plaza Holdings, Inc. (PPHI) is the owner and operator of
the Westin Philippine Plaza Hotel (Hotel). Respondent Ma. Flora M. Episcope
(Episcope) was employedby PPHI since July 24, 1984 until she was
terminated on November 4, 2004 for dishonesty, willful disobedience and
serious misconduct amounting to loss of trust and confidence.
In order to check the performance of the employees and the services in the
different outlets of the Hotel, PPHI regularly employed the services of
independent auditors and/or professional shoppers.For this purpose,Sycip,
Gorres and Velayoauditors dined at the Hotels Caf Plaza on August 28,
2004. After dining, the auditors were billed the total amount of P2,306.65,
representing the cost of the food and drinks they had ordered under Check
No. 565938.4 Based on the audit report 5 submitted to PPHI, Episcope was
one of those who attended to the auditors and was the one who handed
the check and received the payment of P2,400.00. She thereafter returned
Check No. 565938, which was stamp marked "paid," together with the
change.

Upon verification of the foregoing check receipt with the sales report of
Caf Plaza, it was discovered that the Hotel's copy of the receipt bore a
discount of P906.456on account of the use of a Starwood Privilege Discount
Card registered in the name of Peter A. Pamintuan, while the receipt issued
by Episcope to the auditors reflected the undiscounted amount
of P2,306.65considering that none of the auditors had such discount card.
In view of the foregoing, the amount actually remitted to the Hotel was
only P1,400.20thus, leaving a shortage of P906.45.
On September 30, 2004, the Hotel issued a Show-Cause Memo 7 directing
Episcope to explain in writing why no disciplinary action should be taken
against her for the questionable and invaliddiscount application on the
settlement check issued to the auditors on August 28, 2004.
In her handwritten letter,8 Episcope admitted that she was on duty on the
date and time in question but alleged that she could no longer recall if the
concerned guests presented a Starwood Privilege Discount Card.
On October 4, 2004, Episcope was placed on preventive suspension
without pay.9 During the administrative hearing on October 6, 2004,
Episcope, who was therein assisted by the Union President and four union
representatives from National Union of Workers in Hotel Restaurant and
Allied Industries (NUWHRAIN)-Philippine Plaza Hotel Chapter, confirmed the
fact that she was the one who presented the subject check and received
the corresponding payment from the guests. She, however, denied
stampingthe said check as "paid" or that she gaveany discount without a
discount card, explaining that she could not have committed such acts
given that all receipts and discount applications were handled by the
cashier. But when asked why the discounted receipt was not given to the
guests, she merely replied that she could no longer remember. In a
separate inquiry, the cashier of Caf Plaza, however, maintained that a
Starwood Privilege Discount Card must have been presented during the
said incident given that there was a Discount Slip 10 and a stamped receipt
indicating such discounted payment.11
Finding Episcope to have failed to sufficiently explain the questionable
discount application on the settlement bill of the auditors, her employment
was terminated for committing acts ofdishonesty, which was classified as a
Class D offense under the Hotel's Code of Discipline, as well as for willful
disobedience, serious misconduct and loss of trust and confidence. 12

225

Aggrieved, Episcope filed a complaint13 for illegal dismissal with prayer for
payment of damages and attorney's fees against PPHI before the NLRC
docketed as NLRC-NCR Case No. 00-12-13621-04.

Dissatisfied, PPHI moved for reconsideration which was, however, denied in

the assailed July 5, 2010 Resolution.21
Hence, the instant petition anchored on the sole ground that:

Rulings of the LA and the NLRC

On October 20, 2005, the Labor Arbiter (LA) rendered a Decision in favor of
PPHI and thus, dismissed Episcope's complaint for illegal dismissal. 14 The
LA found that there was substantial evidence to support the charge of
improper discount application and observed that the said act resulted to a
loss on the part of the Hotel. Accordingly, the LA held that Episcope's
actions rendered her unworthy of the trust and confidence demanded by
her position which thus, warranted her dismissal.
On appeal,15 the NLRC affirmed the LA's decision in theMay 30, 2007
Resolution.16 Episcope's motion for reconsideration 17 was likewise denied in
the November 14, 2007 Resolution.18
Ruling of the CA
On certiorari, the CA gave due course to the petition and reversed the
NLRC's Decision.19 It found the report submitted by the auditors grossly
insufficient to support the conclusion that Episcope was guilty of the
charges imputed against her. It described the report as a mere transaction
account in tabular form,bereft of any evidentiary worth. It was unsigned
and bore no indication of her alleged culpability. The CA likewise did not
give credence to the minutes of the administrative hearing because it was
based on the same unaudited report. Hence, the CA(1) declared Episcope's
dismissal illegal;(2) ordered her reinstatement to her former position
without loss of seniority rights and benefits under the Labor Code; and (3)
remanded the case to the NLRC for further proceedings on her money
claims and other benefits. The dispositive portion of the CA'sDecision
reads:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The
assailed Resolutions dated May 30, 2007 and November 14, 2007 of the
public respondent NLRC are REVERSED and SET ASIDE. Petitioner is
hereby ordered reinstated to her former position without loss of seniority
rights and benefits under the Labor Code. The case is hereby remanded to
the NLRC for further proceedings on her money claims and other benefits.
SO ORDERED.20

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND

RULED CONTRARY TO LAW AND JURISPRUDENCE WHEN IT ACTED
AS A TRIER OF FACTS AND ORDERED THE REINSTATEMENT OF THE
RESPONDENT AND PAYMENT OF BACKWAGES. 22
The Ruling of the Court
The petition is impressed with merit.
At the outset, it is settled that the jurisdiction of the Supreme Court in
cases brought before it from the CA via Rule 45 of the Rules of Court is
generally limited to reviewing errors of law. The Court is not the proper
venue to consider a factual issue as it is not a trier of facts. The rule,
however, is not ironclad and a departure therefrom may be warranted
where the findings of fact of the CA are contrary to the findings and
conclusions of the trial court or quasi-judicial agency, 23 as in this case.
There is therefore a need to review the records to determine which of them
should be preferred as more conformable to evidentiary facts. 24
After a judicious review of the records, as well as the respective allegations
and defenses of the parties, the Court is constrained to reverse the
findings and conclusion of the CA.
Article 293 (formerly Article 279) of the Labor Code 25 provides that the
employer shall not terminate the services of an employee except only for a
just or authorized cause. If an employer terminates the employment
without a just or authorized cause, then the employee is considered to
have been illegally dismissed and is thus, entitled to reinstatement or in
certain instances, separation pay in lieu thereof, as well as the payment of
backwages.
Among the just causes for termination isthe employers loss of trust and
confidence in its employee. Article 296 (c) (formerly Article 282 [c]) of the
Labor Code provides that an employer may terminate the services of an
employee for fraud or willful breach of the trust reposed in him. But in
order for the said cause to be properly invoked, certain requirements must
be complied with namely,(1) the employee concerned must be

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holding a position of trust and confidence and (2) there must be an

act that would justify the loss of trust and confidence.26
It is noteworthy to mention that there are two classes of positions of
trust: on the one hand, there are managerial employees whose primary
duty consists of the management of the establishment in which they are
employed or of a department or a subdivision thereof, and to other officers
or members of the managerial staff; on the other hand, there are fiduciary
rank-and-file employees, such as cashiers, auditors, property custodians,
or those who, in the normal exercise of their functions, regularly handle
significant amounts of money or property. These employees, though rankand-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.27 Episcope belongs to this latter class and therefore,
occupies a position of trust and confidence.
As may be readily gleaned from the records, Episcope was employed by
PPHI as a service attendant in its Caf Plaza. In this regard, she was tasked
to attend to dining guests, handle their bills and receive their payments for
transmittal to the cashier. It is also apparent that whenever discount cards
are presented, she maintained the responsibility to take them to the
cashier for the application of discounts. Being therefore involved in the
handling of company funds, Episcope is undeniably considered an
employee occupying a position of trust and confidence and as such, was
expected to act with utmost honesty and fidelity.
Anent the second requisite, records likewise reveal that Episcope
committed an act which justified her employers (PPHIs) loss of trust and
confidence in her.
Primarily, it is apt to point out that proof beyond reasonable doubt is not
required in dismissing an employee on the ground of loss of trust and
confidence; it is sufficient that there lies some basis to believe that the
employee concerned is responsible for the misconduct and that the nature
of the employee's participation therein rendered him absolutely unworthy
of trust and confidence demanded by his position.
On this point, the Court, in the case of Bristol Myers Squibb (Phils.), Inc. v.
Baban,28 citing Atlas Fertilizer Corporation v. National Labor Relations
Commission,29 ruled as follows:

As a general rule, employers are allowed a wider latitude of discretion in

terminating the services of employees who perform functions by which
their nature require the employer's full trust and confidence. Mere
existence of basis for believing that the employee has breached the trust
and confidence of the employer is sufficient and does not require proof
beyond reasonable doubt. Thus, when an employee has been guilty of
breach of trust or his employer has ample reason to distrust him, a labor
tribunal cannot deny the employer the authority to dismiss him.
In addition, it must be observed that only substantial evidence is required
in order to support a finding that an employers trust and confidence
accorded to its employee had been breached. As explained in the case
of Lopez v. Alturas Group of Companies:30
xxx, the language of Article 282(c) [now, Article 296 (c)]of the Labor Code
states that the loss of trust and confidence must be based on willful breach
of the trust reposed in the employee by his employer. 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. Moreover, it must be based on substantial
evidence and not on the employer's whims or caprices or suspicions
otherwise, the employee would eternally remain at the mercy of the
employer. Loss of confidence must not be indiscriminately used as a shield
by the employer against a claim that the dismissal of an employee was
arbitrary. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and shows that the employee
concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of responsibility,
trust and confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as the handling or care
and protection of the property and assets of the employer. The betrayal of
this trust is the essence of the offense for which an employee is penalized.
(Emphasis supplied.)
In the present case, records would show that Episcope committed acts of
dishonesty which resulted to monetary loss on the part of PPHI and more
significantly, led to the latters loss of trust and confidence in her.
Notwithstanding the impaired probative value of the unaudited and
unsigned auditors report, the totality of circumstances supports the
foregoing findings:

227

First, it remains unrefuted that Episcope attended to the auditors when

they dined at the Caf Plaza on the date and time in question. In fact,
Episcope herself admitted that she tendered Check No. 565938 bearing the
amount of P2,306.65 and received the amount of P2,400.00 as payment;
Second, it is likewiseundisputed that the check receipt on file with the
Hotel for the same transaction reflected only the amount of P1,400.20 in
view of the application of a certain Starwood Privilege Discount Card
registered in the name of one Peter Pamintuan, while the receipt given to
the auditors bore the undiscounted amount of P2,306.65 which thus,
resulted to a P906.45 discrepancy. During the proceedings, both receipts
were actually presented in evidence yet, Episcope never interposed any
objection on the authenticity of the same; and
Third, when asked to explain the said discrepancy, Episcope
merelyimputed culpability onthe part of the cashier, whom she claimed
prepared all the receipts that were returned to the guests.
From the foregoing incidents, it is clear that Episcope was remiss in her
duty to carefully account for the money she received from the cafe's
guests. It must be observed that though the receipts were prepared by the
cashier, Episcope; as a service attendant,. was the one who actually
handled the money tendered to her by the hotel clients. In this regard,
prudence dictates that Episcope should have at least known why there was
a shortage in remittance. Yet when asked, Episcope could not offer any
plausible explanation but merely shifted the blame to the cashier.
Irrefragably, as an employee who was routinely charged with the care and
custody of her employer's money, Episcope was expected to have been
more circumspect in the performance of her duties as a service attendant.
This she failed to observe in the case at bar which thus, justifies PPHI's loss
of trust and confidence in her as well as her consequent dismissal.
Perforce, having substantially established the actual breach of duty
committed by Episcope and the due observance of due process, no grave
abuse of discretion can be imputed against the NLRC in sustaining the
finding of the LA that her dismissal was proper under the circumstances.
Finally, with respect to Episcope's other monetary claims, namely, service
incentive leave credits and 13th month pay, the Court finds no error on the
part of the LA when it denied the foregoing claims considering that
Episcope failed to proffer any legitimate basis to substantiate her
entitlement to the same.

WHEREFORE, premises considered, the petition is GRANTED. The

assailed March 26, 2010 Decision and July 5, 2010 Resolution of the Court
of Appeals in CA-G.R. SP No. 102188 are REVERSED and SET ASIDE. The
Decision of the Labor Arbiter, as affirmed by the NLRC, dismissing
respondent Ma. Flora M. Episcope's complaint for illegal dismissal and
other monetary claims is REINSTATED.
SO ORDERED.

228

G.R. No. 184520

March 13, 2013

ROLANDO
DS.TORRES, Petitioner,
vs.
RURAL BANK OF SAN JUAN, INC., ANDRES CANO CHUA, JOBEL GO
CHUA, JESUS CANO CHUA, MEINRADO DALISAY, JOSE MANALANSAN
III, OFELIA GINA BE and NATY ASTRERO, Respondents.
DECISION
REYES, J.:
This Petition for Review on Certiorari, 1 under Rule 45 of the Rules of Court,
seeks to reverse and set aside the Decision 2 dated February 21, 2008 of
the Court of Appeals (CA) in CA-G.R. SP No. 94690 dismissing the
complaint for illegal dismissal filed by petitioner Rolando OS. Torres
(petitioner) against respondent Rural Bank of San Juan, Inc. (RBSJT) and its
officers who are the herein individual respondents, namely: Andres Cano
Chua (Andres), Jobel Go Chua (Jobel), Jesus Cano Chua (Jesus), Meinrado
Dalisay, Jose Manalansan III (Jose), Ofelia Ginabe (Ofelia) and Naty Astrero
(collectively referred to as respondents).3
Likewise assailed is the CA Resolution 4 dated June 3, 2008 which denied
reconsideration.
The antecedents
Culled from the rulings of the labor tribunals and the appellate court are
the ensuing factual milieu:5
The petitioner was initially hired by RBSJI as Personnel and Marketing
Manager in 1991. After a six-month probationary period and finding his
performance to be satisfactory, RBSJI renewed his employment for the
same post to a permanent/regular status. In June 1996, the petitioner was
offered the position of Vice-President for RBSJIs newly created department,
Allied Business Ventures. He accepted the offer and concomitantly
relinquished his post. The vacancy created was filled by respondent Jobel
who temporarily held the position concurrently as a Corporate Planning
and Human Resources Development Head.

On September 24, 1996, the petitioner was temporarily assigned as the

manager of RBSJIs N. Domingo branch in view of the resignation of Jacinto
Figueroa (Jacinto).
On September 27, 1996, Jacinto requested the petitioner to sign a standard
employment clearance pertaining to his accountabilities with RBSJI. When
the petitioner declined his request, Jacinto threw a fit and shouted foul
invectives. To pacify him, the petitioner bargained to issue a clearance but
only for Jacintos paid cash advances and salary loan.
About seven months later or on April 17, 1997, respondent Jesus issued a
memorandum to the petitioner requiring him to explain why no
administrative action should be imposed on him for his unauthorized
issuance of a clearance to Jacinto whose accountabilities were yet to be
audited. Jacinto was later found to have unliquidated cash advances and
was responsible for a questionable transaction involving P11 million for
which RBSJI is being sued by a certain Actives Builders Manufacturing
Corporation. The memorandum stressed that the clearance petitioner
issued effectively barred RBSJI from running after Jacinto. 6
The petitioner submitted his explanation on the same day clarifying that
the clearance was limited only to Jacintos paid cash advances and salary
loan based on the receipts presented by Lily Aguilar (Lily), the cashier of N.
Domingo branch. He emphasized that he had no foreknowledge nor was he
forewarned of Jacintos unliquidated cash advances and questionable
transactions and that the clearance did not extend to those matters. 7
After conducting an investigation, RBSJIs Human Resources Department
recommended the petitioners termination from employment for the
following reasons, to wit:
1. The issuance of clearance to Mr. Jacinto Figueroa by the
petitioner have been prejudicial to the Bank considering that
damages [sic] found caused by Mr. Figueroa during his stay with
the bank;
2. The petitioner is not in any authority to issue said clearance
which is a violation of the Company Code of Conduct and Discipline
under Category B Grave Offense No. 1 (falsifying or
misrepresenting persons or other company records, documents or
papers) equivalent to termination; and

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3. The nature of his participation in the issuance of the said

clearance could be a reasonable ground for the Management to
believe that he is unworthy of the trust and confidence demanded
by his position which is also a ground for termination under Article
282 of the Labor Code.8
On May 19, 1997, RBSJIs Board of Directors adopted the above
recommendation and issued Resolution No. 97-102 terminating the
petitioner from employment, the import of which was communicated to
him in a Memorandum dated May 30, 1997.9
Feeling aggrieved, the petitioner filed the herein complaint for illegal
dismissal, illegal deduction, non-payment of service incentive, leave pay
and retirement benefits.10 The petitioner averred that the supposed loss of
trust and confidence on him was a sham as it is in fact the calculated result
of the respondents dubious plot to conveniently oust him from RBSJI.
He claimed that he was deceived to accept a Vice-President position, which
turned out to be a mere clerical and menial work, so the respondents can
install Jobel, the son of a major stockholder of RBSJI, as Personnel and
Marketing Manager. The plot to oust the petitioner allegedly began in 1996
when Jobel annexed the Personnel and Marketing Departments to the
Business Development and Corporate Planning Department thus usurping
the functions of and displacing the petitioner, who was put on a floating
status and stripped of managerial privileges and allowances.
The petitioner further alleged that he was cunningly assigned at N.
Domingo branch so he can be implicated in the anomalous transaction
perpetrated by Jacinto. He narrated that on September 27, 1996, the
officers of RBSJI, namely: Jobel, Andres, Jose and Ofelia, were actually at
the N. Domingo branch but they all suspiciously left him to face the
predicament caused by Jacinto.
He recounted that the next day he was assigned back at the Tarlac
extension office and thereafter repeatedly harassed and forced to resign.
He tolerated such treatment and pleaded that he be allowed to at least
reach his retirement age. On March 7, 1996, he wrote a letter to George
Cano Chua (George) expressing his detestation of how the "new guys" are
dominating the operations of the company by destroying the image of
pioneer employees, like him, who have worked hard for the good image
and market acceptability of RBSJI. The petitioner requested for his transfer
to the operations or marketing department. His request was, however, not
acted upon.

The petitioner claimed that on March 19, 1997, respondent Jesus verbally
terminated him from employment but he later on retracted the same and
instead asked the petitioner to tender a resignation letter. The petitioner
refused. A month thereafter, the petitioner received the memorandum
asking him to explain why he cleared Jacinto of financial accountabilities
and thereafter another memorandum terminating him from employment.
For their part, the respondents maintained that the petitioner was validly
dismissed for loss of trust and confidence precipitated by his unauthorized
issuance of a financial accountability clearance sans audit to a resigned
employee. They averred that a copy of the clearance mysteriously
disappeared from RBSJIs records hence, the petitioners claim that it
pertained only to Jacintos paid cash advances and salary loan cannot
stand for being uncorroborated.
Attempts at an amicable settlement were made but the same proved futile
hence, the Labor Arbiter11 (LA) proceeded to rule on the complaint.
Ruling of LA
In its Decision12 dated November 27, 1998, the LA sustained the claims of
the petitioner as against the factually unsubstantiated allegation of loss of
trust and confidence propounded by the respondents. The LA observed
that the petitioners selfless dedication to his job and efforts to achieve
RBSJIs stability, which the respondents failed to dispute, negate any
finding of bad faith on his part when he issued a clearance of
accountabilities in favor of Jacinto. As such, the said act cannot serve as a
valid and justifiable ground for the respondents to lose trust and
confidence in him.
The LA further held that the failure of both parties to present a copy of the
subject clearance amidst the petitioners explanation that it did not
absolutely release Jacinto from liability, should work against the
respondents since it is the proof that will provide basis for their supposed
loss of trust and confidence.
The LA upheld the petitioners contention that the loss of trust and
confidence in him was indeed a mere afterthought to justify the
respondents premeditated plan to ease him out of RBSJI. The LAs
conclusion was premised on the convergence of the following
circumstances: (1) the petitioners stint from 1991-1996 was not marred
with any controversy or complaint regarding his performance; (2) when

230

Jobel joined RBSJI in the latter part of 1996, he took over the department
led by the petitioner thus placing the latter in a floating status; and (3) the
petitioners temporary transfer to the N. Domingo branch was designed to
deliberately put him in a bind and blame him on whatever course of action
he may take to resolve the same.
Accordingly, the petitioner was found to have been illegally dismissed and
thus accorded the following reliefs in the decretal portion of the LA
Decision, viz:
WHEREFORE, premises considered, judgment is hereby rendered ordering
respondent Bank and individual respondents, to reinstate [the petitioner to
his previous or equivalent position, without loss of seniority rights and
other benefits and privileges appurtaining [sic] to him, and to pay the
petitioner the following:
1. The petitioners partial backwages and other emoluments in the
form of allowances, as gasoline, maintenance, representation,
uniform and membership allowances, from the time of his
dismissal up to his actual date of reinstatement, which as of this
date amount to:
Backwages (Partial) P244,800.00
Gasoline Allowances .. 63,000.00
Maintenance Allowance . 45,000.00
Representation Allowance .. 54,000.00
Membership Allowance .. 12,000.00
Uniform Allowance 8,000.00
Total P426,800.00
2. The petitioners 13th month pay from the time of his dismissal
up to actual date of reinstatement, which as of this date amounts
to Twenty-Seven Thousand Two Hundred (P27,200.00) Pesos;

3. Moral and exemplary damages in the amount of Fifty Thousand

([P]50,000.00) Pesos each, respectively; and
4. Attorneys fees amounting to ten percent (10%) of the total
award, specifically amounting to Fifty-Five Thousand Nine Hundred
Twenty-Three Pesos and Eight ([P]55,923.08) Centavos.
All other claims are hereby Dismissed for lack of merit.
SO ORDERED.13
Ruling of the National Labor Relations Commission (NLRC)
In its Resolution14 dated April 14, 2000, the NLRC disagreed with the LAs
conclusion and opined that it was anchored on irrelevant matters such as
the petitioners performance and the preferential treatment given to
relatives of RBSJIs stockholders. The NLRC held that the legality of the
petitioners dismissal must be based on an appreciation of the facts and
the proof directly related to the offense charged, which NLRC found to have
weighed heavily in favor of the respondents.
The NLRC remarked that the petitioner was indisputably not authorized to
issue the clearance. Also, the tantrums and furious attitude exhibited by
Jacinto are not valid reasons to submit to his demands. The fact that the N.
Domingo branch had been sued civilly on February 25, 1997 for a tax scam
while under Jacintos leadership, should have alerted the petitioner into
issuing him a clearance. The action taken by the petitioner lacked the
prudence expected from a man of his stature thus prejudicing the interests
of RBSJI. Accordingly, the dispositive portion of the decision reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET
ASIDE. Let a new one [sic] entered DISMISSING the instant case for lack of
merit. However, respondent should pay the petitioner his proportionate
13th month pay for 1997 as he was dismissed on May 30, 1997.
SO ORDERED.15
The petitioner sought reconsideration 16 which was admitted by the NLRC in
an Order dated September 30, 2005. From such Order, the respondents
filed a motion for reconsideration on the ground that the petitioner failed to
present a copy of his purported motion bearing the requisite proof of
filing.17

231

Traversing both motions, the NLRC issued its Decision 18 dated March 3,
2006: (1) granting the petitioners plea for the reconsideration of its
Resolution dated April 14, 2000 thus effectively reversing and nullifying the
same; and (2) denying the respondents motion for reconsideration of the
Order dated September 30, 2005.
Anent the first disposition, the NLRC accorded weight to the explanations
proffered by the petitioner that the clearance issued to Jacinto was limited
only to his paid cash advances and salary loan. The NLRC further held that
the offense imputed to the petitioner is not covered by Category B, Grave
Offense No. 1 of RBSJIs Code of Conduct and Discipline as it does not
appear that he falsified or misrepresented personal or other company
records, documents or papers.19
Taking an entirely opposite stance, the NLRC declared that the clearance
issued by the petitioner did not prejudice RBSJIs interest as it was limited
in scope and did not entirely clear Jacinto from all his financial
accountabilities. Also, the petitioner was only "a day old" at the N.
Domingo branch and thus he cannot be reasonably expected to be aware
of the misdeeds purportedly committed by Jacinto.20
For the foregoing reasons, the NLRC reversed its earlier ruling and
reinstated the LAs Decision dated November 27, 1998, thus:
WHEREFORE, the Arbiters decision of 27 November 1998 is hereby
AFFIRMED and REINSTATED.
Accordingly, the Resolution of 14 April 2000 is REVERSED and SET ASIDE.
Finally, the respondents Motion for Reconsideration dated 2 November
2005 is DENIED for lack of merit.

procedures. Not only was he unauthorized to issue the clearance, he also

failed to exercise prudence in clearing Jacinto of his accountabilities given
the fact that the same were yet to be audited. Such omission financially
prejudiced RBSJI and it amounted to gross negligence and incompetence
sufficient to sow in his employer the seed of mistrust and loss of
confidence.24 The decretal portion of the CA Decision thus reads:
IN VIEW OF ALL THE FOREGOING, the petition is GRANTED. The March 03,
2006 Decision of the National Labor Relations Commission is REVERSED
and SET ASIDE. The April 14, 2000 Decision of the National Labor Relations
Commission is hereby REINSTATED. No costs.
SO ORDERED.25
The petitioner moved for reconsideration 26 but the motion was denied in
the CA Resolution27 dated June 3, 2008. Hence, the present appeal.
Arguments of the parties
The petitioner avers that the respondents claim of loss of trust and
confidence is not worthy of credence since they failed to present a copy of
the clearance purportedly showing that he cleared Jacinto of all his
financial accountabilities and not merely as to his paid cash advances and
salary loan. He points out that RBSJI must be in custody thereof
considering that it is a vital official record.
The petitioner insists that the alleged loss of trust and confidence in him is
a mere subterfuge to cover the respondents ploy to oust him out of RBSJI.
He asserts that the seven-month gap between the date when he issued the
subject clearance and the date when he was sent a memorandum for the
said act shows that the respondents supposed loss of trust and confidence
was a mere afterthought.28

SO ORDERED.21
Ruling of the CA
The respondents sought recourse with the CA, 22 which in its
Decision23 dated February 21, 2008 reversed and set aside the NLRC
Decision dated March 3, 2006 and ruled that the petitioner was dismissed
for a just cause. The appellate court articulated that as the Acting Manager
of RBSJIs N. Domingo branch, the petitioner held a highly sensitive and
critical position which entailed the conscientious observance of company

On the other hand, the respondents invoke the ratiocinations of the CA that
they were justified in losing the trust and confidence reposed on the
petitioner since he failed to exercise the degree of care expected of his
managerial position. They reiterate the petitioners admission that no audit
was yet conducted as to the accountabilities of Jacinto when he issued the
clearance.
The respondents further assert that as a former Personnel Manager, the
petitioner is well-aware of RBSJIs policy that before a resigned employee

232

can be cleared of accountabilities, he must be first examined or audited.

However, the petitioner opted to violate this policy and yield to Jacintos
tantrums.29
The above arguments yield the focal issue of whether or not the petitioner
was validly dismissed from employment.
The Courts Ruling
The petition is impressed with merit.
Settled is the rule that when supported by substantial evidence, the
findings of fact of the CA are conclusive and binding on the parties and are
not reviewable by this Court.30 As such, only errors of law are reviewed by
the Court in petitions for review of CA decisions. By way of exception,
however, the Court will exercise its equity jurisdiction and re-evaluate,
review and re-examine the factual findings of the CA when, as in this case,
the same are contradicting31 with the findings of the labor tribunals.
The respondents failed to prove that the petitioner was dismissed for a just
cause.
As provided in Article 282 of the Labor Code and as firmly entrenched in
jurisprudence,33 an employer has the right to dismiss an employee by
reason of willful breach of the trust and confidence reposed in him.
32

To temper the exercise of such prerogative and to reconcile the same with
the employees Constitutional guarantee of security of tenure, the law
imposes the burden of proof upon the employer to show that the dismissal
of the employee is for just cause failing which would mean that the
dismissal is not justified. Proof beyond reasonable doubt is not necessary
but the factual basis for the dismissal must be clearly and convincingly
established.34
Further, the law mandates that before validity can be accorded to a
dismissal premised on loss of trust and confidence, two requisites must
concur, viz: (1) the employee concerned must be holding a position of
trust; and (2) the loss of trust must be based on willful breach of trust
founded on clearly established facts.35
There is no arguing that the petitioner was part of the upper echelons of
RBSJIs management from whom greater fidelity to trust is expected. At the

time when he committed the act which allegedly led to the loss of RBSJIs
trust and confidence in him, he was the Acting Manager of N. Domingo
branch. It was part of the petitioners responsibilities to effect a smooth
turn-over of pending transactions and to sign and approve instructions
within the limits assigned to the position under existing regulations. 36 Prior
thereto and ever since he was employed, he has occupied positions that
entail the power or prerogative to dictate management policies as
Personnel and Marketing Manager and thereafter as Vice-President.
The presence of the first requisite is thus certain. Anent the second
requisite, the Court finds that the respondents failed to meet their burden
of proving that the petitioners dismissal was for a just cause.
The act alleged to have caused the loss of trust and confidence of the
respondents in the petitioner was his issuance, without prior authority and
audit, of a clearance to Jacinto who turned out to be still liable for unpaid
cash advances and for an P11-million fraudulent transaction that exposed
RBSJI to suit. According to the respondents, the clearance barred RBSJI
from running after Jacinto. The records are, however, barren of any
evidence in support of these claims.
As correctly argued by the petitioner and as above set forth, the onus of
submitting a copy of the clearance allegedly exonerating Jacinto from all
his accountabilities fell on the respondents. It was the single and absolute
evidence of the petitioners act that purportedly kindled the respondents
loss of trust. Without it, the respondents allegation of loss of trust and
confidence has no leg to stand on and must thus be rejected. Moreover,
one can reasonably expect that a copy of the clearance, an essential
personnel document, is with the respondents. Their failure to present it and
the lack of explanation for such failure or the documents unavailability
props up the presumption that its contents are unfavorable to the
respondents assertions.
At any rate, the absence of the clearance upon which the contradicting
claims of the parties could ideally be resolved, should work against the
respondents. With only sworn pleadings as proof of their opposite claims
on the true contents of the clearance, the Court is bound to apply the
principle that the scales of justice should be tilted in favor of labor in case
of doubt in the evidence presented.37
RBSJI also failed to substantiate its claim that the petitioners act estopped
them from pursuing Jacinto for his standing obligations. There is no proof
that RBSJI attempted or at least considered to demand from Jacinto the

233

payment of his unpaid cash advances. Neither was RBSJI able to show that
it filed a civil or criminal suit against Jacinto to make him responsible for
the alleged fraud. There is thus no factual basis for RBSJIs allegation that it
incurred damages or was financially prejudiced by the clearance issued by
the petitioner.
More importantly, the complained act of the petitioner did not evince
intentional breach of the respondents trust and confidence. Neither was
the petitioner grossly negligent or unjustified in pursuing the course of
action he took.
It must be pointed out that the petitioner was caught in the quandary of
signing on the spot a standard employment clearance for the furious
Jacinto sans any information on his outstanding accountabilities, and
refusing to so sign but risk alarming or scandalizing RBSJI, its employees
and clients. Contrary to the respondents allegation, the petitioner did not
concede to Jacintos demands. He was, in fact, able to equalize two equally
undesirable options by bargaining to instead clear Jacinto only of his
settled financial obligations after proper verification with branch cashier
Lily. It was only after Lily confirmed Jacintos recorded payments that the
petitioner signed the clearance. The absence of an audit was precisely
what impelled the petitioner to decline signing a standard employment
clearance to Jacinto and instead issue a different one pertaining only to his
paid accountabilities.
Under these circumstances, it cannot be concluded that the petitioner was
in any way prompted by malicious motive in issuing the clearance. He was
also able to ensure that RBSJIs interests are protected and that Jacinto is
pacified. He did what any person placed in a similar situation can prudently
do. He was able to competently evaluate and control Jacintos demands
and thus prevent compromising RBSJIs image, employees and clients to an
alarming scene.
The Court has repeatedly emphasized that the act that breached the trust
must be willful such that it was done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. 38 The conditions
under which the clearance was issued exclude any finding of deliberate or
conscious effort on the part of the petitioner to prejudice his employer.
Also, the petitioner did not commit an irregular or prohibited act. He did
not falsify or misrepresent any company record as it was officially
confirmed by Lily that the items covered by the clearance were truly

settled by Jacinto. Hence, the respondents had no factual basis in declaring

that the petitioner violated Category B Grave Offense No. 1 of the
Company Code of Conduct and Discipline.
The respondents cannot capitalize on the petitioners lack of authority to
issue a clearance to resigned employees. First, it remains but an
unsubstantiated allegation despite the several opportunities for them in
the proceedings below to show, through bank documents, that the
petitioner is not among those officers so authorized. Second, it is the
Courts considered view that by virtue of the petitioners stature in
respondent bank, it was well-within his discretion to sign or certify the
truthfulness of facts as they appear in RBSJIs records. Here, the records of
RBSJI cashier Lily clearly showed that Jacinto paid the cash advances and
salary loan covered by the clearance issued by the petitioner.
Lastly, the seven-month gap between the clearance incident and the April
17, 1997 memorandum asking the petitioner to explain his action is too
lengthy to be ignored. It likewise remains uncontroverted that during such
period, respondent Jesus verbally terminated the petitioner only to recall
the same and instead ask the latter to tender a resignation letter. When
the petitioner refused, he was sent the memorandum questioning his
issuance of a clearance to Jacinto seven months earlier. The confluence of
these undisputed circumstances supports the inference that the clearance
incident was a mere afterthought used to gain ground for the petitioners
dismissal.
Loss of trust and confidence as a ground for 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.39
All told, the unsubstantiated claims of the respondents fall short of the
standard proof required for valid termination of employment. They failed to
clearly and convincingly establish that the petitioners act of issuing a
clearance to Jacinto rendered him unfit to continue working for RBSJI. The
petitioner was illegally dismissed from employment and is entitled to back
wages, to be computed from the date he was illegally dismissed until the
finality of this decision.40

234

The disposition of the case made by the LA in its Decision dated November
27, 1998, as affirmed by the NLRC in its Decision dated March 6, 2006, is
most in accord with the above disquisitions hence, must be reinstated.
However, the monetary awards therein should be clarified.
The petitioner is entitled to separation pay in lieu of reinstatement and his
back wages shall earn legal interest.
In accordance with current jurisprudence, the award of back wages shall
earn legal interest at the rate of six percent (6%) per annum from the date
of the petitioners illegal dismissal until the finality of this
decision.41Thereafter, it shall earn 12% legal interest until fully paid 42 in
accordance with the guidelines in Eastern Shipping Lines, Inc., v. Court of
Appeals.43
In addition to his back wages, the petitioner is also entitled to separation
pay. It cannot be gainsaid that animosity and antagonism have been
brewing between the parties since the petitioner was gradually eased out
of key positions in RBSJI and to reinstate him will only intensify their hostile
working atmosphere.44 Thus, based on strained relations, separation pay
equivalent to one (1) month salary for every year of service, with a fraction
of a year of at least six (6) months to be considered as one (1) whole year,
should be awarded in lieu of reinstatement, to be computed from date of
his engagement by RBSJI up to the finality of this decision. 45
The award of separation pay in case of strained relations is more beneficial
to both parties in that it liberates the employee from what could be a
highly oppressive work environment in as much as it releases the employer
from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust.46

employer fired his employee without just cause or due process. Additional
facts must be pleaded and proven to warrant the grant of moral damages
under the Civil Code, i.e., that the act of dismissal was attended by bad
faith or fraud, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy; and, of course,
that social humiliation, wounded feelings, grave anxiety, and similar injury
resulted therefrom.48 (Citations omitted)
Bad faith does not connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of wrong;
it means breach of a known duty through some motive or interest or ill will;
it partakes of the nature of fraud.49
Here, the petitioner failed to prove that his dismissal was attended by
explicit oppressive, humiliating or demeaning acts. The following events
merely sketch the struggle for power within the upper management of
RBSJI between the "old guys" and the "new guys"; they do not convincingly
prove that the respondents schemed to gradually ease the petitioner out,
viz: (1) his promotion as Vice-President; (2) his replacement by Jobel as
Personnel and Marketing Manager; (2) his designation as Acting Manager of
N. Domingo branch and the recall thereof on the very next day; (3) the
presence of Andres, Jose and Ofelia at the N. Domingo branch in the
morning of
September 27, 1996; and (4) Georges inaction on the petitioners request
to be transferred to the operations or marketing department. As
disagreeable as they may seem, these acts cannot be equated with bad
faith that can justify an award of damages.
Since no moral damages can be granted under the facts of the case,
exemplary damages cannot also be awarded.50

The award of moral and exemplary damages is not warranted.

In M+W Zander Philippines, Inc. v. Enriquez, 47 the Court decreed that illegal
dismissal, by itself alone, does not entitle the dismissed employee to moral
damages; additional facts must be pleaded and proven to warrant the
grant of moral damages, thus:
Moral damages are recoverable only where the dismissal of the employee
was attended by bad faith or fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs or public
policy. Such an award cannot be justified solely upon the premise that the

The solidary liability of individual respondents as corporate officers must

be recalled.
In the same vein, the individual respondents cannot be made solidarily
liable with RBSJI for the illegal dismissal. Time and again, the Court has
held that a corporation has its own legal personality separate and distinct
from those of its stockholders, directors or officers. Hence, absent any
evidence that they have exceeded their authority, corporate officers are
not personally liable for their official acts. Corporate directors and officers
may be held solidarily liable with the corporation for the termination of

235

employment only if done with malice or in bad faith. 51 As discussed above,

the acts imputed to the respondents do not support a finding of bad faith.
In addition, the lack of a valid cause for the dismissal of an employee does
not ipso facto mean that the corporate officers acted with malice or bad
faith. There must be an independent proof of malice or bad faith, 52 which is
absent in the case at bar.
The award of 13th month pay is ncorrect.
Being a managerial employee, the petitioner is not entitled to 13th month
pay.1wphi1 Pursuant to Memorandum Order No. 28, as implemented by
the Revised Guidelines on the Implementation of the 13th Month Pay Law
dated November 16, 1987, managerial employees are exempt from
receiving such benefit without prejudice to the granting of other bonuses,
in lieu of the 13th month pay, to managerial employees upon the
employers discretion.53
The award of attorneys fees is proper.
It is settled that where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorneys fees is
legally and morally justifiable.54 Pursuant to Article 111 of the Labor Code,
ten percent (10%) of the total award is the reasonable amount of
attorneys fees that can be awarded.
WHEREFORE, the petition is GRANTED. The Decision dated February 21,
2008 and Resolution dated June 3, 2008 of the Court of Appeals in CA-G.R.
SP No. 94690 are REVERSED and SET ASIDE. The Decision of the Labor
Arbiter dated November 27, 1998 is REINSTATED with the following
MODIFICATIONS/CLARIFICATIONS: Petitioner Rolando DS. Torres is entitled
to the payment of: (a) back wages reckoned from May 30, 1997 up to the
finality of this Decision, with interest at six percent (6%) per annum, and
12% legal interest thereafter until fully paid; and (b) in lieu of
reinstatement, separation pay equivalent to one (1) month salary for every
year of service, with a fraction of at least six (6) months to be considered
as one (1) whole year, to be computed from the date of his employment up
to the finality of this decision.

The amounts awarded as moral damages, exemplary damages and 13th

month pay are DELETED. Only respondent Rural Bank of San Juan, Inc. is
liable for the illegal dismissal and the consequential monetary awards
arising therefrom. The other portions of and monetary awards in the Labor
Arbiter's Decision dated November 27, 1998 are AFFIRMED.
SO ORDERED.

236

G.R. No. 198620

November 12, 2014

P.J. LHUILLIER, INC. and MARIO

vs.
FLORDELIZ VELAYO, Respondent.

RAMON

LUDENA, Petitioners,

DECISION
REYES, J.:
Before this Court is a petition for review on certiorari 1 under Rule 45 of the
Decision2 dated June 30, 2011 of the Court of Appeals (CA) in CA-GR. SP
No. 03069, affirming the finding of the National Labor Relations
Commission (NLRC) that respondent Flordeliz Velayo (respondent) was
illegally dismissed. The Resolution 3 dated September 14, 2011 denied the
motion for reconsideration thereof.

tracing the overage; and that the omission or failure to report immediately
the overage (sic) was just a simple mistake without intent to defraud her
employer. On March 10, 2008, after the conduct of a formal investigation
and
after
finding
complainants
(herein
private
respondents)
[explanations] without merit, PJ LHUILLIER (herein petitioner) terminated
her employment as per Notice of Termination on grounds of serious
misconduct and breach of trust.4 (Citation omitted)
On March 14, 2008, the respondent filed a complaint for illegal dismissal,
separation pay and other damages against P.J. Lhuillier, Inc. (PJLI) and
Mario Ramon Ludea, Area Operations Manager (petitioners). On July 23,
2008, the Labor Arbiter (LA) rendered judgment, the dispositive portion of
which reads as follows:
WHEREFORE, in view of all the foregoing, judgment is hereby entered
ordering the dismissal of the instant complaint for lack of merit.

The Facts

SO ORDERED.5

The essential antecedent facts are summarized in the assailed CA decision,

to wit:

The LA found that the respondents termination was valid and based not on
a mere act of simple negligence in the performance of her duties as
cashier:

On June 13, 2003, (herein petitioner) PJ (CEBU) LHUILLIER, INC. (PJ

LHUILLIER for brevity) hired FLORDELIZ M. ABATAYO [sic] as Accounting
Clerk at the LH-4, Cagayan de Oro City Branch with a basic monthly salary
ofP9,353.00. On February 9, 2008 appellant (herein private respondent)
was served with a Show Cause Memo by MARIO RAMON LUDEA, Area
Operations Manager of PJ Lhuillier (herein petitioner), ordering her to
explain within 48 hours why no disciplinary action should be taken against
her for dishonesty, misappropriation, theft or embezz[le]ment of company
funds inviolation of Item 11, Rule V of the Company Code of Conduct.
Thereafter, (s)he was placed under preventive suspension from February 9
to March 8, 2008 while her case was under investigation.
The charges against the appellant (herein private respondent) were based
on the Audit Findings conducted on October 29, 2007, where the overage
amount of P540.00 was not reported immediately to the supervisor, not
recorded atthe end of that day.
On February 11, 2008, complainant (herein private respondent) submitted
her reply and admitted that she was not able to report the overage to the
supervisor since the latter was on leave on that day and that she was still

This is not a case of simple negligence as the facts show that complainant,
instead of reporting the matter immediately, had set aside the P540.00 for
her personal use instead of reporting the overage or recording it in the
operating system of the company.
Complainant is not entitled to moral as well as exemplary damages for lack
of basis.6
On appeal, the NLRC in its Decision dated March 19, 2009 countermanded
the LA, holding that the respondent was illegally dismissed since the
petitioners failed to prove a just cause of serious misconduct and willful
breach of trust:
In fine, the Labor Arbiter a quoutterly disregarded the rule on
proportionality that has been observed in a number of cases, that is, "the
penalty imposed should be commensurate to the gravity of his offense." x
xx
xxxx

237

In the instant case, PJ LHUILLIER was not able to discharge the burden of
proving that the dismissal of the complainant was for valid or just causes
of serious misconduct and willful breach of trust. Thus, We disagree with
the Labor Arbiters findings and conclusion that complainant was validly
dismissed from service.

WHETHER OR NOT THE RESPONDENT [NLRC] COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION
WHENIT DEVIATED FROM THE FINDINGS OF FACTS OF THE HONORABLE
LABOR ARBITER.
II

xxxx
... Significantly, the complainants omission or procedural lapse did not
cause any loss or damage to the company.7
Nonetheless, finding that the relations between the petitioners and the
respondent have become strained, the NLRC did not order the
reinstatement of the respondent. Thus:
WHEREFORE, the instant appealis GRANTED. The assailed decision is
hereby SET ASIDE and REVERSED, and a new one entered declaring that
complainant was ILLEGALLY DISMISSED. Accordingly, respondent PJ (CEBU)
LHUILLIER, INC. is hereby ORDERED:

The respondent filed her comment on August 19, 2009. On October 8,

2009, the petitioners filed an urgent motion to resolve their petition for
certiorari and prayer for TRO and/or writ of preliminary injunction. On
November 9, 2009, the CA denied the petitioners prayerfor TRO stating
that they have not shown that they stood to suffer grave and irreparable
injury if the TRO was denied. The remaining issue in the CA, then, was
whether the NLRC acted with grave abuse of discretion amounting to lack
or excess of jurisdiction when it set aside the factual conclusion and ruling
of the LA. The CA ruled in the negative:

(a) to pay complainant separation pay equivalent to one (1) month

salary for every year of service, a fraction of at least six (6) months
being considered as one (1) whole year in lieu of reinstatement
due to strained relationship, computed from June13, 2003 up to the
finality of the promulgation of this judgment;

We concur with the NLRC in finding for private respondent. Time and again,
the Supreme Court has held that it is cruel and unjust to impose the drastic
penalty of dismissal if not commensurate to the gravity of the misdeed.

(b) to pay complainant FULL BACKWAGES in accordance with

Bustamante vs. NLRC ruling (265 SCRA 061); and

In employee termination disputes, the employer bears the burden of

proving that the employees dismissal was for just and valid cause. In the
instant case, the evidence does not support the finding of the Labor Arbiter
that private respondent is guilty of serious misconduct.

(c) to pay ten percent (10%) of the total money award as

attorneys fees.
SO ORDERED.8
The NLRC subsequently denied the petitioners motion for reconsideration
thereof. On July 31,2009, the petitioners filed a petition for certiorariin the
CA with prayer for issuance of a temporary restraining order (TRO) and/or
writ of preliminary injunction, invoking the following issues:
I

WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A

TEMPORARY RESTRAINING ORDER AND/OR WRIT OF PRELIMINARY
INJUNCTION PENDING THE RESOLUTION OF THE INSTANT PETITION. 9

In this jurisdiction, the Supreme Court has consistently defined misconduct

as an improper or wrong conduct, a transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in
character, implies wrongful intent and not mere error of judgment. To be a
just cause for termination under Article 282 of the Labor Code of the
Philippines, the misconduct must be serious, that is, it must be of such
grave and aggravated character and not merely trivial or unimportant.
However serious, such misconduct must nevertheless be in connection
with the employees work; the act complained of must be related to the
performance of the employees duties showing him to be unfit to continue
working for the employer.

238

Private respondents lapse was not a "serious" one, let alone indicative of
serious misconduct. In fact, she (herein private respondent) admitted that
she was not able to report the overage to the supervisor since the latter
was on leave on that day and that she was still tracing the overage; and
that the omission or failure to report immediately the overage was just a
simple mistake without intent to defraud her employer. As found by the
NLRC, private respondent worked for petitioner for almost six (6) years,
and it is not shown that she committed any infraction of company rules
during her employment. In fact, private respondent was once awarded by
petitioner due to her heroic act of defending her Manager, Ms. Lilibeth
Cortez, while resisting a hold-upper.
The settled rule is that when supported by substantial evidence, factual
findings made by quasi-judicial and administrative bodies are accorded
great respect and even finality by the courts. These findings are not
infallible, though; when there is a showing that they were arrived at
arbitrarily or in disregard of the evidence on record, they may be examined
by the courts. Hence, when factual findings of the Labor Arbiter and the
NLRC are contrary to each other, there is a necessity to review the records
to determine which conclusions are more conformable to the evidentiary
facts. The case before Us shows that the finding of the NLRC is supported
by substantive evidence as compared to the finding of the Labor Arbiter
with respect to the issue of illegal dismissal. Moreover, in case of doubt,
such cases should be resolved in favor of labor, pursuant to the social
justice policy of labor laws and the Constitution.
Finally, it is a time-honored principle that although it is the prerogative of
management to employ the services of a person and likewise to discharge
him, such is not without limitations and restrictions. The dismissal of an
employee must be done with just cause and without abuse of discretion. It
must not bedone in an arbitrary and despotic manner. To hold otherwise
would render nugatory the security of tenure clause enshrined in the
Constitution.10 (Citations omitted and emphasis ours)
Invoking Article 27911 of the Labor Code, the CA agreed with the NLRC that
the respondent should have been reinstated without loss of seniority rights
and other privileges, with payment of her full backwages, inclusive of
allowances and other benefits or their monetary equivalent computed from
the time her compensation was withheld up to the time of actual
reinstatement. However, with the parties relations now strained, the CA
conceded that the payment of a separation pay, along with backwages as
a separate and distinct relief, is an acceptable alternative to reinstatement.
The CA further awarded the respondent attorneys fees since she was

forced to litigate and incur expenses to protecther rights and interests by

reason of the unjustified acts of the petitioners.
Petition for Review in the Supreme Court
In this petition, the petitioners raise the following issues:
I. WHETHER OR NOT THE MISAPPROPRIATION BY A PAWNSHOP
PERSONNEL IN THE AMOUNT OF [P]540.00, COUPLED WITH
SUBSEQUENTDENIALS, AMOUNT TO A SERIOUS MISCONDUCT IN
OFFICE?
II. WHETHER OR NOT THE IMPOSITION OF THE PENALTY OF
TERMINATION FROM OFFICE [UPON] A PAWNSHOP PERSONNEL
WHO MISAPPROPRIATED AN AMOUNT OF P540.00 FROM THE
COFFERS OF THE PAWNSHOP, AND WHO MADE SUBSEQUENT
DENIALS, IS CRUEL AND UNJUST?12
The appellate court agreed with the NLRC that the respondents lapse was
"just a simple mistake without intent to defraud her employer;" 13 that the
incident was neither serious norindicative of serious misconduct; and that
her dismissal was disproportionate to her offense. It accepted the
respondents explanation that her failure to report her cash overage
of P540.00 on October 29, 2007 to the branch manager, who was her
immediate superior, was because the latter was then on leave, and that for
days thereafter, she was hard-pressed in trying to trace and determine the
cause thereof. The CA noted that the respondent had worked for PJLI for
almost six years without any previous infractions of company rules, and
that she was once commended for a heroic act of defending her former
branch manager, Ms. Lilibeth Cortez, during a branch holdup.
On the other hand, the petitioners strongly maintain that under Rule V(A)
(11) of its Code of Conduct on "Dishonesty, Misappropriation, Theft or
Embezzlement of Company Funds or Property," the respondent committed
a "First Level Offense" which is punishable by outright dismissal. According
to the petitioners, the respondent committed the following acts which
constitute dishonesty and serious misconduct:
1. The respondent did not enter the discovered cash overage in the
"operating system" (computerized cash ledger) of the branch on
October 29, 2007 notwithstanding that she was fully aware of the

239

companys policy that such unexplained receipt should be recorded

at the end of the business day;
2. The respondent did not report the cash overage to her
immediate superior, Branch Manager Violette Grace Tuling (Tuling),
upon the latters return from a leave ofabsence on November 3,
2007. Neither did the respondent seek Tulings help concerning the
matter, and just averred that she was afraid to be scolded by
Tuling;
3. The respondent deliberately lied about her cash overage after
Tuling confronted her on December 17, 2007;
4. Again, the respondent falsely denied the cash overage when the
company auditor asked her to explain how it happened; and
5. The respondent concocted a cover-up by claiming that a
computer glitch occurred when she was about to post the cash
overage in the operating system.14
Ruling of the Court
There is merit in the petition.
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
employees position. On the other hand,the respondent is not just charged
with a misdeed, but with loss of trust and confidence under Article 282(c)
of the Labor Code, a cause premised on the fact that the employee holds a
position whose functions may only be performed by someone who enjoys
the trust and confidence of management. Needless to say, such an
employee bears a greater burden of trustworthiness than ordinary workers,
and the betrayal of the trust reposed is the essence of the loss of trust and
confidence which is a ground for the employees dismissal. 15
The respondents misconduct must be viewed in light of the strictly
fiduciary nature of her position.
In addition to its pawnshop operations, the PJLI offers its "Pera Padala" cash
remittance service whereby, for a fee or "sending charge," a customer may
remit money to a consignee through its network of pawnshop branches all

over the country. On October 29, 2007, a customer sent P500.00 through
its branch in Capistrano, Cagayan de Oro City, and paid a remittance fee
of P40.00. Inexplicably, however, no corresponding entry was made to
recognize the cash receipt of P540.00 in the computerized accounting
system (operating system) ofthe PJLI. The respondent claimed that she
tried very hard but could not trace the source of her unexplained cash
surplus ofP540.00, but a branch audit conducted sometime in December
2007 showed that it came from a "Pera Padala" customer.
To be sure, no significant financial injury was sustained by the PJLI in the
loss of a mere P540.00 in cash, which, according to the respondent she
sincerely wanted to account for except that she was pre-empted by fear of
what her branch manager might do once she learned of it. But in treating
the respondents misconduct as a simple negligence or a simple mistake,
both the CA and the NLRC grossly failed to consider that she held a
position of utmost trust and confidence in the company.
There are two classes of corporate positions of trust: on the one hand are
the 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 other officers or members of the
managerial staff;on the other hand are the 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 employers money or
property, and are thus classified as occupying positions of trust and
confidence.16
The respondent was first hired by the petitioners as an accounting clerk on
June 13, 2003, for which she received a basic monthly salary of P9,353.00.
On October 29, 2007, the date of the subject incident, she performed the
function of vault custodian and cashier in the petitioners Branch 4
pawnshop in Capistrano, Cagayan de Oro City. In addition to her custodial
duties, it was the respondent who electronically posted the days
transactions in the books of accounts of the branch, a function that is
essentially separate from that of cashier or custodian. It is plain to see then
that when both functions are assigned to one person to perform, a very
risky situation of conflicting interests is created whereby the cashier can
purloin the money in her custody and effectively cover her tracks, at least
temporarily, by simply not recording in the books the cash receipt she
misappropriated. This is commonly referred to as lapping of

240

accounts.17 Only a most trusted clerk would be allowed to perform the two
functions, and the respondent enjoyed this trust.
The series of willful misconduct committed by the respondent in
mishandling the unaccounted cash receipt exposes her as unworthy of the
utmost trust inherent in her position as branch cashier and vault custodian
and bookkeeper.
The respondent insists that she never intended to appropriate the money
but was afraid that Tuling would scold her, and that she kept the money for
a long time in her drawer and only decided to take it home after her search
for the cause of the cash overage had proved futile. Both the CA and the
NLRC agreed with her, and held that what she committed was a simple
mistake or simple negligence.
The Court disagrees.
Granting arguendothat for some reason not due to her fault, the
respondent could not trace the source of the cash surplus, she nonetheless
well knew and understood the companys policy that unexplained cash
must be treated as miscellaneous income under the account "Other
Income," and that the same must be so recognized and recorded at the
end of the day in the branch books or "operating system." No such entry
was made by the respondent, resulting in unrecorded cash in her
possession of P540.00, which the company learned about only two months
thereafter through a branch audit.
Significantly, when Tuling returned on November 3, 2007 from her leave of
absence, the respondent did not just withhold from her the fact that she
had an unaccounted overage, but she refused to seek her help on what to
do about it, despite having had five days to mull over the matter until
Tulings return.

In order that an employer may invoke loss of trust and confidence in

terminating an employee under Article 282(c) of the Labor Code, certain
requirements must be complied with, namely: (1) the employee 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. 18While loss of trust and
confidence should be genuine, it does notrequire proof beyond reasonable
doubt,19 it being sufficient that there issome basis to believe that the
employee concerned is responsible for the misconduct and thatthe nature
of the employees participation therein rendered him unworthy of trust and
confidence demanded by his position.20
The petitioners are fully justified in claiming loss of trust and confidence in
the respondent. While it is natural and understandable that the respondent
should feel apprehensive about Tulings reaction concerning her cash
overage, considering that it was their first time to be working together in
the same branch, we must keep in mind thatthe unaccounted cash can
only be imputed to the respondents own negligence in failing to keep track
of the transaction from which the money came. A subsequent branch audit
revealed that it came from a "Pera Padala" remittance, implying that
although the amount had been duly remitted to the consignee, the sending
branch failed to record the payment received from the consigning
customer. For days following the overage, the respondent tried but failed to
reconcile her records, and for this inept handling of a "Pera Padala"
remittance, she already deserved to be sanctioned.
Further, as a matter of strict company policy, unexplained cash is
recognized at the end of the day as miscellaneous income. Inexplicably,
despite being with the company for four years as accounting clerk and
cashier, the respondent failed to makethe required entry in the branch
operating system recognizing miscellaneous income. Such an entry could
have been easily reversedonce it became clear how the overage came
about.
But the respondent obviously thought that by skipping the entry, she could
keep Tuling from learning about the overage. Her trustworthiness as
branch cashier and bookkeeper has been irreparably tarnished. The
respondents untrustworthiness is further demonstrated when she began
to concoct lies concerning the overage: first, by denying its existence to
Tuling and again to the company auditor; later, when she falsely claimed
that a computer glitch or malfunction had prevented her from posting the
amount on October 29, 2007; and finally,when she was forced to admit
before the companys investigating panel that she took and spent the
money.21

241

Mere substantial evidence is sufficient to establish loss of trust and

confidence
The respondents actuations were willful and deliberate. A cashier who,
through carelessness, lost a document evidencing a cash receipt, and then
wilfully chose not to record the excess cash as miscellaneous income and
instead took it home and spent it on herself, and later repeatedly denied or
concealed the cash overage when confronted, deserves to be dismissed.
Article 28222 of the Labor Code allows an employer to dismiss an employee
for willful breach of trust or loss of confidence. It has been held that a
special and unique employment relationship exists between a corporation
and its cashier. Truly, more than most key positions, that of a cashier calls
for utmost trust and confidence,23 and it is the breach of this trust that
results in an employers loss of confidence in the employee. 24 In San Miguel
Corporation v. NLRC, et al.,25 the Court held:
As a rule this Court leans over backwards to help workers and employees
continue in their employment.1wphi1 We have mitigated penalties
imposed by management on erring employees and ordered employers to
reinstate workers who have been punished enough through suspension.
However, breach of trust and confidence and actsof dishonesty and
infidelity in the handling of funds and properties are an entirely different
matter.26(Emphasis ours)
It has been held that in dismissing a cashier on the ground of loss of
confidence, it is sufficientthat there is some basis for the same or that the
employer has a reasonable ground tobelieve that the employee is
responsible for the misconduct, thus making him unworthy of the trust and
confidence reposed in him.27 Therefore, if there issufficient evidence to
show that the employer has ample reason to distrust the employee, the
labor tribunal cannot justly deny the employer the authority to dismiss
him.28 Indeed, employers are allowed wider latitude in dismissing an
employee for loss of trust and confidence,as the Court held in Atlas
Fertilizer Corporation v. NLRC:29

As a general rule, employers are allowed a wider latitude of discretion in

terminating the services of employees who perform functions which by
their nature require the employers full trust and confidence. Mere
existence of basis for believingthat the employee has breached the trust of
the employer is sufficient and does not require proof beyond reasonable
doubt. Thus, when an employee has been guilty of breach of trust or his
employer has ample reason to distrust him, a labor tribunal cannot deny
the employer the authority to dismiss him. x x x.30(Citations omitted)
Furthermore, it must also be stressed that only substantial evidence is
required in order to support a finding that an employers trust and
confidence accorded to its employee had been breached. As explained in
Lopez v. Alturas Group of Companies:31
[T]he language of Article 282(c) of the Labor Code states that the loss of
trust and confidence must be based on willful breach of the trust reposed
in the employee by his employer. 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. Moreover, it must be based on substantial evidence and not
on the employers whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the employer. Loss of
confidence must not be indiscriminately used as a shield by the employer
against a claim that the dismissal of an employee was arbitrary. And, in
order to constitute a just cause for dismissal, the act complained of must
be work-related and shows that the employee concerned is unfit to
continue working for the employer. In addition, loss of confidence as a just
cause for termination of employment is premised on the fact that the
employee concerned holds a position of responsibility, trust and confidence
or that the employee concerned is entrusted with confidence with respect
to delicate matters, such as the handling or care and protection of the
property and assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is penalized. 32 (Emphasis
and underscoring in the original)
In holding a position requiring full trust and confidence, the respondent
gave up some of the rigid guarantees available to ordinary employees. She
insisted that her misconduct was just an "innocent mistake," and maybe it
was, had it been committed by other employees. But surely not as to the
respondent who precisely because of the special trust and confidence
given her by her employer mustbe penalized with a more severe
sanction.33

242

A cashiers inability to safeguard and account for missing cash is sufficient

cause to dismiss her.
The respondent insisted that she never intended to misappropriate the
missing fund, but in Santos v. San Miguel Corp., 34 the Court held that
misappropriation of company funds, notwithstanding that the shortage has
been restituted, is a valid ground to terminate the services of an employee
for loss of trust and confidence. 35 Also, in Caeda v. Philippine Airlines,
Inc.,36 the Court held that it is immaterial what the respondents intent was
concerning the missing fund, for the undisputed fact is that cash which she
held in trust for the company was missing in her custody. At the very least,
she was negligent and failed to meet the degree of care and fidelity
demanded of her as cashier. Her excuses and failure to give a satisfactory
explanation for the missing cash only gavethe petitioners sufficient reason
to lose confidence in her.37 As it was held in Metro Drug Corporation v.
NLRC:38
It would be most unfair to require an employer to continue employing as its
cashiera person whom it reasonably believes is no longer capable of giving
full and whole hearted trustworthiness in the stewardship of company
funds.39
WHEREFORE, premises considered, the petition is hereby GRANTED. The
Decision dated June 30, 2011 of the Court of Appeals in CA-G.R. SP No.
03069 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter
dated July 23, 2008 is REINSTATED.
SO ORDERED.

243

G.R. No. 211497, March 18, 2015

HOCHENG PHILIPPINES
FARRALES, Respondent.

CORPORATION, Petitioner, v. ANTONIO

M.

recorded on closed-circuit television (CCTV) around 3:00 p.m. on November

27, 2009 showing Farrales taking the missing helmet from a parked
motorcycle, to wit:
a.

At around 3:07:44, [Farrales] was seen walking towards the

motorcycle parking lot;

b.

At around 3:08:47, [Farrales] walked back towards the pedestrian

gate of the company, passing by the motorcycle parking lot;

c.

At around 3:08:51, [Farrales] walked back towards the motorcycle

parking lot and returned to the pedestrian gate;

d.

At around 3:09:10, [Farrales] called on the person of Andy Lopega

and instructed him to get the helmet he was pointing at; [and]

e.

At around 3:09:30, Andy gave the helmet to [Farrales].8

DECISION
REYES, J.:
Before this Court on Petition for Review on Certiorari1 is the Decision2 dated
October 17, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 125103,
which
reversed
the
Decision3 dated
February
29,
2012
and
Resolution4 dated May 7, 2012 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 08-002249-11, and reinstated with modifications
the Decision5 dated April 29, 2011 of the Labor Arbiter (LA) in NLRC Case
No. RAB-IV-03-00618-10-C, which found that respondent Antonio M.
Farrales (Farrales) was illegally dismissed by Hocheng Philippines
Corporation (HPC). The fallo of the appellate decision reads:
WHEREFORE, premises considered, the Decision of the Labor Arbiter
dated April 29, 2011 in NLRC Case No. RAB-IV-03-00618-10-C is reinstated
with modifications. Private respondent Hocheng Philippines Corporation
is liable to pay [Farrales] the following:
(1) Full backwages from date of dismissal on February 15, 2010 until date
of decision equivalent to P276,466.67;
(2) Separation pay of one (1) month salary per year of service for a period
of twelve years equivalent to P228,800.00;
(3) Appraisal year-end bonus in the sum of P11,000.00; and,
(4) Attorneys fees equivalent to 10% of the total award.
SO ORDERED.
The Facts

Farrales was first employed by HPC on May 12, 1998 as Production

Operator, followed by promotions as (1) Leadman in 2004, (2) Acting
Assistant Unit Chief in 2007, and (3) Assistant Unit Chief of Production in
2008, a supervisory position with a monthly salary of ?17,600.00. He was a
consistent recipient of citations for outstanding performance, as well as
appraisal
and
year-end
bonuses.7
On December 2, 2009, a report reached HPC management that a
motorcycle helmet of an employee, Reymar Solas (Reymar), was stolen at
the parking lot within its premises on November 27, 2009. On December 3,
2009, Security Officer Francisco Paragas III confirmed a video sequence

Later that day, HPC sent Farrales a notice to explain his involvement in the
alleged theft. The investigation was supported by the employees union,
ULO-Hocheng.9Below is Farrales explanation, as summarized by the CA:
On November 27, 2009, [Farrales] borrowed a helmet from his co-worker
Eric Libutan (Eric) since they reside in the same barangay. They agreed
that Eric could get it at the house of [Farrales] or the latter could return it
the next time that they will see each other. Eric told him that his
motorcycle was black in color. As there were many motorcycles with
helmets, he asked another employee, Andy Lopega (Andy) who was in
the parking area where he could find Erics helmet. Andy handed over to
him the supposed helmet which he believed to be owned by Eric, then he
went
home.
On November 28, 2009, at around 6 oclock in the morning, he saw Eric at
theirbarangay and told him to get the helmet. But Eric was in a rush to go
to
work,
he
did
not
bother
to
get
it.
In the morning of December 3, 2009, upon seeing Eric in the workplace,
[Farrales] asked him why he did not get the helmet from his house. Eric
told him that, Hindi po sa akin yung nakuha nyong helmet. [Farrales] was
shocked and he immediately phoned the HPCs guard to report the
situation that he mistook the helmet which he thought belonged to Eric.
After several employees were asked as to the ownership of the helmet, he
finally found the owner thereof, which is Jun Reyess (Jun) nephew,
Reymar, who was with him on November 27, 2009. [Farrales] promptly
apologized to Jun and undertook to return the helmet the following day and
explained that it was an honest mistake. These all happened in the

244

morning of December 3, 2009; [Farrales] did not know yet that HPC will
send a letter demanding him to explain. 10
A hearing was held on December 10, 2009 at 1:00 p.m. Present were
Farrales, Eric Libutan (Eric), Andy Lopega (Andy), Jun Reyes, Antonio Alinda,
a witness, and Rolando Garciso, representing ULO-Hocheng. From Andy it
was learned that at the time of the alleged incident, he was already seated
on his motorcycle and about to leave the company compound when
Farrales approached and asked him to hand to him a yellow helmet
hanging from a motorcycle parked next to him. When Andy hesitated,
Farrales explained that he owned it, and so Andy complied. But Eric had
specifically told Farrales that his helmet was colored red and black and his
motorcycle was a black Honda XRM-125 with plate number 8746-DI,
parked near the perimeter fence away from the walkway to the pedestrian
gate. The CCTV showed Farrales instructing Andy to fetch a yellow helmet
from a blue Rossi 110 motorcycle with plate number 3653-DN parked in the
middle of the parking lot, opposite the location given by Eric. Farrales in his
defense claimed he could no longer remember the details of what
transpired that time, nor could he explain why he missed Erics specific
directions.11
On February 15, 2010, the HPC issued a Notice of Termination 12 to Farrales
dismissing him for violation of Article 69, Class A, Item No. 29 of the HPC
Code of Discipline, which provides that stealing from the company, its
employees and officials, or from its contractors, visitors or clients, is akin
to serious misconduct and fraud or willful breach by the employee
of the trust reposed in him by his employer or duly authorized
representative, which are just causes for termination of employment
under
Article
282
of
the
Labor
Code.
On March 25, 2010, Farrales filed a complaint for illegal dismissal, nonpayment of appraisal and mid-year bonuses, service incentive leave pay
and 13th month pay. He also prayed for reinstatement, or in lieu thereof,
separation pay with full backwages, plus moral and exemplary damages
and attorneys fees. During the mandatory conference, HPC paid Farrales ?
10,914.51, representing his 13th month pay for the period of January to
February 2010 and vacation leave/sick leave conversion. Farrales agreed to
waive
his
claim
for
incentive
bonus. 13
On April 29, 2011, the LA ruled in favor of Farrales, 14 the fallo of which is as
follows:
WHEREFORE, PREMISES CONSIDERED, all the respondents Hocheng Phils.
Corporation, Inc. Sam Chen[g] and Judy Geregale are found guilty of illegal
dismissal and ordered jointly and severally to pay complainant the
following:
1. Full backwages from date of dismissal on February 15, 2010 until date
of decision equivalent to P276,466.67.
2. Separation pay of one (1) month salary per year of service for a period
of twelve years equivalent to P228,800.00.

3. Appraisal year-end bonus in the sum of P11,000.00.

4. Moral damages in the sum of P200,000.00.
5. Exemplary damages in the sum of P100,000.00.
6. 10% of all sums owing as attorneys fees or the amount of P81,626.67.
SO ORDERED.15
On appeal by HPC,16 the NLRC reversed the LA,17 and denied Farrales
motion for reconsideration, finding substantial evidence of just cause to
terminate
Farrales.18
On petition for certiorari to the CA,19 Farrales sought to refute the NLRCs
factual finding that he committed theft, as well as to question NLRCs
jurisdiction over HPCs appeal for non-payment of appeal fees. But the CA
found that HPC was able to perfect its appeal by posting a bond equivalent
to the monetary award of ?897,893.37 and paying the appeal fees by
postal
money
order
in
the
amount
of
?520.00. 20
Concerning the substantive issues, the appellate court agreed with the LA
that Farrales act of taking Reymars helmet did not amount to theft,
holding that HPC failed to prove that Farrales conduct was induced by a
perverse and wrongful intent to gain, in light of the admission of Eric that
he did let Farrales borrow one of his two helmets, only that Farrales
mistook Reymars helmet as the one belonging to him.
Petition for Review to the Supreme Court
In this petition, HPC raises the following grounds for this Courts review:
A.

THE HONORABLE [CA] PLAINLY ERRED AND ACTED CONTRARY TO

EXISTING LAW AND JURISPRUDENCE IN REVERSING THE DECISION
OF THE [NLRC] AND DECLARING ILLEGAL THE DISMISSAL FOR
[HPCs] ALLEGED FAILURE TO PROVE THE EXISTENCE OF JUST
CAUSE.
1. THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT
[FARRALES] COMMITTED THEFT IN [HPCs] PREMISES.
2.

THEFT

IS

JUST

CAUSE

FOR

TERMINATION.

3. BY COMMITTING THEFT, [FARRALES], BEING A

SUPERVISORIAL EMPLOYEE, FORFEITED THE TRUST REPOSED
IN HIM BY [HPC], THUS RENDERING HIM DISMISSIBLE FOR
LOSS OF CONFIDENCE.

245

B. IN DECLARING ILLEGAL THE DISMISSAL OF [FARRALES], THE

HONORABLE [CA] VIOLATED DOCTRINES LAID DOWN BY THE
SUPREME COURT.

favor.27 Moreover, the penalty imposed on the erring employee ought to

be proportionate to the offense, taking into account its nature and
surrounding
circumstances.

1. COURTS CANNOT SUBSTITUTE THEIR JUDGMENT FOR

THAT
OF
THE
MANAGEMENT.

The Court has always taken care, therefore, that the employer does not
invoke any baseless justification, much less management prerogative, as a
subterfuge by which to rid himself of an undesirable worker, 28 and thus in
exceptional cases the Court has never hesitated to delve into the NLRCs
factual conclusions where evidence was found insufficient to support them,
or too much was deduced from the bare facts submitted by the parties, or
the LA and the NLRC came up with conflicting positions, as is true in this
case.29

2. COURTS MUST ACCORD DUE RESPECT TO THE FINDINGS

OF ADMINISTRATIVE AGENCIES.21
Chiefly, HPC insists that since the complaint below involves an
administrative case, only substantial evidence, not proof of guilt beyond
reasonable doubt, is required to prove the guilt of Farrales; 22 that what the
CA has done is substitute its judgment for that of the NLRC, which is vested
with statutory duty to make factual determinations based on the evidence
on record.23
Ruling of the Court
The

Court

resolves

to

deny

the

petition.

To validly dismiss an employee, the law requires the employer to prove the
existence of any of the valid or authorized causes, 24 which, as enumerated
in Article 282 of the Labor Code, are: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the
latters 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 his duly
authorized representative; (d) commission of a crime or offense by the
employee against the person of his employer or any immediate member of
his family or his duly authorized representative; and (e) other causes
analogous to the foregoing.25 As a supervisorial employee, Farrales is
admittedly subject to stricter rules of trust and confidence, and thus
pursuant to its management prerogative HPC enjoys a wider latitude of
discretion to assess his continuing trustworthiness, than if he were an
ordinary rank-and-file employee.26 HPC therefore insists that only
substantial proof of Farrales guilt for theft is needed to establish the just
causes to dismiss him, as the NLRC lengthily asserted in its decision.
Article 4 of the Labor Code mandates that all doubts in the implementation
and interpretation of the provisions thereof shall be resolved in favor of
labor. Consistent with the States avowed policy to afford protection to
labor, as Article 3 of the Labor Code and Section 3, Article XIII of the 1987
Constitution have enunciated, particularly in relation to the workers
security of tenure, the Court held that [t]o be lawful, the cause for
termination must be a serious and grave malfeasance to justify the
deprivation of a means of livelihood. This is merely in keeping with the
spirit of our Constitution and laws which lean over backwards in favor of
the working class, and mandate that every doubt must be resolved in their

As aptly pointed out by the LA, while HPC has the onus probandi that the
taking of Reymars helmet by Farrales was with intent to gain, it failed to
discharge this burden, as shown by the following circumstances: Farrales
sought and obtained the permission of Eric, his co-employee as well
asbarangay co-resident, to borrow his helmet; at the parking lot, Farrales
asked another employee, Andy, to fetch a yellow helmet from one of the
parked motorcycles, mistakenly thinking it belonged to Eric (whom he
knew owned two helmets); the following day, November 28, Farrales asked
Eric why he had not dropped by his house to get his helmet, and Eric
replied that Farrales got the wrong helmet because he still had his other
helmet with him; Farrales immediately sought the help of the company
guards to locate the owner of the yellow helmet, who turned out to be
Reymar; Farrales apologized to Reymar for his mistake, and his apology
was promptly accepted.30 All these circumstances belie HPCs claim that
Farrales took Reymars helmet with intent to gain, the LA said.
In ruling that Farrales dismissal by HPC was attended with utmost malice
and bad faith as to justify an award of moral and exemplary damages and
attorneys fees, the LA stated that [i]t is succinctly clear that [the]
respondents [therein] tried to blow out of proportions the indiscretion of
[Farrales] for reasons known only to them, and moreover, [f]inding that
the dismissal on the ground of theft is unavailing, [the] respondents
[therein] immediately offered [Farrales] his former position when he filed
[his] complaint. What does this act of [the] respondents [therein] speak
[of]?31
On the other hand, the NLRC found that Farrales lied, first, when he told
Andy, then already astride his motorbike at the parking area and about to
leave the company premises, that the yellow helmet belonged to
him,32 and second, when he claimed that Eric was his neighbor, although
they were not. It ruled as doubtful Farrales hazy recollection about what
happened that afternoon at the parking lot, since he could not even give a
description of the motorcycle from which he took the yellow helmet. These
circumstances, the NLRC determined, comprise substantial proof belying
Farrales claim of good faith. As a supervisory employee, he held a position
of high responsibility in the company making him accountable to stricter
rules of trust and confidence than an ordinary employee, and under Article

246

282 of the Labor Code, he is guilty of a serious misconduct and a willful

breach of trust. The NLRC went on to cite a settled policy that in trying to
protect the rights of labor, the law does not authorize the oppression or
self-destruction of the employer. Management also has its own rights,
which as such, are entitled to respect and enforcement in the interest of
simple
fair
play.33
But the Court agrees with the CA that Farrales committed no serious or
willful misconduct or disobedience to warrant his dismissal. It is not
disputed that Farrales lost no time in returning the helmet to Reymar the
moment he was apprised of his mistake by Eric, which proves, according to
the CA, that he was not possessed of a depravity of conduct as would
justify HPCs claimed loss of trust in him. Farrales immediately admitted his
error to the company guard and sought help to find the owner of the yellow
helmet, and this, the appellate court said, only shows that Farrales did
indeed mistakenly think that the helmet he took belonged to Eric.
It is not, then, difficult to surmise that when Farrales told Andy that the
yellow helmet was his, his intent was not to put up a pretence of ownership
over it and thus betray his intent to gain, as the NLRC held, but rather
simply to assuage Andys reluctance to heed his passing request to reach
for the helmet for him; Andy, it will be recalled, was at that moment
already seated in his motorbike and about to drive out when Farrales made
his request. As to Farrales claim that he and Eric were neighbors, suffice it
to say that as the CA noted, they resided in the same barangay, and thus,
loosely,
were
neighbors.
The CA also pointed out that although the alleged theft occurred within its
premises, HPC was not prejudiced in any way by Farrales conduct since
the helmet did not belong to it but to Reymar. In light of Article 69, Class A,
Item No. 29 of the HPC Code of Discipline, this observation may be
irrelevant, although it may be that the LA regarded it as proving HPCs bad
faith.
Theft committed by an employee against a person other than his
employer, if proven by substantial evidence, is a cause analogous to
serious misconduct.34 Misconduct is improper or wrong conduct, it is the
transgression of some established and definite rule of action, a forbidden
act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment. The misconduct to be serious must be of
such grave and aggravated character and not merely trivial or
unimportant. Such misconduct, however serious, must, nevertheless, be in
connection with the employees work to constitute just cause for his
separation.35
But where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter of illegal
dismissal.36 If doubts exist between the evidence presented by the
employer and that of the employee, the scales of justice must be tilted in
favor of the latter. The employer must affirmatively show rationally

adequate evidence that the dismissal was for a justifiable cause. 37

Nonetheless, the Court agrees with the CAs dismissal of the award of
moral and exemplary damages for lack of merit. There is no satisfactory
proof that the concerned officers of HPC acted in bad faith or with malice in
terminating Farrales. Notwithstanding the LAs assertion to this effect,
Farrales bare allegations of bad faith deserve no credence, and neither is
the mere fact that he was illegally dismissed sufficient to prove bad faith
on the part of HPCs officers.38 But concerning the award of attorneys fees,
Farrales was dismissed for a flimsy charge, and he was compelled to
litigate to secure what is due him which HPC unjustifiably withheld.
WHEREFORE, premises considered, the petition for review is DENIED.
SO ORDERED.
ARMANDO G. YRASUEGUI, G.R. No. 168081
Petitioner,
Present:
YNARES-SANTIAGO, J.,
Ch
airperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:
PHILIPPINE AIRLINES, INC.,
Respondent. October 17, 2008
x--------------------------------------------------x
DECISION
REYES, R.T., J.:

THIS case portrays the peculiar story of an international flight

steward who was dismissed because of his failure to adhere to the weight
standards of the airline company.

He is now before

this

Court

via

petition

for

review

on certiorari claiming that he was illegally dismissed. To buttress his

stance, he argues that (1) his dismissal does not fall under 282(e) of the

247

Labor Code; (2) continuing adherence to the weight standards of the

After meeting the required weight, petitioner was allowed to return

company is not a bona fide occupational qualification; and (3) he was

to work. But petitioners weight problem recurred. He again went on leave

discriminated against because other overweight employees were promoted

without pay from October 17, 1988 to February 1989.

instead of being disciplined.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over
After a meticulous consideration of all arguments pro and con, We uphold

his ideal weight. In line with company policy, he was removed from flight

the legality of dismissal. Separation pay, however, should be awarded in

duty effective May 6, 1989to July 3, 1989. He was formally requested to

favor of the employee as an act of social justice or based on equity. This is

trim down to his ideal weight and report for weight checks on several

so because his dismissal is not for serious misconduct. Neither is it

dates. He was also told that he may avail of the services of the company

reflective of his moral character.

physician should he wish to do so. He was advised that his case will be
evaluated on July 3, 1989.[2]

The Facts
On February 25, 1989, petitioner underwent weight check. It was
Petitioner Armando G. Yrasuegui was a former international flight

discovered that he gained, instead of losing, weight. He was overweight

steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight

at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-

inches (58) with a large body frame. The proper weight for a man of his

duty status was retained.

height and body structure is from 147 to 166 pounds, the ideal weight
being 166 pounds, as mandated by the Cabin and Crew Administration
Manual[1] of PAL.

On October

17,

1989, PAL Line

Administrator

Gloria Dizon personally visited petitioner at his residence to check on the

progress of his effort to lose weight. Petitioner weighed 217 pounds,

The weight problem of petitioner dates back to 1984. Back

gaining 2 pounds from his previous weight. After the visit, petitioner made

then, PAL advised him to go on an extended vacation leave from December

a commitment[3] to reduce weight in a letter addressed to Cabin Crew

29, 1984 to March 4, 1985 to address his weight concerns. Apparently,

Group Manager Augusto Barrios. The letter, in full, reads:

petitioner

failed

to

meet

the

companys

weight

standards, prompting another leave without pay from March 5, 1985 to

November 1985.

Dear Sir:
I would like to guaranty my commitment towards a
weight loss from 217 pounds to 200 pounds from today
until 31 Dec. 1989.
From thereon, I promise to continue reducing at a
reasonable percentage until such time that my ideal weight
is achieved.

248

Likewise, I promise to personally report to your

office at the designated time schedule you will set for my
weight check.
Respectfull
y Yours,
F/S
Armando Yr
asuegui[4]

directive and did not report for weight checks. On June 26, 1990, petitioner
was required to explain his refusal to undergo weight checks. [7]

When petitioner tipped the scale on July 30, 1990, he weighed

at 212 pounds. Clearly, he was still way over his ideal weight of 166
pounds.

Despite the lapse of a ninety-day period given him to reach his

From then on, nothing was heard from petitioner until he followed

ideal weight, petitioner remained overweight. On January 3, 1990, he was

up his case requesting for leniency on the latter part of 1992. He weighed

informed of the PAL decision for him to remain grounded until such time

at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992.

that he satisfactorily complies with the weight standards. Again, he was

directed to report every two weeks for weight checks.

On November 13, 1992, PAL finally served petitioner a Notice of

Administrative Charge for violation of company standards on weight
requirements. He was given ten (10) days from receipt of the charge within
which to file his answer and submit controverting evidence.[8]

Petitioner failed to report for weight checks. Despite that, he was

given one more month to comply with the weight requirement. As usual, he
was asked to report for weight check on different dates. He was reminded

On December 7, 1992, petitioner submitted his Answer. [9] Notably,

that his grounding would continue pending satisfactory compliance with

he did not deny being overweight. What he claimed, instead, is that his

the weight standards.[5]

violation, if any, had already been condoned by PAL since no action has
been taken by the company regarding his case since 1988. He also claimed

Again, petitioner failed to report for weight checks, although he

was seen submitting his passport for processing at the PAL Staff Service

that PAL discriminated against him because the company has not been fair
in treating the cabin crew members who are similarly situated.

Division.
On December 8, 1992, a clarificatory hearing was held where
On April 17, 1990, petitioner was formally warned that a repeated
refusal to report for weight check would be dealt with accordingly. He was
given another set of weight check dates. [6] Again, petitioner ignored the

petitioner manifested that he was undergoing a weight reduction program

to lose at least two (2) pounds per week so as to attain his ideal weight. [10]

249

On June 15, 1993, petitioner was formally informed by PAL that due

his weight did not hamper the performance of his duties. [16] Assuming that

to his inability to attain his ideal weight, and considering the utmost

it did, petitioner could be transferred to other positions where his weight

leniency extended to him which spanned a period covering a total of

would not be a negative factor.[17] Notably, other overweight employees,

almost five (5) years, his services were considered terminated effective

i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being

immediately.[11]

disciplined.[18]

His motion for reconsideration having been denied, [12] petitioner

filed a complaint for illegal dismissal against PAL.

Both parties appealed to the National Labor Relations Commission

(NLRC).

[19]

On October 8, 1999, the Labor Arbiter issued a writ of execution

Labor Arbiter, NLRC and CA Dispositions

directing the reinstatement of petitioner without loss of seniority rights and

other benefits.[20]

On November

18,

1998,

Labor

Arbiter Valentin C.

Reyes

ruled[13] that petitioner was illegally dismissed. The dispositive part of the
Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is
hereby rendered, declaring the complainants dismissal
illegal, and ordering the respondent to reinstate him to his
former position or substantially equivalent one, and to pay
him:
a. Backwages of Php10,500.00 per month from his
dismissal on June 15, 1993 until reinstated, which for
purposes of appeal is hereby set from June 15, 1993 up
to August 15, 1998 atP651,000.00;
b. Attorneys fees of five percent (5%) of the total
award.
SO ORDERED.[14]

The Labor Arbiter held that the weight standards of PAL are
reasonable in view of the nature of the job of petitioner. [15] However, the
weight standards need not be complied with under pain of dismissal since

On February 1, 2000, the Labor Arbiter denied[21] the Motion to

Quash Writ of Execution[22] of PAL.

On March 6, 2000, PAL appealed the denial of its motion to quash

to the NLRC.[23]

On June 23, 2000, the NLRC rendered judgment[24] in the following

tenor:
WHEREFORE, premises considered[,] the Decision
of the Arbiter dated 18 November 1998 as modified by our
findings herein, is hereby AFFIRMED and that part of the
dispositive
portion
of
said
decision
concerning
complainants entitlement to backwages shall be deemed
to
refer
to
complainants
entitlement
to
his
full backwages, inclusive of allowances and to his other
benefits
or their monetary
equivalent instead of
simply backwages, from date of dismissal until his actual
reinstatement or finality hereof. Respondent is enjoined to
manifests (sic) its choice of the form of the reinstatement
of complainant, whether physical or through payroll within

250

ten (10) days from notice failing which, the same shall be
deemed as complainants reinstatement through payroll
and execution in case of non-payment shall accordingly be
issued by the Arbiter. Both appeals of respondent thus,
are DISMISSED for utter lack of merit.[25]

The CA opined that there was grave abuse of discretion on the part
of the NLRC because it looked at wrong and irrelevant considerations [33] in
evaluating the evidence ofthe parties. Contrary to the NLRC ruling, the
weight standards of PAL are meant to be a continuing qualification for an

According to the NLRC, obesity, or the tendency to gain weight

employees position.[34] The failure to adhere to the weight standards is

uncontrollably regardless of the amount of food intake, is a disease in itself.

an analogous cause for the dismissal of an employee under Article 282(e)

As a consequence, there can be no intentional defiance or serious

of the Labor Code in relation to Article 282(a). It is not willful disobedience

misconduct by petitioner to the lawful order of PAL for him to lose weight.

as the NLRC seemed to suggest. [35] Said the CA, the element of willfulness

[27]

that the NLRC decision cites is an irrelevant consideration in arriving at a

[26]

conclusion on whether the dismissal is legally proper. [36] In other words, the
Like the Labor Arbiter, the NLRC found the weight standards

relevant question to ask is not one of willfulness but one of reasonableness

of PAL to be reasonable. However, it found as unnecessary the Labor

of the standard and whether or not the employee qualifies or continues to

Arbiter holding that petitioner was not remiss in the performance of his

qualify under this standard.[37]

duties as flight steward despite being overweight. According to the NLRC,

the Labor Arbiter should have limited himself to the issue of whether the

Just like the Labor Arbiter and the NLRC, the CA held that the weight

failure of petitioner to attain his ideal weight constituted willful defiance of

standards of PAL are reasonable.[38] Thus, petitioner was legally dismissed

the weight standards of PAL.[28]

because he repeatedly failed to meet the prescribed weight standards. [39] It

is obvious that the issue of discrimination was only invoked by petitioner

PAL moved for reconsideration to no avail.

[29]

Thus, PAL elevated

for purposes of escaping the result of his dismissal for being overweight. [40]

the matter to the Court of Appeals (CA) via a petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure.[30]

On May
reconsideration.

By Decision dated August 31, 2004, the CA reversed

[31]

the NLRC:

WHEREFORE, premises considered, we hereby

GRANT the petition. The assailed NLRC decision is declared
NULL and VOID and is hereby SET ASIDE. The private
respondents complaint is hereby DISMISSED. No costs.

10,
[41]

2005,

the

CA

denied

petitioners

motion

for

Elaborating on its earlier ruling, the CA held that the

weight standards of PAL are a bona fide occupational qualification which, in

case of violation, justifies an employees separation from the service. [42]

Issues

SO ORDERED.[32]
In this Rule 45 petition for review, the following issues are posed for
resolution:

251

x x x [T]he standards violated in this case were not mere

orders of the employer; they were the prescribed weights
that a cabin crew must maintain in order to qualify for
and keep his or her position in the company. In other
words, they were standards that establish continuing
qualifications for an employees position. In this sense,
the failure to maintain these standards does not fall under
Article 282(a) whose express terms require the element of
willfulness in order to be a ground for dismissal. The failure
to meet the employers qualifying standards is in fact a
ground that does not squarely fall under grounds (a) to (d)
and is therefore one that falls under Article 282(e) the
other causes analogous to the foregoing.

I.
WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT PETITIONERS OBESITY
CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e)
OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES;
II.
WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT PETITIONERS DISMISSAL
FOR OBESITY CAN BE PREDICATED ON THE BONA FIDE
OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE;
III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT PETITIONER WAS NOT UNDULY
DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE
OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER
GIVEN FLYING DUTIES OR PROMOTED;

By its nature, these qualifying standards are norms that

apply prior to and after an employee is hired. They
apply prior to employment because these are the
standards a job applicant must initially meet in order to be
hired. They apply after hiring because an employee must
continue to meet these standards while on the job in order
to keep his job. Under this perspective, a violation is not
one of the faults for which an employee can be dismissed
pursuant to pars. (a) to (d) of Article 282; the employee
can be dismissed simply because he no longer qualifies for
his job irrespective of whether or not the failure to qualify
was willful or intentional. x x x[45]

IV.
WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONERS
CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY
FOR
BEING
MOOT AND ACADEMIC.[43] (Underscoring
supplied)

Our Ruling

Petitioner, though, advances a very interesting argument. He claims that

obesity

I. The obesity of petitioner is a ground for dismissal under

Article 282(e) [44] of the Labor Code.

A reading of the weight standards of PAL would lead to no other conclusion

than that they constitute a continuing qualification of an employee in order
to keep the job. Tersely put, an employee may be dismissed the moment
he is unable to comply with his ideal weight as prescribed by the weight

is

physical

abnormality

and/or

illness. [46] Relying

on Nadura v. Benguet Consolidated, Inc.,[47] he says his dismissal is illegal:

Conscious of the fact that Naduras case cannot be made to
fall squarely within the specific causes enumerated in
subparagraphs 1(a) to (e), Benguet invokes the provisions
of subparagraph 1(f) and says that Naduras illness
occasional attacks of asthma is a cause analogous to them.
Even a cursory reading of the legal provision under
consideration is sufficient to convince anyone that, as the
trial court said, illness cannot be included as an analogous
cause by any stretch of imagination.

standards. The dismissal of the employee would thus fall under Article
282(e) of the Labor Code. As explained by the CA:

It is clear that, except the just cause mentioned in subparagraph 1(a), all the others expressly enumerated in the
law are due to the voluntary and/or willful act of the
employee. How Nadurasillness could be considered as

252

analogous to any of them is beyond our understanding,

there being no claim or pretense that the same was
contracted through his own voluntary act.[48]

easily availed the assistance of the company physician, per the advice
of PAL.[51] He chose to ignore the suggestion. In fact, he repeatedly failed to
report when required to undergo weight checks, without offering a valid

The reliance on Nadura is off-tangent. The factual milieu in Nadura is

explanation. Thus, his fluctuating weight indicates absence of willpower

substantially different from the case at bar. First, Nadura was not decided

rather than an illness.

under the Labor Code. The law applied in that case was Republic Act (RA)
No. 1787. Second, the issue of flight safety is absent in Nadura, thus, the

Petitioner cites Bonnie Cook v. State of Rhode Island, Department

rationale there cannot apply here. Third, in Nadura, the employee who was

of Mental Health, Retardation and Hospitals,[52] decided by the United

a miner, was laid off from work because of illness, i.e., asthma. Here,

States Court of Appeals (First Circuit). In that case, Cook worked from 1978

petitioner was dismissed for his failure to meet the weight standards

to 1980 and from 1981 to 1986 as an institutional attendant for the

of PAL. He was not dismissed due to illness. Fourth, the issue in Nadura is

mentally retarded at the Ladd Center that was being operated by

whether or not the dismissed employee is entitled to separation pay and

respondent. She

damages. Here, the issue centers on the propriety of the dismissal of

record. Even respondent admitted that her performance met the Centers

petitioner for his failure to meet the weight standards of PAL. Fifth,

legitimate expectations. In 1988, Cook re-applied for a similar position. At

in Nadura, the employee was not accorded due process. Here, petitioner

that time, she stood 52 tall and weighed over 320 pounds. Respondent

was accorded utmost leniency. He was given more than four (4) years to

claimed that the morbid obesity of plaintiff compromised her ability to

comply with the weight standards of PAL.

evacuate patients in case of emergency and it also put her at greater risk

twice

resigned

voluntarily

with

an

unblemished

of serious diseases.
In the case at bar, the evidence on record militates against
petitioners claims that obesity is a disease. That he was able to reduce his

Cook contended that the action of respondent amounted to

weight from 1984 to 1992 clearly shows that it is possible for him to lose

discrimination on the basis of a handicap. This was in direct violation of

weight given the proper attitude, determination, and self-discipline. Indeed,

Section 504(a) of the Rehabilitation Act of 1973,[53] which incorporates the

during the clarificatory hearing on December 8, 1992, petitioner himself

remedies contained in Title VI of the Civil Rights Act of 1964. Respondent

claimed that [t]he issue is could I bring my weight down to ideal weight

claimed, however, that morbid obesity could never constitute a handicap

which is 172, then the answer is yes. I can do it now. [49]

within the purview of the Rehabilitation Act. Among others, obesity is a

mutable condition, thus plaintiff could simply lose weight and rid herself of

True, petitioner claims that reducing weight is costing him a lot of

expenses.

[50]

However, petitioner has only himself to blame. He could have

concomitant disability.

253

The appellate Court disagreed and held that morbid obesity is a

disability under the Rehabilitation Act and that respondent discriminated

considered voluntary although it lacks the element of intent found in

Article 282(a), (c), and (d).[54]

against Cook based on perceived disability. The evidence included expert

testimony that morbid obesity is a physiological disorder. It involves a
dysfunction of both the metabolic system and the neurological appetite

II. The dismissal of petitioner can be predicated on the

bona fide occupational qualification defense.

suppressing signal system, which is capable of causing adverse effects

within

the

musculoskeletal,

respiratory,

and

cardiovascular

Employment in particular jobs may not be limited to persons of a particular

systems. Notably, the Court stated that mutability is relevant only in

sex, religion, or national origin unless the employer can show that sex,

determining the substantiality of the limitation flowing from a given

religion, or national origin is an actual qualification for performing the

impairment, thus mutability only precludes those conditions that an

job. The qualification is called a bona fide occupational qualification

individual can easily and quickly reverse by behavioral alteration.

(BFOQ).[55] In the United States, there are a few federal and many state job
discrimination laws that contain an exception allowing an employer to

Unlike Cook, however, petitioner is not morbidly obese. In the

engage in an otherwise unlawful form of prohibited discrimination when

words of the District Court for the District of Rhode Island, Cook was

the action is based on a BFOQ necessary to the normal operation of a

sometime before 1978 at least one hundred pounds more than what is

business or enterprise.[56]

considered appropriate of her height. According to the Circuit Judge, Cook

Petitioner contends that BFOQ is a statutory defense. It does not

weighed over 320 pounds in 1988. Clearly, that is not the case here.At his

exist if there is no statute providing for it. [57] Further, there is no existing

heaviest, petitioner was only less than 50 pounds over his ideal weight.

BFOQ statute that could justify his dismissal. [58]

In fine, We hold that the obesity of petitioner, when placed in the

Both arguments must fail.

context of his work as flight attendant, becomes an analogous cause under

Article 282(e) of the Labor Code that justifies his dismissal from the
service. His

obesity

may

not

be

unintended,

but

is

nonetheless

First, the Constitution,[59] the Labor Code,[60] and RA No. 7277[61] or

the Magna Carta for Disabled Persons[62] contain provisions similar to BFOQ.

voluntary. As the CA correctly puts it, [v]oluntariness basically means that

the just cause is solely attributable to the employee without any external
force influencing or controlling his actions. This element runs through all
just causes under Article 282, whether they be in the nature of a wrongful
action or omission. Gross and habitual neglect, a recognized just cause, is

Second,

in British

Columbia Public

Service

Employee

Commission

(BSPSERC) v. The British Columbia Government and Service Employees

Union (BCGSEU),[63] the Supreme Court of Canada adopted the socalled Meiorin Test in determining whether an employment policy is
justified. Under this test, (1) the employer must show that it adopted the

254

standard for a purpose rationally connected to the performance of the job;

safety of the passengers it transports. [74] It is bound to carry its passengers

(2) the employer must establish that the standard is reasonably

safely as far as human care and foresight can provide, using the utmost

[64]

necessary[65] to the accomplishment of that work-related purpose; and (3)

diligence

of

the employer must establish that the standard is reasonably necessary in

circumstances.

very

cautious

persons,

with

due

regard

for

all

the

[75]

order to accomplish the legitimate work-related purpose. Similarly, in Star

Paper Corporation v. Simbol,[66] this Court held that in order to justify a

The law leaves no room for mistake or oversight on the part of a

BFOQ, the employer must prove that (1) the employment qualification is

common carrier. Thus, it is only logical to hold that the weight standards

reasonably related to the essential operation of the job involved; and (2)

of PAL show its effort to comply with the exacting obligations imposed

that there is factual basis for believing that all or substantially all persons

upon it by law by virtue of being a common carrier.

meeting the qualification would be unable to properly perform the duties of

the job.[67]

The business of PAL is air transportation. As such, it has committed

itself to safely transport its passengers. In order to achieve this, it must
necessarily rely on its employees, most particularly the cabin flight deck

In short, the test of reasonableness of the company policy is used

because it is parallel to BFOQ.

[68]

BFOQ is valid provided it reflects an

crew who are on board the aircraft. The weight standards of PAL should be
viewed as imposing strict norms of discipline upon its employees.

inherent quality reasonably necessary for satisfactory job performance. [69]

In other words, the primary objective of PAL in the imposition of the
In Duncan

Association

of Detailman-PTGWTO

weight standards for cabin crew is flight safety. It cannot be gainsaid that

the Court did not hesitate to pass

cabin attendants must maintain agility at all times in order to inspire

upon the validity of a company policy which prohibits its employees from

passenger confidence on their ability to care for the passengers when

marrying employees of a rival company. It was held that the company

something goes wrong. It is not farfetched to say that airline companies,

policy is reasonable considering that its purpose is the protection of the

just like all common carriers, thrive due to public confidence on their safety

interests of the company against possible competitor infiltration on its

records. People, especially the riding public, expect no less than that

trade secrets and procedures.

airline companiestransport

v. Glaxo Wellcome Philippines, Inc.,

[70]

their

passengers

to

their

respective

destinations safely and soundly. A lesser performance is unacceptable.

Verily, there is no merit to the argument that BFOQ cannot be
applied if it has no supporting statute. Too, the Labor Arbiter,[71] NLRC,

The task of a cabin crew or flight attendant is not limited to serving

and CA[73] are one in holding that the weight standards of PAL are

meals or attending to the whims and caprices of the passengers. The most

reasonable. A common carrier, from the nature of its business and for

important activity of the cabin crew is to care for the safety of passengers

reasons of public policy, is bound to observe extraordinary diligence for the

and the evacuation of the aircraft when an emergency occurs. Passenger

[72]

255

safety goes to the core of the job of a cabin attendant.Truly, airlines need

require airline companies to reconfigure the aircraft in order to widen the

cabin attendants who have the necessary strength to open emergency

aisles and exit doors just to accommodate overweight cabin attendants like

doors, the agility to attend to passengers in cramped working conditions,

petitioner.

and the stamina to withstand grueling flight schedules.

The biggest problem with an overweight cabin attendant is the
On board an aircraft, the body weight and size of a cabin attendant

possibility of impeding passengers from evacuating the aircraft, should the

are important factors to consider in case of emergency. Aircrafts have

occasion call for it. The job of a cabin attendant during emergencies is to

constricted cabin space, and narrow aisles and exit doors. Thus, the

speedily get the passengers out of the aircraft safely. Being overweight

arguments of respondent that [w]hether the airlines flight attendants are

necessarily impedes mobility. Indeed, in an emergency situation, seconds

overweight or not has no direct relation to its mission of transporting

are what cabin attendants are dealing with, not minutes. Three lost

passengers to their destination; and that the weight standards has nothing

seconds can translate into three lost lives. Evacuation might slow down

to do with airworthiness of respondents airlines, must fail.

just because a wide-bodied cabin attendant is blocking the narrow

aisles. These possibilities are not remote.

The rationale in Western Air Lines v. Criswell

[76]

relied upon by

petitioner cannot apply to his case. What was involved there were two (2)
airline pilots who were denied reassignment as flight engineers upon
reaching the age of 60, and a flight engineer who was forced to retire at

Petitioner is also in estoppel. He does not dispute that the weight

age 60. They sued the airline company, alleging that the age-60 retirement

standards of PAL were made known to him prior to his employment. He is

for flight engineers violated the Age Discrimination in Employment Act of

presumed to know the weight limit that he must maintain at all times. [78] In

1967. Age-based BFOQ and being overweight are not the same. The case

fact, never did he question the authority of PAL when he was repeatedly

of overweight cabin attendants is another matter. Given the cramped cabin

asked to trim down his weight. Bona fides exigit ut quodconvenit fiat. Good

space and narrow aisles and emergency exit doors of the airplane, any

faith

overweight cabin attendant would certainly have difficulty navigating the

done. Kung ang tao ay tapat kanyang tutuparin ang napagkasundu

cramped cabin area.

an.

demands

that

what

is

agreed

upon

shall

be

In short, there is no need to individually evaluate their ability to

Too, the weight standards of PAL provide for separate weight

perform their task. That an obese cabin attendant occupies more space

limitations based on height and body frame for both male and female

than a slim one is an unquestionable fact which courts can judicially

cabin attendants. A progressive discipline is imposed to allow non-

recognize without introduction of evidence.[77] It would also be absurd to

compliant cabin attendants sufficient opportunity to meet the weight

256

standards. Thus,

the

clear-cut

rules

obviate

any

ideal weights; weights over their ideal weights; the periods they were

possibility for thecommission of abuse or arbitrary action on the part

allowed to fly despite their being overweight; the particular flights

of PAL.

assigned to them; the discriminating treatment they got from PAL; and
other relevant data that could have adequately established a case of
III. Petitioner failed to substantiate his claim that he was

discriminated against by PAL.

discriminatory treatment by PAL. In the words of the CA, PAL really had no
substantial case of discrimination to meet.[82]

Petitioner next claims that PAL is using passenger safety as a

We are not unmindful that findings of facts of administrative

convenient excuse to discriminate against him. [79] We are constrained,

agencies, like the Labor Arbiter and the NLRC, are accorded respect, even

however, to hold otherwise. We agree with the CA that [t]he element of

finality.[83] The reason is simple: administrative agencies are experts in

discrimination came into play in this case as a secondary position for the

matters within their specific and specialized jurisdiction. [84] But the

private respondent in order to escape the consequence of dismissal that

principle is not a hard and fast rule. It only applies if the findings of facts

being overweight entailed. It is a confession-and-avoidance position that

are duly supported by substantial evidence. If it can be shown that

impliedly admitted the cause of dismissal, including the reasonableness of

administrative bodies grossly misappreciated evidence of such nature so

the applicable standard and the private respondents failure to comply. [80] It

as to compel a conclusion to the contrary, their findings of facts must

is a basic rule in evidence that each party must prove his affirmative

necessarily be reversed. Factual findings of administrative agencies do not

allegation.[81]

have infallibility and must be set aside when they fail the test of

Since the burden of evidence lies with the party who asserts an
affirmative

allegation,

petitioner

has

to

prove

his

allegation

arbitrariness.[85]

with

particularity. There is nothing on the records which could support the

finding

of

discriminatory

treatment.

Petitioner

cannot

establish

Here,

the

Labor

Arbiter

and

the

NLRC

inexplicably misappreciated evidence. We thus annul their findings.

discrimination by simply naming the supposed cabin attendants who are

allegedly similarly situated with him. Substantial proof must be shown as

To make his claim more believable, petitioner invokes the equal

to how and why they are similarly situated and the differential treatment

protection clause guaranty[86] of the Constitution. However, in the absence

petitioner got from PAL despite the similarity of his situation with other

of governmental interference, the liberties guaranteed by the Constitution

employees.

cannot be invoked.[87] Put differently, the Bill of Rights is not meant to be

invoked

against

acts

of

private

individuals. [88] Indeed,

the

United

Indeed, except for pointing out the names of the supposed overweight

States Supreme Court, in interpreting the Fourteenth Amendment,

cabin attendants, petitioner miserably failed to indicate their respective

is the source of our equal protection guarantee, is consistent in saying that

[89]

which

257

the equalprotection erects no shield against private conduct,

however

discriminatory or wrongful.[90] Private actions, no matter how egregious,

Labor Arbiter.[95] In fact, petitioner duly received the return to work notice
on February 23, 2001, as shown by his signature.[96]

cannot violate the equal protection guarantee.[91]

Petitioner cannot take refuge in the pronouncements of the Court
IV. The claims of petitioner for reinstatement and wages are moot.

in a case[97] that [t]he unjustified refusal of the employer to reinstate the

dismissed employee entitles him to payment of his salaries effective from

As his last contention, petitioner avers that his claims for reinstatement

the time the employer failed to reinstate him despite the issuance of a writ

and wages have not been mooted. He is entitled to reinstatement and his

of execution[98] and even if the order of reinstatement of the Labor Arbiter

full backwages, from the time he was illegally dismissed up to the time

is reversed on appeal, it is obligatory on the part of the employer to

that the NLRC was reversed by the CA.

reinstate and pay the wages of the employee during the period of appeal

[92]

until reversal by the higher court. [99] He failed to prove that he complied
At this point, Article 223 of the Labor Code finds relevance:

with

the

return

to

work

appear on record that he actually

In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.

order
rendered

of PAL. Neither
services

does

for PAL from

it
the

moment he was dismissed, in order to insist on the payment of his

full backwages.

In insisting that he be reinstated to his actual position despite

being overweight, petitioner in effect wants to render the issues in the
present case moot. He asks PAL to comply with the impossible. Time and

The law is very clear. Although an award or order of reinstatement

is self-executory and does not require a writ of execution, [93] the option to

again, the Court ruled that the law does not exact compliance with the
impossible.[100]

exercise actual reinstatement or payroll reinstatement belongs to the

employer. It does not belong to the employee, to the labor tribunals, or

V. Petitioner is entitled to separation pay.

even to the courts.

Be that as it may, all is not lost for petitioner.
Contrary to the allegation of petitioner that PAL did everything
under the sun to frustrate his immediate return to his previous position,

Normally,

legally

dismissed

employee

is

not

entitled

to

there is evidence that PALopted to physically reinstate him to a

separation pay. This may be deduced from the language of Article 279 of

substantially equivalent position in accordance with the order of the

the Labor Code that [a]n employee who is unjustly dismissed from work

[94]

258

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. Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed

employee as an act social justice, [101] or based on equity.[102] In both
instances, it is required that the dismissal (1) was not for serious
misconduct; and (2) does not reflect on the moral character of the
employee.[103]

Here, We grant petitioner separation pay equivalent to one-half

(1/2) months pay for every year of service. [104] It should include regular
allowances which he might have been receiving. [105] We are not blind to the
fact that he was not dismissed for any serious misconduct or to any act
which would reflect on his moral character. We also recognize that his
employment with PAL lasted for more or less a decade.

WHEREFORE, the appealed Decision of the Court of Appeals

is AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is
entitled to separation pay in an amount equivalent to one-half (1/2)
months pay for every year of service, which should include his regular
allowances.

SO ORDERED.

259

HEAVYLIFT MANILA, INC. and/or JOSEPHINE

EVANGELIO,
Administrative
&
Finance
Manager,AND CAPT. ROLANDO* TOLENTINO,
Petitioners,

- versus -

THE COURT OF APPEALS,

MA. DOTTIE GALAY and the NATIONAL
LABOR RELATIONS COMMISSION,
Respondents.

G.R. No. 154410

Present:
Davide, Jr., C.J.,
(Chairman),
Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.

On February 23, 1999, petitioner Heavylift, a maritime agency, thru a letter

signed by petitioner Josephine Evangelio, Administrative and Finance
Manager of Heavylift, informed respondent Ma. Dottie Galay, Heavylift
Insurance and Provisions Assistant, of her low performance rating and the
negative feedback from her team members regarding her work attitude.

Promulgated:

The letter also notified her that she was being relieved of her other

October 20, 2005

functions except the development of the new Access program.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
Subsequently, on August 16, 1999, Galay was terminated for alleged loss
DECISION
of confidence. Thereafter, she filed with the Labor Arbiter a complaint for
QUISUMBING, J.:

illegal dismissal and nonpayment of service incentive leave and 13 th month

pay against petitioners.

Before us is a petition for certiorari assailing the Resolution[1] dated

December 18, 2001 of the Court of Appeals in CA-G.R. SP No. 68072
denying the petition for failure to comply with procedural rules, as well as
the Decision[2] dated

August

30,

2001

and

the Resolution[3] dated

September 28, 2001 of the National Labor Relations Commission (NLRC)

which affirmed the Labor Arbiters decision finding petitioners guilty of
illegal dismissal.

The factual antecedents of the case are as follows:

Before the labor arbiter, petitioners alleged that Galay had an attitude
problem and did not get along with her co-employees for which she was
constantly warned to improve. Petitioners aver that Galays attitude
resulted to the decline in the companys efficiency and productivity.
Petitioners presented a letter[4] dated February 23, 1999 and a notice of
termination[5] dated August 16, 1999.

The Labor Arbiter found that Galay was illegally terminated for petitioners
failure to prove that she violated any company regulation, and for failure to
give the proper notice as required by law.[6]

260

Petitioner appealed to the NLRC. The latter, however, denied the appeal for
lack of merit and affirmed the decision of the Labor Arbiter. [7] A motion for
reconsideration was subsequently filed but which was likewise denied. [8]

relationship between
Galay and petitioners.

respondent

b. The cause for terminating the employment of

respondent
by
the
petitioner
appears foreign to the causes of
terminating an employment either
under loss of trust and confidence
or under analogous causes.

Petitioner elevated the case by certiorari to the Court of Appeals. But,

petitioners failed to: state the full names and actual addresses of all the
petitioners; attach the copies of all pleadings and supporting documents;
properly verify the petition; and certify against forum-shopping. For these
procedural lapses, the petition was dismissed. [9] Petitioners moved for

c. The NLRC acted in a despotic manner when it

ruled that complainant is entitled
to service incentive pay and
13th month pay in the absence of
any claim, prayer or evidence.
III. It is a grave abuse of discretion on the part of the NLRC
when it made it to appear that the right of worker
for security of tenure is absolute.[11]

reconsideration and attached a board resolution authorizing petitioner

Tolentino to legally represent the company. Nonetheless, the Court of

Simply, the issues are (1) Were the petitioners denied due process with the

Appeals denied the motion for lack of justifying circumstances, and

Court of Appeals dismissal of the petition on technical grounds? (2) Is

because the attached board resolution was issued after the petition was

attitude problem a valid ground for the termination of an employee? (3) If

filed.[10]

in the affirmative, was this sufficiently proved? (4) Were the procedural
requirements for an effectual dismissal present? and (5) Were the awards

Hence, the instant petition for certiorari alleging that

I. The Honorable Court of Appeals grossly erred in relying
too much on form rather than on the merits of the
petition thereby denying petitioners of right to due
process.
II. The NLRC acted in a whimsical, arbitrary and despotic
manner with grave abuse of discretion when it
ruled that:

of service incentive pay and 13th month pay proper?

Anent the first issue, petitioners posit that instead of denying outright their
petition on technicalities, the Court of Appeals should have given it due
course. Petitioners explain that only the name and address of petitioner

a. Petitioners failed to submit substantial evidence

that will prove petitioners had
withdrawn
their
trust
and
confidence upon the respondent
notwithstanding
the
admitted
strained
and
irreconcilable

Heavylift were stated in the petition because it was the real party in
interest, while the rest were mere nominal parties. They also reasoned that

261

it was not necessary to attach the pleadings submitted to the Labor Arbiter

Additionally, verification of a pleading is a formal, not a jurisdictional

as the arguments asserted therein were sufficiently tackled and reiterated

requisite. It is intended to secure an assurance that what are alleged in the

in the petition. Lastly, petitioners submit that petitioner Tolentino was

pleading are true and correct and not the product of the imagination or a

authorized by the Board of Directors as the legal representative of the

matter of speculation, and that the pleading is filed in good faith. [15]

agency and its officers.

The rule on certification against forum-shopping requires strict compliance.
Respondent counters that strict adherence to the rules of procedure is

The requirement underscores its mandatory nature such that it cannot be

required to promote efficiency and orderliness. It adds that petitioners did

altogether dispensed with. However, under justifiable circumstances, the

not present any persuasive reason for a liberal application of the Rules.

Court does allow substantial compliance.[16]

The Rules of Court require that the petition for certiorari shall be verified,

Further, we accept petitioners inadvertence to state the names and

contain the full names and actual addresses of all the petitioners and

addresses of the other petitioners as a minor defect. We also accept their

[12]

respondents, accompanied by a certified true copy of the subject decision,

explanation on their failure to incorporate the Labor Arbiters decision.

order or resolution and other documents relevant or pertinent thereto, and

Thus, mindful that the greater interest of justice would be served if the
be submitted with the certification of non-forum shopping signed by the
petition is adjudicated on its merits,[17] we will proceed with the remaining
principal.

[13]

issues, and discuss them jointly.

We likewise have enunciated that the Rules of Court are designed for the
Was there just cause in the termination of Galay?
proper and prompt disposition of cases. In not a few instances, we relaxed
the rigid application of the rules to afford the parties opportunity to fully

Petitioners assert that it terminated Galay because she had an attitude

ventilate their cases on the merits. In that way, the ends of justice would

problem. This situation, according to petitioners, is analogous to loss of

be better served.[14]

trust and confidence. They aver that respondent did not deny the strained
and irreconcilable relationship between them, in effect, admitting the

262

same. Further, petitioners aver that having lost their trust and confidence

An employee who cannot get along with his co-employees is detrimental to

on Galay, they could no longer make her in-charge of the confidential Crew

the company for he can upset and strain the working environment. Without

Information System which accounts for the personnel, management and

the necessary teamwork and synergy, the organization cannot function

professional records of all the employees of and seamen connected with

well. Thus, management has the prerogative to take the necessary action

the company. Lastly, petitioners maintain that because of Galays attitude,

to correct the situation and protect its organization. When personal

the companys work atmosphere had become very strained and had

differences

gravely affected the workers and their outputs. Galays dismissal, according

environment, the peace of the company is affected. Thus, an employees

to petitioners, was merely an act of self-preservation.

attitude problem is a valid ground for his termination. [18] It is a situation

between

employees

and

management

affect

the

work

analogous to loss of trust and confidence that must be duly proved by the
Petitioners explained that they sent Galay a letter of notice dated February
employer. Similarly, compliance with the twin requirement of notice and
23, 1999, apprising her of her low performance and her attitude problem,
hearing must also be proven by the employer.
before the letter of her termination dated August 16, 1999. Petitioners
claim that the company waited for six months, to give Galay a chance to

However, we are not convinced that in the present case, petitioners have

undergo counseling before dismissing her from the service.

shown sufficiently clear and convincing evidence to justify Galays

termination. Though they are correct in saying that in this case, proof

Galay counters that petitioners failed to show a just and valid cause for her
beyond reasonable doubt is not required, still there must be substantial
termination, and that letters of notice and termination did not comply with
evidence to support the termination on the ground of attitude. [19] The mere
the twin requirement of notice and hearing. Galay argues that the letter
mention of negative feedback from her team members, and the letter
dated February 23, 1999 neither informed her of her infraction of any
dated February 23, 1999, are not proof of her attitude problem. Likewise,
company rule that warrants disciplinary action; nor required her to submit
her failure to refute petitioners allegations of her negative attitude does
an explanation.
not amount to admission. Technical rules of procedure are not binding in
labor cases.[20] Besides, the burden of proof is not on the employee but on

263

the employer who must affirmatively show adequate evidence that the

evidence that these benefits were already paid. Moreover, this issue

dismissal was for justifiable cause.[21]

involves

question

of

fact

which

is

not

proper

in

petition

for certiorari and the determinations of the Labor Arbiter and the NLRC are
In our view, neither does the February 23, 1999 letter constitute the
afforded great weight and respect by the courts on these matters, when
required notice. The letter did not inform her of the specific acts
these findings are supported by substantial evidence, and devoid of any
complained of and their corresponding penalty. The law requires the
unfairness or arbitrariness. [23] Hence, their findings must be sustained.
employer to give the worker to be dismissed two written notices before
terminating his employment, namely, (1) a notice which apprises the

WHEREFORE, the Decision dated September 16, 2000 of the Labor Arbiter

employee of the particular acts or omissions for which his dismissal is

in NLRC NCR Case No. 00-08-08461-99 as well as Decision dated August

sought; and (2) the subsequent notice which informs the employee of the

30, 2001 and the Resolution dated September 28, 2001 of the National

employers decision to dismiss him. [22] Additionally, the letter never gave

Labor Relations Commission in NLRC NCR CA No. 026466-2000 are

respondent Galay an opportunity to explain herself, hence denying her due

hereby AFFIRMED.

process.
Costs against petitioners.
In sum, we find that Galay was illegally dismissed, because petitioners
failed to show adequately that a valid cause for terminating respondent
exists, and because petitioners failed to comply with the twin requirement
of notice and hearing.

Apropos the award of service incentive pay and 13 th month pay, we find
that they were properly prayed for by Galay. These were subsumed in the
complaint and under the position papers general prayer of such other relief
as are just and equitable under the law. Petitioners failed to present

SO ORDERED.

264

ELPIDIO CALIPAY,

Before the Court is a petition for review on certiorari seeking to annul and

Petitioner,

G.R. No. 166411

set aside the Decision[1] and Resolution[2] of the Court of Appeals (CA),
dated August 24, 2004 andDecember 10, 2004, respectively, in CA-G.R. SP

Present:

No.

79277. The

CA

Decision

dismissed

the

special

civil

action

for certiorari filed by petitioner, while the CA Resolution denied petitioners

- versus -

motion for reconsideration.

CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and

NATIONAL LABOR RELATIONS COMMISSION,

TRIANGLE ACE CORPORATION and JOSE LEE,
Respondents.

MENDOZA, JJ.

The pertinent facts of the case are as follows:

On July 16, 1999, a Complaint[3] for illegal dismissal, unfair labor practice,
underpayment of wages and 13th month pay, non-payment of service
incentive leave pay, overtime pay, premium pay for holiday, rest day, night

Promulgated:

shift allowances and separation pay was filed by herein petitioner Elpidio
Calipay, together with Alfredo Mission and Ernesto Dimalanta against
herein private respondents Triangle Ace Corporation (Triangle) and Jose

August 3, 2010

Lee.

x-----------------------------------------------------------------------------------------x
Calipay and the other complainants alleged in their Position Paper
that in the course of their employment, they were not given any specific
work assignment; they performed various kinds of work imposed upon
DECISION

them by Lee; in discharging their functions, they were required by Lee to

work for nine (9) hours a day, beginning from 7:00 a.m. and ending at 6:00
p.m. with a break of one hour at 12:00 noon; they were also required to

PERALTA, J.:

report from Monday to Sunday; for work rendered from Mondays to

Saturdays beyond the normal eight (8) working hours in a day, they were
paid a uniform daily wage in the amount of P140.00 even during holidays;
for work performed on Sundays, they were not paid any wage due to the
policy of Lee that his workers must provide work without pay at least a day

265

in the week under his so-called bayanihan system; in receiving their

On February 1, 2002, the NLRC rendered judgment via a

wages, they were not given any duly accomplished payslips; instead, they

Resolution[6] based on the findings that: (a) in dismissing the complainants

were forced to sign a blank form of their daily time records and salary

from their employment, respondents failed to faithfully observe the

vouchers.

requirements of notice and hearing rendering the said dismissals invalid

and illegal; (b) the dismissals were not based on any of the just causes

It was further alleged that in May 1998, Lee confronted Calipay

and Mission regarding

their

alleged

participation

and

assistance

in

provided in Article 282 of the Labor Code; (3) the complainants failure to
report

for

work

were

justified

by

their

sudden

termination

from

Dimalantas claim for disability benefits with the Social Security System;

employment which nullified respondents contention that complainants

despite their denials, Lee scolded Calipay and Mission; this incident later

were guilty of abandonment of work. The dispositive portion of the NLRC

led to their dismissal in the same month.

Decision reads as follows:

In their Position Paper, private respondents countered that the

termination of Calipay and the other complainants was for a valid or just
cause and that due process was observed. They claimed, among others,
that Calipay was on absence without leave (AWOL) status from November
2, 1998 up to November 17, 1998; a memorandum dated November 17,
1998, requiring him to explain why his services should not be terminated,
was sent by mail but he refused to receive the same; for failure to explain
his side, another memorandum dated December 11, 1998 was issued
terminating Calipays employment on the ground of abandonment of work;

WHEREFORE, the Decision appealed from is hereby

MODIFIED, ordering respondents Triangle Ace Corporation
Inc./Jose Lee to reinstate the complainants to their former
position without loss of seniority rights and benefits and to
pay them full backwages reckoned from the date of
dismissals up to actual reinstatement which as of even
date amount to P149,017.57 for Alfredo Mission,
P148,705.44 for Elpidio Calipay, and P165,961.77 for
Ernesto Dimalanta, plus ten (10%) percent of the total
award as and for attorneys fees totaling P46,368.47
computed as follows:
xxxx

there is no unfair labor practice because there is no union; there is full

compliance with the law regarding payment of wages and other benefits

Should reinstatement be not feasible, the payment

of separation pay in lieu thereof is awarded.

due to their employees; non-payment of nightshift premium is true,

because the company does not operate at night.
On July 10, 2000, the Labor Arbiter handling the case rendered a

The Decision is AFFIRMED in all other respects.

SO ORDERED.[7]

Decision[4] dismissing the Complaint for lack of merit.

Calipay and the other complainants filed an appeal with the

National Labor Relations Commission (NLRC).[5]

Aggrieved, private respondents filed a Motion for Reconsideration.

266

On September 24, 2002, the NLRC issued a Resolution [8] granting

private respondents Motion for Reconsideration, the dispositive portion of
which reads:
WHEREFORE, the instant motion being meritorious is
GIVEN
DUE
COURSE. Accordingly,
Our
Resolution
promulgated
on February
1,
2002 is
hereby
RECONSIDERED and the decision of the Arbiter a quo dated
10 July 2002 is REINSTATED and AFFIRMED en (sic) toto.
SO ORDERED.[9]

As a consequence, Calipay and the other complainants moved for the

reconsideration of the above-quoted Resolution, but the same was denied
by the NLRC in a Resolution dated June 30, 2003.

PETITION
FOR
CERTIORARI
AND
AFFIRMING
THE
RESOLUTIONS OF PUBLIC RESPONDENT NLRC DATED 30
JUNE
2003
AND
24
SEPTEMBER
2002,
WHICH
RESOLUTIONS DISMISSED PETITIONERS COMPLAINT FOR
ILLEGAL DISMISSAL BY REVERSING RESPONDENT NLRCS
PREVIOUS RESOLUTION DATED 01 FEBRUARY 2002.

II.
WHETHER OR NOT PUBLIC RESPONDENT COURT OF
APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT
AFFIRMED THE SUBJECT RESOLUTIONS OF PUBLIC
RESPONDENT NLRC DISMISSING THE APPEAL FILED BY
PETITIONER AND REINSTATED THE DECISION OF LABOR
ARBITER PANGANIBAN ORDERING THE DISMISSAL OF THE
COMPLAINT
FOR
ILLEGAL
TERMINATION
NOTWITHSTANDING THE PREVIOUS RESOLUTION OF PUBLIC
RESPONDENT NLRC DATED 01 FEBRUARY 2002 DECLARING
THE ILLEGALITY OF PETITIONERS DISMISSAL FROM
EMPLOYMENT.

Calipay and the other complainants then filed a special civil action
for certiorari, with the CA assailing the September 24, 2002 and June 30,
2003 Resolutions of the NLRC.
On August 24, 2004, the CA rendered its presently disputed Decision
dismissing the abovementioned petition for certiorari.

Calipay filed a Motion for Reconsideration, but the CA denied it in its

Resolution dated December 10, 2004.

III.
WHETHER OR NOT SUBSTANTIAL JUSTICE WAS UNDULY
COMPROMISED WHEN PUBLIC RESPONDENT COURT OF
APPEALS AFFIRMED NLRCS DISMISSAL OF PETITIONERS
APPEAL DATED 06 SEPTEMBER 2000 AND RULED AGAINST
PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL BASED
SOLELY ON TECHNICAL RULES OF PROCEDURE WHEN THE
SAME SHOULD HAVE BEEN RELAXED TO GIVE WAY TO
MERITORIOUS AND JUDICIOUS CASES SUCH AS THIS
INVOLVING DISMISSAL FROM WORK OF AN EMPLOYEE. [10]

Hence, the instant petition of Calipay raising the following issues:

I.
WHETHER OR NOT PUBLIC RESPONDENT COURT OF
APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT
ISSUED ITS DECISION DATED 24 AUGUST 2004 AND
RESOLUTION DATED 10 DECEMBER 2004 DISMISSING THE

Petitioners basic contention is that the CA erred in dismissing the petition

filed with it on the basis of strictly adhering to purely technical
grounds. Petitioner argues that he cannot be solely faulted for his failure to

267

timely file his appeal with the NLRC, considering that his former counsel

an appeal within the prescribed period, so does the winner also have the

suddenly and unexpectedly withdrew his services at the time that said

correlative right to enjoy the finality of the decision. [20]

counsel should have been preparing his appeal, leaving petitioner without
anyone to help him prepare his appeal on time. Petitioner avers that in a
number of cases, this Court allowed the late filing of an appeal where such

It is true that procedural rules may be waived or dispensed with in

appeal by a dismissed worker is, like in the present case, impressed with

the interest of substantial justice. [21] This Court may deign to veer away

merit in order that the ends of substantial justice would be served.

from the general rule if, on its face, the appeal appears to be absolutely
meritorious.[22] Indeed, in a number of instances, procedural rules are

The petition lacks merit.

relaxed in order to serve substantial justice. However, the Court sees no

reason to do so in this case as there is no reason to reverse the findings of

It bears to reiterate the settled rule that the timely perfection of an appeal

the CA, to wit:

is a mandatory requirement, which cannot be trifled with as a mere

technicality to suit the interest of a party.[11] The rules on periods for filing
appeals are to be observed religiously, and parties who seek to avail
themselves of the privilege must comply with the rules. [12]

Procedural rules setting the period for perfecting an appeal or filing

a petition for review are generally inviolable. [13] It is doctrinally entrenched
that appeal is not a constitutional right, but a mere statutory privilege.
[14]

Hence, parties who seek to avail themselves of it must comply with the

statutes or rules allowing it. [15] The requirements for perfecting an appeal
within the reglementary period specified in law must, as a rule, be strictly
followed.[16] Such requirements are considered indispensable interdictions
against needless delays and are necessary for the orderly discharge of the
judicial business.[17] Furthermore, the perfection of an appeal in the manner
and within the period permitted by law is not only mandatory, but also
jurisdictional.[18] Failure to perfect the appeal renders the judgment of the
court final and executory.[19] Just as a losing party has the privilege to file

It must be considered that his [Calipays] former

counsel had manifested in his Withdrawal of Appearance
(p. 80, Rollo) that he was withdrawing as counsel by reason
of his (Calipay) desire to engage the services of another
counsel for purposes of perfecting his appeal from the
Labor Arbiters Decision and said Withdrawal of Appearance
was duly signed by his former counsel with the petitioners
conformity thereto and which therefore showed that the
latter had assented to such withdrawal by reason stated
therein. Hence, petitioner Calipay could not blame their
former counsel for the non-perfection of their appeal. And
even if it were true, that there was untimely withdrawal of
his counsel, the latter should not be totally blamed as the
herein petitioner is duty bound to protect his interests and
he should have been more vigilant and circumspect of his
right in pursuing his case by observing the rule on
perfection of appeal.[23]

268

Moreover, the Court notes private respondents contention that petitioner

Resolution, he, however, always fails to mention that in a subsequent

again did not comply with procedural requirements when he failed to

Resolution dated September 24, 2002, the NLRC reversed itself and

attach to the instant petition a verification and certificate against forum

reinstated the Decision of the Labor Arbiter dismissing the complaint filed

shopping as required under Section, Rule 45 of the Rules of Court. On this

by petitioner and his former co-employees.

basis alone, the petition should be dismissed.

Furthermore, petitioner insists that he is not guilty of abandoning his job

and that his failure to report for work was justified by his unceremonious

Even if the Court were to disregard petitioners violation of the above-cited

procedural rules, a careful review of his contentions, as well as the records

dismissal from employment.However, the Labor Arbiter made the following

categorical findings:

of the case, would show that on its merits, the present petition should still
fail.

A perusal of the assailed Decision of the CA would readily confirm that the
appellate courts dismissal of the petition filed by herein petitioner was not
based solely on procedural or technical grounds. Thus, the CA held:
Be that as it may, even if We would set aside the
technicalities in the interest of substantial justice as
proffered by petitioner Calipay that the belated filing of his
appeal should nevertheless be considered in order to
completely resolve the case on its merits, We opine that
the instant case would likewise fail.
We agree with the Labor Arbiters finding that petitioner
Calipay had abandoned his work. x x x
In the instant case, petitioner Calipay had failed to report
for work for unknown reasons x x x His continued absences
without the private respondents approval constituted gross
and habitual neglect which is a just cause for termination
under Article 282 of the Labor Code of the Philippines. [24]

Complainant Ernesto Dimalanta claimed that he was

dismissed on January 30, 1998. x x x Complainants Alfredo
Mission and Elpidio Calipay, for their part, alleged that they
were dismissed by the respondent[s] on May 25,
1998 and May 27, 1998, respectively x x x. The record,
however, shows that complainants actually reported for
work and were paid wages by the respondent company
even after their alleged termination as evidenced by their
Daily Time Records and Salary Vouchers submitted by
respondents.
Complainant Mission worked
with
the
respondent untilJuly 15, 1998, complainant Calipay up
to November 2, 1998 while complainant Dimalanta
until May 17, 1998. After those dates, they absented
themselves from their work without any permission from
the management or without filing any leave of absence.
Thus, two (2) written notices were sent to each
complainant and the Department of Labor and
Employment by the respondent through its General
Manager.[25]

Calipay and the other complainants failed to sufficiently refute these

findings of the Labor Arbiter in their appeal filed with the NLRC. They
simply insisted that they did not report for work, because they were

Petitioner harps on the fact that on February 1, 2002, the NLRC issued a

already terminated. However, they did not present any evidence to prove

Resolution which was in his favor. While petitioner relies heavily on the said

their allegation. On the other hand, as held by the Labor Arbiter, private

269

respondents were able to present the DTRs and Salary Vouchers of Calipay

reinstatement. This

is

an

indication

that

petitioner

and

the

other

and the other complainants showing that they indeed reported for work

complainants never had the intention or desire to return to their jobs. In

even after their alleged termination from employment. [26] Calipay and the

fact, there is no evidence to prove that petitioner and his former co-

other complainants also failed to present evidence to prove their allegation

employees ever attempted to return to work after they were dismissed

that they were forced to sign blank forms of their DTRs and Salary

from employment.

Vouchers.
On the other hand, private respondents were able to present
Indeed, if petitioner was dismissed, as he claims, on May 27, 1998,

memoranda or show-cause letters served on petitioner and the other

why did the DTRs and Salary Vouchers presented by private respondents

complainants at their last known address requiring them to explain their

show

absence,

that

he

continued

to

receive

wages

until October

31,

with

warning

that

their

failure

would

be

construed

1998? Moreover, why did petitioner file his complaint for illegal dismissal

as abandonment of work. Also, private respondents served on petitioner

only on July 16, 1999, or more than one year after he claims to have been

and the other complainants a notice of termination as required by

illegally dismissed?

law. Private

respondents

compliance

with

said

requirements,

taken

together with the other circumstances above-discussed, only proves

On the basis of the foregoing, the Court arrives at the conclusion

petitioner and the other complainants abandonment of their work.

that the filing of the complaint for illegal dismissal appears only as a
convenient

afterthought

on

the

part

of

petitioner

and

the

other

complainants after they were dismissed in accordance with law.

Finally, it bears to point out that the Decision of the Labor Arbiter
was affirmed by the NLRC and the CA. The settled rule is that the factual
findings of the Labor Arbiter and the NLRC, especially when affirmed by the

Jurisprudence has held time and again that abandonment is totally

CA, are accorded not only great respect but also finality, and are deemed

inconsistent with the immediate filing of a complaint for illegal dismissal,

binding upon this Court so long as they are supported by substantial

more so if the same is accompanied by a prayer for reinstatement.

evidence.[28] In the present case, the Court finds no cogent reason to

[27]

In the

present case, however, petitioner filed his complaint more than one year

depart from this rule.

after his alleged termination from employment.Moreover, petitioner and

the other complainants inconsistency in their stand is also shown by the

WHEREFORE,

fact that in the complaint form which they personally filled up and filed

Resolution of the Court of Appeals, dated August 24, 2004 and December

with the NLRC, they only asked for payment of separation pay and other

10, 2004, respectively, in CA-G.R. SP No. 79277, are AFFIRMED.

monetary claims. They did not ask for reinstatement. It is only in their
Position Paper later prepared by their counsel that they asked for

SO ORDERED.

the

petition

is DENIED. The

assailed

Decision

and

270

MANILA ELECTRIC COMPANY,

Petitioner,

G.R. Nos. 191288 & 19130

Present:
CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

- versus -

Promulgated:
JAN CARLO GALA,
Respondent.

March 7, 2012

x------------------------------------------------------------------------------------x

DECISION
BRION, J.:

We resolve the petition for review on certiorari,[1] seeking to annul the

decision[2] dated August 25, 2009 and the resolution[3] dated February 10,
2010 of the Court of Appeals (CA) rendered in CA-G.R. SP. Nos. 105943 and
106021.

The Antecedents

271

The facts are summarized below.

foremen as they were seen conversing with him. Llanes boarded the
trucks, without being stopped, and took out what were later found as

On March 2, 2006, respondent Jan Carlo Gala commenced employment

electrical supplies. Aside from Gala, the foremen and the other linemen

with the petitioner Meralco Electric Company (Meralco) as a probationary

who were at the worksite when the pilferage happened were later charged

lineman. He was assigned at Meralcos Valenzuela Sector. He initially

with misconduct and dishonesty for their involvement in the incident.

served as member of the crew of Meralcos Truck No. 1823 supervised by

Foreman Narciso Matis. After one month, he joined the crew of Truck No.

Unknown to Gala and the rest of the crew, a Meralco surveillance task force

1837 under the supervision of Foreman Raymundo Zuiga, Sr.

was monitoring their activities and recording everything with a Sony video
camera. The task force was composed of Joseph Aguilar, Ariel Dola and

On July 27, 2006, barely four months on the job, Gala was dismissed for

Frederick Riano.

alleged complicity in pilferages of Meralcos electrical supplies, particularly,

for the incident which took place on May 25, 2006. On that day, Gala and

Meralco called for an investigation of the incident and asked Gala to

other Meralco workers were instructed to replace a worn-out electrical pole

explain. Gala denied involvement in the pilferage, contending that even if

at the Pacheco Subdivision in Valenzuela City. Gala and the other linemen

his superiors might have committed a wrongdoing, he had no participation

were directed to join Truck No. 1891, under the supervision of Foreman

in what they did. He claimed that: (1) he was at some distance away from

Nemecio Hipolito.

the trucks when the pilferage happened; (2) he did not have an inkling that
an illegal activity was taking place since his supervisors were conversing

When they arrived at the worksite, Gala and the other workers saw that

with Llanes, giving him the impression that they knew him; (3) he did not

Truck No. 1837, supervised by Zuiga, was already there. The linemen of

call the attention of his superiors because he was not in a position to do so

Truck No. 1837 were already at work. Gala and the other members of the

as he was a mere lineman; and (4) he was just following instructions in

crew of Truck No. 1891 were instructed to help in the digging of a hole for

connection with his work and had no control in the disposition of company

the pole to be installed.

supplies and materials. He maintained that his mere presence at the scene
of the incident was not sufficient to hold him liable as a conspirator.

While the Meralco crew was at work, one Noberto Bing Llanes, a nonMeralco employee, arrived. He appeared to be known to the Meralco

272

Despite Galas explanation, Meralco proceeded with the investigation and

eventually terminated his employment on July 27, 2006.[4] Gala responded

The CA Decision

by filing an illegal dismissal complaint against Meralco. [5]

In its decision of August 25, 2009,[9] the CA denied Meralcos petition for
The Compulsory Arbitration Rulings

lack of merit and partially granted Galas petition. It concurred with the
NLRC that Gala had been illegally dismissed, a ruling that was supported

In a decision dated September 7, 2007,[6] Labor Arbiter Teresita D.

by the evidence. It opined that nothing in the records show Galas

Castillon-Lora dismissed the complaint for lack of merit. She held that

knowledge of or complicity in the pilferage. It found insufficient the joint

Galas participation in the pilferage of Meralcos property rendered him

affidavit[10] of the members of Meralcos task force testifying that Gala and

unqualified to become a regular employee.

two other linemen knew Llanes.

The CA modified the NLRC decision of May 2, 2008[11] and ordered Galas

Gala appealed to the National Labor Relations Commission (NLRC). In its

reinstatement with full backwages and other benefits. The CA also denied

decision

Meralcos motion for reconsideration. Hence, the present petition for review

of May

2,

2008,[7] the

NLRC

reversed

the

labor

arbiters

ruling. It found that Gala had beenillegally dismissed, since there was no

on certiorari.[12]

concrete showing of complicity with the alleged misconduct/dishonesty[.]

[8]

The NLRC, however, ruled out Galas reinstatement, stating that his

The Petition

tenure lasted only up to the end of his probationary period. It awarded him
backwages and attorneys fees.

The petition is anchored on the ground that the CA seriously erred and
gravely abused its discretion in -

Both parties moved for partial reconsideration; Gala, on the ground that he
should have been reinstated with full backwages, damages and interests;

1.

ruling that Gala was illegally dismissed; and

and Meralco, on the ground that the NLRC erred in finding that Gala had

2.

directing Galas reinstatement despite his probationary

been illegally dismissed. The NLRC denied the motions. Relying on the
same grounds, Gala and Meralco elevated the case to the CA through a
petition for certiorari under Rule 65 of the Rules of Court.

status.

273

Meralco faults the CA for not giving credit to its witnesses Aguilar,

Meralco posits that because of his undeniable knowledge of, if not

Dola and Riano, and instead treated their joint affidavit (Samasamang

participation in, the pilferage activities done by their group, the company

Sinumpaang

participation

was well within its right in terminating his employment as a probationary

in the pilferage of company property on May 25, 2006. It submits that the

employee for his failure to meet the basic standards for his regularization.

affidavit of the three Meralco employees disproves the CAs findings,

The standards, it points out, were duly explained to him and outlined in his

considering that their statements were based on their first-hand account of

probationary employment contract. For this reason and due to the

the incident during their day-long surveillance on May 25, 2006. It points

expiration of Galas probationary employment, the CA should not have

out that thethree Meralco employees categorically stated that all of

ordered his reinstatement with full backwages.

Salaysay) asinconclusive to establish Galas

the

companys foremen and linemen present at that time, including Gala,

had knowledge of the pilferage that was happening at the time. According

Finally, Meralco argues that even if Gala was illegally dismissed, he

to Aguilar, Dola and Riano, the trucks crew, including Gala, was familiar

was entitled to just his backwages for the unexpired portion of his

with Llanes who acted as if his presence particularly, that of freely

employment contract with the company.

collecting materials and supplies was a regular occurrence during their

operations.

Meralco

Galas Case

own

By way of his Comment (to the Petition) dated September 2, 2010, [15] Gala

testimony[13] that he had been familiar with Llanes even before the May 25,

asks for a denial of the petition because of (1) serious and fatal infirmities

2006 incident where he saw Zuiga, the foreman of Truck No. 1837,

in the petition; (2) unreliable statements of Meralcos witnesses; and (3)

conversing with Llanes. Meralco submits that Galas admission, instead of

clear lack of basis to support the termination of his employment.

demonstrating

maintains

his

feigned

that

Gala

himself

innocence, [14] even

admitted

in

highlights

his

his

guilt,

especially considering that by design, his misfeasance assisted Llanes in

Gala contends, in regard to the alleged procedural defects of the petition,

pilfering company property; Gala neither intervened to stop Llanes, nor did

that the Verification and Certification, Secretarys Certificate and Affidavit of

he report the incident to the Meralco management.

Service do not contain the details of the Community or Residence Tax

Certificates of the affiants, in violation of Section 6 of Commonwealth Act
No. 465 (an Act to Impose a Residence Tax). Additionally, the lawyers who

274

signed the petition failed to indicate their updated Mandatory Continuing

trucks, he was not aware that a wrongdoing was being committed or was

Legal Education (MCLE) certificate numbers, in violation of the rules.

about to be committed. He points out at that precise time, his superiors

were much nearer to the trucks than he as he was among the crew digging

With respect to the merits of the case, Gala bewails Meralcos reliance on
the joint affidavit[16] of Aguilar, Dola and Riano not only because it was

a hole. He presumed at the time that his own superiors, being the more
senior employees, could be trusted to protect company property.

presented for the first time on appeal to the CA, but also because it was a
mere afterthought. He explains that Aguilar and Dola were the very same

Finally, Gala posits that his reinstatement with full backwages is but a

persons who executed a much earlier sworn statement or transcription

consequence of the illegality of his dismissal. He argues that even if he

dated July 7, 2006. This earlier statement did not even mention Gala, but

was on probation, he is entitled to security of tenure. Citing Philippine

the later joint affidavit splashes GALAs name in a desperate attempt to link

Manpower Services, Inc. v. NLRC,[18] he claims that in the absence of any

him to an imagined wrongdoing.[17]

justification for the termination of his probationary employment, he is

entitled to continued employment even beyond the probationary period.

Zeroing in on what he believes as lack of credibility of Meralcos evidence,

Gala posits that there is clear lack of basis for the termination of his

The Courts Ruling

employment. Thus, he wonders why Meralco did not present as evidence

the video footage of the entire incident which it claims exists. He suspects

The procedural issue

that the footage was adverse to Meralcos position in the case.

Gala would want the petition to be dismissed outright on procedural
Gala adds that the allegations of a reported pilferage or rampant theft or

grounds, claiming that the Verification and Certification, Secretarys

pilferage committed prior to May 25, 2006 by his superiors were not

Certificate and Affidavit of Service accompanying the petition do not

established, for even the labor arbiter did not make a finding on the

contain the details of the Community Tax Certificates of the affiants, and

foremens involvement in the incident. He stresses that the same is true in

that the lawyers who signed the petition failed to indicate their updated

his case as there is no proof of his participation in the pilferage.

MCLE certificate numbers, in violation of existing rules.

Gala further submits that even if he saw Llanes on May 25, 2006 at about
the time of the occurrence of the pilferage near or around the Meralco

275

We stress at this point that it is the spirit and intention of labor

Gala insists that he cannot be sanctioned for the theft of company

legislation that the NLRC and the labor arbiters shall use every reasonable

property on May 25, 2006. He maintains that he had no direct participation

means to ascertain the facts in each case speedily and objectively, without

in the incident and that he was not aware that an illegal activity was going

regard to technicalities of law or procedure, provided due process is duly

on as he was at some distance from the trucks when the alleged theft was

observed.[19] In keeping with this policy and in the interest of substantial

being committed. He adds that he did not call the attention of the foremen

justice, we deem it proper to give due course to the petition, especially in

because he was a mere lineman and he was focused on what he was doing

view of the conflict between the findings of the labor arbiter, on the one

at the time. He argues that in any event, his mere presence in the area

hand, and the NLRC and the CA, on the other. As we said in S.S. Ventures

was not enough to make him a conspirator in the commission of the

International, Inc. v. S.S. Ventures Labor Union,[20] the application of

pilferage.

technical rules of procedure in labor cases may be relaxed to serve the

demands of substantial justice.

Gala misses the point. He forgets that as a probationary employee, his

overall job performance and his behavior were being monitored and

The substantive aspect of the case

measured in accordance with the standards (i.e., the terms and conditions)
laid down in his probationary employment agreement. [22] Under paragraph

We find merit in the petition.

8 of the agreement, he was subject to strict compliance with, and nonviolation of the Company Code on Employee Discipline, Safety Code, rules

Contrary to the conclusions of the CA and the NLRC, there is

and regulations and existing policies. Par. 10 required him to observe at all

substantial evidence supporting Meralcos position that Gala had become

times the highest degree of transparency, selflessness and integrity in the

unfit to continue his employment with the company. Gala was found, after

performance of his duties and responsibilities, free from any form of

an administrative investigation, to have failed to meet the standards

conflict or contradicting with his own personal interest.

expected of him to become a regular employee and this failure was mainly
due to his undeniable knowledge, if not participation, in the pilferage

The evidence on record established Galas presence in the worksite where

activities done by their group, all to the prejudice of the Companys

the pilferage of company property happened. It also established that it was

interests.[21]

not only on May 25, 2006that Llanes, the pilferer, had been seen during a
Meralco operation. He had been previously noticed by Meralco employees,

276

including Gala (based on his admission), [23] in past operations. If Gala had

question:

what

was

he

doing

there?

Apparently,

he

had

been

seen Llanes in earlier projects or operations of the company, it is

visiting Meralco worksites, at least in the Valenzuela Sector, not simply to

incredulous for him to say that he did not know why Llanes was there or

socialize, but to do something else. As testified to by witnesses, he was

what Zuiga and Llanes were talking about. To our mind, the Meralco crew

picking up unused supplies and materials that were not returned to the

(the foremen and the linemen) allowed or could have even asked Llanes to

company. From these factual premises, it is not hard to conclude that this

be there during their operations for one and only purpose to serve as their

activity was for the mutual pecuniary benefit of himself and the crew who

conduit for pilfered company supplies to be sold to ready buyers outside

tolerated the practice. For one working at the scene who had seen or who

Meralco worksites.

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 familiarity of the Meralco crew with Llanes, a non-Meralco employee

the very suspicious.

who had been present in Meralco field operations, does not contradict at all
but rather support the Meralco submission that there had been reported

We consider, too, and we find credible the company submission that the

pilferage or rampant theft, by the crew, of company property even

Meralco

crew

who

worked

at

the

Pacheco

Subdivision

before May 25, 2006. Gala downplays this particular point with the

in Valenzuela City on May 25, 2006 had not been returning unused supplies

argument that the labor arbiter made no such finding as she merely

and materials, to the prejudice of the company. From all these, the

assumed it to be a fact, [24] her only basis being the statement that may

allegedly hearsay evidence that is not competent in judicial proceedings

natanggap na balita na ang mga crew na ito ay palagiang hindi nagsasauli

(as noted above), takes on special meaning and relevance.

ng mga electric facilities na kanilang ginagamit o pinapalitan bagkus ito ay

With respect to the video footage of the May 25, 2006 incident,

ibinenta palabas.[25] Gala impugns the statement as hearsay. He also

Gala himself admitted that he viewed the tape during the administrative

wonders why Meralcos supposed video footage of the incident on May 25,

investigation, particularly in connection with the accusation against him

2006 was never presented in evidence.

that he allowed Llanes (binatilyong may kapansanan sa bibig) to board the

Meralco trucks.[26] The choice of evidence belongs to a party and the mere

The established fact that Llanes, a non-Meralco employee, was often seen

fact that the video was shown to Gala indicates that the video was not an

during company operations, conversing with the foremen, for reason or

evidence that Meralco was trying to suppress. Gala could have, if he had

reasons connected with the ongoing company operations, gives rise to the

wanted to, served a subpoena for the production of the video footage as

277

evidence. The fact that he did not does not strengthen his case nor weaken
the case of Meralco.

On the whole, the totality of the circumstances obtaining in the case

convinces us that Gala could not but have knowledge of the pilferage of
company electrical supplies on May 25, 2006; he was complicit in its
commission, if not by direct participation, certainly, by his inaction while it
was being perpetrated and by not reporting the incident to company
authorities. Thus, we find substantial evidence to support the conclusion
that Gala does not deserve to remain in Meralcos employ as a regular
employee. He violated his probationary employment agreement, especially
the requirement for him to observe at all times the highest degree of
transparency, selflessness and integrity in the performance of their duties
and responsibilities[.][27] He failed to qualify as a regular employee. [28]

For ignoring the evidence in this case, the NLRC committed grave abuse
of discretion and, in sustaining the NLRC, the CA committed a reversible
error.

WHEREFORE,

premises

considered,

the

petition

is GRANTED. The

assailed decision and resolution of the Court of Appeals are SET ASIDE.
The complaint is DISMISSEDfor lack of merit.

SO ORDERED.

278

BLUE SKY TRADING COMPANY,

INC. and/or JOSE TANTIANSU and
LINDA TANTIANSU,
Petitioners,

G.R. No. 190559

- versus -

Present:

ARLENE P. BLAS and

JOSEPH D. SILVANO,
Respondents.

CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

The

assailed

resolution

denied

the

petitioners'

Motion

for

Reconsideration[5] to the foregoing.

Antecedent Facts

Petitioner Blue Sky Trading Company, Inc. (Blue Sky) is a duly registered
domestic corporation engaged in the importation and sale of medical

Promulgated:

supplies and equipment. Petitioner Jose G. Tantiansu, Jr. (Jose) is Blue Sky's

March 7, 2012

vice president for operations while petitioner Linda G. Tantiansu (Linda) is

its assistant corporate secretary. The respondents Arlene P. Blas (Arlene)

x----------------------------------------------------------------------------------------x

and Joseph D. Silvano (Joseph) were regular employees of Blue Sky and
they respectively held the positions of stock clerk and warehouse helper

DECISION

before they were dismissed from service on February 5, 2005.

On January 29, 2005, Lorna N. Manalastas (Lorna), Blue Sky's warehouse

REYES, J.:

supervisor, wrote Jose a memorandum [6] informing the latter that six pairs
The Case

of intensifying screens were missing. Lorna likewise stated that when a

certain Boy conducted an inventory on October 2004, the screens were still

Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules

completely accounted for.

of Court assailing the October 26, 2009 Decision[2] and the December 14,
2009 Resolution[3] of the Court of Appeals (CA) in CA G.R. SP No. 108432.
The dispositive portion of the assailed decision reads:

On January 31, 2005, Helario Adonis, Jr. (Helario), warehouse personnel,

was summoned by Linda, Jose's wife Alice Tantiansu, and human resources
department head Jean B. De La Paz (Jean). Helario was asked to admit his

WHEREFORE, premises considered, the instant Petition

is GRANTED. The challenged resolution of the NLRC dated
30 January 2009 is hereby REVERSED and SET ASIDE.
Accordingly, the Decision of the NLRC dated 29 November
2007 is hereby REINSTATED.
SO ORDERED.[4]

participation in the theft of the missing screens. While he was offered to be

paid a separation pay if he would confess complicity with the alleged theft,
he pleaded utter innocence.

279

On February 1, 2005, Jean notified Helario of his termination from service

on the ground of his failure to properly account for and maintain a balance
of the company's stock inventories, hence, resulting in Blue Sky's loss of
trust and confidence in him.[7] The day after, Blue Sky promptly filed with
the Department of Labor and Employment (DOLE) an establishment
termination report[8] indicating therein Helario's dismissal from service for
cause.

On

February

suspension

[9]

3,

2005,

Jean

issued

notices

to

explain/preventive

para mag-explain regarding that matter. Maging fair naman

kayo sa akin.
Anyway, regarding sa nawawalang IS, ang alam ko inimventory ni Kuya Boy yan last Oct. According to him,
complete daw lahat yun. Nang bumaba si Sir Jun mga last
week ng Dec. para magpalinis ng stocks, na-found out nya
na kulang ang stocks. So we did, we compare the bincard
to the stockcard. But tally silang pareho. Kaya, we did we
trace it is sa mga possible records like shipment sa Cebu or
sales. But wala doon. Ang naiisip naming dahilan ay baka
nagpakabit si Ate Lorna ng cassette with IS sa technical
and she forgot to report it. Yun lang ang possible reason na
alam ko. At wala na akong alam pang iba. x x x [10]

to Arlene, Joseph, delivery personnel Jayde Tano-an (Jayde)

and maintenance personnel/driver Wilfredo Fasonilao (Wilfredo). The

notices informed them that they were being accused of gross dishonesty in

On

the

other

hand,

Joseph

proffered

the

following

explanation:

connection with their alleged participation in and conspiracy with other

employees in committing theft against company property, specifically
relative to the loss of the six intensifying screens. They were placed under
preventive suspension pending investigation and were thus required to file
their written explanations within 48 hours from receipt of the notices.

Tungkol po sa nawawalang intensifying screen, wala po

akong alam. Kasi po sa messanin[,] pumapasok lang po
ako pag may inutos o may pagagawa, tsaka hindi po ako
naghahanda ng lumang stocks. Nagbababa po kami ng
stock at nag-aakyat sa 2nd flor pag kami po ay inutusan ng
nakakataas sa akin o may katungkulan. Yun lang po ang
aking trabaho sa mesanin. Eto lang po ang aking masasabi.
[11]

On

February

4,

2005,

Arlene

submitted

to

Jean

handwritten

memorandum denying knowledge or complicity with the theft of the

intensifying screens. In part, the memorandum reads:

Jayde and Wilfredo also filed their written explanations denying any
involvement in the theft which took place and professing their dedication

I'm not the supervisor of that dep't. para tanungin sa lahat

ng nangyayari. Second, hindi naman ako ang naginventory ng stocks na yan. Third, nag-oout lang ako ng
stocks kapag wala sila at kailangan na ang stocks. And
lastly, ano ba talaga ang trabaho ko dito, kc all I know is
pag-re-record ng stocks but parang lumalabas guard ako
na kailangan kong malaman ang lahat ng kilos at galaw ng
lahat ng employee dito. Dahil ako lagi ang tinatanong
tungkol sa nangyayari sa mezz. Bakit ako lang ba ang tao
doon? So it means that, dapat lahat kami ay may memo

and loyalty to Blue Sky.[12]

On February 5, 2005, Jean issued to Arlene, Joseph, Jayde and Wilfredo

notices of dismissal for cause [13] stating therein that evidence that they had
conspired with each other to commit theft against company property was
too glaring to ignore. Blue Sky had lost its trust and confidence on them

280

and as an act of self-preservation, their termination from service was in

On November 17, 2005, Labor Arbiter Gaudencio P. Demaisip, Jr. (LA

order.

Demaisip) dismissed the complaint relative to Helario, Jayde and Wilfredo

as a consequence of their filing of the affidavits of desistance. As to Arlene

On February 7, 2005, Blue Sky filed with the DOLE an establishment

and Joseph, LA Demaisip denied their claims of illegal suspension and

termination report stating therein the dismissal of Arlene, Joseph, Jayde

dismissal and for payment of ECOLA and overtime pay based on the

and Wilfredo.

following grounds:

[14]

On February 8, 2005, Arlene, Joseph, Helario, Jayde and Wilfredo filed with
the National Labor Relations Commission (NLRC) a complaint for illegal
dismissal and suspension, underpayment of overtime pay, and nonpayment of emergency cost of living allowance (ECOLA), with prayers for
reinstatement and payment of full backwages. The complaint was
docketed as NLRC NCR Case No. 00-02-01351-05.

Meanwhile, an entrapment operation was conducted by the police during

which Jayde and Helario were caught allegedly attempting to sell to an
operative an ultrasound probe worth around P400,000.00 belonging to
Blue Sky. On April 22, 2005, Quezon City Inquest Prosecutor Arleen
Tagaban issued a resolution

[15]

recommending the filing in court of criminal

charges against Jayde and Helario.

On May 2005, before the complaint which was filed with the NLRC can be
resolved,
desistance

Helario,
[16]

Jayde

and

Wilfredo

executed

affidavits

of

stating therein that their termination by Blue Sky was for

cause and after observance of due process.

The Ruling of the Labor Arbiter

[T]he duties of Ms. Blas [Arlene] was to take out stocks.

Also, Mr. Silvano's [Joseph] work consisted of removing,
storing, or furnishing of stocks or supplies.
Further, Ms. Blas [Arlene] was tasked to make written
monitoring of stocks or supplies.
Complainants therefore, are charged with the care and
custody of respondents' property. They may not be given
such functions or allowed entrance and exit from
respondents' bodega if they were untrustworthy.
Indeed, the functions consisting of removing, storing,
furnishing, monitoring and gaining ingress to and egress
from the bodega, where the stocks or supplies are kept,
involved trust and confidence.
Article 282 of the Labor Code allows the employer to
terminate the services of the employees, among others, for
breach of trust and confidence.
Loss of confidence however, apply (sic) to the following: x x
x (2) to those situations where the employee is routinely
charged with the care and custody of the employer's
money or property such as auditors, cashier; property
custodians, or those who regularly handle significant
amount of money or property.
The dismissal must rest on
committed by the employee.

actual

breach

of

duty

Further, proof beyond reasonable doubt is not necessary. It

is sufficient if there is some basis for such loss of
confidence.

281

xxx
The basis, for the dismissal of the complainants, is the fact
that six (6) pairs of assorted sizes of Intensifying Screen of
the company at the bodega were lost x x x.
An entrapment was conducted against Tano-an [Jayde] and
Adonis [Helario] x x x:
xxx
Simply put, the contention, about the missing items or
supplies, is credible and reliable.
It is not necessary that proof of taking or conspiracy must
exist.
The existence of the fact, that items or supplies were
missing at the bodega of the company, would suffice to
prove loss of confidence.
Complainants failed in their duties to exercise utmost
protection, care, or custody of respondent's property.
Hence, their dismissal from the service is warranted.
xxx
Claims for ECOLA and overtime pay were not discussed by
the complainants[,] hence, they should be denied.[17]

property. It was, thus, incumbent upon the respondents to

prove the alleged theft by the appellants [Arlene and
Joseph] with clear and substantial evidence. A reading of
the record will, however, show that respondents have not
presented any evidence to show the involvement of the
complaint [sic] Arlene Blas and Joseph Silvano x x x in the
theft. To start with, appellants were not caught red handed.
No specific acts or deeds were imputed upon appellants to
prove the allegation that they committed theft against the
respondents. While there may be articles which may have
been lost, the respondents have not shown how these were
lost and how appellants participated in the theft. The fact
that appellants had access to the lost items is not sufficient
to prove their guilt. As shown, there were several other
persons who had unlimited access to the warehouse where
the items stolen were stacked. No witnesses were also
presented implicating appellants in the theft.
As it is, all respondents have are general allegations that
appellants conspired with the other complainants in
stealing the lost items. Allegations, no matter how
convincing they may sound, while they remain to be so,
cannot be considered as clear and substantial evidence
sufficient to justify the dismissal of an employee. While
proof beyond reasonable doubt is not required, still
respondents should have presented substantial evidence to
support the grounds they have relied upon. x x x
xxx

Arlene and Joseph assailed before the NLRC the decision rendered by LA
Demaisip.[18]

The Rulings of the NLRC

On November 29, 2007, the NLRC ordered the reinstatement of Arlene and
Joseph and the payment to them of full backwages and ten percent
attorney's fees. The decision, in part, reads:
[T]he respondents [Blue Sky, Jose and Linda] accused
complainants [Arlene and Joseph] of theft of company

Finally, [w]e do not see appellants as holding positions of

trust and confidence. Before an employee may be
dismissed due to willful breach of trust, he must hold a
position of trust and confidence (Estiva [v]s. NLRC, G.R.
No. 95145, August 5, 1993). A position of trust and
confidence is one where a person is entrusted with
confidence on delicate matters, or with the custody,
handling, or care and protection of the employers property
(Panday vs. NLRC, G.R. No. 67664, May 20, 1994) and/or
funds (Gonzales vs. NLRC, 335 SCRA 197).
Appellant Arlene Blas is a Stock Clerk while Joseph Silvano
is a warehouse helper. While they may have access to the
lost items, they were not entrusted with confidence on

282

delicate matters or custody of the employer's property.

They do not have the authority to withdraw, transfer or
release items in the warehouse. They are mere low keyed
employees who deal with the handling of stocks only when
ordered to by their superiors.[19]

Both parties filed their motions for reconsideration [20] to the

foregoing.

Claiming that their relations with Blue Sky had been strained, Arlene and
Joseph sought the payment of separation pay, in lieu of reinstatement.
Further, they lamented that the NLRC failed to specifically address the
issue relative to their monetary claims. Hence, they reiterated the said
claims, in addition to service incentive leave and 13 th month pay for the
year 2005, arguing that the burden to prove payment of benefits pertained

thievery as established from the subsequent entrapment

operations conducted by the respondents with the
assistance of PNP operatives against the two (2) other
complainants, namely Jayde [Tano-an] and Helario Adonis,
who are presently facing charges for attempting to sell
respondents' property, convinced this Commission to
reconsider its previous finding and be in agreement with
the respondents' position.
xxx
While we are not unmindful of the fact that complainants
Blas and Silvano were not part of the group who were
apprehended during the entrapment operations, however,
had they not been remiss in their respective duties [as]
stock clerk and warehouse helper or not aided their former
co-workers Tano-an and Adonis, thievery or losses of
company's property could not have been committed.
xxx

support its claim that Arlene and Joseph participated in, or at the least

The loss of company's property having been substantially

proven, complainants Blas [Arlene] and Silvano [Blas]
cannot just make a general denial and wash their hands
clean. Their termination not only due to loss of trust but
also for gross neglect of duties is therefore found justified.
xxx

knew about, the theft of the missing screens.

xxx

to Blue Sky which miserably failed in this regard.

On the other hand, Blue Sky averred that substantial evidence existed to

On January 30, 2009, the NLRC issued a resolution reversing its earlier
decision and reinstating LA Demaisip's dismissal of the complaint filed by
Arlene and Joseph on the basis of the following:
In our Decision promulgated on November 29, 2007, we
advanced the view that complainants Blas [Arlene] and
Silvano [Joseph] were ordinary employees not occupying
positions of trust, without however taking a profound
appreciation of the fact that complainants' duties as stock
clerk and warehouse helper routinely involved having
unlimited access to company's properties and stocks. The
fact that same properties which were subject of losses and

Finally, as regards complainants' claim for alleged unpaid

13th month pay and service incentive leave pay for 2005,
contrary evidence however showed that respondents [Blue
Sky] had paid the said claims as shown by the payment of
their final monetary benefits which the complainants had
duly received.[21]

Aggrieved,

Arlene

and

Joseph

filed

before

the

CA

Petition

for Certiorari[22] under Rule 65 of the Rules of Court to challenge the above
quoted NLRC resolution.

The Ruling of the CA

283

making their positions as one reposed with trust and

confidence.
In the decision rendered on October 26, 2009, which is now the subject of
the instant petition, the CA found merit in the claims advanced by Arlene
and Joseph. In reversing the January 30, 2009 Resolution of the NLRC, the
CA ratiocinated that:
Prefatorily, the basic 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. A position of trust and confidence is one where
a person is entrusted with confidence on delicate matters,
or with the custody, handling or care and protection of the
employer's property. And, in order to constitute a just
cause for dismissal, the act complained of must be workrelated and shows that the employee concerned is unfit to
continue to work for the employer.
In General Bank and Trust Company vs. Court of Appeals,
the Supreme Court laid down the following guidelines for
the application of the doctrine of loss of confidence as a
justification in the termination of erring employees, viz:
(a) loss of confidence which should not be simulated;
(b) it should not be used as a subterfuge for causes which
are improper, illegal or unjustified;
(c) it should not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and
(d) it must be genuine, not a mere afterthought to justify
earlier action taken in bad faith.
xxx
To [o]ur mind, the NLRC is correct insofar as it considered
the nature of [p]etitioner BLAS and [p]etitioner SILVANO as
stock clerk and warehouse helper, respectively, as
positions of trust and confidence. On account of their
positions in the company, the [p]etitioners were given
access to the [r]espondents' warehouse w[h]ere the
company products and goods are kept. Likewise, by the
nature of the work the [p]etitioners performed for the
[r]espondents, it is logical to conclude that the former were
charged with the custody of [r]espondents' property, thus

However, [w]e hold that the [r]espondents failed to

sufficiently establish the charge against [p]etitioners which
was the basis for its loss of trust and confidence that
warranted their dismissal. Concededly, it is settled that
proof beyond reasonable doubt is not required in
dismissing an employee on the ground of loss of trust and
confidence. It is sufficient that there is some basis for such
loss of confidence or that there must be some reasonable
grounds to believe, if not to entertain the moral conviction
that the employee concerned is responsible for the
misconduct and that the nature of his participation therein
rendered him absolutely unworthy of trust and confidence
demanded by his position. However, loss of confidence as
a valid cause to terminate an employee must nonetheless
rest on actual breach of duty committed by the employee
and not on the employer's imagined whim or caprice.
Verily, [w]e are convinced that the [r]espondents failed to
adduce any substantial proof showing that the [p]etitioners
committed an actual breach of their duty which destroyed
the trust and confidence reposed upon them by their
employer. Clearly, there is no ample evidence to show that
[p]etitioners conspired with the thieves in stealing six (6)
pairs of intensifying screens from [r]espondents[']
warehouse. Nor is there any shred of evidence that tends
to prove that the [p]etitioners had a direct hand in the
larceny committed against the [r]espondents. In fact, the
verity of the [p]etitioners' innocence on the thievery
committed against the [r]espondents was recognized by
the NLRC in the assailed Resolution, viz:
xxx
While we are not unmindful of the fact
that complainants Blas [Arlene] and
Silvano [Joseph] were not part of the
group who were apprehended during
the entrapment operations, however,
had they not been remiss in their
respective duties [as] stock clerk and
warehouse helper or not aided their

284

former
co-workers
Tano-an
and
Adonis,
thievery
or
losses
of
company's property could not have
been committed. x x x

In Salvador v. Philippine Mining Service Corporation,[25] it was ruled that

proof

beyond

reasonable

doubt

of

the

employee's

misconduct

or

dishonesty is not required to justify loss of confidence, it being sufficient

xxx

that there is substantial basis for loss of trust. Thus, an employer should

The ratiocination of the NLRC in reversing its initial

pronouncement is that the [p]etitioners were remiss in
their duty is flawed. It bears noting that the NLRC offered
no explanation to justify this finding nor is there any
scintilla of evidence in the records to support the
conclusion that the [p]etitioners had aided, expressly or
impliedly, their former co-workers in committing theft
against the company.[23] (Citations omitted)

not be held liable for dismissing the services of an employee sincerely

believed to have at least known or participated in the commission of theft
against company property. The employer is not required to present proofs
of the employee's actual taking or unlawful possession of company
property. In fact, in Dole Philippines, Inc. v. NLRC, et al.,[26] the court held
that where the dismissal for loss of confidence is based on suspected theft
of company property on the part of the employee, it remains a valid cause

The CA denied the petitioners' motion for reconsideration, hence, the

for dismissal even if the employee is subsequently acquitted.

instant petition.
It is immaterial that Arlene and Joseph were not among those who were
The Issues

entrapped attempting to sell an ultrasound probe to a police operative. The

nature of their tasks at Blue Sky and the fact of loss of the intensifying

The petitioners submit the following for resolution:

I.
WHETHER OR NOT THE EVIDENCE ADDUCED BEFORE THE
NLRC BY PETITIONERS ARE SUFFICIENT TO ESTABLISH THE
CHARGES WHICH WAS (sic) BASIS FOR THE LOSS OF TRUST
AND CONFIDENCE AGAINST RESPONDENTS[-]EMPLOYEES.
II.
WHETHER OR NOT THE CA WAS CORRECT IN GRANTING
THE PETITION FOR CERTIORARI FILED BY RESPONDENTS
AND LATER, DENYING PETITIONERS' MOTION FOR
RECONSIDERATION.[24]

screens dictated Arlene and Joseph's liabilities. Arlene's daily work routine
involved (a) receiving and releasing of stocks; and (b) preparing stock
cards
for purposes of checking and monitoring the items in the warehouse. On
the other hand, Joseph carried and moved stocks in and out of the
warehouse. The six intensifying screens were discovered missing while
Arlene, Joseph, Helario, Jayde and Wilfredo were supposedly performing
their tasks, hence, the logical inference that they conspired to commit the
theft or at least, knowingly allowed it to happen. Had the employees
exercised due or even ordinary diligence to protect company property, no
loss would have been incurred. Further, the defense interposed by Arlene

The Petitioners' Arguments

in her written explanation that she was not employed by Blue Sky as a
security guard, showed her utter lack of concern for the company's

285

welfare, which rendered her undeserving of an employer's trust and

confidence.

We deem it proper to first resolve the procedural challenge interposed by

the respondents against the instant petition and we find it lacking in merit.

Findings of fact of quasi-judicial agencies, like the NLRC, are accorded not
only respect but even finality when they are supported by substantial

It bears stating that Rule 45 limits us merely to the review of questions of

evidence.

law raised against the assailed CA decision. [29] Further, the Court is

[27]

Thus, the CA erred when it ruled that the NLRC gravely abused

its discretion in ordering the dismissal of the respondents' complaint.

generally bound by the CA's factual findings. The foregoing rules, however,
admit of exceptions, among which is when the CA's findings are contrary to

The Respondents' Contentions

those of the trial court or administrative body exercising quasi-judicial

functions from which the action originated. [30] The case before us now falls

In their Comment,[28] the respondents cited Section 1, Rule 45 of the Rules

under the aforementioned exception as the LA, NLRC and the CA were at

of Court to argue that only questions of law can be raised in a petition for

odds as to their findings.

review on certiorari. In the case at bar, the petitioners raise a factual

question, to wit, the alleged sufficiency of the evidence they presented to
justify the dismissal of Arlene and Joseph on the basis of loss of trust and
confidence. The petitioners thus call for an examination of the probative
value of the evidence offered by the parties, which is beyond the province
of a petition filed under Rule 45 of the Rules of Court.

This Court's Ruling

While a petition for
review
on certiorari under Rule
45 of the Rules of Court
generally precludes us
from resolving factual
issues, the instant case
falls
among
the
exceptions as the LA,
the NLRC and the CA
were at odds as to
their findings.

Substantial evidence of
actual breach by an
employee is required
from an employer to be
able
to
justify
the
former's dismissal from
service on the basis of
an alleged participation
in theft of company
property. However, in
the case at bar, Blue Sky
had failed to discharge
the burden of proof
imposed upon it.

We note that the petitioners essentially raise the sole question of whether
they had proven by substantial evidence the charges of theft against
Arlene and Joseph which led to the latter's termination from service on the
ground of loss of trust and confidence.

286

We rule in the negative.

Blue Sky alleged that Arlene, who was a stock clerk, and Joseph, a
In Functional, Inc. v. Samuel Granfil,[31] we declared:

warehouse helper, had free access to the missing items. Arlene, who kept
the stock cards, was supposed to be monitoring on a daily basis the

The rule is long and well settled that, in illegal dismissal

cases like the one at bench, the burden of proof is upon the
employer to show that the employees termination from
service is for a just and valid cause. The employers case
succeeds or fails on the strength of its evidence and not on
the weakness of that adduced by the employee, in keeping
with the principle that the scales of justice should be tilted
in favor of the latter in case of doubt in the evidence
presented by them. Often described as more than a mere
scintilla, the quantum of proof is substantial evidence
which is understood as such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion, even if other equally reasonable minds might
conceivably opine otherwise. Failure of the employer to
discharge the foregoing onus would mean that the
dismissal is not justified and therefore illegal.

incoming and outgoing stocks stored in or taken out of the warehouse.

Joseph took the stocks from the warehouse to the vehicles for transport or
delivery purposes. Arlene and Joseph averred otherwise. They insisted that
they were mere lowly employees who did not have actual custody of
company property, specifically, of the missing items. Arlene claimed that
she was not responsible for conducting inventories and that she released
stocks only when urgently necessary and only in the absence of those
authorized to do so. Joseph alleged that he only went to the mezzanine,
where the missing items were stored, when ordered to do so by his
superiors.

We note that the parties disagree as to what tasks were actually and
Further, in Baron v. NLRC,

we held that for there to be a valid dismissal

regularly performed by Arlene and Joseph. They are at odds as to the issue

based on loss of trust and confidence, the breach of trust must be willful,

of whether or not Arlene and Joseph had custody of the missing screens.

meaning it must be done intentionally, knowingly, and purposely, without

We observe though that neither of the parties presented any documentary

justifiable excuse.

evidence, such as employment contracts, to establish their claims relative

[32]

to the actual nature of Arlene and Joseph's daily tasks. It bears

In the case at bar, we agree with the petitioners that mere substantial

emphasizing though that the photocopies of the identification cards issued

evidence and not proof beyond reasonable doubt is required to justify the

by Blue Sky, which were annexed to the respondents' position paper filed

dismissal from service of an employee charged with theft of company

with the LA, indicated that Arlene was assigned at the customer service

property. However, we find no error in the CA's findings that the petitioners

department while Joseph was part of the warehouse department. [33]

had not adequately proven by substantial evidence that Arlene and Joseph
indeed participated or cooperated in the commission of theft relative to the

During the entrapment operation conducted by police operatives, Jayde

six missing intensifying screens so as to justify the latter's termination from

and Helario were caught attempting to sell an ultrasound probe allegedly

employment on the ground of loss of trust and confidence.

belonging to Blue Sky. Thereafter, Jayde, Helario and Wilfredo withdrew

287

their complaints for illegal dismissal against the company. Arlene and

The petitioners also argue that if Arlene and Joseph had not been grossly

Joseph, however, pursued their claims. Nonetheless, Blue Sky construed

negligent in the performance of their duties, Blue Sky would not have

the result of the entrapment operation to mean that there was a

incurred the loss. We observe though that in the notices sent to Arlene and

conspiracy among the five employees to commit theft of company

Joseph, first charging them with theft, and later, informing them of their

property. In the reply filed by the petitioners to the respondents' position

dismissal from service, gross negligence was not stated therein as a

paper filed before the LA, the former alleged that in a letter, Jayde, Helario

ground. Hence, Arlene and Joseph could not have defended themselves

and Wilfredo implicated Arlene and Joseph as participants and conspirators

against the charge of gross negligence. They cannot be dismissed on that

in the commission of theft.

ground lest due process be violated.

[34]

However, we note that the petitioners'

allegation was bare since the letter supposedly written by Jayde, Helario
and Wilfredo was not offered as evidence. Further, Blue Sky alleged that

Only the following had been established without dispute: (a) the fact of loss

the ultrasound probe was among the items found missing in the inventory

of the six intensifying screens; (b) an entrapment operation was

conducted in December 2004. We observe though that the employees

successfully conducted by the police operatives who caught Jayde and

were dismissed for alleged theft of six intensifying screens. In the

Helario in the act of attempting to sell an ultrasound probe which allegedly

termination notices, no references were made at all to a missing

belonged to Blue Sky; and (c) Jayde, Helario and Wilfredo filed their

ultrasound probe.

affidavits of desistance to withdraw their complaints for illegal dismissal

against Blue Sky while Arlene and Joseph pursued their complaints.

Further, we notice that both parties mentioned a certain Boy who

conducted the inventory in October 2004. There is no dispute that at that

In its November 29, 2007 Decision, the NLRC found that Arlene and Joseph,

time, the six intensifying screens were still completely accounted

a stock clerk and a warehouse helper, respectively, did not have unlimited

for. Further, Arlene and Joseph claimed that it was Lorna who had control

access to or custody over Blue Sky's property. The CA, in the decision and

and custody of the stocks as she was the warehouse supervisor. Boy and

resolution assailed herein, while ordering the reinstatement of the

Lorna were not called upon by either of the parties to corroborate their

November 29, 2007 NLRC Decision, found that Arlene and Joseph exercised

claims. Boy and Lorna could have provided important information as to the

custody over company property. Be that as it may, we observe that the

time line and the manner the intensifying screens were lost. If Boy and

nature of Arlene and Joseph's regular duties while under Blue Sky's employ

Lorna remain under Blue Sky's employ, it is the company which is in a

and their specific participation in or knowledge of the theft of the

better position to require the two to execute affidavits relative to what they

intensifying screens remain uncertain. Thus, whether or not Arlene and

know about the missing screens.

Joseph had actual custody over company property, we agree with the CA
that the petitioners had failed to establish by substantial evidence the
charges which led to Arlene and Joseph's dismissal from service.

288

alleged violation is the subject of an investigation. The purpose of the

While we empathize with Blue Sky's loss and understand that its actions

suspension is to prevent an employee from causing harm or injury to his

were merely motivated by its intent to protect the interests of the

colleagues and to the employer. The maximum period of suspension is 30

company, no blanket authority to terminate all employees whom it merely

days, beyond which the employee should either be reinstated or be paid

suspects as involved in the commission of theft resides in its favor. We thus

wages and benefits due to him.

reiterate the doctrine enunciated in Functional, Inc.

[35]

that the employers

case succeeds or fails on the strength of its evidence and not on the

In Arlene and Joseph's case, Blue Sky issued to them notices to explain on

weakness of that adduced by the employee, in keeping with the principle

February 3, 2005. They submitted their written explanation the day after

that the scales of justice should be tilted in favor of the latter in case of

and they were dismissed from service on February 5, 2005. While we do

doubt in the evidence presented by them.

not agree with Blue Sky's subsequent decision to terminate them from
service, we find no impropriety in its act of imposing preventive suspension

Notwithstanding our affirmation of the CA's finding that the petitioners had

upon the respondents since the period did not exceed the maximum

failed to discharge the burden of proof imposed upon them to justify the

imposed by law and there was a valid purpose for the same.

dismissal of Arlene and Joseph, we deem it proper to modify the assailed

decision and resolution in the manner to be discussed hereunder.
Blue Sky committed no
impropriety in imposing
preventive
suspension
against
Arlene
and
Joseph
pending
investigation
of
the
theft
allegedly
committed against the
company.

We, however, find no merit in the challenge made by Arlene and Joseph
against the legality of the preventive suspension imposed by Blue Sky
upon them pending the investigation of the alleged theft.

In lieu of reinstatement,
Arlene and Joseph are
entitled to an award of
separation pay.

If reinstatement proves impracticable, and hardly in the best interest of the

parties, perhaps due to the lapse of time since the employees dismissal, or
if the employee decides not to be reinstated, the latter should be awarded
separation pay in lieu of reinstatement.[37]

In the case at bar, Arlene and Joseph were dismissed from service on
February 5, 2005. We find that the lapse of more than seven years already
renders their reinstatement impracticable. Further, from the stubborn
stances of the parties, to wit, the petitioners' insistence that dismissal was

In Mandapat v. Add Force Personnel Services, Inc.,[36] we explained that

preventive suspension may be legally imposed on an employee whose

valid on one hand, and the respondents' express prayer for the payment of

289

separation pay on the other, we find that reinstatement would no longer be

in the best interest of the contending parties.

Arlene and Joseph are

entitled to the payment
of ECOLA, but not to
13th month,
service
incentive
leave
and
overtime pay.

Arlene and Joseph moral

and
exemplary
damages. Consequently,
we delete the award in
the respondents' favor
of
ten
percent
attorney's fees.

If there is no evidence to show that the dismissal of an employee had been

carried out arbitrarily, capriciously and maliciously and with personal illwill, moral damages cannot be awarded. [40] If moral damages cannot be

It is well-settled that in labor cases, the burden of proving payment of

awarded, the consequence is that there can also be no award of exemplary

monetary claims rests on the employer.

damages and attorney's fees.[41]

[38]

We find nothing in the records to indicate that the petitioners had indeed

In the case at bar, albeit we find Arlene and Joseph's dismissal from service

paid ECOLA to Arlene and Joseph.

as illegal, we cannot attribute bad faith on the part of Blue Sky which
merely acted with an intent to protect its interest. Hence, we find as

In the resolution issued on January 30, 2009, the NLRC found proof by way

lacking in basis the NLRC's award of ten percent attorney's fees in the

of the petitioners' annex to their position paper that Arlene and Joseph

respondents' favor.

already received their 13 month and service incentive leave pay for the
th

year 2005.[39] The respondents had not specifically refuted the NLRC's
findings, hence, we sustain the same.

Anent the respondents' claim for overtime pay, we find no ample basis to

Jose and Linda cannot

be held solidarily liable
for the dismissal of
Arlene and Joseph in the
absence of proof that
they acted with malice
and bad faith.

grant it as they had not offered any proof to show that they in fact
rendered such service.

As a general rule, a corporate officer cannot be held liable for acts done in
his official capacity because a corporation, by legal fiction, has a

The decision rendered

by
the
NLRC
on
November
29,
2007,
which the CA affirmed,
did not award in favor of

personality separate and distinct from its officers, stockholders, and

members.[42] In illegal dismissal cases, corporate officers may only be held
solidarily liable with the corporation if the termination was done with

290

malice or bad faith.[43] We find that the aforementioned circumstance did

not obtain in the case of Jose and Linda relative to Arlene and Joseph's
dismissal from service.

IN VIEW OF THE FOREGOING, the October 26, 2009 Decision and

December 14, 2009 Resolution issued by the Court of Appeals, finding that
the dismissal from service of respondents Arlene and Joseph was illegal
and awarding in their favor full backwages, are AFFIRMED but with the
following MODIFICATIONS:

(a) Blue Sky is directed to pay ECOLA and separation pay to the
respondents;

(b) The award in favor of the respondents of ten percent attorney's fees
made by the National Labor Relations Commission in its November 29,
2007 Decision and which was affirmed by the Court of Appeals in the
herein assailed decision and resolution is deleted; and

(c) Pursuant to our ruling in Eastern Shipping Lines, Inc. v. CA,[44] an

interest of 12% per annum is imposed on the total sum of the monetary
award to be computed from the date of finality of this Decision until full
satisfaction thereof.

The case is remanded to the National Labor Relations Commission which is

hereby ORDERED

to

COMPUTE the monetary benefits

awarded in

accordance with this Decision and to submit its compliance thereon within
thirty (30) days from notice hereof.
SO ORDERED.

291

CANADIAN OPPORTUNITIES UNLIMITED, INC.,

Petitioner,

- versus -

BART Q. DALANGIN, JR.,

Respondent.

G.R. No. 172223

Dalangin was hired by the company only in the previous month, or in

Present:

October 2001, as Immigration and Legal Manager, with a monthly salary

CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

of P15,000.00. He was placed on probation for six months. He was to

Promulgated:

Canadian and Philippine laws.

report directly to the Chief Operations Officer, Annie Llamanzares Abad. His
tasks involved principally the review of the clients applications for
immigration to Canada to ensure that they are in accordance with

February 6, 2012
x------------------------------------------------------------------------------------x

Through a memorandum[4] dated October 27, 2001, signed by Abad, the

DECISION

company terminated Dalangins employment, declaring him unfit and

unqualified to continue as Immigration and Legal Manager, for the

BRION, J.:

following reasons:
a)

Obstinacy and utter disregard of company

policies. Propensity to take prolonged and
extended lunch breaks, shows no interest in
familiarizing oneself with the policies and
objectives.

b)

Lack of concern for the companys interest

despite having just been employed in the company.
(Declined to attend company sponsored activities,
seminars intended
to
familiarize
company
employees with Management objectives and
enhancement of company interest and objectives.)

c)

Showed lack of enthusiasm toward work.

For resolution is the petition for review on certiorari[1] to nullify the decision
dated December 19, 2005 [2] and the resolution dated March 30, 2006 [3] of
the Court of Appeals (CA) rendered in CA-G.R. SP No. 84907.

The Antecedents

On November 20, 2001, respondent Bart Q. Dalangin, Jr. filed a complaint

for illegal dismissal, with prayer for reinstatement and backwages, as well
as damages (moral and exemplary) and attorneys fees, against petitioner

d)

Showed lack of interest in

relationship with his co-employees.[5]

fostering

The Compulsory Arbitration Proceedings

Canadian Opportunities Unlimited, Inc. (company). The company, based in

Pasong Tamo, Makati City, provides assistance and related services to

Dalangins submission

applicants for permanent residence in Canada.

Dalangin alleged, in his Position Paper, [6] that the company issued a
memorandum requiring its employees to attend a Values Formation

292

Seminar scheduled for October 27, 2001 (a Saturday) at 2:00 p.m.

could not keep in his company people who are hard-headed and who

onwards. He inquired from Abad about the subject and purpose of the

refuse to follow orders from management.[9] Sichani also told him that since

seminar and when he learned that it bore no relation to his duties, he told

he was a probationary employee, his employment could be terminated at

Abad that he would not attend the seminar. He said that he would have to

any time and at will. Sichani refused to accept his letter-reply to the

leave at 2:00 p.m. in order to be with his family in the province. Dalangin

company memorandum dated October 26, 2001 and instead told him to

claimed that Abad insisted that he attend the seminar so that the other

just hand it over to Abad.

employees would also attend. He replied that he should not be treated

similarly with the other employees as there are marked differences

The companys defense

between their respective positions and duties. Nonetheless, he signified his

willingness to attend the seminar, but requested Abad to have it conducted

Through their position paper,[10] the company and its principal officers

within office hours to enable everybody to attend.

alleged that at the time of Dalangins engagement, he was advised that he

was under probation for six months and his employment could be

Dalangin further alleged that Abad refused his request and stressed that all

terminated should he fail to meet the standards to qualify him as a regular

company employees may be required to stay beyond 2:00 p.m. on

employee. He was informed that he would be evaluated on the basis of the

Saturdays which she considered still part of office hours. Under his

results of his work; on his attitude towards the company, his work and his

employment contract,

co-employees, as spelled out in his job description; [11] and on the basis of

[7]

his work schedule was from 9:00 a.m. to 6:00 p.m.,

Monday to Friday, and 9:00 a.m. to 2:00 p.m. on Saturdays. Dalangin

Abads affidavit.[12]

argued that it has been an established company practice that on

Saturdays, office hours end at 2:00 p.m.; and that an employee cannot be

They further alleged that during his brief employment in the company,

made to stay in the office beyond office hours, except under circumstances

Dalangin showed lack of enthusiasm towards his work and was indifferent

provided in Article 89 of the Labor Code.

towards his co-employees and the company clients. Dalangin refused to

comply with the companys policies and procedures, routinely taking long

On

October

lunch breaks, exceeding the one hour allotted to employees, and leaving

requiring him to explain why he could not attend the

the company premises without informing his immediate superior, only to

seminar scheduled for October 27, 2001 and the other forthcoming

call the office later and say that he would be unable to return because he

seminars. The following day, October 27, 2001, Abad informed him that Mr.

had some personal matters to attend to. He also showed lack of

Yadi N. Sichani, the companys Managing Director, wanted to meet with him

interpersonal

regarding the matter. He alleged that at the meeting, he was devastated to

immigration application of a company client, Mrs. Jennifer Tecson, was

hear from Sichani that his services were being terminated because Sichani

denied by the Canadian Embassy. Dalangin failed to provide counsel to

memorandum

26,
[8]

2001,

Dalangin

claimed

that

Abad

issued

skills

and

initiative

which

he

manifested

when

the

293

Tecson; he also should have found a way to appeal her denied application,
but he did not. As it turned out, the explanation he gave to Tecson led her

The CA Decision

to believe that the company did not handle her application well. Dalangins
lack of interest in the company was further manifested when he refused to

In its now assailed decision, [15] the CA held that the NLRC erred when it

attend company-sponsored seminars designed to acquaint or update the

ruled that Dalangin was not illegally dismissed. As the labor arbiter did, the

employees with the companys policies and objectives.

CA found that the company failed to support, with substantial evidence, its
claim that Dalangin failed to meet the standards to qualify as a regular

The company argued that since Dalangin failed to qualify for the position of

employee.

Immigration and Legal Manager, the company decided to terminate his

services, after duly notifying him of the companys decision and the reason

Citing a ruling of the Court in an earlier case, [16] the CA pointed out that the

for his separation.

company did not allow Dalangin to prove that he possessed the

qualifications
The Compulsory Arbitration Rulings

to

meet

the

reasonable

standards

for

his

regular

employment; instead, it dismissed Dalangin peremptorily from the service.

It opined that it was quite improbable that the company could fully

In his decision dated April 23, 2003,[13] Labor Arbiter Eduardo G. Magno

determine Dalangins performance barely one month into his employment.

declared

[17]

Dalangins

dismissal

illegal,

and

awarded

him

backwages

of P75,000.00, moral damages ofP50,000.00 and exemplary damages

of P50,000.00, plus 10% attorneys fees. The labor arbiter found that the

The CA denied the companys subsequent motion for reconsideration in its

charges against Dalangin, which led to his dismissal, were not established

resolution of March 30, 2006.[18] Hence, this appeal.

by clear and substantial proof.

The Companys Case
On appeal by the company, the National Labor Relations Commission
(NLRC) rendered a decision on March 26, 2004[14] granting the appeal,

Through

thereby reversing the labor arbiters ruling. It found Dalangins dismissal to

Memorandum

be a valid exercise of the companys management prerogative because

the following issues: (1) whether the requirements of notice and hearing in

Dalangin failed to meet the standards for regular employment. Dalangin

employee dismissals are applicable to Dalangins case; and (2) whether

moved for reconsideration, but the NLRC denied the motion, prompting him

Dalangin is entitled to moral and exemplary damages, and attorneys fees.

to go to the CA on a petition for certiorari under Rule 65 of the Rules of

Court.

its
[21]

submissions

the

Petition,[19] the

Reply[20] and

the

the company seeks a reversal of the CA rulings, raising

294

On the first issue, the company argues that the notice and hearing

existing laws and jurisprudence, are entitled to notice and hearing prior to

requirements are to be observed only in termination of employment based

the termination of their employment; and (2) he is entitled to moral and

on just causes as defined in Article 282 of the Labor Code. Dalangins

exemplary damages, and attorneys fees.

dismissal, it maintains, was not based on a just cause under Article 282,
but was due to his failure to meet the companys standards for regular

Dalangin disputes the companys submission that under the Labor Codes

employment. It contends that under the Labor Codes Implementing Rules

implementing rules, only a written notice is required for the dismissal of

and Regulations, [i]f the termination is brought about x x x by failure of an

probationary employees. He argues that the rules cited by the company

employee to meet the standards of the employer in the case of

clearly mandate the employer to (1) serve the employee a written notice

probationary employment, it shall be sufficient that a written notice is

and (2) within a reasonable time before effecting the dismissal. He stresses

served the employee within a reasonable time from the effective date of

that for the dismissal to be valid, these requirements must go hand in

termination.[22] It

hand.

points

out

that

it

properly

observed

the

notice

requirement when it notified Dalangin of his dismissal on October 27,

2001,[23] after it asked him to explain (memorandum of October 26, 2001)

He explains that in the present case, the company did not observe the

why he could not attend the seminar scheduled for October 27, 2001;

above two requirements as he was dismissed the day after he was asked,

Dalangin failed to submit his explanation. It posits that contrary to the CAs

by way of a memorandum dated October 26, 2001, [26] to explain within

conclusion, the companys finding that Dalangin failed to meet its

twenty-four hours why he could not attend the October 27, 2001 seminar.

standards for regular employment was supported by substantial evidence.

He adds that on the assumption that the termination letter datedOctober

With respect to the second issue, the company submits that Dalangin is

27, 2001 refers to the written notice contemplated under the rules, still the

not entitled to moral and exemplary damages, and attorneys fees. It

company did not observe the second requirement of providing him a

maintains that Dalangin failed to present convincing evidence establishing

reasonable time before he was dismissed. He posits that the company

bad faith or ill-motive on its part. It insists that it dismissed Dalangin in

disregarded the security of tenure guarantee under the Constitution which

good faith with the belief that he would not contribute any good to the

makes no distinction between regular and probationary employees.

company, as manifested by his behavior towards his work and coemployees.

On the companys claim that he failed to perform in accordance with its

standards, Dalangin argues that a perusal of the grounds in support of his
The Case for Dalangin

dismissal reveals that none of the charges leveled against him is supported
by concrete and tangible evidence. He maintains that the company

Through his Comment

Dalangin asks the Court to

miserably failed to cite a single company policy which he allegedly violated

deny the petition. He argues that (1) probationary employees, under

and defied. He refutes the companys claim that his job description and his

[24]

and Memorandum,

[25]

295

employment contract apprise him of the company policy that he is to

observe for the duration of his employment. He, thus, maintains that he

The Courts Ruling

had not been previously informed of the company standards he was

supposed to satisfy. He stresses that the CA did not err in holding that the

As a rule, the Court is not a trier of facts, the resolution of factual issues

companys general averments regarding his failure to meet its standards for

being the function of lower courts whose findings are received with respect

regular employment were not corroborated by any other evidence and,

and are binding on the Court subject to certain exceptions. [30] A recognized

therefore, are insufficient to justify his dismissal.

exception to the rule is the circumstance in which there are conflicting

findings of fact by the CA, on the one hand, and the trial court or

Dalangin insists that he is entitled to backwages, moral and exemplary

government agency concerned, on the other, as in the present case. The

damages, as well as attorneys fees, claiming that his dismissal was unjust,

factual findings of the NLRC on the dispute between Dalangin and the

oppressive, tainted with bad faith, and contrary to existing morals, good

company are at variance with those of the CA, thus necessitating our

customs and public policy. There was bad faith, he argues, because he was

review of the case, especially the evidence on record. [31]

dismissed without the requisite notice and hearing required under the law;
and merely on the basis of the companys bare, sweeping and general

We

now

resolve

the

core

issue

of

whether

allegations that he is difficult to deal with and that he might cause

probationary employee, was validly dismissed.

Dalangin,

problems to the companys future business operations. He is entitled to

attorneys fees, he submits, because he was forced to litigate and vindicate

In International Catholic Migration Commission v. NLRC, [32] the Court

his rights.

explained that a probationary employee, as understood under Article 281

of the Labor Code, is one who is on trial by an employer, during which, the

He bewails what he considers as a pre-conceived plan and determined

latter

design[27] on the part of Sichani and Abad to immediately terminate his

employment.

employment. Elaborating, he points out that the company, through Abad,

opportunity to observe the fitness of a probationer while at work, and to

prepared two memoranda, both dated October 26, 2001, one is the memo

ascertain whether he would be a proper and efficient employee.

to him requiring his written explanation

[28]

determines
A

whether

or

probationary

not

he

is

appointment

qualified
gives

the

for

permanent

employer

an

and the other, addressed to

Sichani, recommending his dismissal. [29] He was surprised that Sichani did

Dalangin was barely a month on the job when the company terminated his

not bother to ask Abad why she gave him two conflicting memos on the

employment. He was found wanting in qualities that would make him a

same day; neither did Sichani or Abad investigate the surrounding

proper and efficient employee or, as the company put it, he was unfit and

circumstances on the matter nor did they give him the opportunity to

unqualified to continue as its Immigration and Legal Manager.

explain his side.

296

Dalangins dismissal was viewed differently by the NLRC and the CA. The
NLRC upheld the dismissal as it was, it declared, in the exercise of the
companys management prerogative. On the other hand, the CA found that

accordance with reasonable standards made known by the

employer to the employee at the time of his
engagement. An employee who is allowed to work after a
probationary period shall be considered a regular
employee.

the dismissal was not supported by substantial evidence and that the
company did not allow Dalangin to prove that he had the qualifications to

As the Court explained in International Catholic Migration Commission, the

meet the companys standards for his regular employment. The CA did not

word probationary, as used to describe the period of employment, implies

believe that the company could fully assess Dalangins performance within

the purpose of the term or period, but not its length. [34] Thus, the fact that

a month. It viewed Dalangins dismissal as arbitrary, considering that the

Dalangin was separated from the service after only about four weeks does

company had very little time to determine his fitness for the job.

not necessarily mean that his separation from the service is without basis.

We disagree.

Contrary to the CAs conclusions, we find substantial evidence

indicating that the company was justified in terminating Dalangins

The essence of a probationary period of employment fundamentally lies in

employment, however brief it had been.Time and again, we have

the purpose or objective of both the employer and the employee during

emphasized that substantial evidence is such relevant evidence as a

the period. While the employer observes the fitness, propriety and

reasonable mind might accept as adequate to support a conclusion. [35]

efficiency of a probationer to ascertain whether he is qualified for

permanent employment, the latter seeks to prove to the former that he

Dalangin overlooks the fact, wittingly or unwittingly, that he

has the qualifications to meet the reasonable standards for permanent

offered glimpses of his own behavior and actuations during his four-week

employment.

stay with the company; he betrayed his negative attitude and regard for

[33]

the company, his co-employees and his work.

The trial period or the length of time the probationary employee remains
on probation depends on the parties agreement, but it shall not exceed six

Dalangin admitted in compulsory arbitration that the proximate

(6) months under Article 281 of the Labor Code, unless it is covered by an

cause for his dismissal was his refusal to attend the companys Values

apprenticeship agreement stipulating a longer period. Article 281 provides:

Formation Seminar scheduled for October 27, 2001, a Saturday. He refused

Probationary employment. Probationary employment

shall not exceed six (6) months from the date the
employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in

to attend the seminar after he learned that it had no relation to his duties,
as he claimed, and that he had to leave at 2:00 p.m. because he wanted to
be with his family in the province. When Abad insisted that he attend the
seminar to encourage his co-employees to attend, he stood pat on not
attending, arguing that marked differences exist between their positions

297

and duties, and insinuating that he did not want to join the other

Additionally, very early in his employment, Dalangin exhibited

employees. He also questioned the scheduled 2:00 p.m. seminars on

negative working habits, particularly with respect to the one hour lunch

Saturdays as they were not supposed to be doing a company activity

break policy of the company and the observance of the companys working

beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on

hours. Thus, Abad stated that Dalangin would take prolonged lunch breaks

Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of

or would go out of the office without leave of the company only to call the

the law.

personnel manager later to inform the latter that he would be unable to

return as he had to attend to personal matters. Without expressly
The Values Formation Seminar incident is an eye-opener on the

kind of person and employee Dalangin was. His refusal to attend the

countering or denying Abads statement, Dalangin dismissed the charge for

the companys failure to produce his daily time record. [38]

seminar brings into focus and validates what was wrong with him, as Abad
narrated in her affidavit [36] and as reflected in the termination of
employment

memorandum.

[37]

familiarizing

himself with

the

Significantly,

the

seminar

It

highlights
companys

involved

his

lack

objectives

acquainting

and

of

interest

and

The same thing is true with Dalangins handling of Tecsons

in

application for immigration to Canada, especially his failure to find ways to

policies.

appeal the denial of Tecsons application, as Abad stated in her

updating

the

affidavit. Again, without expressly denying Abads statement or explaining

employees with the companys policies and objectives. Had he attended

exactly what he did with Tecsons application, Dalangin brushes aside

the seminar, Dalangin could have broadened his awareness of the

Abads insinuation that he was not doing his job well, with the ready

companys policies, in addition to Abads briefing him about the companys

argument that the company did not even bother to present Tecsons

policies on punctuality and attendance, and the procedures to be followed

testimony.

in handling the clients applications. No wonder the company charged him

with obstinacy.

In the face of Abads direct statements, as well as those of his coemployees, it is puzzling that Dalangin chose to be silent about the

The incident also reveals Dalangins lack of interest in establishing

charges, other than saying that the company could not cite any policy he

good working relationship with his co-employees, especially the rank and

violated. All along, he had been complaining that he was not able to

file; he did not want to join them because of his view that the seminar was

explain his side, yet from the labor arbiters level, all the way to this Court,

not relevant to his position and duties. It also betrays an arrogant and

he offered no satisfactory explanation of the charges. In this light, coupled

condescending attitude on his part towards his co-employees, and a lack of

with Dalangins adamant refusal to attend the companys Values Formation

support for the company objective that company managers be examples to

Seminar and a similar program scheduled earlier, we find credence in the

the rank and file employees.

companys submission that Dalangin was unfit to continue as its

Immigration and Legal Manager. As we stressed earlier, we are convinced

298

that the company had seen enough from Dalangins actuations, behavior

companys submission. He insists that the company failed to comply with

and deportment during a four-week period to realize that Dalangin would

the rules as he was not afforded a reasonable time to defend himself

be a liability rather than an asset to its operations.

before he was dismissed.

We, therefore, disagree with the CA that the company could not

The records support Dalangins contention. The notice served on him did

have fully determined Dalangins performance barely one month into his

not give him a reasonable time, from the effective date of his separation,

employment.

Migration

as required by the rules. He was dismissed on the very day the notice was

Commission, the probationary term or period denotes its purpose but not

given to him, or, on October 27, 2001. Although we cannot invalidate his

its length. To our mind, four weeks was enough for the company to assess

dismissal in light of the valid cause for his separation, the companys non-

Dalangins fitness for the job and he was found wanting. In separating

compliance with the notice requirement entitles Dalangin to indemnity, in

Dalangin from the service before the situation got worse, we find

the form of nominal damages in an amount subject to our discretion.

the company not liable for illegal dismissal.

[40]

As

we

said

inInternational

Catholic

Under the circumstances, we consider appropriate an award of nominal

damages of P10,000.00 to Dalangin.

The procedural due process issue
Damages and attorneys fees
Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and
Regulations provides:

Finally, given the valid reason for Dalangins dismissal, the claim for moral
and exemplary damages, as well as attorneys fees, must necessarily fail.

If the termination is brought about by the completion of a

contract or phase thereof, or by failure of an employee to
meet the standards of the employer in the case of
probationary employment, it shall be sufficient that a
written notice is served the employee within a reasonable
time from the effective date of termination.

The company contends that it complied with the above rule when it asked
Dalangin, through Abads Memorandum dated October 26, 2001, [39] to
explain why he could not attend the seminar scheduled for October 27,

WHEREFORE, premises considered, the petition is hereby GRANTED. The

assailed decision and resolution of the Court of Appeals are hereby SET
ASIDE. The complaint isDISMISSED for lack of merit.

Petitioner Canadian Opportunities Unlimited, Inc. is DIRECTED to pay

respondent Bart Q. Dalangin, Jr. nominal damages in the amount
of P10,000.00.

2001. When he failed to submit his explanation, the company, again

through Abad, served him a notice the following day, October 27, 2001,
terminating his employment. Dalangin takes strong exception to the

Costs against the respondent.

SO ORDERED.

299

300

[G.R. No. 122876. February 17, 2000]

CHENIVER DECO PRINT TECHNICS
CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (SECOND DIVISION), CFW-MAGKAKAISANG LAKAS NG
MGA MANGGAGAWA SA CHENIVER DECO PRINT TECHNIC
CORPORATION, EDGARDO VIGUESILLA, respondents.
DECISION
QUISUMBING, J.:
This special civil action for certiorari seeks to annul the resolution of public
respondent promulgated on May 31, 1995, in NLRC NCR CA 007946-94,
and its resolution dated August 14, 1995, which denied petitioners motion
for reconsideration.
Petitioner is a duly organized corporation operating its printing business in
Visita St., Barangay Sta. Cruz, Makati. Private respondent CFWMagkakaisang Lakas ng mga Manggagawa sa Cheniver Deco Print Technic
Corporation is a registered labor union affiliated with the Confederation of
Free Workers (CFW). Private respondent Edgardo Viguesilla and twenty-two
(22) others are members of aforesaid union and former employees of
petitioner.
The records disclose that on June 5, 1992, petitioner informed its workers
about the transfer of the company from its site in Makati to Sto. Tomas,
Batangas. Petitioner decided to relocate its business in view of the
expiration of the lease contract on the premises it occupied in Makati and
the refusal of the lessor to renew the same. Earlier, the local authorities
also took action to force out petitioner from Makati because of the alleged
hazards petitioners plant posed to the residents nearby.
In view of the impending transfer, petitioner gave its employees up to the
end of June 1992 to inform management of their willingness to go with
petitioner, otherwise, it would hire replacements. On June 27, 1992,
petitioner reminded its workers of the following schedule to be followed:

August 1, 1992 - start of operation at new site in Sto.

Tomas, Batangas.
On August 4, 1992, petitioner wrote its employees to report to the new
location within seven days, otherwise, they would be considered to have
lost interest in their work and would be replaced. Five days later, the union
advised petitioner that its members are not willing to go along with the
transfer to the new site. Nonetheless, petitioner gave its workers additional
time within which to report to the new work place. Later on, the labor
federation informed petitioner that the employees decided to continue
working for petitioner. However, not one reported for work at petitioners
new site. It appears that several employees namely, Edgar Paquit, Dexter
Mitschek, Nicanor Quebec, Maricris Polvorosa, Vicente Solis, Eugene De la
Cruz, Rodel Gomez, Marylin Macaraig, Diomedis Poblio, Albert Pimentel,
Marieta Ramos, Gilbert Saquibal, Marlon Tafalla, Eduardo Jolbitado, Solitario
Andres, Maria Cecilia Perez and Wilfredo Flores, decided not to work at the
new site but just opted to be paid financial assistance offered by petitioner.
On the other hand, the remaining workers (private respondents herein)
filed a complaint against petitioner for unfair labor practice, illegal
dismissal, underpayment of wages, non-payment of legal holiday pay, 13th
month pay, incentive leave pay and separation pay. On October 27, 1994,
the labor arbiter rendered a decision declaring the transfer of petitioners
operation valid and absolving petitioner of the charges of unfair labor
practice and illegal dismissal. However, the labor arbiter directed petitioner
to pay private respondents their separation pay and other money claims as
well as attorneys fees, decreeing as follows:
"WHEREFORE, premises considered, judgment is hereby
rendered:
1. Declaring respondent company not guilty of unfair labor
practice. (ULP);
2. Declaring respondent company not guilty of illegal
dismissal and illegal lay-off but directing it to pay the
individual complaints their separation pay, to wit:

June 29, 1992 - last day of operation in Makati

a) Adeser, Tarcisio ----------- P 20,280.00

July 1-31, 1992 - temporary shutdown to give way to

transfer of operation

b) Albino, Silveria ----------- 36,816.00

301

c) Arizala, Imelda ----------- 18,408.00

_____________

d) Canares, Danilo ----------- 36,816.00

P 422,188.00

e) Carin, Elena ---------- 12,272.00

f) Cabanatan, Lourdes ----------- 9,204.00

3. Directing respondent company to pay complainants the

sum of P280,010.00 as to their other money claims
aforestated, distributed as follows:

g) Dizon, Juanito ----------- 12,272.00

a) Adeser, Tarcisio ---------------- P 5,330.00

h) Domingo, Salome -------- 24,544.00

b) Albino, Silveria -------------- 13,080.00

i) Esguerra, Bonifacio ---------- 21,476.00

c) Arizala, Imelda -------------- 13,080.00

j) Famillaran, Benjamin ----------- 27,612.00

d) Canares, Danilo -------------- 13,080.00

k) Gabucan, Amelia ------------ 15,340.00

e) Carin, Elena -------------- 13,080.00

l) Ibardolaza, Hadjie ------------- 21,476.00

f) Cabanatan, Lourdes ------------- 13,080.00

m) Jores, Nelita ------------- 18,408.00

g) Dizon, Juanito -------------- 13,080.00

n) Largadas, Mario ------------- 9,204.00

h) Domingo, Salome -------------- 13,080.00

o) Mitschek, Dexter ------------- 33,748.00

i) Esguerra, Bonifacio ------------- 13,080.00

p) Paquit, Edgar ------------- 15,340.00

j) Famillaran, Benjamin ----------- 13,080.00

q) Panotes, Roel ------------- 12,272.00

k) Gabucan, Amelia -------------- 13,080.00

r) Pedrigosa, Lerma ------------- 18,408.00

l) Ibardolaza, Hadjie -------------- 13,080.00

s) Pedrigosa, Liza ------------- 18,408.00

m) Jores, Nelita -------------- 13,080.00

t) Ulzoron, Yolanda ------------- 9,204.00

n) Largadas, Mario -------------- 13,080.00

u) Viguesilla, Edgardo ------------ 21,476.00

o) Mitschek, Dexter -------------- 13,080.00

v) Viray, Ruel ---------------- 9,204.00

p) Paquit, Edgar -------------- 13,080.00

302

q) Panotes, Roel -------------- 13,080.00

AFFIRMING THE LABOR ARBITERS AWARD OF SEPARATION

PAY TO PRIVATE RESPONDENTS;

r) Pedrigosa, Lerma -------------- 13,080.00

II
s) Pedrigosa, Liza -------------- 13,080.00
t) Ulzoron, Yolanda -------------- 13,080.00
u) Viguesilla, Edgardo ------------ 13,080.00
v) Viray, Ruel -------------- 13,080.00
______________
P 280,010.00
4. Directing respondent company to pay complainants
attorneys fees of ten (10%) percent based on the totality of
the monetary award.
Other claims are hereby dismissed for lack of factual and
legal basis.
SO ORDERED."[1]
On appeal, respondent NLRC affirmed with modification the decision of the
labor arbiter by deleting the award of attorneys fees, thus:
"For all of the foregoing the decision appealed from is
hereby AFFIRMED with modification that the award of
attorneys fees be deleted for lack of legal and factual
basis.
SO ORDERED."[2]
Its motion for reconsideration having been denied, petitioner filed the
instant petition alleging that public respondent committed grave abuse of
discretion in:
"I

AFFIRMING THE AWARD OF OTHER MONEY CLAIMS TO

PRIVATE RESPONDENTS WITHOUT BASIS IN FACT AND [IN]
LAW AS SHOWN BY LACK OF COMPUTATION OF THE
SAME."[3]
Petitioner contends that the transfer of its business is neither a closure nor
retrenchment, hence, separation pay should not be awarded to the private
respondents. It also avers that private respondents were not terminated
from the service but they resigned from their job because they find the
new work site too far from their residences.
The foregoing contention lacks factual and legal basis, hence, bereft of
merit.
Broadly speaking, there appears no complete dissolution of petitioners
business undertaking but the relocation of petitioners plant to Batangas, in
our view, amounts to cessation of petitioners business operations in
Makati. It must be stressed that the phrase "closure or cessation of
operation of an establishment or undertaking not due to serious business
losses or reverses" under Article 283 of the Labor Code includes both the
complete cessation of all business operations and the cessation of only
part of a companys business.[4] In Philippine Tobacco Flue-Curing &
Redrying Corp. vs. NLRC,[5] a company transferred its tobacco processing
plant in Balintawak, Quezon City to Candon, Ilocos Sur. The company
therein did not actually close its entire business but merely relocated its
tobacco processing and redrying operations to another place. Yet, this
Court considered the transfer as closure not due to serious business losses
for which the workers are entitled to separation pay.
There is no doubt that petitioner has legitimate reason to relocate its plant
because of the expiration of the lease contract on the premises it occupied.
That is its prerogative. But even though the transfer was due to a reason
beyond its control, petitioner has to accord its employees some relief in the
form of severance pay. Thus, in E. Razon, Inc. vs. Secretary of Labor and
Employment,[6] petitioner therein provides arrastre services in all piers in
South Harbor, Manila, under a management contract with the Philippine
Ports Authority. Before the expiration of the term of the contract, the PPA

303

cancelled the said contract resulting in the termination of employment of

workers engaged by petitioner. Obviously, the cancellation was not sought,
much less desired by petitioner. Nevertheless, this Court required
petitioner therein to pay its workers separation pay in view of the cessation
of its arrastre operations.
Now, let it be noted that the termination of employment by reason of
closure or cessation of business is authorized under Article 283 of the
Labor Code which provides:
"ART. 283. Closure of establishment and reduction of
personnel. -- The employer may 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 workers and the Ministry of Labor and
Employment 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 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 one (1) whole
year."
Consequently, petitioner herein must pay his employees their termination
pay in the amount corresponding to their length of service. Since the
closure of petitioners business is not on account of serious business losses,
petitioner shall give private respondents separation pay equivalent to at
least one (1) month or one-half (1/2) month pay for every year of service,
whichever is higher.
Petitioners contention that private respondents resigned from their jobs,
does not appear convincing. As public respondent observed, the
subsequent transfer of petitioner to another place hardly accessible to its

workers resulted in the latters untimely separation from the service not to
their own liking, hence, not construable as resignation. [7] Resignation must
be voluntary and made with the intention of relinquishing the office,
accompanied with an act of relinquishment.[8] Indeed, it would have been
illogical for private respondents herein to resign and then file a complaint
for illegal dismissal. Resignation is inconsistent with the filing of the said
complaint.[9]
As to petitioners assertion that private respondents resorted to forum
shopping, the same deserves scant consideration. As noted by the Solicitor
General, private respondents claims in this case are based on
underpayment of wages, legal holiday pay, service incentive leave pay and
13th month pay. On the other hand, the other cases separately filed in
different fora by Danilo Canares, Aurelia Gabucan, Dexter Mitschek and
Ruel Viray involved different issues which are distinct and have no bearing
on the case at bar.[10] The case pursued by Canares is for diminution of
salary on account of his demotion which was decided in his favor with
finality by this Court;[11] Gabucans case involves reinstatement to her job;
Mitscheks case pertains to diminution of his salary; and Virays complaint
was dismissed without prejudice for failure to prosecute. Thus, there is no
basis for petitioners forum shopping charge as the instant case and the
others do not raise identical causes of action, subject matter and issues. [12]
Lastly, petitioner alleges that claims of other private respondents have
already been paid upon the enforcement of the order dated February 26,
1992 in case number NRC-00-9112-CI-001. This is not correct. As correctly
pointed out by the Solicitor General, the aforesaid order refers to the
enforcement of Wage Order No. NCR-02 mandating P2.00 wage increase.
[13]
Certainly, the wage differential received by private respondents by
virtue of the mandated wage increase is different from the monetary
benefits herein being claimed by private respondents. Hence, public
respondent cannot be faulted for grave abuse of discretion on this score.
WHEREFORE, the instant petition is DENIED, and the assailed
RESOLUTIONS of public respondent are AFFIRMED. Costs against petitioner.
SO ORDERED.

304

G.R. No. 187621, September 24, 2014

Ruling of the Labor Arbiter

MOUNT CARMEL COLLEGE EMPLOYEES UNION (MCCEU)/RUMOLO S.

BASCAR, MARIBEL TESALUNA, ROLANDO TESALUNA, KENNETH
BENIGNOS, MARILYN MANGULABNAN, EMELINA I. NACIONAL,
JODELYN REBOTON, EVERSITA S. BASCAR, MAE BAYLEN, ERNA E.
MAHILUM, EVELYN R. ANTONES, Petitioners, v. MOUNT CARMEL
COLLEGE, INCORPORATED, Respondent.

In the Decision dated May 7, 2004, the Labor Arbiter (LA) declared the
petitioners to have been illegally dismissed, among others. According to
the LA, the respondents alleged losses were not serious as its financial
statements even showed a net surplus. Thus, the LA ordered the
respondent to pay the petitioners separation pay in lieu of reinstatement,
plus attorneys fees.5
The dispositive portion of the LA Decision provides:

DECISION
REYES, J.:
This is a petition for review assailing the Decision 1 dated November 19,
2008 of the Court of Appeals (CA) and the Resolution dated March 25, 2009
denying the motion for reconsideration thereof in CA-G.R. SP No. 02237.
Facts
The petitioners were elementary and high school academic and nonacademic personnel employed by Mount Carmel College (respondent),
located in New Escalante, Negros Occidental. In April 1999, the petitioners
were informed of their retrenchment by the respondent due to the closure
of the elementary and high school departments of the school. The
petitioners contend that such closure was merely a subterfuge of their
termination due to their union activities. According to the petitioners, they
organized a union in 1997 (Mount Carmel College Employees Union
[MCCEU]), and were in the process of negotiating with the respondent as
regards their collective bargaining agreement when the respondent
decided to close the two departments in June 1999. 2 The petitioners
alleged that such closure was motivated by ill-will just to get rid of the
petitioners who were all union members because in June 2001, the school
re-opened its elementary and high school departments with newly-hired
teachers. They claimed for the remaining separation pay differentials
since what they received was only computed at 15 days for every year of
service when they were retrenched.3
The respondent, on the other hand, denied committing any act of unfair
labor practice and alleged that their retrenchment was valid as it was due
to the financial losses it suffered as result of a decline in its enrolment.
The respondent claimed that as it was, the expenses for its academic and
non-academic personnel were already eating into its budget portion
allocated for capital and administrative development, and that the
teachers demand for increased salaries and benefits, coupled with the
decline in the enrolment, left the school with no choice but to close down
its grade school and high school departments.4

WHEREFORE, premises considered, judgment is hereby rendered as

follows:
1.

DECLARING that respondents had committed unfair labor practice

against complainants;

2.

DECLARING that complainants were illegally dismissed by

respondents;

3.

ORDERING respondents to pay complainants their corresponding

separation pay in lieu of reinstatement, in the amount equivalent
to their remaining 15 days for every year of service and their back
wages including the retirement benefits of Milagros Gempesala in
the total amount of P3,257,637.90 as per computation in the
hereto attached sheet;

4.

ORDERING respondents to pay complainants attorneys fees in an

amount equivalent to 10% of the total judgment award which
is P325,763.79 thereby making a total claim of P3,583,401.69,
the same to be deposited with the Cashier of this Office within ten
(10) days from receipt of this Decision for proper disposition.

All other claims are hereby dismissed for lack of merit.

SO ORDERED.6
Ruling of the NLRC
Aggrieved, the respondent appealed to the National Labor Relations
Commission (NLRC). The petitioners, on the other hand, questioned the
appeal bond posted by the respondent. Subsequently, in the Decision
dated May 25, 2005, the NLRC reversed the LA decision, ruling that: (1) the
respondents failure to attach a copy of the appeal bond and other
documents to the Appeal Memorandum furnished to the petitioners is a
minor defect; (2) the respondent acted in good faith when it procured the
appeal bond from Country Bankers and Insurance Corporation (CBIC),

305

which, it turned out, was blacklisted at that time (March 15, 2004); and
since CBIC was already included in the list of the Supreme Courts
accredited bonding companies from February 1, 2005 until July 31, 2005,
there is no more impediment for CBIC to make good its bond; and (3) the
petitioners retrenchment is an exercise by the respondent of its
management prerogative and the latters state of finances justifies the
same.7
Ruling of the Court of Appeals
In the assailed decision promulgated on November 19, 2008, the CA did
not find any grave abuse of discretion committed by the NLRC and thus,
affirmed its decision. The CA found no factual basis for the petitioners
allegation that the school closed down for purposes of union busting, and
that the school cannot be compelled to operate at a loss, as shown by its
financial statements. The CA also ruled that the respondent cannot be
compelled to re-hire the petitioners when it later re-opened as it has the
discretion in the hiring of its employees.8
The petitioners sought reconsideration of the assailed decision, which was
denied by the CA in its Resolution dated March 25, 2009. 9

Settled is the rule that when supported by substantial evidence, factual

findings made by quasi-judicial and administrative bodies are accorded
great respect and even finality by the courts. These findings are not
infallible, though; when there is a showing that they were arrived at
arbitrarily or in disregard of the evidence on record, they may be examined
by the courts.11 In this case, inasmuch as the LAs conclusions differ from
that of the NLRC and the CA, the Court must now exercise its power of
review and resolve the issues raised by the petitioners. In undertaking
such review, the Court bears in mind that the CA decision must be
examined from the prism of whether it correctly determined the presence
or absence of grave abuse of discretion in the NLRC decision before it, not
on the basis of whether the NLRC decision on the merits of the case was
correct.12
Thus, the first question that must be resolved is whether the CA correctly
ruled that the NLRC did not commit any grave abuse of discretion when it
allowed the respondents appeal despite the blacklisting of CBIC at the
time it issued the appeal bond.
Article 223 of the Labor Code, as amended, sets forth the rules on appeal
from the LAs monetary award:

Hence, this petition, where the following issues were raised:

Art. 223. Appeal. x x x.
I.

II.

III.

THE HONORABLE COURT OF APPEALS ERRED AND COMMITTED

GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION WHEN IT INTENTIONALLY IGNORED THE ISSUES
RAISED IN THE PETITION REGARDING THE BLATANT VIOLATIONS
COMMITTED BY RESPONDENT IN NOT COMPLYING WITH THE STRICT
REQUIREMENTS LAID DOWN IN SECTION 6 RULE VI OF THE 2002
NEW RULES OF THE NLRC AS WELL AS THE MEMORANDUM NO. 101 DATED JANUARY 13, 2004 OF THE HONORABLE CHAIRMAN ROY
V. SEERES;
THE HONORABLE COURT [OF] APPEALS ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION IN SUSTAINING THE DECISION OF THE
HONORABLE NLRC DESPITE THE ESTABLISHED FACT ON RECORD
THAT THE NLRC BLATANTLY IGNORED THE MARCH 15, 2004
MEMORANDUM OF HONORABLE CHAIRMAN ROY V. SEERES;
THE HONORABLE COURT OF APPEALS ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION IN SUSTAINING THE DECISION OF THE
HONORABLE NLRC DESPITE THE ESTABLISHED FACT ON RECORD
THAT THE GROUNDS CITED BY THE PUBLIC RESPONDENT TO
SUPPORT CLOSURE ARE BEREFT OF EVEN JUST SUBSTANTIAL
EVIDENCE WHILE THE PRESENCE OF BAD FAITH/MALICE ARE
OBVIOUS.10

xxxx
In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Emphasis ours)
At the time of the respondents filing of its appeal from the LA decision in
2004, the rules of procedure in force was the New Rules of Procedure of the
NLRC, as amended by NLRC Resolution No. 01-02, Series of 2002, Section 6
of which provides:
Sec. 6. BOND. - In case the decision of the Labor Arbiter or the Regional
Director involves a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond. The appeal bond
shall either be in cash or surety in an amount equivalent to the monetary
award, exclusive of damages and attorneys fees.
In case of surety bond, the same shall be issued by a reputable
bonding companyduly accredited by the Commission or the
Supreme Court, and shall be accompanied by:
(a) a joint declaration under oath by the employer, his counsel, and the

306

bonding company, attesting that the bond posted is genuine, and shall be
in effect until final disposition of the case.
(b) a copy of the indemnity agreement between the employer-appellant
and bonding company; and
(c) a copy of security deposit or collateral securing the bond.
A certified true copy of the bond shall be furnished by the appellant to the
appellee who shall verify the regularity and genuineness thereof and
immediately report to the Commission any irregularity.
Upon verification by the Commission that the bond is irregular or not
genuine, the Commission shall cause the immediate dismissal of the
appeal.
xxxx
Section 6 requiring the issuance of a bond by a reputable bonding
company duly accredited by the NLRC or the Supreme Court was
substantially carried over to the 2005 Revised Rules of Procedure of the
NLRC13 and the 2011 NLRC Rules of Procedure.14 In this regard, the Court
has ruled that in a judgment involving a monetary award, the appeal shall
be perfected only upon: (1) proof of payment of the required appeal fee;
(2) posting of a cash or surety bond issued by a reputable bonding
company; and (3) filing of a memorandum of appeal.15
In this case, it was not disputed that at the time CBIC issued the appeal
bond, it was already blacklisted by the NLRC. The latter, however, opined
that respondents should not be faulted if the Bacolod branch office of the
bonding company issued the surety bond and that [r]espondents acted
in good faith when they transacted with the bonding company for the
issuance of the surety bond.16
Good faith, however, is not an excuse for setting aside the mandatory and
jurisdictional requirement of the law. In Cawaling v. Menese,17 the Court
categorically ruled that the defense of good faith does not render the
issued bond valid. The Court further ruled that
It was improper to honor the appeal bond issued by a surety company
which was no longer accredited by this Court. Having no authority to issue
judicial bonds not only does Intra Strata cease to be a reputable surety
company the bond it likewise issued was null and void.
x x x It is not within respondents discretion to allow the filing of the
appeal bond issued by a bonding company with expired accreditation
regardless of its pending application for renewal of accreditation. x x
x.18 (Emphasis ours)
The condition of posting a cash or surety bond is not a meaningless

requirement it is meant to assure the workers that if they prevail in the

case, they will receive the money judgment in their favor upon the
dismissal of the formers appeal.19 Such aim is defeated if the bond issued
turned out to be invalid due to the surety companys expired
accreditation.20 Much more in this case where the bonding company was
blacklisted at the time it issued the appeal bond. The blacklisting of a
bonding company is not a whimsical exercise. When a bonding company is
blacklisted, it meant that it committed certain prohibited acts and/or
violations of law, prescribed rules and regulations. 21 Trivializing it would
release a blacklisted bonding company from the effects sought to be
achieved by the blacklisting and would make the entire process
insignificant.
Also, the lifting of CBICs blacklisting on January 24, 2005 does not render
the bond it issued on March 15, 2004 subsequently valid. It should be
stressed that what the law requires is that the appeal bond must be issued
by a reputable bonding company duly accredited by the NLRC or the
Supreme Court at the time of the filing of the appeal. To rule
otherwise would make the requirement ineffective, and employers using
fly-by-night and untrustworthy bonding companies could easily
manipulate their obligation to post a valid bond by raising such
justification.
On the foregoing point alone, it is clear that the CA committed a reversible
error when it ruled out any grave abuse of discretion on the part of the
NLRC in admitting the respondents appeal and reversing the decision of
the LA. It should be stressed that the requirement of the posting of an
appeal bond by a reputable company is jurisdictional. 22 It cannot be
subject to the NLRCs discretion and there is a little leeway for condoning
a liberal interpretation of the rule.23
Even if the Court were to relax the rules and consider the respondents
appeal, the Court still finds that the CA committed an error when it ruled
that the NLRC did not commit grave abuse of discretion in finding that the
petitioners retrenchment was valid under the circumstances of the case.
Retrenchment, as an authorized cause for the dismissal of employees,
finds basis in Article 28324 of the Labor Code, which states:
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 workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. x x x. 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-

307

half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
Standards25 have been laid down by the Court in order to prevent its abuse
by an employer, to wit:
(1) That retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de minimis,
but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the
employer;
(2) That the employer served written notice both to the employees and to
the Department of Labor and Employment at least one month prior to
the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay
equivalent to one (1) month pay or at least one-half () month pay for
every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in
good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees,
such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.26 (Emphasis ours)
In the present case, the respondents justification for implementing the
retrenchment of the petitioners was due to the alleged closure or cessation
of its elementary and high school departments. According to them, the
continued operations of these departments was an exercise of
management prerogative to protect its business and it was no longer
viable to maintain the two departments as it was already being subsidized
by the college department. As proof thereof, the respondent submitted its
audited Financial Statements for the years 1997, 1998 and 1999.
Respondent also alleged that such closure was recognized by the Tuition
Fee Law, which mandates that 70% of the tuition incremental proceeds
should be allocated for salaries, wages and other benefits of its personnel.
Respondent claimed that in its case, personnel benefits are already eating
into the portion of the budget allocated for capital and administrative
development, and faced further with the demands of the employees of
additional increase in salaries and benefits, it had no choice but to close
down.27
The burden of proving that the termination of services is for a valid or
authorized cause rests upon the employer. In termination by
retrenchment, not every loss incurred or expected to be incurred by an
employer can justify retrenchment.28 The employer must prove, among
others, that the losses are substantial and that the retrenchment is
reasonably necessary to avert such losses.29 In this case, while the
respondent may have presented its Financial Statements, the respondent,
nevertheless, failed to establish with reasonable certainty that the

proportion of its revenues are largely expended for its elementary and high
school personnel salaries, wages and other benefits. Its Financial
Statements30 showed the following figures, among others:
Financial Statement
Gross Revenues
Personnel Expenses
Net Surplus

1997

1998

1999

10,529,810.39

12,603,283.12

12,438,060.00

6,273,646.00

7,199,859.58

6,688,710.32

405,091.76

769,460.93

130,681.44

The Financial Statements pertain to its assets, liabilities, gross revenues

and expenses for the entire college system, that is, from elementary, high
school to the college department. The expenses for the elementary and
high school departments were not set out in detail and instead, were
lumped together with the college department. Such detail becomes
material in the light of the respondents claim that the personnel expenses
for the elementary and high school departments were eating into the
portion of its budget allocated for other purposes. There could be no
practical basis from which the respondents claim finds support. Aside
from this, the respondent failed to present any proof establishing how the
continued operations of the elementary and high school departments has
become impracticable. The respondent merely assumed, which the NLRC
and CA improperly sustained, that [f]aced with the intractable demands of
complainant Union for additional increases in salaries and economic
benefits, with the steady decline in enrolment and the increase in
overhead expenses, respondent had no choice but to close down the two
departments and make do with the College Department x x x. 31 There is
nothing on record showing how the respondent came up with such
conclusion, save for the alleged decline in its elementary and high school
enrolment, and no feasibility studies, analysis, or at the very least, an
academic projection was presented to validate its forecast. Note that the
Financial Statements show that the respondent was not operating at a loss
but actually had surplus, albeit at a minimum. Thus, it has been held that

Not every loss incurred or expected to be incurred by a company will justify

retrenchment. The losses must be substantial and the retrenchment must
be reasonably necessary to avert such losses. The employer bears the
burden of proving the existence or the imminence of substantial
losses with clear and satisfactory evidence that there are
legitimate business reasons justifying a retrenchment. Should the
employer fail to do so, the dismissal shall be deemed
unjustified.32 (Emphasis ours)
The respondent, likewise, cannot rely on the alleged condition in the Tuition
Fee Law that 70% of tuition incremental proceeds should be allocated for
the payment of salaries, wages and other benefits of the schools academic
and non-academic personnel.33 In the first place, the Tuition Fee

308

Law34 alluded to by the respondent refers to R.A. No. 6728, as

amended35 or the Government Assistance to Students and Teachers in
Private Education Act. Section 5 of R.A. No. 6728 allows the increase in
tuition fees in private educational institutions and provides for the
allocation of the increment, to wit:
(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be
granted and tuition fees under subparagraph (c) may be increased, on the
condition that seventy percent (70%) of the amount subsidized
allotted for tuition fee or of the tuition fee increases shall go to
the payment of salaries, wages, allowances and other benefits of
teaching and non-teaching personnel x x x and may be used to cover
increases as provided for in the collective bargaining agreements existing
or in force at the time when this Act is approved and made effective: x x x
At least twenty percent (20%) shall go to the improvement or
modernization of buildings, equipment, libraries, laboratories, gymnasia
and similar facilities and to the payment of other costs of operation. x x x.
The 70% allocation presupposes an increase in a schools tuition fee, which
was not established in this case. Moreover, the Court has already ruled
that the 70% allocation set by law is only theminimum, and not the
maximum percentage, and there is actually a 10% portion the disposition
of which the law does not regulate.36 Even assuming that the allocation
provided by law is applicable in the respondents situation, the bare fact
that the expenses allotted for the salaries, wages and benefits of the
respondents personnel exceeded the minimum allocation, without more,
does not constitute reasonable justification for the closure of its
elementary and high school departments, and the retrenchment of the
petitioners. The respondent must establish by substantial and convincing
evidence that the impending losses it expected to incur, based on such
allocation, were imminent and that the retrenchment it conducted was
necessary to prevent such losses. Another factor that militates against the
respondents reason was that it re-opened after two years, due to the
clamor for its re-opening. This is contrary to the respondents
perceived impending loss considering that there was actually a demand
for its educational services. While enrolment may have declined, the Court
is not convinced that the closure of the elementary and high school
departments was a reasonable necessity, especially in the absence of any
showing on the part of the respondent that it explored other less drastic
and/or cost-saving measures to avoid serious financial or economic
problems.37
Finally, on the petitioners allegation that the closure and their
retrenchment amounted to unfair labor practice, suffice it to say that the
petitioners failed to discharge its burden of proving that the retrenchment
was motivated by ill will, bad faith or malice, or that it was aimed at
interfering with their right to self-organize. While the confluence of the
circumstances make it suspect, the Court is not convinced that the
respondents acts affected, in whatever manner, the petitioners right
to self-organization.38

WHEREFORE, the petition is GRANTED. The Decision dated November

19, 2008 and Resolution dated March 25, 2009 of the Court of Appeals in
CA-G.R. SP No. 02237 are SET ASIDE. The Labor Arbiter Decision dated
May 7, 2004 is REINSTATED with the MODIFICATION in that its finding of
unfair labor practice is REVERSED. In all other respects, the same
is AFFIRMED.
SO ORDERED

309

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE
DE GUZMAN,respondents.
DECISION
REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner
Philippine Telegraph and Telephone Company (hereafter, PT&T) invokes the
alleged concealment of civil status and defalcation of company funds as
grounds to terminate the services of an employee. That employee, herein
private respondent Grace de Guzman, contrarily argues that what really
motivated PT&T to terminate her services was her having contracted
marriage during her employment, which is prohibited by petitioner in its
company policies. She thus claims that she was discriminated against in
gross violation of law, such a proscription by an employer being outlawed
by Article 136 of the Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever,
specifically as a Supernumerary Project Worker, for a fixed period from
November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on
maternity leave.[1] Under the Reliever Agreement which she signed with
petitioner company, her employment was to be immediately terminated
upon expiration of the agreed period. Thereafter, from June 10, 1991 to July
1, 1991, and from July 19, 1991 to August 8, 1991, private respondents
services as reliever were again engaged by petitioner, this time in
replacement of one Erlinda F. Dizon who went on leave during both periods.
[2]
After August 8, 1991, and pursuant to their Reliever Agreement, her
services were terminated.
On September 2, 1991, private respondent was once more asked to
join petitioner company as a probationary employee, the probationary
period to cover 150 days. In the job application form that was furnished her
to be filled up for the purpose, she indicated in the portion for civil status
therein that she was single although she had contracted marriage a few
months earlier, that is, on May 26, 1991.[3]
It now appears that private respondent had made the same
representation in the two successive reliever agreements which she signed
on June 10, 1991 and July 8, 1991. When petitioner supposedly learned

about the same later, its branch supervisor in Baguio City, Delia M. Oficial,
sent to private respondent a memorandum dated January 15, 1992
requiring her to explain the discrepancy. In that memorandum, she was
reminded about the companys policy of not accepting married women for
employment.[4]
In her reply letter dated January 17, 1992, private respondent stated
that she was not aware of PT&Ts policy regarding married women at the
time, and that all along she had not deliberately hidden her true civil
status.[5] Petitioner
nonetheless
remained
unconvinced
by
her
explanations. Private respondent was dismissed from the company
effective January 29, 1992, [6] which she readily contested by initiating a
complaint for illegal dismissal, coupled with a claim for non-payment of
cost of living allowances (COLA), before the Regional Arbitration Branch of
the National Labor Relations Commission in Baguio City.
At the preliminary conference conducted in connection therewith,
private respondent volunteered the information, and this was incorporated
in the stipulation of facts between the parties, that she had failed to remit
the amount of P2,380.75 of her collections. She then executed a
promissory note for that amount in favor of petitioner. [7] All of these took
place in a formal proceeding and with the agreement of the parties and/or
their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed
down a decision declaring that private respondent, who had already gained
the status of a regular employee, was illegally dismissed by petitioner. Her
reinstatement, plus payment of the corresponding back wages and COLA,
was correspondingly ordered, the labor arbiter being of the firmly
expressed view that the ground relied upon by petitioner in dismissing
private respondent was clearly insufficient, and that it was apparent that
she had been discriminated against on account of her having contracted
marriage in violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said
public respondent upheld the labor arbiter and, in its decision dated April
29, 1994, it ruled that private respondent had indeed been the subject of
an unjust and unlawful discrimination by her employer, PT&T. However, the
decision of the labor arbiter was modified with the qualification that Grace
de Guzman deserved to be suspended for three months in view of the
dishonest nature of her acts which should not be condoned. In all other
respects, the NLRC affirmed the decision of the labor arbiter, including the

310

order for the reinstatement of private respondent in her employment with

PT&T.
The subsequent motion for reconsideration filed by petitioner was
rebuffed by respondent NLRC in its resolution of November 9, 1994, hence
this special civil action assailing the aforestated decisions of the labor
arbiter and respondent NLRC, as well as the denial resolution of the latter.
1. Decreed in the Bible itself is the universal norm that women should
be regarded with love and respect but, through the ages, men have
responded to that injunction with indifference, on the hubristic conceit that
women constitute the inferior sex. Nowhere has that prejudice against
womankind been so pervasive as in the field of labor, especially on the
matter of equal employment opportunities and standards. In the Philippine
setting, women have traditionally been considered as falling within the
vulnerable groups or types of workers who must be safeguarded with
preventive and remedial social legislation against discriminatory and
exploitative practices in hiring, training, benefits, promotion and retention.
The Constitution, cognizant of the disparity in rights between men and
women in almost all phases of social and political life, provides a gamut of
protective provisions. To cite a few of the primordial ones, Section 14,
Article II[8] on the Declaration of Principles and State Policies, expressly
recognizes the role of women in nation-building and commands the State
to ensure, at all times, the fundamental equality before the law of women
and men. Corollary thereto, Section 3 of Article XIII [9] (the progenitor
whereof dates back to both the 1935 and 1973 Constitution) pointedly
requires the State to afford full protection to labor and to promote full
employment and equality of employment opportunities for all, including an
assurance of entitlement to tenurial security of all workers. Similarly,
Section 14 of Article XIII [10] mandates that the State shall protect working
women through provisions for opportunities that would enable them to
reach their full potential.
2. Corrective labor and social laws on gender inequality have emerged
with more frequency in the years since the Labor Code was enacted on
May 1, 1974 as Presidential Decree No. 442, largely due to our countrys
commitment as a signatory to the United Nations Convention on the
Elimination of All Forms of Discrimination Against Women (CEDAW). [11]
Principal among these laws are Republic Act No. 6727
which
explicitly prohibits discrimination against women with respect to terms and
conditions of employment, promotion, and training opportunities; Republic
[12]

Act No. 6955[13] which bans the mail-order-bride practice for a fee and the
export of female labor to countries that cannot guarantee protection to the
rights of women workers; Republic Act No. 7192, [14] also known as the
Women in Development and Nation Building Act, which affords women
equal opportunities with men to act and to enter into contracts, and for
appointment, admission, training, graduation, and commissioning in all
military or similar schools of the Armed Forces of the Philippines and the
Philippine National Police; Republic Act No. 7322[15] increasing the
maternity benefits granted to women in the private sector; Republic Act
No. 7877[16] which outlaws and punishes sexual harassment in the
workplace and in the education and training environment; and Republic Act
No. 8042,[17] or the Migrant Workers and Overseas Filipinos Act of 1995,
which prescribes as a matter of policy,inter alia, the deployment of migrant
workers, with emphasis on women, only in countries where their rights are
secure. Likewise, it would not be amiss to point out that in the Family Code,
[18]
womens rights in the field of civil law have been greatly enhanced and
expanded.
In the Labor Code, provisions governing the rights of women workers
are found in Articles 130 to 138 thereof. Article 130 involves the right
against particular kinds of night work while Article 132 ensures the right of
women to be provided with facilities and standards which the Secretary of
Labor may establish to ensure their health and safety. For purposes of
labor and social legislation, a woman working in a nightclub, cocktail
lounge, massage clinic, bar or other similar establishments shall be
considered as an employee under Article 138. Article 135, on the other
hand, recognizes a womans right against discrimination with respect to
terms and conditions of employment on account simply of sex. Finally, and
this brings us to the issue at hand, Article 136 explicitly prohibits
discrimination merely by reason of the marriage of a female employee.
3. Acknowledged as paramount in the due process scheme is the
constitutional guarantee of protection to labor and security of tenure. Thus,
an employer is required, as a conditionsine qua non prior to severance of
the employment ties of an individual under his employ, to convincingly
establish, through substantial evidence, the existence of a valid and just
cause in dispensing with the services of such employee, ones labor being
regarded as constitutionally protected property.
On the other hand, it is recognized that regulation of manpower by the
company falls within the so-called management prerogatives, which
prescriptions encompass the matter of hiring, supervision of workers, work
assignments, working methods and assignments, as well as regulations on

311

the transfer of employees, lay-off of workers, and the discipline, dismissal,

and recall of employees. [19] As put in a case, an employer is free to
regulate, according to his discretion and best business judgment, all
aspects of employment, from hiring to firing, except in cases of unlawful
discrimination or those which may be provided by law. [20]
In the case at bar, petitioners policy of not accepting or considering as
disqualified from work any woman worker who contracts marriage runs
afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the
Constitution. Contrary to petitioners assertion that it dismissed private
respondent from employment on account of her dishonesty, the record
discloses clearly that her ties with the company were dissolved principally
because of the companys policy that married women are not qualified for
employment in PT&T, and not merely because of her supposed acts of
dishonesty.
That it was so can easily be seen from the memorandum sent to
private respondent by Delia M. Oficial, the branch supervisor of the
company, with the reminder, in the words of the latter, that youre fully
aware that the company is not accepting married women employee (sic),
as it was verbally instructed to you.[21] Again, in the termination notice sent
to her by the same branch supervisor, private respondent was made to
understand that her severance from the service was not only by reason of
her concealment of her married status but, over and on top of that, was
her violation of the companys policy against marriage (and even told you
that married women employees are not applicable [sic] or accepted in our
company.)[22]Parenthetically, this seems to be the curious reason why it was
made to appear in the initiatory pleadings that petitioner was represented
in this case only by its said supervisor and not by its highest ranking
officers who would otherwise be solidarily liable with the corporation. [23]
Verily, private respondents act of concealing the true nature of her
status from PT&T could not be properly characterized as willful or in bad
faith as she was moved to act the way she did mainly because she wanted
to retain a permanent job in a stable company. In other words, she was
practically forced by that very same illegal company policy into
misrepresenting her civil status for fear of being disqualified from
work. While loss of confidence is a just cause for termination of
employment, it should not be simulated. [24] It must rest on an actual breach
of duty committed by the employee and not on the employers caprices.
[25]
Furthermore, it should never be used as a subterfuge for causes which
are improper, illegal, or unjustified.[26]

In the present controversy, petitioners expostulations that it dismissed

private respondent, not because the latter got married but because she
concealed that fact, does have a hollow ring. Her concealment, so it is
claimed, bespeaks dishonesty hence the consequent loss of confidence in
her which justified her dismissal. Petitioner would asseverate, therefore,
that while it has nothing against marriage, it nonetheless takes umbrage
over the concealment of that fact. This improbable reasoning, with
interstitial distinctions, perturbs the Court since private respondent may
well be minded to claim that the imputation of dishonesty should be the
other way around.
Petitioner would have the Court believe that although private
respondent defied its policy against its female employees contracting
marriage,
what
could
be
an
act
of
insubordination
was
inconsequential. What it submits as unforgivable is her concealment of that
marriage yet, at the same time, declaring that marriage as a trivial matter
to which it supposedly has no objection. In other words, PT&T says it gives
its blessings to its female employees contracting marriage, despite the
maternity leaves and other benefits it would consequently respond for and
which obviously it would have wanted to avoid. If that employee confesses
such fact of marriage, there will be no sanction; but if such employee
conceals the same instead of proceeding to the confessional, she will be
dismissed. This line of reasoning does not impress us as reflecting its true
management policy or that we are being regaled with responsible
advocacy.
This Court should be spared the ennui of strained reasoning and
the tedium of propositions which confuse through less than candid
arguments. Indeed, petitioner glosses over the fact that it was its unlawful
policy against married women, both on the aspects of qualification and
retention, which compelled private respondent to conceal her supervenient
marriage. It was, however, that very policy alone which was the cause of
private respondents secretive conduct now complained of. It is
then apropos to recall the familiar saying that he who is the cause of the
cause is the cause of the evil caused.
Finally, petitioners collateral insistence on the admission of private
respondent that she supposedly misappropriated company funds, as an
additional ground to dismiss her from employment, is somewhat insincere
and self-serving. Concededly, private respondent admitted in the course of
the proceedings that she failed to remit some of her collections, but that is
an altogether different story. The fact is that she was dismissed solely
because of her concealment of her marital status, and not on the basis of

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that supposed defalcation of company funds. That the labor arbiter would
thus consider petitioners submissions on this supposed dishonesty as a
mere afterthought, just to bolster its case for dismissal, is a perceptive
conclusion born of experience in labor cases. For, there was no showing
that private respondent deliberately misappropriated the amount or
whether her failure to remit the same was through negligence and, if so,
whether the negligence was in nature simple or grave. In fact, it was
merely agreed that private respondent execute a promissory note to
refund the same, which she did, and the matter was deemed settled as a
peripheral issue in the labor case.

4. The government, to repeat, abhors any stipulation or policy in the

nature of that adopted by petitioner PT&T. The Labor Code states, in no
uncertain terms, as follows:

Private respondent, it must be observed, had gained regular status at

the time of her dismissal. When she was served her walking papers on
January 29, 1992, she was about to complete the probationary period of
150 days as she was contracted as a probationary employee on September
2, 1991. That her dismissal would be effected just when her probationary
period was winding down clearly raises the plausible conclusion that it was
done in order to prevent her from earning security of tenure. [27] On the
other hand, her earlier stints with the company as reliever were
undoubtedly those of a regular employee, even if the same were for fixed
periods, as she performed activities which were essential or necessary in
the usual trade and business of PT&T. [28] The primary standard of
determining regular employment is the reasonable connection between the
activity performed by the employee in relation to the business or trade of
the employer.[29]

This provision had a studied history for its origin can be traced to
Section 8 of Presidential Decree No. 148, [31] better known as the Women
and Child Labor Law, which amended paragraph (c), Section 12 of Republic
Act No. 679,[32] entitled An Act to Regulate the Employment of Women and
Children, to Provide Penalties for Violations Thereof, and for Other
Purposes. The forerunner to Republic Act No. 679, on the other hand, was
Act No. 3071 which became law on March 16, 1923 and which regulated
the employment of women and children in shops, factories, industrial,
agricultural, and mercantile establishments and other places of labor in the
then Philippine Islands.

As an employee who had therefore gained regular status, and as she

had been dismissed without just cause, she is entitled to reinstatement
without loss of seniority rights and other privileges and to full back wages,
inclusive of allowances and other benefits or their monetary equivalent.
[30]
However, as she had undeniably committed an act of dishonesty in
concealing her status, albeit under the compulsion of an unlawful
imposition of petitioner, the three-month suspension imposed by
respondent NLRC must be upheld to obviate the impression or inference
that such act should be condoned. It would be unfair to the employer if she
were to return to its fold without any sanction whatsoever for her act which
was not totally justified.Thus, her entitlement to back wages, which shall
be computed from the time her compensation was withheld up to the time
of her actual reinstatement, shall be reduced by deducting therefrom the
amount corresponding to her three months suspension.

ART. 136. Stipulation against marriage. - It shall be unlawful for an

employer to require as a condition of employment or continuation of
employment that a woman shall not get married, or to stipulate expressly
or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage.

It would be worthwhile to reflect upon and adopt here the

rationalization in Zialcita, et al. vs. Philippine Air Lines,[33] a decision that
emanated from the Office of the President. There, a policy of Philippine Air
Lines requiring that prospective flight attendants must be single and that
they will be automatically separated from the service once they marry was
declared void, it being violative of the clear mandate in Article 136 of the
Labor Code with regard to discrimination against married women. Thus:
Of first impression is the incompatibility of the respondents policy or
regulation with the codal provision of law. Respondent is resolute in its
contention that Article 136 of the Labor Code applies only to women
employed in ordinary occupations and that the prohibition against
marriage of women engaged in extraordinary occupations, like flight
attendants, is fair and reasonable, considering the pecularities of their
chosen profession.
We cannot subscribe to the line of reasoning pursued by respondent. All
along, it knew that the controverted policy has already met its doom as
early as March 13, 1973 when Presidential Decree No. 148, otherwise
known as the Women and Child Labor Law, was promulgated. But for the
timidity of those affected or their labor unions in challenging the validity of

313

the policy, the same was able to obtain a momentary reprieve. A close look
at Section 8 of said decree, which amended paragraph (c) of Section 12 of
Republic Act No. 679, reveals that it is exactly the same provision
reproduced verbatim in Article 136 of the Labor Code, which was
promulgated on May 1, 1974 to take effect six (6) months later, or on
November 1, 1974.
It cannot be gainsaid that, with the reiteration of the same provision in the
new Labor Code, all policies and acts against it are deemed illegal and
therefore abrogated. True, Article 132 enjoins the Secretary of Labor to
establish standards that will ensure the safety and health of women
employees and in appropriate cases shall by regulation require employers
to determine appropriate minimum standards for termination in special
occupations, such as those of flight attendants, but that is precisely the
factor that militates against the policy of respondent. The standards have
not yet been established as set forth in the first paragraph, nor has the
Secretary of Labor issued any regulation affecting flight attendants.
It is logical to presume that, in the absence of said standards or regulations
which are as yet to be established, the policy of respondent against
marriage is patently illegal. This finds support in Section 9 of the New
Constitution, which provides:
Sec. 9. The State shall afford protection to labor, promote full employment
and equality in employment, ensure equal work opportunities regardless of
sex, race, or creed, and regulate the relations between workers and
employees. The State shall assure the rights of workers to selforganization, collective bargaining, security of tenure, and just and
humane conditions of work x x x.
Moreover, we cannot agree to the respondents proposition that termination
from employment of flight attendants on account of marriage is a fair and
reasonable standard designed for their own health, safety, protection and
welfare, as no basis has been laid therefor. Actually, respondent claims that
its concern is not so much against the continued employment of the flight
attendant merely by reason of marriage as observed by the Secretary of
Labor, but rather on the consequence of marriage-pregnancy. Respondent
discussed at length in the instant appeal the supposed ill effects of
pregnancy on flight attendants in the course of their employment. We feel
that this needs no further discussion as it had been adequately explained
by the Secretary of Labor in his decision of May 2, 1976.

In a vain attempt to give meaning to its position, respondent went as far as

invoking the provisions of Articles 52 and 216 of the New Civil Code on the
preservation of marriage as an inviolable social institution and the family
as a basic social institution, respectively, as bases for its policy of nonmarriage. In both instances, respondent predicates absence of a flight
attendant from her home for long periods of time as contributory to an
unhappy married life. This is pure conjecture not based on actual
conditions, considering that, in this modern world, sophisticated
technology has narrowed the distance from one place to
another. Moreover, respondent overlooked the fact that married flight
attendants can program their lives to adapt to prevailing circumstances
and events.
Article 136 is not intended to apply only to women employed in ordinary
occupations, or it should have categorically expressed so. The sweeping
intendment of the law, be it on special or ordinary occupations, is reflected
in the whole text and supported by Article 135 that speaks of nondiscrimination on the employment of women.
The judgment of the Court of Appeals in Gualberto, et al. vs.
Marinduque Mining & Industrial Corporation [34] considered as void a policy
of the same nature. In said case, respondent, in dismissing from the
service the complainant, invoked a policy of the firm to consider female
employees in the project it was undertaking as separated the moment they
get married due to lack of facilities for married women. Respondent further
claimed that complainant was employed in the project with an oral
understanding that her services would be terminated when she gets
married. Branding the policy of the employer as an example of
discriminatory chauvinism tantamount to denying equal employment
opportunities to women simply on account of their sex, the appellate court
struck down said employer policy as unlawful in view of its repugnance to
the Civil Code, Presidential Decree No. 148 and the Constitution.
Under American jurisprudence, job requirements which establish
employer preference or conditions relating to the marital status of an
employee are categorized as a sex-plus discrimination where it is imposed
on one sex and not on the other. Further, the same should be evenly
applied and must not inflict adverse effects on a racial or sexual group
which is protected by federal job discrimination laws. Employment rules
that forbid or restrict the employment of married women, but do not apply
to married men, have been held to violate Title VII of the United States
Civil Rights Act of 1964, the main federal statute prohibiting job

314

discrimination against employees and applicants on the basis of, among

other things, sex.[35]
Further, it is not relevant that the rule is not directed against all
women but just against married women. And, where the employer
discriminates against married women, but not against married men, the
variable is sex and the discrimination is unlawful. [36] Upon the other hand, a
requirement that a woman employee must remain unmarried could be
justified as a bona fide occupational qualification, or BFOQ, where the
particular requirements of the job would justify the same, but not on the
ground of a general principle, such as the desirability of spreading work in
the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job
performance. Thus, in one case, a no-marriage rule applicable to both male
and female flight attendants, was regarded as unlawful since the restriction
was not related to the job performance of the flight attendants. [37]
5. Petitioners policy is not only in derogation of the provisions of
Article 136 of the Labor Code on the right of a woman to be free from any
kind of stipulation against marriage in connection with her employment,
but it likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by
all accounts inheres in the individual as an intangible and inalienable right.
[38]
Hence, while it is true that the parties to a contract may establish any
agreements, terms, and conditions that they may deem convenient, the
same should not be contrary to law, morals, good customs, public order, or
public policy.[39] Carried to its logical consequences, it may even be said
that petitioners policy against legitimate marital bonds would encourage
illicit or common-law relations and subvert the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state
that the relations between the parties, that is, of capital and labor, are not
merely contractual, impressed as they are with so much public interest
that the same should yield to the common good. [40] It goes on to intone
that neither capital nor labor should visit acts of oppression against the
other, nor impair the interest or convenience of the public. [41] In the final
reckoning, the danger of just such a policy against marriage followed by
petitioner PT&T is that it strikes at the very essence, ideals and purpose of
marriage as an inviolable social institution and, ultimately, of the family as
the foundation of the nation.[42] That it must be effectively interdicted here
in all its indirect, disguised or dissembled forms as discriminatory conduct
derogatory of the laws of the land is not only in order but imperatively
required.

ON THE FOREGOING PREMISES, the petition of Philippine Telegraph

and Telephone Company is hereby DISMISSED for lack of merit, with double
costs against petitioner.
SO ORDERED.

315

G.R. No. 106256 December 28, 1994

MAYA FARMS EMPLOYEES ORGANIZATION, MAYA REALTY AND
LIVESTOCK SUPERVISORY UNION, MAYA FARMS EMPLOYEES
ASSOCIATION, and MAYA FARMS, INC. SUPERVISORY
UNION, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MAYA REALTY &
LIVESTOCK, INC., MAYA FARMS, INC., and LIBERTY FLOUR MILLS,
INC., respondents.
Paterno D. Menzon Law Office for petitioners.
Angara, Abello, Concepcion, Regala & Cruz for private respondents.

KAPUNAN, J.:

Accordingly, the program was amended to reduce the minimum

requirement of eight (8) years of service to only five (5) years.
However, the response to the program was nil. There were only a few
takers. To avert further losses, private respondents were constrained to
look into the companies' organizational set-up in order to streamline
operations. Consequently, the early retirement program was converted into
a special redundancy program intended to reduce the work force to an
optimum number so as to make operations more viable.
In December 1991, a total of sixty-nine (69) employees from the two
companies availed of the special redundancy program.
On January 17, 1992, the two companies sent letters to sixty-six (66)
employees informing them that their respective positions had been
declared redundant. The notices likewise stated that their services would
be terminated effective thirty (30) days from receipt thereof. Separation
benefits, including the conversion of all earned leave credits and other
benefits due under existing CBAs were thereafter paid to those affected.

This petition for review on certiorari seeks to set aside the decision of
public respondent National Labor Relations Commission (NLRC) which
upheld the legality of the separation of sixty-six (66) employees who are
members of petitioner unions, thereby dismissing petitioners' complaint
against private respondents for violation of collective bargaining
agreement (CBA) and unfair labor practice.

On January 24, 1992, a notice of strike was filed by the petitioners which
accused private respondents, among others, of unfair labor practice,
violation of CBA and discrimination. Conciliation proceedings were held by
the National Conciliation and Mediation Board (NCMB) but the parties failed
to arrive at a settlement.

Private respondents Maya Farms, Inc. and Maya Realty and Livestock
Corporation belong to the Liberty Mills group of companies whose
undertakings include the operation of a meat processing plant which
produces ham, bacon, cold cuts, sausages and other meat and poultry
products.

On February 6, 1992, the two companies filed a petition with the Secretary
of Labor and Employment asking the latter to assume jurisdiction over the
case and/or certify the same for compulsory arbitration. Thus, on February
12, 1992, the then Acting Labor Secretary (now Secretary) Nieves Confesor
certified the case to herein public respondent for compulsory arbitration.

Petitioners, on the other hand, are the exclusive bargaining agents of the
employees of Maya Farms, Inc. and the Maya Realty and Livestock
Corporation.

On March 4, 1992, the parties were called to a hearing to identify the

issues involved in the case. Thereafter, they were ordered to submit their
respective position papers.

On April 12, 1991, private respondents announced the adoption of an early

retirement program as a cost-cutting measure considering that their
business operations suffered major setbacks over the years. The program
was voluntary and could be availed of only by employees with at least
eight (8) years of service. 1 Dialogues were thereafter conducted to give
the parties an opportunity to discuss the details of the program.

In their position paper, petitioners averred that in the dismissal of

sixty-six (66) union officers and members on the ground of redundancy,
private respondents circumvented the provisions in their CBA, more
particularly, Section 2, Article III thereof. Said provision reads:

316

Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment

resulting in termination of employment in the line of work,
the
Last-In-First-Out (LIFO) Rule must always be strictly
observed.
Petitioners also alleged that the companies' claim that they were in
economic crisis was fabricated because in 1990, a net income of over 83
million pesos was realized by Liberty Flour Mills Group of
Companies. 2Furthermore, with the termination of the sixty-six (66)
employees pursuant to the special redundancy program, the remaining
work force, especially the drivers, became overworked and overburdened
so much so that they found themselves doing overtime work and reporting
for duty even during rest days.
Invoking the workers' constitutional right to security of tenure, petitioners
prayed for the reinstatement of the sixty-six (66) employees and the
payment of attorney's fees as they were constrained to hire the services of
counsel in order to protect the workers' rights.
On their part, private respondents contend that their decision to implement
a special redundancy program was an exercise of management prerogative
which could not be interfered with unless it is shown to be tainted with bad
faith and ill motive. Private respondents explained that they had no choice
but to reduce their work force, otherwise, they would suffer more losses.
Furthermore, they denied that the program violated CBA provisions.
On June 29, 1992, public respondent rendered a decision,
portion of which reads:

the dispositive

WHEREFORE, in view of the foregoing, judgment is hereby

rendered confirming the legality of the separation of the 66
employees of management thereby dismissing the charges
of violation of CBA and unfair labor practice on the part of
management. Accordingly, Maya Farms Incorporated and
Maya Realty and Livestocks Inc. are hereby ordered to
comply with its (sic) undertaking per the notice of
termination dated January 17, 1992 issued to the
remaining fifty three (53) employees paying them their
respective separation benefits as listed in the attached
sheet considered part of this Decision. Said awards (sic) is
in addition to other benefits as extended by the companies
in the letter of termination.

SO ORDERED. 4
Not satisfied with the above-quoted decision, petitioners interposed the
instant petition.
Petitioners maintain that public respondent grossly erred and gravely
abused its discretion when it ruled that: (a) the termination of the sixty-six
(66) employees was in accordance with the LIFO rule in the CBA; (b) the
termination of the sixty-six (66) employees was in accordance with Article
283 of the Labor Code; and (c) the payment or offer of payment can
substitute for the 30-day required notice prior to termination. 5
A close scrutiny of these assigned errors however, shows that the same
primarily deal with the factual findings of public respondent which we are
not at liberty to set aside in the absence of grave abuse of discretion
amounting to lack or in excess of jurisdiction.
This Court has consistently ruled that findings of fact of administrative
agencies and quasi-judicial bodies which have acquired expertise because
their jurisdiction is confined to specific matters are generally accorded not
only respect but even finality 6 and are binding upon this Court unless there
is a showing of grave abuse of discretion, 7 or where it is clearly shown that
they were arrived at arbitrarily or in disregard of the evidence on record. 8
Nevertheless, we will look into the factual findings of public respondent if
only to determine whether there was grave abuse of discretion amounting
to lack or in excess of jurisdiction.
The termination of the sixty-six employees was done in accordance with
Article 283 of the Labor Code. The basis for this was the companies' study
to streamline operations so as to make them more viable. Positions which
overlapped each other, or which are in excess of the requirements of the
service, were declared redundant.
Article 283 provides:
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 devises, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the

317

purpose of circumventing in the provisions of this title, by

serving a written notice on the workers and the
Department of Labor and Employment at least one (1)
month before the intended date thereof. In case of
retrenchment to prevent losses of operations of
establishment or undertaking not due to serious business
losses or financial reverses, the one (1) month pay or at
least
one-half (1/2) pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
We fully agree with the findings and conclusions of the public respondent
on the issue of termination, to wit:
We sustain the companies' prerogative to adopt the alleged
redundancy/retrenchment program to minimize if not, to
avert losses in the conduct of its operations. This has been
recognized in a line of cases. (Wiltshire File Co. vs. NLRC,
G.R. No. L-82249, February 7, 1991). However, the
companies' decision on this matter is not absolute. The
basis for such an action must be far from being whimsical
and the same must be proved by substantial evidence. In
addition, the implementation of such a decision or policy
must be in accordance with existing laws, rules and
procedure and provisions of the CBA between the parties, if
there be any. Short of any of these conditions,
management policy to pursue and terminate its employees
allegedly to avert losses, must fail.
In subject case, the 66 complaining employees were
separated from service as a result of the decision of
management to limit its operations and streamline
positions and personnel requirements.
In the case of Maya Farms, Inc. its meat processing
department, prior to the adoption of special redundancy
program had four (4) sections each of which is headed by
an assistant superintendent. These 3 sections are: (a) meat
processing; (b) slaughterhouse; (c) packing. With the
implementation of the decision of management to limit
meat processing with sausages as the only output, only
one position for assistant superintendent was retained that

of Asst. Superintendent for meat processing held by Lydia

Bandong. (Plantilla attached to the letter of May 24, 1992;
also Exh. "E." Likewise, positions of slicer/seater operator,
debonner/skinner, ham and bacon operative, were
scrapped. Similarly, positions for packers were decreased
retaining only five positions out of 21 packers. Also
affected were the positions of egg sorters/stockers as only
4 positions were retained out of ten (10) positions.
A close examination of the positions retained by
management show that said positions such as egg sorter,
debonner were but the minimal positions required to
sustain the limited functions/operations of the meat
processing department. In the absence of any evidence to
prove bad faith on the part of management in arriving at
such decision, which records on hand failed to show in
instant case, the rationality of the act of management in
this regard must be sustained. While it may be true that
the Liberty Flour Mills Group of Companies as a whole
posted a net income of P83.3 Million, it is admitted that
with respect to operations of the meat processing and
livestock which were undertaken by herein companies
sustained losses in the sum of P2,257,649.88 (Exh. "3").
This is the reason, as advanced by management, for its
decision to streamline positions resulting in the reduction
of manpower compliment (sic). 9
In Abbott Laboratories (Phils.) Inc. vs. NLRC, 10 we had occasion to uphold
the employer in its exercise of what are clearly management prerogatives,
thus:
The hiring, firing, transfer, demotion, and promotion of
employees has been traditionally, identified as a
management prerogative subject to limitations found in
law, a collective bargaining agreement or general
principles of fair play and justice. This is a function
associated with the employer's inherent right to control
and manage effectively its enterprise. Even as the law is
solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are
clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve

318

its purpose cannot be denied (see Dangan vs. National

Labor Relations Commission, 127 SCRA 706).
The rule is well-settled that labor laws discourage interference with an
employer's judgment in the conduct of his business. Even as the law is
solicitous of the welfare of employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. As long
as the company's exercise of the same is in good faith to advance its
interest and not for the purpose of defeating or circumventing the rights of
employees under the laws or valid agreements, such exercise will be
upheld. 11
The NLRC correctly held that private respondents did not violate the LIFO
rule under Section 2, Article III of the CBA which provides:
Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment
resulting in termination of employment in the line of work,
the
Last-in-First-Out (LIFO) Rule must always be strictly
observed.
It is not disputed that the LIFO rule applies to termination of employment
in the line of work. 12 Verily, what is contemplated in the LIFO rule is that
when there are two or more employees occupying the same position in the
company affected by the retrenchment program, the last one employed
will necessarily be the first to go.
Moreover, the reason why there was no violation of the LIFO rule was
amply explained by public respondent in this wise:
. . . . The LIFO rule under the CBA is explicit. It is ordained
that in cases of retrenchment resulting in termination of
employment in line of work, the employee who was
employed on the latest date must be the first one to go.
The provision speaks of termination in the line of work.
This contemplates a situation where employees occupying
the same position in the company are to be affected by the
retrenchment program. Since there ought to be a
reduction in the number of personnel in such positions, the
length of service of each employees is the determining
factor, such that the employee who has a longer period of
employment will be retained.

In the case under consideration, specifically with respect to

Maya Farms, several positions were affected by the special
involuntary redundancy program. These are packers, egg
sorters/stockers, drivers. In the case of packers, prior to the
involuntary redundancy program,
twenty-one employees occupied the position of packers.
Out of this number, only 5 were retained. In this group of
employees, the earliest date of employment was October
27, 1969, and the latest packer was employed in 1989. The
most senior employees occupying the position of packers
who were retained are as follows:
Santos, Laura C. Oct. 27, 1969
Estrada, Mercedes Aug. 20, 1970
Hortaleza, Lita June 11, 1971
Jimenez, Lolita April 25, 1972
Aquino, Teresita June 25, 1975
All the other packers employed after June 2, 1975 (sic)
were separated from the service.
The same is true with respect to egg sorters. The egg
sorters employed on or before April 26, 1972 were
retained. All those employed after said date were
separated.
With respect to the position of drivers, there were eight
drivers prior to the involuntary redundancy program.
Thereafter only 3 positions were retained. Accordingly, the
three drivers who were most senior in terms of period of
employment, were retained. They are: Ceferino D. Narag,
Efren Macaraig and Pablito Macaraig.
The case of Roberta Cabrera and Lydia C. Bandong, Asst.
Superintendent for packing and Asst. Superintendent for
meat processing respectively was presented by the union
as an instance where the LIFO rule was not observed by
management. The union pointed out that Lydia Bandong
who was retained by management was employed on a
much later date than Roberta Cabrera, and both are
Assistant Superintendent. We cannot sustain the union's
argument. It is indeed true that Roberta Cabrera was
employed earlier (January 28, 1961) and (sic) Lydia

319

Bandong (July 9, 1966). However, it is maintained that in

meat processing department there were 3 Asst.
Superintendents assigned as head of the 3 sections
thereat. The reason advanced by the company in retaining
Bandong was that as Asst. Superintendent for meat
processing she could "already take care of the operations
of the other sections." The nature of work of each assistant
superintendent as well as experience were taken into
account by management. Such criteria was not shown to
be whimsical nor carpricious (sic). 13 (Emphasis supplied).
Finally, contrary to petitioners' contention, there is nothing on record to
show that the 30-day notice of termination to the workers was disregarded
and that the same substituted with separation pay by private respondents.
As found by public respondent, written notices of separation were sent to
the employees on January 17, 1992. The notices expressly stated that the
termination of employment was to take effect one month from receipt
thereof. Therefore, the allegation that separation pay was given in lieu of
the 30-day notice required by law is baseless.
WHEREFORE, finding no grave abuse of discretion amounting to lack or in
excess of jurisdiction on the part of public respondent, the instant petition
is hereby DISMISSED.
SO ORDERED.

320

SYLLABUS
1.

2.

LABOR AND SOCIAL LEGISLATION; EMPLOYMENT; ILLEGAL

DISMISSAL;
CHARGE
OF
SERIOUS
MISCONDUCT,
NOT
SUBSTANTIATED. -- Petitioners were unable to substantiate the
charge of serious misconduct against Macaspac and Albasin. The
incident report of the security guards that they caught the two
slashing with razor blades several bundles of towels in the warehouse
was on its face categorical on the culpability of subject respondents,
yet the report was not utilized as supporting evidence in the criminal
proceedings. We have reason to believe that the incident report was
merely concocted by petitioners in view of the filing of the labor cases
against them. Moreover, it has not been shown that Macaspac and
Albasin were such feckless individuals who would resort to destruction
of company properties in total disregard of its dire consequences. On
the contrary, they were union members fighting for their rights as
employees. Even the reason for their misconduct banks on
speculation. Further still, it does not appear that the criminal case
filed ever prospered at the prosecutor's level.
ID.; ID.; ID.; NON-COMPLIANCE WITH PROCEDURAL DUE
PROCESS. -- Macaspac and Albasin were likewise denied procedural
due process. Petitioners failed to afford Macaspac and Albasin the
benefit of hearing and investigation before termination. Neither did
petitioners comply with the requirement on notices. An established
rule of long standing is that to effect a completely valid and
unassailable dismissal, an employer must show not only sufficient
ground therefor but must also prove that procedural due process has
been observed by giving the employee two (2) notices: one, of the
intention to dismiss, indicating therein his acts or omissions
complained against, and two, notice of the decision to dismiss.

3. ID.; ID.; ID.; REDUNDANCY, NOT ADEQUATELY PROVEN. -- The

characterization of an employee's services as no longer necessary or
sustainable, and therefor properly terminable, is an exercise of
business judgment on the part of the employer. The wisdom or
soundness of such characterization or decision is not subject to
discretionary review on the part of the Labor Arbiter nor the NLRC
provided, of course, that violation of law or arbitrary or malicious
action is not shown. In the instant case, we question petitioners'
exercise of management prerogative because it was not shown that
Rivera and Macaspac's positions were indeed unnecessary, much less

was petitioners' claim supported by any evidence. It is not enough for

a company to merely declare that it has become overmanned. It must
produce adequate proof that such is the actual situation in order to
justify the dismissal of the affected employees for redundancy.
4. ID.; ID.; ID.; NO CRITERIA FOR DISMISSAL ON GROUND OF
REDUNDANCY WAS ADOPTED. -- We have laid down the principle
that in selecting the employees to be dismissed, a fair and reasonable
criteria must be used, such as but not limited to: (a) less preferred
status (e.g., temporary employee), (b) efficiency, and (c) seniority.
The records disclose that no criterion whatsoever was adopted by
petitioners in dismissing Rivera and Macaspac.
5. ID.; ID.; ID.; LACK OF WRITTEN NOTICE TO DOLE. -- Another
procedural lapse committed by petitioners is the lack of written notice
to the DOLE required under Art. 283 of the Labor Code. The purpose
of such notice is to ascertain the verity of the cause of termination of
employment.
6. ID.; ID.; ID.; WHERE EMPLOYEE'S ACT OF DISRESPECT WAS
PROVOKED BY THE EMPLOYER. -- The utterances by an employee
of obscene, insulting or offensive words against a superior justify his
dismissal for gross misconduct. The scornful attitude is also
destructive of his co-employees' morale. However, the dismissal will
not be upheld where it appears, as in this case, that the employee's
act of disrespect was provoked by the employer. Balbino was
suspended because she allegedly continually slowed down in her
production. Yet, petitioners failed to show that there was an
established quota for production as a point of reference to determine
whether an employee was performing below or above the quota to
warrant the charge. Balbino hurled invectives at petitioner Bico
because she was provoked by the baseless suspension imposed on
her. The penalty of dismissal must be commensurate with the act,
conduct or omission imputed to the employee. Under the
circumstances, we believe that dismissal was a harsh penalty; one (1)
week suspension would have sufficed.
7.

ID.; ID.; ID.; ABANDONMENT, NOT APPRECIATED. -- For

abandonment to exist, it is essential that (1) the employee must have
failed to report for work or must have been absent without valid or
justifiable reason; and, (2) there must have been a clear intention to
sever the employer-employee relationship manifested by some overt

321

acts. The circumstance that Cachucha lost no time in filing a

complaint for illegal dismissal against petitioners is incompatible with
the charge of abandonment and confirms in fact that he was refused
entry into the company premises.
8. ID.; ID.; ID.; ELUCIDATED. -- Dismissal is the ultimate penalty that can
be meted to an employee. It must therefore be based on a clear and
not on an ambiguous or ambivalent ground. From our assessment of
the record, we find that petitioners exercised their authority to dismiss
without due regard to the pertinent exacting provisions of the Labor
Code. The right to terminate should be utilized with extreme caution
because its immediate effect is to put an end to an employee's
present means of livelihood while its distant effect, upon subsequent
finding of illegal dismissal is just as pernicious to the employer who
will most likely be required to reinstate the subject employee and
grant him full back wages and other benefits.

[G.R. No. 119157. March 11, 1999]

GOLDEN THREAD KNITTING INDUSTRIES, INC., GEORGE NG
and WILFREDO BICO, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, GEORGE MACASPAC, MARY ANN
MACASPAC, ROMULO ALBASIN, MELCHOR CACHUCHA,
GILBERT RIVERA and FLORA BALBINO,respondents.
DECISION
BELLOSILLO, J.:
From 16 July to 2 September 1992 four (4) separate complaints were
filed against petitioners Golden Thread Knitting Industries, Inc., George Ng
and Wilfredo Bico by their employees: the first, on 16 July 1992 for unfair
labor practice, illegal dismissal, overtime pay, premium pay, holiday pay
and illegal rotation by Gilbert Rivera, Mary Ann Macaspac, Deogracias
Balingit, Lolita Geraldez, Mila Santos, Perlita Matias, Lourdes Barranco,
Melchor Cachucha, Romulo Albasin, Lani Agudo, Rosalie Cachucha, Cristina
Balingit,
Rossie
Rejuso, Carmen
Balingit,
George
Macaspac,
Flora Balbino, Ma. LuisaBalbino, Angelina Albasin, Vilma Ballesteros, Evelyn
Carlos and Letty Bejamonde; the second, on 22 July 1992, for unfair labor
practice, illegal dismissal, reduction of working days, fabrication/frame-up

of union member and union busting, by Flora Balbino, Mary Ann Macaspac,
Rossie Rejuso, Rosalie Cachucha, Lolita Geraldez, Angelina Albasin, Ma.
Luisa Balbino, Vilma Ballesteros and Carmen Balingit; the third, on 24
August 1992, for unfair labor practice and withholding of wages filed by
Deogracias Balingit; and the fourth, on 2 September 1992, for unfair labor
practice and illegal dismissal, by Gilbert Rivera and Mary Ann
Macaspac. Thereafter, the four (4) complaints had to be, as they in fact
were, consolidated.
During the pendency of these cases, Lolita Geraldez, Perlita Matias,
Mila Santos and Angelina Albasin moved that they be dropped as
complainants in view of their subsequent resignation/ separation from
employment.
The complainants alleged that in the first week of May 1992 they
organized a labor union. On 22 May 1992 Cristina Balingit, wife of the
union Chairman, was dismissed from employment as sewer. In the last
week of May union Chairman Deogracias Balingit himself was suspended
from work as knitting operator. On 1 June 1992 petitioners shortened the
number of working days of the union officers and members from six (6) to
three (3) days a week.
On 1 July 1992 the union filed a petition for certification election.
On 6 July 1992 union members Romulo Albasin, Melchor Cachucha
and George Macaspac, who worked as printers, were barred from entering
the
company
premises. On
5
August
1992
Flora
Balbino
was suspended, then on the same day terminated from her job as
sewer. On 14 August 1992 union Vice Chairman Gilbert Rivera, as artist,
was dismissed from employment together with union Secretary Mary Ann
Macaspac. On 10 September 1992 Mila Santos was suspended. The
complainants thus considered the foregoing acts as retaliatory measures of
petitioners on account of the former having established a union.
Petitioners contended that they resorted to rotation of work, which
affected practically all employees, because of the low demand for their
towels and shirts. Petitioners also avowed that they validly dismissed five
(5) of the complainants, namely, Romulo Albasin, George Macaspac, Gilbert
Rivera, Mary Ann Macaspac and Flora Balbino. According to petitioners,
Romulo Albasin and George Macaspac slashed several bundles of towels on
3 July 1992, while the positions of Gilbert Rivera and Mary Ann Macaspac
became redundant. Flora Balbino threatened the Personnel Manager and
violated company rules by removing her time card from the rack, while

322

Melchor Cachucha was not dismissed but abandoned his employment on 7

July 1992.
On 17 March 1993 the Labor Arbiter partly ruled in favor of the
complainants. On the issue of unfair labor practice, he opined that the
reduction of working days and suspension or dismissal of union officers or
members were not shown to have been done in retaliation to the
complainants' act of organizing a union. He noted that those events
transpired
before
petitioners
came
to
know
about
the existenceof the union which was in the later part of July 1992
when they received the notice of hearing on the petition for
certification
election. Moreover, he was convinced that the reduction of working days
which was company wide was brought about by the low demand for the
company's products.
With respect to the dismissals of Romulo Albasin, George Macaspac,
Gilbert Rivera, Mary Ann Macaspac and Flora Balbino, the Labor Arbiter
upheld petitioners on the validity thereof except that Gilbert Rivera and
Mary Ann Macaspac should be paid separation pay of one-half (1/2) month
for every year of service or P4,602.00 each. On the other hand, Flora
Balbino should be paid her two (2) days' salary of P236.00 that was
withheld from her. As for Melchor Cachucha, the Labor Arbiter sustained
petitioners' contention that he was guilty of abandonment.
Regarding the claims of Deogracias and Cristina Balingit, the Labor
Arbiter found that these were barred by their previous separate
complaints, one of which was pending appeal while the other was already
dismissed. The rest of the claims was dismissed for lack of merit. [1]
Public respondent National Labor Relations Commission evaluated the
evidence in a different manner. Except for the dismissal of the charge of
unfair labor practice and the award of unpaid wages to Flora Balbino, the
rest of the Labor Arbiter's ruling was set aside on 22 November 1994.
According to the NLRC George Macaspac, Mary Ann Macaspac, Romulo
Albasin, Melchor Cachucha, Gilbert Rivera and Flora Balbino were illegally
dismissed so that petitioners were directed to immediately reinstate them
with full back wages and other benefits.
Furthermore, the NLRC found merit in the claim for holiday pay for
1990, 1991 and 1992 and thus ordered petitioners to give complainants
their pay for ten (10) regular holidays for each year. Finally, it required
petitioners to pay attorney's fees equivalent to ten (10%) percent of the
total monetary awards.[2]

Petitioners maintain that valid causes exist for the termination of the
five (5) complainants earlier mentioned. Romulo Albasin and George
Macaspac were caught by security guards M. Abelgas and E. Antonio
slashing with razor blades several bundles of towels in the warehouse at
about 12:30 o'clock in the afternoon of 3 July 1992. The incident, which
constituted serious misconduct, was witnessed by another employee, Jose
Arnel Mejia. Gilbert Rivera and Mary Ann Macaspac were terminated on 14
August 1992 due to redundancy, i.e., the Design Section where they
worked as artists became overmanned when the volume of work was
drastically reduced. Flora Balbino was guilty of serious misconduct by
hurling invectives at petitioner Bico and threatening him in front of several
workers, and taking her time card off the rack on 5 August 1992.
In the case of Melchor Cachucha, petitioners insist that he
unjustifiably left his employment on 7 July 1992 and refused to return to
work despite notice sent through his wife, who was also employed by
petitioner company, through a memorandum dated 22 July 1992[3] and
personal notification by another employee, Nilo Wales. [4] Petitioners insist
that private respondents are not entitled to holiday pay on the basis of
bare allegations and without specifying the unpaid holidays.
Clearly, there are only two (2) issues that confront this
Court: (1) whether respondent NLRC committed grave abuse of discretion
in ordering petitioners to reinstate private respondents Romulo Albasin,
George Macaspac, Gilbert Rivera, Mary Ann Macaspac, Flora Balbino and
Melchor Cachucha; and, (2) whether these private respondents are entitled
to holiday pay.
The factual findings of administrative bodies, being considered
experts in their field, are binding on this Court. But this is a general rule
which holds true only when established exceptions do not obtain.One of
these exceptions is where the findings of the Labor Arbiter and the NLRC
are contrary to each other, as in the present case. Thus, there is a
necessity to review the records to determine which conclusions are more
conformable to the evidentiary facts.[5]
With regard to George Macaspac and Romulo Albasin, security guards
M. Abelgas and E. Antonio submitted an incident report to the Manager of
petitioner company regarding the destruction of several bundles of towels
by Macaspac and Albasin with the use of razor blades. [6] In fact, on 20 July
1992 petitioner Bico as Supervisor of petitioner company filed a complaint
for malicious mischief against them the property destroyed being
worth P3,800.00.[7] In this connection, another employee of petitioners,

323

Jose Arnel Mejia, executed a sworn statement on the same day before the
State Prosecutor regarding the incident -

On 5 November 1992 Mejia executed another affidavit substantially

reiterating his prior narrations.[9]

xxxx

On 6 August 1992 Macaspac and Albasin executed a counter-affidavit

denying the accusation against them. They claim that they were having
lunch outside the company premises during the time and date of the
alleged incident.[10] Their denial and alibi were substantiated by the joint
affidavits of Mary Ann Macaspac, Perlita Matias, Lolita Geraldez, Melchor
Cachucha and Ma. Luisa Balbino.[11]

03. T: Ano naman ang iyong titistiguhan na nakita mo?

S: Nakita ko po na hinihiwa ng dalawang kasamahan ko sa trabaho
iyong nakarolliong tuwalya at ito ay kanilang ikinalat at iyong
nakabalot na plastic sa mga nakarollio ay kanilang pinagsisira.
04. T: Sino naman itong dalawang kasamahan mo na sumira sa mga
nakarolliong tuwalya?
S: Sila ay sina R(O)M(U)LO ALBASIN at GEORGE MACASPAC, na pawang
mga kasamahan ko sa trabaho.
05. T: Kailan at saan naman nangyari ang mga bagay na ito?
S: Noon pong ika-3 ng (H)ul(y)o 1992, mga bandang alas 12:00 ng
tanghali, doon po sa warehouse ng Golden Thread (K)nitting
(I)ndustries, sa no. 270 Tangka St., Malinta, Valenzuela, Metro
Manila.
06. T: Nakita mo ba n(an)g kasalukuyan nilang sinisira iyong mga
tuwalya?
S: Opo, nakita ko dahil sabay-sabay kaming lumabas at isa lamang ang
aming dinadaanan.
07. T: Kasama mo ba si(l)a sa isang department?

NLRC did not find lawful cause for the dismissal of Macaspac and
Albasin since x x x x Records show that respondents failed to give the aforenamed
complainants an opportunity to be heard. There was no investigation
conducted, calling the attention of the aforenamed complainants (to) the
charge imputed against them and requiring them to explain and/or answer
the same. Respondents' lone witness in the person of Jose Arnel Mejia was
not presented for confrontation by the said complainants. Thus, with the
vehement denial of the complainants, together with their own
witnesses (pp. 157-163, Records), We find the charge imputed against
them of questionable veracity x x x x[12]
The ruling is correct. We find that petitioners were unable to
substantiate the charge of serious misconduct against Macaspac and
Albasin. The incident report of the two (2) security guards was on its face
categorical on the culpability of subject respondents, yet it is perplexing
that the report was not utilized as supporting evidence in the criminal
proceedings. The affidavit of petitioner Bico sworn to before the State
Prosecutor only mentioned that xxxx

S: Opo, at lunch break na po iyon at maglalabasan kami para kumain at

pagdaan nila doon sa mga nakakamadang tuwalya ay ginulo nila
iyong mga kamada at pinaghihiwa nila.

03. T: Ano ang dahilan at naririto ka sa aming tang(g)apan at

nagbibigay ng salaysay?

08. T: Alam mo ba ang dahilan at kung bakit ginawa nila ang bagay na
iyon?

S: Dahil sa ako po ang napag(-)utusan ng aming Manager upang

maghain ng reklamo laban doon sa dalawang trabahador n(a)
sumira sa produktong tuwalya x x x x

S: Nagalit po siguro sila dahil inalis ni Manager iyong pinaskil nilang

karatula tungkol sa labor x x x x[8]

09. T: Papaano mo naman nalaman na sila ang nagsira ng mga

produktong tuwalya?

324

S: Nagpunta po sa akin iyong lady guard at sinabi niya na

iyong mga nakarolliong tuwalya na nakaka(l)at ay mga (h)iniwa at
sira. (A)ng ginawa ko ay pumunta ako doon sa lugar ng mga
tuwalya at nakita ko na sira nga ang mga tuwalya, pinagtanong ko
kung sino ang nakakita na sumira sa mga tuwalya at doon ay
mayroon umamin sa akin at sinabi na sila R(o)m(u)lo Albasin at
George Macaspac ang sumira x x x x[13]
As previously stated, the incident report was addressed to the
Manager of the company. Considering that it was the Manager who
instructed petitioner Bico to lodge the criminal complaint, and if the report
was submitted after the incident, then there was no reason for it not to
form part of the evidence in the criminal proceedings. As it is, we can
gather from the narration of petitioner Bico that the person who revealed
to him the identities of the culprits was not one of the security guards but
Mejia who supplied the supporting affidavit. These circumstances
inevitably lead us to the conclusion that the incident report was merely
concocted by petitioners in view of the filing of the labor cases against
them.
The narration of Mejia regarding the alleged slashing incident is
obviously another fabrication. In answer to the query, "Nakita mo ba
n(an)g kasalukuyan nilang sinisira iyong mga tuwalya?" Mejia
replied, "Opo, nakita ko dahil sabay-sabay kaming lumabas at isa lamang
ang aming dinadaanan." Indeed, it is hard to believe that Macaspac and
Albasin destroyed company properties in Mejia's full view who did not
appear to be with them in the controversy. Often, misdeeds are committed
either in the presence of an ally, if nobody is around to blow the whistle, or
when darkness has adequately shrouded the surroundings. Moreover, it
has
not
been
shown
that
Macaspac
and
Albasin
were such feckless individuals who would resort to destruction of company
properties in total disregard of its dire consequences. On the contrary, they
were union members fighting for their rights as employees. Even the
reason
advanced
by
Mejia
for
their
misconduct
banks
on
speculation. Further still, it does not appear that the criminal case filed by
petitioner Bico primarily on the strength of the affidavit of Mejia ever
prospered at the prosecutor's level.
Macaspac and Albasin were likewise denied procedural due
process. As correctly observed by respondent NLRC, petitioners failed to
afford Macaspac and Albasin the benefit of hearing and investigation
before termination. It is also our observation that neither did petitioners
comply
with
the
requirement
on
notices. An
established

rule of long standing is that to effect a completely valid and unassailable

dismissal, an employer must show not only sufficient ground therefor but
must also prove that procedural due process has been observed by giving
the employee two (2) notices: one, of the intention to dismiss, indicating
therein his acts or omissions complained against, and two, notice of the
decision to dismiss.[14] Macaspac and Albasin were summarily eased out of
employment when they were refused entry into the company premises
three (3) days after allegedly slashing the bundles of towels or on 6 July
1992.
As regards Gilbert Rivera and Mary Ann Macaspac, petitioners claim
that they were constrained to trim down the number of their artists in the
Design Section from five (5) to two (2) as a consequence of the drastic
reduction of their volume of work, and Rivera and Macaspac were among
the three (3) employees dismissed for redundancy.
Rivera and Macaspac assail the alleged redundancy as the events that
transpired prior to their termination proved otherwise. According to Rivera,
on 27 July 1992 he was dismissed on account allegedly of poor revenues
and was in fact offered separation pay, which he refused. He further said
that the following day he was dismissed, he sent a letter to petitioners Ng
and Bico protesting his dismissal, claiming that he had not done anything
wrong to them nor to the company. [15] Further still, Rivera claimed that on 4
August 1992 he was advised by petitioner Ng to report for work
immediately,[16] although upon his return he was again offered separation
pay but opted instead to continue working.
On her part, Macaspac claims that she was also offered separation
pay on the same ground but she also rejected the offer. Both Rivera and
Macaspac requested evidence of the company's financial setback but
petitioners failed to furnish them any. Rivera's working days were further
reduced from three (3) to two (2) days a week.[17] Insisting on the
redundancy of the positions of Rivera and Macaspac, petitioners finally
dismissed them on 14 August 1992.
The circumstances recounted by Rivera and Macaspac were
considered by the NLRC to have cast serious doubt on the validity and
propriety of their termination. Moreover, the NLRC found that their
dismissal was not reported by petitioners to the Department of Labor and
Employment (DOLE) as required by law.
Again, we agree with respondent NLRC. The characterization of an
employee's services as no longer necessary or sustainable, and therefore

325

properly terminable, is an exercise of business judgment on the part of the

employer. The wisdom or soundness of such characterization or decision is
not subject to discretionary review on the part of the Labor Arbiter nor the
NLRC provided, of course, that violation of law or arbitrary or malicious
action is not shown.[18] In the instant case, we question petitioners' exercise
of management prerogative because it was not shown that Rivera and
Macaspac's positions were indeed unnecessary, much less was petitioners'
claim supported by any evidence. It is not enough for a company to merely
declare that it has become overmanned. It must produce adequate proof
that such is the actual situation in order to justify the dismissal of the
affected employees for redundancy.[19]
Furthermore, we have laid down the principle that in selecting the
employees to be dismissed, a fair and reasonable criteria must be used,
such as but not limited to: (a) less preferred status (e. g., temporary
employee), (b) efficiency, and (c) seniority. [20] The records disclose that no
criterion whatsoever was adopted by petitioners in dismissing Rivera and
Macaspac. Another procedural lapse committed by petitioners is the lack of
written notice to the DOLE required under Art. 283 of the Labor Code.
[21]
The purpose of such notice is to ascertain the verity of the cause of
termination of employment.[22]
Quite related to the alleged drastic reduction of their volume of work,
petitioners further contended in the proceedings below that they resorted
to rotation of employees due to the low demand for their products. But
respondent NLRC was not persuaded since, other than petitioners' bare
contention, they miserably failed to support it with concrete evidence. [23]

Balbino's story is completely different. According to her, she was

dismissed outright by Bico on the same date she asked for a
memorandum on her suspension. She was however silent on the other
charge that she stole the time card in her name.
The NLRC lent full credence to the version of Balbino. Here, we
disagree. As between the uncorroborated account of Balbino and the
narration of petitioner Bico, which was attested to by witnesses and
substantiated by other employees, we accord weight to the latter. The
utterances by an employee of obscene, insulting or offensive words against
a superior justify his dismissal for gross misconduct. The scornful attitude
is also destructive of his co-employees' morale. [27] However, the dismissal
will not be upheld where it appears, as in this case, that the employee's act
of disrespect was provoked by the employer. [28] It may be recalled that
Balbino was suspended because she allegedly continually slowed down in
her production. Yet, as found by the NLRC, to which we agree, petitioners
failed to show that there was an established quota for production as a
point of reference to determine whether an employee was performing
below or above the quota to warrant the charge. [29] What surfaces from our
assessment of the evidence of petitioners is that Balbino hurled invectives
at petitioner Bico because she was provoked by the baseless suspension
imposed on her. The penalty of dismissal must be commensurate with the
act,
conduct
or omission imputed to the employee.[30] Under the
circumstances, we believe that dismissal was a harsh penalty; one (1)
week suspension would have sufficed.

[24]

Balbino might have taken the time card in her name but the Court
considers this act as a mere emotional outburst and an offshoot of her
suspension. Anyway, no material damage was demonstrated to have been
suffered by petitioners on account thereof. A time card shows the actual
number of hours and days in a certain period performed by an employee
such that the loss thereof will surely pose a problem. But not so in the case
of Balbino since only her work performed on 31 July and 3 August 1992
was unpaid. These circumstances on non-payment were uncontroverted by
petitioners, rightfully entitling Balbino to an award therefor which the NLRC
determined to be P236.00. Also worth mentioning is the fact that Balbino
was denied procedural due process when she was summarily dismissed. [31]

Security guard Abelgas submitted a written report regarding Balbino's

act of stealing the time card in her name after bad mouthing petitioner
Bico and refusing to sign the memorandum on her suspension. [25] Another
employee submitted her own report corroborating Balbino's act of
removing her time card from the rack.[26]

Insofar as Melchor Cachucha is concerned, petitioners insist that he

abandoned his work on 7 July 1992 and refused to return despite notice
sent through his wife, through a memorandum dated 22 July 1992, and
personal notification by co-employee Nilo Wales. But disputing the charge,
Cachucha claimed that together with Macaspac and Albasin, he was

On the part of Flora Balbino, petitioner Bico submitted a certification

dated 5 August 1992 stating that on that day he explained to Flora Balbino
the company memorandum on her 3-day suspension on the ground that
she repeatedly slowed down her production. He told her to sign the
memorandum which, according to Bico, obviously infuriated her thus
prompting her to hurl invectives at him in the presence of many persons
inside his office. She even threatened him, "Humanda ka sa darating na
araw ipatitiklo kita." The certification was attested to by five (5) witnesses.

326

prevented by the company security guards from reporting for work on 6

July 1992.
The NLRC sustained Cachucha that he did not abandon his work
considering that he seasonably filed a complaint for illegal dismissal
against petitioners on 16 July 1992 and positively disavowed any notice to
return to work allegedly sent to him by petitioners.
The NLRC is correct. For abandonment to exist, it is essential that (1)
the employee must have failed to report for work or must have been
absent without valid or justifiable reason; and, (2) there must have been a
clear intention to sever the employer-employee relationship manifested by
some overt acts.[32] The circumstance that Cachucha lost no time in filing a
complaint for illegal dismissal against petitioners on 16 July 1992 is
incompatible with the charge of abandonment[33] and confirms in fact that
he was refused entry into the company premises on 6 July 1992.
Petitioners' allegation that they informed Cachucha's wife that
Cachucha must report to work immediately is unsubstantiated and selfserving. The alleged notification through the memorandum of 22 July 1992
has not been shown to have been received by Cachucha. On the other
hand, the affidavit of Wales stating that on 23 July 1992 he relayed to
Cachucha the directive to return to work which the latter turned down for
lack of interest does not inspire belief. If Wales' narrations were true, then
Cachucha would have simply abided by the directive and moved for the
dismissal of his complaint which was filed earlier. After all, it was precisely
reinstatement that he was seeking.[34]
Dismissal is the ultimate penalty that can be meted to an employee. It
must therefore be based on a clear and not on an ambiguous or
ambivalent ground.[35] From our assessment of the records, we find that
petitioners exercised their authority to dismiss without due regard to the
pertinent exacting provisions of the Labor Code. The right to terminate
should be utilized with extreme caution because its immediate effect is to
put an end to an employee's present means of livelihood while its distant
effect, upon a subsequent finding of illegal dismissal, is just as pernicious
to the employer who will most likelybe required to reinstate the subject
employee and grant him full back wages and other benefits. [36]

The award of compensation for ten (10) regular holidays for 1990,
1991 and 1992 by the NLRC is proper. The dismissed workers distinctly set
forth in their Position Paper that they were not remunerated for ten (10)
regular holidays for the years 1990, 1991 and 1992. [37] This claim stands
undisputed.
WHEREFORE, the Resolution of public respondent National Labor
Relations Commission of 22 November 1994 directing petitioners GOLDEN
THREAD KNITTING INDUSTRIES, INC., GEORGE NG and WILFREDO BICO to
immediately reinstate private respondents George Macaspac, Mary Ann
Macaspac, Romulo Albasin, Melchor Cachucha, Gilbert Rivera and Flora
Balbino to their former positions without loss of seniority rights and other
privileges and with full back wages, inclusive of allowances, and to their
other benefits or their monetary equivalent computed from the time of
their dismissal up to actual reinstatement, is AFFIRMED but
with modification as regards private respondent Balbino whose date of
termination should be 12 August 1992, taking into account her one (1)
week
suspension. All
the
rest
of
the
dispositive portion, particularly the order to petitioners to pay private
respondents for ten (10) regular holidays for 1990, 1991 and 1992; to pay
private respondent Balbino her wages for two (2) days amounting
to P236.00; and, to pay private respondents attorney's fees
equivalent to ten per cent (10%) of the total monetary awards, is
likewise AFFIRMED. Costs against petitioners.
SO ORDERED.

SYNOPSIS
The NLRC reversed the decision of the Labor Arbiter upholding the
dismissals of private respondents by declaring that they were illegally
dismissed and thus, directed petitioners to immediately reinstate said
private respondents with full back wages and other benefits.
The Court agreed with the ruling of the NLRC. The charge of serious
misconduct against Romulo Albasin and George Macaspac was not
substantiated. Further, they were denied procedural due process because
they were not afforded the benefit of hearing and investigation before
termination. Neither did they receive notice to that effect. They were
summarily eased out of employment when they were refused entry into

327

the company premises after allegedly slashing with razor blades several
bundles of towels in the warehouse.
As regards Gilbert Rivera and Mary Ann Macaspac who were
terminated on the ground of redundancy, there existed serious doubt on
the validity and propriety of their termination. It was not shown why their
positions were indeed unnecessary and no criterion whatsoever was
adopted in their dismissal. Further, the dismissal was not reported to the
DOLE as required by law.
On the part of Flora Balbino who was terminated for serious
misconduct for hurling invectives and threats to his employer, and taking
her time card off the rack, the Court ruled that the same was provoked by
the employer who imposed baseless suspension on her. Hence, dismissal
was too harsh a penalty. One week suspension would have sufficed. Then
again, she was denied procedural due process when she was summarily
dismissed.
On the termination of Melchor Cachucha for abandonment of work,
the Court noted that Cachucha lost no time in filing a complaint for illegal
dismissal against petitioners. This was incompatible with the charge of
abandonment and confirmed his allegation that he was refused entry into
the company premises.

328

G.R. No. 174184, January 28, 2015

G.J.T. REBUILDERS MACHINE SHOP, GODOFREDO TRILLANA, AND
JULIANA TRILLANA,Petitioners, v. RICARDO AMBOS, BENJAMIN
PUTIAN, AND RUSSELL AMBOS, Respondents.
DECISION
LEONEN, J.:
To prove serious business losses, employers must present in evidence
financial statements showing the net losses suffered by the business within
a sufficient period of time. Generally, it cannot be based on a single
financial statement showing losses. Absent this proof, employers closing
their businesses must pay the dismissed employees separation pay
equivalent to one-month pay or to at least one-half-month pay for every
year of service, whichever is higher.
This is a Petition for Review on Certiorari 1 of the Court of Appeals
Decision,2 granting Ricardo Ambos, Russell Ambos,3 and Benjamin Putians
Petition for Certiorari. The Court of Appeals found that G.J.T. Rebuilders
Machine Shop (G.J.T. Rebuilders) failed to prove its alleged serious business
losses. Thus, when it closed its establishment on December 15, 1997,
G.J.T. Rebuilders should have paid the affected employees separation pay. 4
G.J.T. Rebuilders is a single proprietorship owned by the Spouses Godofredo
and Juliana Trillana (Trillana spouses). It was engaged in steel works and
metal fabrication, employing Ricardo Ambos (Ricardo), Russell Ambos
(Russell), and Benjamin Putian (Benjamin) as machinists. 5
G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building in Shaw
Boulevard, Mandaluyong City, which served as the site of its machine
shop. On September 8, 1996, a fire partially destroyed the FEA Building. 6
Due to the damage sustained by the building, its owner notified its tenants
to vacate their rented units by the end of September 1996 to avoid any
unforeseen accidents which may arise due to the damage. 7
Despite the building owners notice to vacate, G.J.T. Rebuilders continued
its business in the condemned building. When the building owner finally
refused to accommodate it, G.J.T. Rebuilders left its rented space and
closed the machine shop on December 15, 1997.8 It then filed an Affidavit
of Closure before the Department of Labor and Employment on February
16, 1998 and a sworn application to retire its business operations before
the Mandaluyong City Treasurers Office on February 25, 1998. 9
Having lost their employment without receiving separation pay, Ricardo,

Russell, and Benjamin filed a Complaint for illegal dismissal before the
Labor Arbiter. They prayed for payment of allowance, separation pay, and
attorneys fees.10
In their defense, G.J.T. Rebuilders and the Trillana spouses argued that
G.J.T. Rebuilders suffered serious business losses and financial reverses,
forcing it to close its machine shop. Therefore, Ricardo, Russell, and
Benjamin were not entitled to separation pay.11
Labor Arbiter Facundo L. Leda (Labor Arbiter Leda) decided the Complaint,
finding no convincing proof of G.J.T. Rebuilders alleged serious business
losses. Labor Arbiter Leda, in the Decision12 dated December 28, 1999,
found that Ricardo, Russell, and Benjamin were entitled to separation pay
under Article 283 of the Labor Code.13 In addition, they were awarded
attorneys fees, having been constrained to litigate their claims. 14
Even assuming that G.J.T. Rebuilders closure was due to serious business
losses, Labor Arbiter Leda held that the employees affected were still
entitled to separation pay based on social justice and equity. 15
G.J.T. Rebuilders and the Trillana spouses appealed Labor Arbiter Ledas
Decision before the National Labor Relations Commission.16
In contrast with the Labor Arbiters finding, the National Labor Relations
Commission found G.J.T. Rebuilders to have suffered serious business
losses. Because of the fire that destroyed the building where G.J.T.
Rebuilders was renting space, the demand for its services allegedly
declined as no same customer would dare to entrust machine works to be
done for them in a machine shop lying in a ruined and condemned
building.17 The National Labor Relations Commission then concluded that
the fire proximately caused18 G.J.T. Rebuilders serious business losses,
with its financial statement for the fiscal year 1997 showing a net loss of
P316,210.00.19
In the Decision20 dated January 25, 2001, the National Labor Relations
Commission vacated and set aside Labor Arbiter Ledas Decision and
dismissed the Complaint for lack of merit. Since the Commission found
that G.J.T. Rebuilders ceased operations due to serious business losses, it
held that G.J.T. Rebuilders and the Trillana spouses need not pay Ricardo,
Russell, and Benjamin separation pay.
Ricardo, Russell, and Benjamin filed a Motion for Reconsideration, which
the National Labor Relations Commission denied in the Resolution 21 dated
March 5, 2001.
Because of the alleged grave abuse of discretion of the National Labor
Relations Commission, a Petition for Certiorari was filed before the Court of
Appeals.22

329

The Court of Appeals reversed the National Labor Relations Commissions

Decision, agreeing with Labor Arbiter Leda that G.J.T. Rebuilders failed to
prove its alleged serious business losses. The Court of Appeals conceded
that G.J.T. Rebuilders had to close the machine shop for reasons connected
with the fire that partially destroyed the building where it was renting
space. Nevertheless, G.J.T. Rebuilders continued its business for more than
one year after the fire. Thus, according to the Court of Appeals, G.J.T.
Rebuilders did not suffer from serious business losses but closed the
machine shop to prevent losses.23

belatedly subscribed under oath by the Certified Public Accountant who

prepared it.33
With no credible proof of G.J.T. Rebuilders supposed serious business
losses, respondents argue that petitioners must pay them separation pay
under Article 283 of the Labor Code.34
The issue for our resolution is whether petitioners sufficiently proved that
G.J.T. Rebuilders suffered from serious business losses.
This petition should be denied.

With respect to G.J.T. Rebuilders financial statement showing an alleged

net loss in 1997, the Court of Appeals refused to admit it in evidence since
it was not subscribed under oath by the Certified Public Accountant who
prepared it. According to the Court of Appeals, the financial statement was
subscribed under oath only after G.J.T. Rebuilders had submitted it to Labor
Arbiter Leda as an annex to its Motion to re-open proceedings and to
submit additional evidence. Thus, the Court of Appeals gave G.J.T.
Rebuilders financial statement scant consideration. 24
In the Decision25 dated January 17, 2006, the Court of Appeals granted the
Petition for Certiorari, vacating and setting aside the National Labor
Relations Commissions Decision. It reinstated Labor Arbiter Ledas
Decision dated December 28, 1999.
G.J.T. Rebuilders and the Trillana spouses filed a Motion for
Reconsideration, which the Court of Appeals denied in the
Resolution26 dated August 11, 2006.
Petitioners G.J.T. Rebuilders and the Trillana spouses filed before this court
a Petition for Review on Certiorari.27 Respondents Ricardo, Russell, and
Benjamin commented28 on the Petition, after which petitioners filed a
Reply.29
In their Petition for Review on Certiorari, petitioners maintain that G.J.T.
Rebuilders suffered serious business losses as evidenced by its financial
statement covering the years 1996 and 1997. Petitioners admit that the
financial statement was belatedly subscribed under oath. 30 Nevertheless,
the credibility or veracity of the entries31 in the financial statement was
not affected since the Bureau of Internal Revenue received the same
unsubscribed financial statement when G.J.T. Rebuilders allegedly filed its
income tax return on April 15, 1998.32
Considering that petitioners sufficiently proved G.J.T. Rebuilders serious
business losses, petitioners argue that respondents are not entitled to
separation pay.
As for respondents, they contend that G.J.T. Rebuilders failed to prove its
alleged serious business losses. They argue that the financial statement
showing a net loss for the year 1997 was not credible, having been

I
G.J.T. Rebuilders must pay respondents
their separation pay for failure to prove
its alleged serious business losses
Article 283 of the Labor Code allows an employer to dismiss an employee
due to the cessation of operation or closure of its establishment or
undertaking, thus:
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 workers and the
Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to 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 to 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 one (1) whole year.
The decision to close ones business is a management prerogative that
courts cannot interfere with.35 Employers can lawfully close shop at
anytime,36 even for reasons of their own. Just as no law forces anyone to
go into business, no law can compel anybody to continue in it. 37 In Mac
Adams Metal Engineering Workers Union-Independent v. Mac Adams Metal
Engineering,38 this court said:
It would indeed be stretching the intent and spirit of the law if [courts]
were to unjustly interfere with the managements prerogative to close or

330

cease its business operations just because [the] business operation or

undertaking is not suffering from any loss or simply to provide the workers
continued employment.39
However, despite this management prerogative, employers closing their
businesses must pay the affected workers separation pay equivalent to
one-month pay or to at least one-half-month pay for every year of service,
whichever is higher.40 The reason is that an employee dismissed, even for
an authorized cause, loses his or her means of livelihood. 41
The only time employers are not compelled to pay separation pay is when
they closed their establishments or undertaking due to serious business
losses or financial reverses.42
Serious business losses are substantial losses, not de minimis.43 Losses
means that the business must have operated at a loss for a period of time
for the employer to [have] perceived objectively and in good faith 44 that
the business financial standing is unlikely to improve in the future.
The burden of proving serious business losses is with the employer. 45 The
employer must show losses on the basis of financial statements covering a
sufficient period of time. The period covered must be sufficient for the
National Labor Relations Commission and this court to appreciate the
nature and vagaries of the business.
In North Davao Mining Corporation v. NLRC,46 North Davao Mining
Corporation presented in evidence financial statements showing a
continuing pattern of loss from 1988 until its closure in 1992. The
company suffered net losses averaging P3 billion a year, with an aggregate
loss of P20 billion by the time of its closure. 47 This court found that North
Davao suffered serious business losses.48
In Manatad v. Philippine Telegraph and Telephone Corporation, 49 the
Philippine Telegraph and Telephone Corporation presented in evidence
financial statements showing a continuing pattern of loss from 1995 to
1999.50 By 2000, the corporation suffered an aggregate loss of P2.169
billion, constraining it to retrench some of its employees. This court held
that the Philippine Telegraph and Telephone Corporation was fully justified
in implementing a retrenchment program since it was undergoing business
reverses, not only for a single fiscal year, but for several years prior to and
even after the program.51
In LVN Pictures Employees and Workers Association (NLU) v. LVN Pictures,
Inc.,52 a case G.J.T. Rebuilders cited, LVN Pictures, Inc. presented in
evidence financial statements showing a continuing pattern of loss from
1957 to 1961. By the time the corporation closed its business, it had
suffered an aggregate loss of P1,560,985.14.53 This court found that LVN
Pictures, Inc. suffered serious business losses. 54
Aside from the obligation to pay separation pay, employers must comply

with the notice requirement under Article 283 of the Labor Code.
Employers must serve a written notice on the affected employees and on
the Department of Labor and Employment at least one month before the
intended date of closure. Failure to comply with this requirement renders
the employer liable for nominal damages.55
We uphold G.J.T. Rebuilders decision to close its establishment as a valid
exercise of its management prerogative. G.J.T. Rebuilders closed its
machine shop, believing that its former customers . . . seriously doubted
[its] capacity . . . to perform the same quality [of service] 56 after the fire
had partially damaged the building where it was renting space.
Nevertheless, we find that G.J.T. Rebuilders failed to sufficiently prove its
alleged serious business losses.
The financial statement G.J.T. Rebuilders submitted in evidence covers the
fiscal years 1996 and 1997. Based on the financial statement, G.J.T.
Rebuilders earned a net income of P61,157.00 in 1996 and incurred a net
loss of P316,210.00 in 1997.57
We find the two-year period covered by the financial statement insufficient
for G.J.T. Rebuilders to have objectively perceived that the business would
not recover from the loss. Unlike in North Davao Mining Corporation,
Manatad, and LVN Pictures Employees and Workers Association (NLU), no
continuing pattern of loss within a sufficient period of time is present in this
case. In fact, in one of the two fiscal years covered by the financial
statement presented in evidence, G.J.T. Rebuilders earned a net income.
We, therefore, agree with the Labor Arbiter and the Court of Appeals that
G.J.T. Rebuilders closed its machine shop to prevent losses, not because of
serious business losses.58
Considering that G.J.T. Rebuilders failed to prove its alleged serious
business losses, it must pay respondents their separation pay equivalent to
one-month pay or at least one-half-month pay for every year of service,
whichever is higher. In computing the period of service, a fraction of at
least six months is considered a year.59
Ricardo began working as a machinist on February 9, 1978. 60 Since he last
worked for G.J.T. Rebuilders on December 15, 1997, he worked a total of 19
years, 10 months, and six days. This period is rounded off to 20 years,
with the last 10 months and six days being considered a year. 61
Ricardo had a daily salary of P230.00 and worked 13 days a month. 62 His
one-month pay, therefore, is equal to P2,990.00. On the other hand, his
one-half-month pay for every year of service is equal to P29,250.00. The
latter amount being higher, Ricardo must receive P29,250.00 as separation
pay.
With respect to Russell, he began his employment on September 1,
1992.63 Since he last worked for G.J.T. Rebuilders on December 15, 1997,

331

he worked a total of five years, three months, and 14 days. This period is
rounded off to five years, not six years, since the last three months and 14
days are less than the six months required to be considered a year. 64
Russell had a daily salary of P225.00 and worked 13 days a month. 65 His
one-month pay, therefore, is equal to P2,925.00. On the other hand, his
one-half-month pay for every year of service is equal to P7,312.50. The
latter amount being higher, Russell must receive P7,312.50 as separation
pay.
As for Benjamin, he began working as a machinist on February 1, 1994. 66
Since he last worked for G.J.T. Rebuilders on December 15, 1997, he
worked a total of three years, 10 months, and 14 days. This period is
rounded off to four years, with the last 10 months and 14 days being
considered a year.67
Benjamin had a daily salary of P225.00 and worked 13 days a month. 68 His
one-month pay, therefore, is equal to P2,925.00. On the other hand, his
one-half-month pay for every year of service is equal to P5,850.00. The
latter amount being higher, Benjamin must receive P5,850.00 as
separation pay.
II
G.J.T. Rebuilders must pay respondents
nominal damages for failure to comply
with the procedural requirements for
closing its business
In addition to separation pay, G.J.T. Rebuilders must pay each of the
respondents nominal damages for failure to comply with the notice
requirement under Article 283 of the Labor Code.
Notice of the eventual closure of establishment is a personal right of the
employee to be personally informed of his [or her] proposed dismissal as
well as the reasons therefor.69 The reason for this requirement is to give
the employee some time to prepare for the eventual loss of his [or her]
job.70
The requirement is not a mere technicality or formality which the
employer may dispense with.71 Should employers fail to properly notify
their employees, they shall be liable for nominal damages even if they
validly closed their businesses.72
Generally, employers that validly closed their businesses but failed to
comply with the notice requirement are liable in the amount of
P50,000.00.73 This amount of nominal damages, however, may be reduced
depending on the sound discretion of the court.74 In Sangwoo
Philippines, Inc. v. Sangwoo Philippines, Inc. Employees Union-OLALIA,75 we
said that:

[i]n the determination of the amount of nominal damages which is

addressed to the sound discretion of the court, several factors are taken
into account: (1) the authorized cause invoked . . .; (2) the number of
employees to be awarded; (3) the capacity of the employers to satisfy the
awards, taking into account their prevailing financial status as borne by the
records; (4) the employers grant of other termination benefits in favor of
the employees; and (5) whether there was bona fide attempt to comply
with the notice requirements as opposed to giving no notice at all. 76
G.J.T. Rebuilders allegedly conferred with all [of its employees] of [its]
intention to cease business operations 77 one month before closing its
business. It allegedly submitted an Affidavit of Closure to the Department
of Labor and Employment on February 16, 1998.78
Conferring with employees is not the notice required under Article 283 of
the Labor Code. The law requires a written notice of closure served on the
affected employees. As to when the written notice should be served on
the Department of Labor and Employment, the law requires that it be
served at least one month before the intended date of closure. G.J.T.
Rebuilders served the written notice on the Department of Labor and
Employment on February 16, 1998, two months after it had closed its
business on December 15, 1997.
With G.J.T. Rebuilders failing to comply with the notice requirement under
Article 283 of the Labor Code, we find that it deprived respondents of due
process. However, considering that G.J.T. Rebuilders attempted to comply
with the notice requirement, we find the nominal damages of ?10,000.00
for each of the respondents sufficient.79
III
Respondents are not entitled to attorneys fees
Attorneys fees represent the reasonable compensation [a client pays his
or her lawyer] [for legal service rendered].80 The award of attorneys fees
is the exception rather than the rule.81 Specifically in labor cases,
attorneys fees are awarded only when there is unlawful withholding of
wages82 or when the attorneys fees arise from collective bargaining
negotiations that may be charged against union funds in an amount to be
agreed upon by the parties.83 For courts and tribunals to properly award
attorneys fees, they must make an express finding of fact and [citation]
of applicable law84 in their decisions.
In the present case, there is no unlawful withholding of wages or an award
of attorneys fees arising from collective bargaining negotiations. Neither
did the Labor Arbiter nor the Court of Appeals make findings of fact or cite
the applicable law in awarding attorneys fees. That respondents were
constrained to engage the services of counsel to prosecute their
claims85 is not enough justification since no premium should be placed on
the right to litigate.86

332

For these reasons, we delete the award of attorneys fees.

All told, G.J.T. Rebuilders failed to prove that it closed its machine shop due
to serious business losses. Moreover, it failed to comply with Article 283 of
the Labor Code on the notice requirement. Therefore, petitioners must pay
respondents Ricardo Ambos, Russell Ambos, and Benjamin Putian
separation pay and nominal damages.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court
of Appeals Decision dated January 17, 2006 is AFFIRMED with
MODIFICATION.
Petitioners are ordered to PAY respondents their separation pay with 6%
legal interest87 from the finality of this Decision until full payment:
Ricardo Ambos
Russell Ambos
Benjamin Putian

P29,250.00
P7,312.50
P5,850.00.

Furthermore, petitioners shall PAY each of the respondents ?10,000.00 as

nominal damages with 6% legal interest88 from the finality of this Decision
until full payment.
The award of attorneys fees is DELETED.
SO ORDERED.

333

SHIMIZU PHILS.
CONTRACTORS, INC.,
Petitioner,

G.R. No. 165923

- versus -

Present:

Respondent then filed an illegal dismissal complaint against petitioner assailing his

CORONA, C. J., Chairperson,

VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

dismissal as without any valid cause.

VIRGILIO P. CALLANTA,
Promulgated:
Respondent.
September 29, 2010
x------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:

Petitioner advanced that respondents services was terminated in

accordance with a valid retrenchment program being implemented by the
company since 1996 due to financial crisis that plague the construction
industry. To prove its financial deficit, petitioner presented financial statements for
the years 1995 to 1997 as well as the Securities and Exchange Commissions
approval of petitioners application for a new paid-in capital amounting
to P330,000,000. Petitioner alleged that in order not to jeopardize the completion

By this Petition for Review on Certiorari,[1] Shimizu Phils. Contractors, Inc.

of its projects, the abolition of several departments and the concomitant

(petitioner) assails the Decision[2] dated June 10, 2004 and Resolution[3] dated

termination of some employees were implemented as each project is

October 5, 2004 of the Court of Appeals (CA) in CA-G.R. SP. No. 66888, which

completed. When respondents Honda Project was completed, petitioner offered

reversed the Decision[4] dated December 14, 2000 of the National Labor Relations

respondent his separation pay which the latter refused to accept and instead filed

Commission (NLRC) and ordered petitioner to reinstate Virgilio P. Callanta

an illegal dismissal complaint.

(respondent) and pay him his backwages for not having been validly dismissed.
Respondent claimed that petitioner failed to comply with the requirements called
Antecedent Facts

for by law before implementing a retrenchment program thereby rendering it

legally infirmed. First, it did not comply with the provision of the Labor Code

Petitioner, a corporation engaged in the construction business, employed

mandating the service of notice of retrenchment. He pointed out that the notice

respondent on August 23, 1994 as Safety Officer assigned at petitioners Yutaka-

sent to him never mentioned retrenchment but only project completion as the

Giken Project and eventually as Project Administrator of petitioners Structural

cause of termination. Also, the notice sent to the Department of Labor and

Steel Division (SSD) in 1995.

Employment

(DOLE)

did

not

conform

to

the

30-day

prior

notice

requirement. Second, petitioner failed to use fair and reasonable criteria in

In a Memorandum dated June 7, 1997,[5] respondent was informed that his

determining which employees shall be retrenched or retained. As shown in the

services will be terminated effective July 9, 1997 due to the lack of any vacancy in

termination report[6] submitted to DOLE, he was the only one dismissed out of 333

other projects and the need to re-align the companys personnel requirements

employees. Worse, junior and inexperienced employees were appointed/assigned

brought about by the imperatives of maximum financial commitments.

334

in his stead to new projects thus also ignoring seniority in hiring and firing
employees.
In reply, petitioner reiterated its progressive implementation of the retrenchment
program and finds this as basis why respondents termination coincided with
project completion. Petitioner argued that when it submitted the retrenchment
notice/termination report to DOLE, there was already substantial compliance with
the requirement. It explained that such termination report reflects only the
number of employees retrenched for the particular month of July of 1997 and
cannot be deemed as evidence of the total number of employees affected by the
retrenchment program. Petitioner also accused respondent of giving false

In
terminating
the
services
of
complainant,
respondent Shimizu had complied with the requirements of law
on retrenchment. It had prepared a check for the amount
of P 29,320.30 as payment for his separation pay and other
entitlements. However, as afore-stated, complainant refused to
receive the amount, for reasons known only to him. Also,
respondent company had duly notified the Department of Labor
and Employment (DOLE) about the retrenchment of the
complainant.
WHEREFORE, in view of the foregoing premises, judgment is
hereby rendered dismissing the instant complaint for lack of
merit.
SO ORDERED.[12]

narration of facts about his employment position and further disclosed that
respondent has been saddled with complaints subject of administrative

Ruling of the National Labor Relations Commission

investigations for violations of several company rules, i.e., cited for discrepancies
in his time sheet,[7] unauthorized use of company vehicle, [8] stealing of company

Upon appeal, the NLRC upheld the ruling that there was valid ground for

property[9]and abandonment of work,[10] so much so that petitioners decision to

respondents termination but modified the Labor Arbiters Decision by holding that

appoint more competent and more senior employees in his stead cannot be

petitioner violated respondents right to procedural due process. The NLRC found

questioned.

that petitioner failed to comply with the 30-day prior notice to the DOLE and that
there is no proof that petitioner used fair and reasonable criteria in the selection of
employees to be retrenched. The dispositive portion of the NLRC Decision reads:

Ruling of the Labor Arbiter

On April 14, 2000, the Labor Arbiter rendered a Decision[11] holding that
respondent was validly retrenched. He found that sufficient evidence was
presented to establish company losses; that petitioner offered respondent his
separation

pay;

and

that

petitioner

duly

notified

DOLE

about

the

WHEREFORE, in view of the foregoing, the finding of the Labor

Arbiter a quo is MODIFIED.
Respondent Shimizu Philippine Contractor, Inc., is ordered to pay
complainant-appellant Virgilio P. Callanta his separation pay
equivalent to one (1) month pay for every year of service. For
want of due notice, respondent is further directed to pay
complainant an indemnity equivalent to one (1) month salary.

retrenchment. The Labor Arbiter further relied on petitioners factual version

relating to respondents employment background with regard to his position and

SO ORDERED.[13]

behavioral conduct.
Both parties sought reconsideration of the NLRCs Decision. Respondent, in his
Pertinent portions of the Labor Arbiters Decision read:

Motion for Reconsideration,[14] attributed grave error upon the NLRC in ruling that

335

the absence of fair and reasonable criteria in effecting the retrenchment affected

reasonable criteria in determining which employees to retrench. According to the

only the requirements of due process, arguing that such failure should have

CA, petitioners failure to produce evidence raises the presumption that such

invalidated the entire retrenchment program. Petitioner, for its part, filed a Motion

evidence will be adverse to it. Consequently, the CA invalidated the retrenchment,

for Partial Reconsideration

held respondent to have been illegally dismissed, and ordered respondents

[15]

questioning the amount of separation pay awarded

to respondent.

reinstatement and payment of backwages.

The NLRC, in its Resolution[16] dated June 29, 2001, denied respondents motion

The dispositive portion of the Decision reads:

and found merit in petitioners motion by modifying the amount of separation pay
to an amount equivalent to one month or one-half month pay for every year of
service, whichever is higher, in consonance with Article 283 of the Labor Code.
Thus:
WHEREFORE, premises considered, the complainants Motion for
Reconsideration is hereby DENIED for lack of merit. The
respondents partial motion for reconsideration is hereby
GRANTED.Consequently, our Decision promulgated on
December 14, 2000 is hereby MODIFIED in that the separation
pay granted to complainant should be one (1) month pay or
one-half (1/2) month pay for every year of service, whichever is
higher, a fraction of at least six months to be considered one (1)
whole year.
Other dispositions in our said Decision stand Affirmed.
SO ORDERED.

[17]

WHEREFORE, the assailed Decision dated December 14, 2000

and the Resolution dated June 29, 2001 both of the National
Labor Relations Commission, Third Division in NLRC Case No. CA
024643-00 are REVERSED and SET ASIDE.
Private Respondent Shimizu Philippine Contractors, Inc. is hereby
ORDERED to reinstate Petitioner VIRGILIO P. CALLANTA with
backwages computed from the date of his dismissal on July 9,
1997 up to the finality of this Decision without loss of seniority
rights and benefits appurtenant to his position.
SO ORDERED.[18]

The CA denied petitioners Motion for Reconsideration [19] and reiterated that
petitioner offered no proof of any standard or program intended to implement the
retrenchment program.

Issues
Ruling of the Court of Appeals
Thus, the instant petition raising the following issues:
Undaunted, respondent filed a petition for certiorari with the CA. On June 10,
2004, the CA reversed and set aside the NLRCs ruling. The CA opined that
petitioner failed to prove that there were employees other than respondent who
were similarly dismissed due to retrenchment and that respondents alleged
replacements

held

much

higher

ranks

and

were

more

deserving

employees. Moreover, there were no proofs to sustain that petitioner used fair and

A.
WHETHER X X X THE HONORABLE COURT OF APPEALS
EXCEEDED ITS JURISDICTION WHEN IT REVERSED THE FACTUAL
FINDINGS OF THE LABOR ARBITER AND THE NLRC BY REEVALUATING THE EVIDENCE ON RECORD.
B.

336

WHETHER X X X THE HONORABLE COURT OF APPEALS

SERIOUSLY ERRED IN FINDING THAT PETITIONER FAILED TO
OBSERVE FAIR AND REASONABLE STANDARDS OR CRITERIA IN
EFFECTING THE DISMISSAL OF [RESPONDENT].[20]

[21]

However, under certain circumstances, the CA is allowed to review the factual

findings or the legal conclusions of the NLRC in order to determine whether these
findings are supported by the evidence presented and the conclusions derived

Petitioner contends that the CAs corrective power in petitions for certiorari is
confined only to jurisdictional issues and a determination of whether there is grave
abuse of discretion amounting to lack or excess of jurisdiction. It does not
encompass the reevaluation and reassessment of factual findings and conclusions
of the Labor Arbiter which should be accorded great weight and respect when
affirmed by the NLRC. According to petitioner, the CA gravely erred in finding that
no valid retrenchment exists contrary to the prior findings of the Labor Arbiter and
NLRC.

Petitioner also insists that all the requisites for a valid retrenchment have been
established by substantial evidence and that it observed fair and reasonable

therefrom are accurately ascertained.[22] It has been held that [i]t is within the
jurisdiction of the CA x x x to review the findings of the NLRC.[23]

From the foregoing, the CA, in the present case, cannot be faulted in re-evaluating
the NLRCs findings as it can undoubtedly affirm, modify or reverse the same if the
evidence warrants.Having settled thus, we shall now proceed to review whether
the CA correctly appreciated the NLRCs finding and if the CAs resultant decision
was in accord with law and evidentiary facts.
There
was
substantial
compliance for a valid
retrenchment; petitioner used
fair and reasonable criteria in
effecting retrenchment.

standards in implementing its retrenchment program, to wit: ability to perform

work efficiently and seniority. As succinctly found by the Labor Arbiter,
respondent is notorious for violating company rules which adversely reflected on
his ability to perform work effectively. Petitioner further denies that junior
officers/employees were retained and that respondent was singled out for
termination.

As an authorized cause for separation from service under Article 283 of

the Labor Code,[24] retrenchment is a valid exercise of management prerogative
subject to the strict requirements set by jurisprudence:
(1)

That the retrenchment is reasonably necessary and

likely to prevent business losses which, if already incurred,
are not merely de minimis, but substantial, serious, actual
and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;

(2)

That the employer served written notice both to the

employees and to the Department of Labor and
Employment at least one month prior to the intended date
of retrenchment;

(3)

That the employer pays the retrenched employees

separation pay equivalent to one month pay or at least
month pay for every year of service, whichever is higher;

Our Ruling

We find the petition meritorious.

At the outset, the power of the CA to review a decision of the NLRC in a

petition for certiorari under Rule 65 of the Rules of Court does not normally
include an inquiry into the correctness of the NLRCs evaluation of the evidence.

337

(4)

(5)

That the employer exercises its prerogative to retrench

employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees right to
security of tenure; and
That the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status, x x x
efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.[25]

several departments like the Civil Works Division, Electro-mechanical Works

Division and the Territorial Project Management Offices, among others, were
abolished in the early part of 1996 and thereafter the Structural Steel Division, of
which respondent was an Administrator. Respondent was among the last batch of
employees who were retrenched and by the end of year 1997, all of the
employees of the Structural Steel Division were severed from employment.

In the present case, both the Labor Arbiter and the NLRC found sufficient

Respondent, in any of the pleadings filed by him, never refuted the

compliance with these substantive requirements, there being enough evidence to

foregoing facts. Respondents argument that he was singled out for termination as

prove that petitioner was sustaining business losses, that separation pay was

allegedly shown in petitioners monthly termination report for the month of July

offered to respondent, and that notices of termination of service were furnished

1997 filed with the DOLE does not persuade this Court. Standing alone, this

respondent and DOLE. However, the NLRC modified the Decision of the Labor

document is not proof of the total number of retrenched employees or that

Arbiter by granting respondent indemnity since the notice to DOLE was served

respondent was the only one retrenched. It merely serves as notice to DOLE of

short of the 30-day notice requirement and that there is no proof of the use of fair

the names of employees terminated/ retrenched only for the month of July. In

and reasonable criteria in the selection of employees to be retrenched or

other words, it cannot be deemed as an evidence of the number of employees

retained. The CA, then, reversed the Decision of the NLRC by ruling that the

affected by the retrenchment program. Thus we cannot conclude that no other

absence of fair and reasonable criteria in implementing the retrenchment

employees were previously retrenched.

invalidates altogether the retrenchment.

Respondent then claimed that petitioner did not observe seniority in retrenching
him. He further alleged that he is more qualified and efficient than those retained

Petitioner presented proof that it incurred substantial losses as shown by

by petitioner. Notably, however, the records do not bear any proof that these

its financial statements and that it substantially complied with the requirements of

allegations were substantiated. On the contrary, the Labor Arbiter found

serving written notices of retrenchment. It was also shown that it offered to pay

respondents notoriety due to pieces of evidence showing numerous company

respondents separation pay. The CA, however, ruled that petitioner failed to show

violations imputed against respondent. This fact of being subject of several

that it implemented its retrenchment program in a just and proper manner in the

administrative investigations, respondent failed to refute. Moreover, the Labor

absence of reasonable criteria in effecting such.

Arbiter likewise found respondent guilty of several misrepresentations in the

pleadings filed before the tribunal with regard to the latters employment position.

We disagree. In implementing its retrenchment scheme, petitioner was

By advancing that other employees were less efficient, qualified and senior than

constrained to streamline its operations and to downsize its complements in a

him, respondent has the burden of proving these allegations which he failed to

progressive manner in order not to jeopardize the completion of its projects. Thus,

discharge.

338

compliance with this rule clearly violates the employees right to statutory due
On the contrary, we find that petitioner implemented its retrenchment program in

process.

good faith because it undertook several measures in cutting down its costs, to wit,
withdrawing certain privileges of petitioners executives and expatriates; limiting

Consequently, we affirm the NLRCs award of indemnity to respondent for

the grant of additional monetary benefits to managerial employees and cutting

want of sufficient due notice. But to be consistent with our ruling in Jaka Food

down expenses; selling of company vehicles; and infusing fresh capital into the

Processing Corporation v. Pacot,[27] the indemnity in the form of nominal damages

company. Respondent did not attempt to refute that petitioner adopted these

should be fixed in the amount of P50,000.00.

measures before implementing its retrenchment program.

WHERFORE, the petition is GRANTED. The challenged June 10, 2004 Decision
and October 5, 2004 Resolution of the Court of Appeals in CA- G.R. SP. No. 66888

In fine, we hold that petitioner was able to prove that it incurred substantial

are REVERSED and SET ASIDE. The Decision and Resolution of the National

business losses, that it offered to pay respondent his separation pay, that the

Labor Relations Commission dated December 14, 2000 and June 29, 2001,

retrenchment scheme was arrived at in good faith, and lastly, that the criteria or

respectively, upholding the legality of respondents dismissal and awarding him

standard used in selecting the employees to be retrenched was work efficiency

separation pay equivalent to one (1) month pay or one-half (1/2) month pay for

which passed the test of fairness and reasonableness.

every

year

of

service,

whichever

is

higher,

are REINSTATED and AFFIRMEDwith MODIFICATION that the indemnity to be

The termination notice sent
to DOLE did not comply with
the
30-day
notice
requirement,
thus,
respondent is entitled to
indemnity for violation of due
process.

However, although there was authorized cause to dismiss respondent from the
service, we find that petitioner did not comply with the 30-day notice
requirement. Petitioner maintains that it substantially complied with the
requirement of the law in that it, in fact, submitted two notices or reports with the
DOLE. However, petitioner admitted that the reports were submitted 21 days, in
the case of the first notice, and 16 days, in the case of the second notice, before
the intended date of respondents dismissal.
The purpose of the one month prior notice rule is to give DOLE an
opportunity to ascertain the veracity of the cause of termination. [26] Non-

awarded to respondent is fixed in the amount of P50,000.00 as nominal damages.

SO ORDERED.

339

INTERNATIONAL
MANAGEMENT
SERVICES/MARILYN C. PASCUAL,
Petitioner,

G.R. No. 163657

by Marilyn C. Pascual, deployed respondent Roel P. Logarta to work for
Present:
Petrocon Arabia Limited (Petrocon) in Alkhobar, Kingdom of Saudi Arabia, in
VELASCO, JR., J., Chairperson
PERALTA,
connection with general engineering services of Petrocon for the Saudi
ABAD,
MENDOZA, and
Arabian Oil Company (Saudi Aramco). Respondent was employed for a
PERLAS-BERNABE, JJ.
Promulgated:
period of two (2) years, commencing on October 2, 1997, with a monthly
April 18, 2012
salary of eight hundred US Dollars (US$800.00). In October 1997,

- versus -

ROEL P. LOGARTA,
Respondent.

respondent started to work for Petrocon as Piping Designer for works on

the projects of Saudi Aramco.

Thereafter, in a letter[3] dated December 21, 1997, Saudi Aramco informed

Petrocon that for the year 1998, the former is allotting to the latter a total

x-----------------------------------------------------------------------------------------x

work load level of 170,850 man-hours, of which 100,000 man-hours will be

DECISION

allotted for cross-country pipeline projects.

PERALTA, J.:
However, in a letter[4] dated April 29, 1998, Saudi Aramco notified Petrocon
This

is

petition

for

review

on certiorari assailing

the

Decision[1] dated January 8, 2004 of the Court of Appeals (CA) in CA-G.R. SP

No. 58739, and the Resolution[2]dated May 12, 2004 denying petitioners

that due to changes in the general engineering services work forecast for
1998, the man-hours that were formerly allotted to Petrocon is going to be
reduced by 40%.

motion for reconsideration.

Consequently, due to the considerable decrease in the work requirements
The factual and procedural antecedents are as follows:

of Saudi Aramco, Petrocon was constrained to reduce its personnel that

were employed as piping designers, instrument engineers, inside plant

Sometime in 1997, the petitioner recruitment agency, International

Management Services (IMS), a single proprietorship owned and operated

engineers, etc., which totaled to some 73 personnel, one of whom was

respondent.

340

Thus,

on June

1,

1998,

Petrocon

gave

respondent

written

After the parties filed their respective position papers, the Labor

notice[5] informing the latter that due to the lack of project works related to

Arbiter rendered a Decision [9] in favor of the respondent, the dispositive

his expertise, he is given a 30-day notice of termination, and that his last

portion of which reads:

day of work with Petrocon will be on July 1, 1998. Petrocon also informed
respondent that all due benefits in accordance with the terms and
conditions of his employment contract will be paid to respondent, including
his ticket back to the Philippines.

WHEREFORE, premises considered, judgment is

hereby rendered ordering the respondent Marilyn C.
Pascual, doing business under the name and style
International
Management
Services,
to
pay
the
complainant Roel Logarta the peso equivalent of US
$5,600.00 based on the rate at the time of actual payment,
as payment of his wages for the unexpired portion of his
contract of employment.

On June 23, 1998, respondent, together with his co-employees, requested

The other claims are dismissed for lack of merit.

Petrocon to issue them a letter of Intent stating that the latter will issue

So Ordered.[10]

them a No Objection Certificate once they find another employer before

they leave Saudi Arabia.[6] On June 27, 1998, Petrocon granted the request
and issued a letter of intent to respondent.[7]

Aggrieved, petitioner filed an Appeal [11] before the NLRC. On

October 29, 1999, the NLRC, Fourth Division, Cebu City rendered a
Decision[12] affirming the decision of the Labor Arbiter, but reduced the

Before his departure from Saudi Arabia, respondent received his final

amount to be paid by the petitioner, to wit:

paycheck[8] from Petrocon amounting SR7,488.57.

Upon his return, respondent filed a complaint with the Regional

Arbitration

Branch

VII,

National

Labor

Relations

Commission

WHEREFORE, premises considered, the decision of

the
Labor
Arbiter
is
hereby
AFFIRMED with
MODIFICATION reducing the award to only US $4,800.00 or
its peso equivalent at the time of payment.
SO ORDERED.[13]

(NLRC), Cebu City, against petitioner as the recruitment agency which

employed him for employment abroad. In filing the complaint, respondent

Petitioner filed a motion for reconsideration, but it was denied in the

sought to recover his unearned salaries covering the unexpired portion of

Resolution[14] dated April 17, 2000.

his employment contract with Petrocon on the ground that he was illegally
dismissed.

Not satisfied, petitioner sought recourse before the CA, [15] arguing
that the NLRC gravely abused its discretion:

341

given a 30-day notice of his termination, there was no showing that the
(a)

in holding that while Petrocons retrenchment was

justified, Petrocon failed to observe the legal procedure
for a valid retrenchment when, in fact, Petrocon did
observe the legal procedural requirements for a valid
implementation of its retrenchment scheme; and

Department of Labor and Employment (DOLE) was also sent a copy of the
said notice as required by law. Moreover, the CA found that a perusal of the
check payroll details would readily show that respondent was not paid his

(b) in making an award under Section 10 of R.A. No. 8042

which is premised on a termination of employment
without just, valid or authorized cause as defined by
law or contract, notwithstanding that NLRC itself found
Petrocons retrenchment to be justified.[16]

separation pay.

Petitioner filed a motion for reconsideration, but it was denied in

the Resolution[18] dated May 12, 2004.
On January 8, 2004, the CA rendered the assailed Decision
dismissing the petition, the decretal portion of which reads:

Hence, the petition assigning the following errors:

WHEREFORE, premises considered, the petition is

DISMISSED and the impugned Decision dated October 29,
1999 and
Resolution
dated April
17,
2000 are
AFFIRMED. Costs against the petitioner.

I.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN RULING THAT THE 30-DAY NOTICE TO DOLE PRIOR TO
RETRENCHMENT IS NOT APPLICABLE IN THIS CASE.

SO ORDERED.[17]

In ruling in favor of the respondent, the CA agreed with the findings

of the NLRC that retrenchment could be a valid cause to terminate
respondents employment with Petrocon. Considering that there was a

II.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN RULING THAT RESPONDENT EMPLOYEE DID NOT
CONSENT TO HIS SEPARATION FROM THE PRINCIPAL
COMPANY.
III.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN RULING THAT JARIOL VS. IMS IS NOT APPLICABLE TO THE
INSTANT CASE.

considerable reduction in Petrocons work allocation from Saudi Aramco,

the reduction of its work personnel was a valid exercise of management
prerogative to reduce the number of its personnel, particularly in those
fields

affected

by

the

reduced

work

allocation

from

IV.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN RULING THAT RESPONDENT DID NOT RECEIVE THE
SEPARATION PAY REQUIRED BY LAW.[19]

Saudi
Petitioner argues that the 30-day notice of termination, as required

Aramco. However, although there was a valid ground for retrenchment, the
in Serrano v. NLRC,[20] is not applicable in the case at bar, considering that
same was implemented without complying with the requisites of a valid
respondent was in fact given the 30-day notice. More importantly, Republic
retrenchment. Also, the CA concluded that although the respondent was

342

Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipino Act of

(1) month pay or at least one-half (1/2) month pay for every year of

1995 nor its Implementing Rules do not require the sending of notice to the

service, whichever is higher.

DOLE, 30 days before the effectivity of a retrenchment of an Overseas

Filipino Worker (OFW) based on grounds under Article 283 of the Labor

On his part, respondent maintains that the CA committed no reversible

Code.

error in rendering the assailed decision.

Petitioner maintains that respondent has consented to his termination,

The petition is partly meritorious.

since he raised no objection to his retrenchment and actually sought

another employer during his 30-day notice of termination. Respondent

Retrenchment is the reduction of work personnel usually due to poor

even requested from Petrocon a No Objection Certificate, which the latter

financial returns, aimed to cut down costs for operation particularly on

granted to facilitate respondents application to other Saudi Arabian

salaries and wages.[22] It is one of the economic grounds to dismiss

employers.

employees and is resorted by an employer primarily to avoid or minimize

business losses.[23]

Petitioner also posits that the CA should have applied the case of Jariol v.
IMS[21] even if the said case was only decided by the NLRC, a quasi-judicial
agency. The

said

case

involved

similar

facts,

wherein

the

Retrenchment programs are purely business decisions within the

NLRC

purview of a valid and reasonable exercise of management prerogative. It

categorically ruled that employers of OFWs are not required to furnish the

is one way of downsizing an employers workforce and is often resorted to

DOLE in the Philippines a notice if they intend to terminate a Filipino

by

employee.

depression, or seasonal fluctuations, and during lulls in production

the

employer

during

periods

of

business

recession,

industrial

occasioned by lack of orders, shortage of materials, conversion of the plant

Lastly,

petitioner

insists

that

respondent

received

his

separation

for a new production program, or introduction of new methods or more

pay. Moreover, petitioner contends that Section 10 of R.A. No. 8042 does

efficient machinery or automation. It is a valid management prerogative,

not apply in the present case, since the termination of respondent was due

provided it is done in good faith and the employer faithfully complies with

to a just, valid or authorized cause. At best, respondent is only entitled to

the substantive and procedural requirements laid down by law and

separation pay in accordance with Article 283 of the Labor Code, i.e., one

jurisprudence.[24]

343

In the case at bar, despite the fact that respondent was employed by
Petrocon as an OFW in Saudi Arabia, still both he and his employer are

prevent losses and in cases of closure or cessation of

operations of establishment or undertaking not due to
serious business losses or financial reverses, the
separation pay shall be equivalent to at least 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.

subject to the provisions of the Labor Code when applicable. The basic
policy in this jurisdiction is that all Filipino workers, whether employed
Thus, retrenchment is a valid exercise of management prerogative
locally or overseas, enjoy the protective mantle of Philippine labor and
social legislations.[25] In the case of Royal Crown Internationale v. NLRC,
[26]

this Court has made the policy pronouncement, thus:

x x x. Whether employed locally or overseas, all Filipino
workers enjoy the protective mantle of Philippine labor and
social legislation, contract stipulations to the contrary
notwithstanding. This pronouncement is in keeping with
the basic public policy of the State to afford protection to
labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate
the relations between workers and employers. x x x[27]

Philippine Law recognizes retrenchment as a valid cause for the

dismissal of a migrant or overseas Filipino worker under Article 283 of the
Labor Code, which provides:
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 operations 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 workers and the
Department of Labor and Employment 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 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

subject to the strict requirements set by jurisprudence, to wit:

(1) That the retrenchment is reasonably necessary and
likely to prevent business losses which, if already incurred,
are not merely de minimis, but substantial, serious, actual
and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the
employees and to the Department of Labor and
Employment at least one month prior to the intended date
of retrenchment;
(3) That the employer pays the retrenched employees
separation pay equivalent to one month pay or at least
month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench
employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees' right to
security of tenure; and
(5) That the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status, x x x
efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.[28]

Applying the above-stated requisites for a valid retrenchment in

the case at bar, it is apparent that the first, fourth and fifth requirements
were complied with by respondents employer. However, the second and
third requisites were absent when Petrocon terminated the services of
respondent.

344

As to complying with the fifth requirement, the CA was correct

As aptly found by the NLRC and justly sustained by the CA,
Petrocon exercised its prerogative to retrench its employees in good faith
and the considerable reduction of work allotments of Petrocon by Saudi
Aramco was sufficient basis for Petrocon to reduce the number of its

when it ruled that:

As to the fifth requirement, the NLRC considered
the following criteria fair and reasonable in ascertaining
who would be dismissed and who would be retained among
the employees; (i) less preferred status; (ii) efficiency
rating; (iii) seniority; and (iv) proof of claimed financial
losses.

personnel, thus:
Moreover, from the standard form of employment
contract relied upon by the Labor Arbiter, it is clear that
unilateral cancellation (sic) may be effected for legal, just
and valid cause or causes. Clearly, contrary to the Labor
Arbiters
perception,
the
enumerated
causes
for
employment termination by the employer in the standard
form of employment contract is not exclusive in the same
manner that the listed grounds for termination by the
employer is not exclusive. As pointed out above, under
Sec. 10 of RA 8042, it is clear that termination of
employment may be for just, valid or authorized cause as
defined by law or contract. Retrenchment being indubitably
a legal and authorized cause may be availed of by the
respondent.
From the records, it is clearly shown that there was
a drastic reduction in Petrocons 1998 work allocation from
250,000 man-hours to only 80,000 man-hours. Under these
circumstances over which respondents principal, Petrocon
had no control, it was clearly a valid exercise of
management prerogative to reduce personnel particularly
those without projects to work on. To force Petrocon to
continue maintaining all its workers even those without
projects is tantamount to oppression. The determination to
cease operation is a prerogative of management which the
state does not usually interfere with as no business or
undertaking must be required to continue at a loss simply
because it has to maintain its employees in
employment. Such an act would be tantamount to a taking
of property without due process of law. (Industrial Timber
Corp. vs. NLRC, 273 SCRA 200)[29]

The primary reason for respondents termination is

lack of work project specifically related to his expertise as
piping designer. Due to the highly specialized nature of
Logartas job, we find that the availability of work and
number of allocated man-hours for pipeline projects are
sufficient and reasonable criteria in determining who would
be dismissed and who would be retained among the
employees. Consequently, we find the criterion of less
preferred status and efficiency rating not applicable.
The list of terminated employees submitted by
Petrocon, shows that other employees, with the same
designation as Logartas (Piping Designer II), were also
dismissed. Terminated, too, were employees designated as
Piping Designer I and Piping Designer. Hence, employees
whose job designation involves pipeline works were
without bias terminated.
As to seniority, at the time the notice of
termination was given to him, Logartas employment was
eight (8) months, clearly, he has not accumulated sufficient
years to claim seniority.
As to proof of claimed financial losses, the NLRC
itself has recognized the drastic reduction of Petrocons
work allocation, thereby necessitating the retrenchment of
some of its employees.[30]

As for the notice requirement, however, contrary to petitioners

contention, proper notice to the DOLE within 30 days prior to the intended
date of retrenchment is necessary and must be complied with despite the
fact that respondent is an overseas Filipino worker. In the present case,

345

although respondent was duly notified of his termination by Petrocon 30

amount as separation pay. However, a perusal of his Payroll Check Details,

days before its effectivity, no allegation or proof was advanced by

[33]

petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days

month prior to his departure, and hence, was justly due to him as his

before the respondent was terminated. Thus, this requirement of the law

salary. Furthermore, the amounts which he received as his End of Contract

was not complied with.

Benefit and Other Earning/Allowances: for July 1998 [34] form part of his

clearly reveals that what he received was his compensation for the

wages/salary, as such, cannot be considered as constituting his separation

Also, petitioners contention that respondent freely consented to his

pay.

dismissal is unsupported by substantial evidence. Respondents recourse of

finding a new employer during the 30-day period prior to the effectivity of

Verily, respondent is entitled to the payment of his separation pay.

his dismissal and eventual return to the Philippines is but logical and

However, this Court disagrees with the conclusion of the Labor Arbiter, the

reasonable under the circumstances. Faced with the eventuality of his

NLRC and the CA, that respondent should be paid his separation pay in

termination from employment, it is understandable for respondent to seize

accordance with the provision of Section 10 of R.A. No. 8042. A plain

the opportunity to seek for other employment and continue working

reading of the said provision clearly reveals that it applies only to an

in Saudi Arabia.

illegally dismissed overseas contract worker or a worker dismissed from

overseas employment without just, valid or authorized cause, the pertinent

Moreover, petitioners insistence that the case of Jariol v. IMS should

portion of which provides:

be applied in the present case is untenable. Being a mere decision of the

NLRC, it could not be considered as a precedent warranting its application

Sec. 10. Money Claims. x x x In case of termination

of overseas employment without just, valid or authorized
cause as defined by law or contract, x x x

in the case at bar. Suffice it to state that although Article 8 of the Civil
Code[31] recognizes judicial decisions, applying or interpreting statutes as
In the case at bar, notwithstanding the fact that respondents
part of the legal system of the country, such level of recognition is not
termination from his employment was procedurally infirm, having not
afforded to administrative decisions.[32]
complied with the notice requirement, nevertheless the same remains to
be for a just, valid and authorized cause, i.e., retrenchment as a valid
Anent the proper amount of separation pay to be paid to
exercise of
respondent, petitioner maintains that respondent was paid the appropriate

346

SYLLABUS
management prerogative. To stress, despite the employers failure to
comply with the one-month notice to the DOLE prior to respondents
termination, it is only a procedural infirmity which does not render the
retrenchment illegal. In Agabon v. NLRC,[35] this Court ruled that when the
dismissal is for a just cause, the absence of proper notice should not nullify
the dismissal or render it illegal or ineffectual. Instead, the employer
should indemnify the employee for violation of his statutory rights. [36]

Consequently, it is Article 283 of the Labor Code and not Section

10 of R.A. No. 8042 that is controlling. Thus, respondent is entitled to
payment of separation pay equivalent to one (1) month pay, or at least
one-half (1/2) month pay for every year of service, whichever is
higher. Considering that respondent was employed by Petrocon for a period
of eight (8) months, he is entitled to receive one (1) month pay as
separation pay. In addition, pursuant to current jurisprudence,[37] for failure
to fully comply with the statutory due process of sufficient notice,
respondent is entitled to nominal damages in the amount P50,000.00.
WHEREFORE, premises considered, the petition is DENIED. The
Decision dated January 8, 2004 and the Resolution dated May 12, 2004 of
the

Court

of

Appeals

areAFFIRMED with MODIFICATIONS. Petitioner

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; TERMINATION

OF EMPLOYMENT; CAUSED BY CLOSURE DUE TO LOSSES;
EMPLOYER, NOT OBLIGATED TO PAY SEPARATION BENEFITS. Where the closure was due to business losses the Labor Code
does not impose any obligation upon the employer to pay separation
benefits, for obvious reasons. Art. 283 of the Labor Code does not
obligate an employer to pay separation benefits when the closure is
due to losses.
2. ID.; ID.; ID.; GOVERNMENT AS A STOCK-HOLDER, NOT
PERSONALLY
LIABLE
FOR
INDEBTEDNESS
OF
THE
CORPORATION. - Even if the national government owned or
controlled 81.8% of the common stock and 100% of the preferred
stock of North Davao, it remains only a stockholder thereof, and under
existing laws and prevailing jurisprudence, a stockholder as a rule is
not directly, individually and/or personally liable for the indebtedness
of the corporation. The national government is not the employer of
private respondent and his co-complainants, so there is no reason to
expect any kind of bailout by the national government under existing
law and jurisprudence.
3. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT BY THE NATIONAL
LABOR RELATIONS COMMISSION; BINDING UPON THE COURT.
- It is well settled that this Court is bound by the findings of fact of the
NLRC, so long as said findings are supported by substantial evidence.
In Maya Farms Employees Organization vs. NLRC, 239 SCRA 508, 512
(December 28, 1994) we held: This Court has consistently ruled that
findings of fact of administrative agencies and quasi-judicial bodies
which have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but even
finality and are binding upon this Court unless there is a showing of
grave abuse of discretion, or where it is clearly shown that they were
arrived at arbitrarily or in disregard of the evidence on record.

is ORDERED to pay Roel P. Logarta one (1) month salary as separation pay
and P50,000.00 as nominal damages.
SO ORDERED.

[G.R. No. 112546. March 13, 1996]

NORTH
DAVAO
MINING
CORPORATION
and
ASSET
PRIVATIZATION TRUST, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER ANTONIO M.
VILLANUEVA and WILFREDO GUILLEMA, respondents.

347

DECISION
PANGANIBAN, J.:
Is a company which is forced by huge business losses to close its
business, legally required to pay separation benefits to its employees at
the time of its closure in an amount equivalent to the separation pay paid
to those who were separated when the company was still a going
concern? This is the main question brought before this Court in this petition
for certiorari under Rule 65 of the Revised Rules of Court, which seeks to
reverse and set aside the Resolutions dated July 29, 1993 [1] and September
27, 1993[2] of the National Labor Relations Commision [3] (NLRC) in NLRC-CA
No. M-001395-93.
The Resolution dated July 29, 1993 affirmed in tow the decision of the
Labor Arbiter in RAB-1 1-08-00672-92 and RAB- 11-08-00713-92 ordering
petitioners to pay the complainants therein certain monetary claims.
The Resolution dated September 27, 1993 denied the motion for
reconsideration of the said July 29, 1993 Resolution.
The Facts
Petitioner North Davao Mining Corporation (North Davao) was
incorporated in 1974 as a 100% privately-owned company. Later, the
Philippine National Bank (PNB) became part owner thereof as a result of a
conversion into equity of a portion of loans obtained by North Davao from
said bank. On June 30, 1986, PNB transferred all its loans to and equity in
North Davao in favor of the national government which, by virtue of
Proclamation No. 50 dated December 8, 1986, later turned them over to
petitioner Asset Privatization Trust (APT). As of December 31, 1990 the
national government held 81.8% of the common stock and 100% of the
preferred stock of said company. [4]
Respondent Wilfredo Guillema is one among several employees of
North Davao who were separated by reason of the companys closure on
May 31, 1992, and who were the complainants in the cases before the
respondent labor arbiter.
On May 31, 1992, petitioner North Davao completely ceased
operations due to serious business reverses. From 1988 until its closure in
1992, North Davao suffered net losses averaging three billion pesos

(P3,000,000,000.00) per year, for each of the five years prior to its
closure. All told, as of December 31, 1991, or five months prior to its
closure, its total liabilities had exceeded its assets by 20.392 billion pesos,
as shown by its financial statements audited by the Commission on
Audit. When it ceased operations, its remaining employees were separated
and given the equivalent of 12.5 days pay for every year of service,
computed on their basic monthly pay, in addition to the commutation to
cash of their unused vacation and sick leaves. However, it appears that,
during the life of the petitioner corporation, from the beginning of its
operations in 1981 until its closure in 1992, it had been giving separation
pay equivalent to thirty (30) days pay for every year of service. Moreover,
inasmuch as the region where North Davao operated was plagued by
insurgency and other peace and order problems, the employees had to
collect their salaries at a bank in Tagum, Davao del Norte, some 58
kilometers from their workplace and about 2 hours travel time by public
transportation; this arrangement lasted from 1981 up to 1990.
Subsequently, a complaint was filed with respondent labor arbiter by
respondent Wilfredo Guillema and 271 other seperated employees for: (1)
additional separation pay of 17.5 days for every year of service; (2) back
wages equivalent to two days a month; (3) transportation allowance; (4)
hazard pay; (5) housing allowance; (6) food allowance; (7) postemployment medical clearance; and (8) future medical allowance, all of
which amounted to P58,022,878.31 as computed by private respondent. [5]
On May 6, 1993, respondent Labor Arbiter rendered a decision
ordering petitioner North Davao to pay the complainants the following:
(a) Additional separation pay of 17.5 days for every year of service;
(b) Backwages equivalent to two (2) days a month times the number of
years of service but not to exceed three (3) years;
(c) Transportation allowance at P80 a month times the number of years of
service but not to exceed three (3) years.
The benefits awarded by respondent Labor Arbiter amounted to
P10,240,517.75. Attorneys fees equivalent to ten percent (10%) thereof
were also granted.[6]

348

On appeal, respondent NLRC affirmed the decision in toto. Petitioner

North Davaos motion for reconsideration was likewise denied. Hence, this
petition.
The Parties Submissions and the Issues
In affirming the Labor Arbiters decision, respondent NLRC ruled that
since (North Davao) has been paying its employees separation pay
equivalent to thirty (30) days pay for every year of service, knowing fully
well that the law provides for a lesser separation pay, then such company
policy has ripened into an obligation, and therefore, depriving now the
herein private respondent and others similarly situated of the same
benefits would be discriminatory.[7] Quoting from Businessday Information
Systems and Services. Inc. (BISSI) vs. NLRC. [8] it said that petitioners may
not pay separation benefits unequally for such discrimination breeds
resentment and ill-will among those who have been treated less
generously than others. It also citedAbella vs. NLRC,[9] as authority for
saying that Art. 283 of the Labor Code protects workers in case of the
closure of the establishment.
To justify the award of two days a month in backwages and P80 per
month of transportation allowance, respondent Commission ruled:
As to the appellants claim that complainants-appeallees time spent in
collecting their wages at Tagum, Davao is not compensable allegedly
because it was on official time can not be given credence. No iota of
evidence has been presented to back up said contention. The same is true
with appellants assertion that the claim for transportation expenses is
without basis since they were incurred by the complainants.Appellants
should have submitted the payrolls to prove that complainants-appellees
were not the ones who personally collected their wages and/or the
bus/jeep trip tickets or vouchers to show that the complainants-appellees
were provided with free transportation as claimed.
Petitioner, through the Government Corporate Counsel, raised the
following grounds for the allowance of the petition:
1. The NLRC acted with grave abuse of discretion in affirming without legal
basis the award of additional separation pay to private respondents who
were separated due to serious business losses on the part of petitioner.

2. The NLRC acted with grave abuse of discretion in affirming without

sufficient factual basis the award of backwages and transportation
expenses to private respondents.
3. There is no appeal, nor any plain, speedy and adequate remedy in the
ordinary course of the law.
and the following issues:
1. Whether or not an employer whose business operations ceased due to
serious business losses or financial reverses is obliged to pay separation
pay to its employees separated by reason of such closure.
2. Whether or not time spent in collecting wages in a place other than the
place of employment is compensable notwithstanding that the same is
done during official time.
3. Whether or not private respondents are entitled to transportation
expenses in the absence of evidence that these expenses were incurred.
The First Issue: Separation Pay
To resolve this issue, it is necessary to revisit the provision of law
adverted to by the parties in their submissions, namely Art. 283 of the
Labor Code, which reads as follows:
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
under-taking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment 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 () month pay for every

349

year of service, whichever is higher. A fraction of at least six (6) months

shall be considered one (1) whole year. (italics supplied)
The underscored portion of Art. 283 governs the grant of seperation
benefits in case of closures or cessation of operation of business
establishments NOT due to serious business losses or financial reverses x x
x. Where, however, the closure was due to business losses - as in the
instant case, in which the aggregate losses amounted to over P20 billion the Labor Code does not impose any obligation upon the employer to pay
separation benefits, for obvious reasons. There is no need to belabor this
point. Even the public respondents, in their Comment [10] filed by the
Solicitor General, impliedly concede this point.
However, respondents tenaciously insist on the award of separation
pay, anchoring their claim solely on petitioner North Davaos long-standing
policy of giving separation pay benefits equivalent to 30- days pay, which
policy had been in force in the years prior to its closure. Respondents
contend that, by denying the same separation benefits to private
respondent and the others similarly situated, petitioners discriminated
against them. They rely on this Courts ruling in Businessday Information
Systems and Services, Inc. (BISSI) vs. NLRC, (supra). In said case,
petitioner BISSI, after experiencing financial reverses, decided as a
retrenchment measure to lay-off some employees on May 16, 1988 and
gave them separation pay equivalent to one-half () month pay for every
year of service. BISSI retained some employees in an attempt to
rehabilitate its business as a trading company. However, barely two and a
half months later, these remaining employees were likewise discharged
because the company decided to cease business operations
altogether. Unlike the earlier terminated employees, the second batch
received separation pay equivalent to a full months salary for every year of
service, plus a mid-year bonus. This Court ruled that there was
impermissible discrimination against the private respondents in the
payment of their separation benefits. The law requires an employer to
extend equal treatment to its employees. It may not, in the guise of
exercising management prerogatives, grant greater benefits to some and
less to others. x x x
In resolving the present case, it bears keeping in mind at the outset
that the factual circumstances of BISSI are quite different from the current
case. The Court noted that BISSI continued to suffer losses even after the
retrenchment of the first batch of employees; clearly, business did not
improve despite such drastic measure. That notwithstanding, when BISSI
finally shut down, it could well afford to (and actually did) pay off its

remaining employees with MORE separation benefits as compared with

those earlier laid off; obviously, then, there wasno reason for BISSI to
skimp on separation pay for the first batch of discharged employees. That
it was able to pay one-month separation benefit for employees at the time
of closure of its business meant that it must have been also in a position to
pay the same amount to those who were separated prior to closure. That it
did not do so was a wrongful exercise of management prerogatives. That is
why the Court correctly faulted it with impermissible discrimination.
Clearly, it exercised its management prerogatives contrary to general
principles of fair play and justice.
In the instant case however, the companys practice of giving one
months pay for every year of service could no longer be continued
precisely because the company could not afford it anymore. It was forced
to close down on account of accumulated losses of over P20 billion. This
could not be said of BISSI. In the case of North Davao, it gave 30-days
separation pay to its employees when it was still a going concern even if it
was already losing heavily. As a going concern, its cash flow could still have
sustained the payment of such separation benefits. But when a business
enterprise completely ceases operations, i.e., upon its death as a going
business concern, its vital lifeblood -its cashflow - literally dries
up. Therefore, the fact that less separation benefits were granted when the
company finally met its business death cannot be characterized as
discrimination. Such action was dictated not by a discriminatory
management option but by its complete inability to continue its business
life due to accumulated losses. Indeed, one cannot squeeze blood out of a
dry stone. Nor water out of parched land.
As already stated, Art. 283 of the Labor Code does not obligate an
employer to pay separation benefits when the closure is due to losses. In
the case before us, the basis for the claim of the additional separation
benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of
employees, which is proscribed as an unfair labor practice by Art. 248 (e)
of said Code.Under the facts and circumstances of the present case, the
grant of a lesser amount of separation pay to private respondent was
done, not by reason of discrimination, but rather, out of sheer financial
bankruptcy - a fact that is not controlled by management
prerogatives. Stated differently, the total cessation of operation due to
mind-boggling losses was a supervening fact that prevented the company
from continuing to grant the more generous amount of separation pay. The
fact that North Davao at the point of its forced closure voluntarily paid any
separation benefits at all - although not required by law - and 12.5-days
worth
at
that,
should
have
elicited
admiration
instead
of

350

condemnation. But to require it to continue being generous when it is no

longer in a position to do so would certainly be unduly oppressive, unfair
and most revolting to the conscience. As this Court held in Manila
Trading & Supply Co. vs. Zulueta,[11] and reiterated in San Miguel
Corporation vs. NLRC[12] and later, in Allied Banking Corporation vs. Castro,
[13]
(t)he law, in protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer.
At this juncture, we note that the Solicitor General in his Comment
challenges the petitioners assertion that North Davao, having closed down,
no longer has the means to pay for the benefits. The Solicitor General
stresses that North Davao was among the assets transferred by PNB to the
national government, and that by virtue of Proclamation No. 50 dated
December 8, 1986, the APT was constituted trustee of this government
asset. He then concludes that (i)t would, therefore, be incongruous to
declare that the National Government, which should always be presumed
to be solvent, could not pay now private respondents money claims. Such
argumentation is completely misplaced. Even if the national government
owned or controlled 81.8% of the common stock and 100% of the preferred
stock of North Davao, it remains only a stockholder thereof, and under
existing laws and prevailing jurisprudence, a stockholder as a rule is not
directly, individually and/or personally liable for the indebtedness of the
corporation. The obligation of North Davao cannot be considered the
obligation of the national government, hence, whether the latter be solvent
or not is not material to the instant case. The respondents have not shown
that this case constitutes one of the instances where the corporate veil
may be pierced.[14] From another angle, the national government is not the
employer of private respondent and his co-complainants, so there is no
reason to expect any kind of bailout by the national government under
existing law and jurisprudence.
The Second and Third Issues:
Back Wages and Transportation Allowance
Anent the award of back wages and transportation allowance, the
issues raised in connection therewith are factual, the determination of
which is best left to the respondent NLRC. It is well settled that this Court is
bound by the findings of fact of the NLRC, so long as said findings are
supported by substantial evidence.[15]
As the Solicitor General pointed out in his comment:

It is undisputed that because of security reasons, from the time of its

operations, petitioner NDMC maintained its policy of paying its workers at a
bank in Tagum, Davao del Norte, which usually took the workers about two
and a half (2 1/2) hours of travel from the place of work and such travel
time is not official.
Records also show that on February 12,1992, when an inspection was
conducted by the Department of Labor and Employment at the premises of
petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that
petitioners had violated labor standards law, one of which is the place of
payment of wages (p.109, Vol. 1, Record).
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the
Labor Code provides that:
Section 4. Place of payment. - (a) As a general rule, the place of payment
shall be at or near the place of undertaking. Payment in a place other than
the workplace shall be permissible only under the following circumstances:
(1) When payment cannot be effected at or near the place of work by
reason of the deterioration of peace and order conditions, or by reason of
actual or impending emergencies caused by fire, flood, epidemic or other
calamity rendering payment thereat impossible;
(2) When the employer provides free transportation to the employees back
and forth; and
(3) Under any analogous circumstances; provided that the time spent by
the employees in collecting their wages shall be considered as
compensable hours worked.
(b) xxx xxx xxx.
(Italics supplied)
Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1, Record),
the Regional Director, Regional Office No. XI, Department of Labor and
Employment, Davao City, ordered petitioner NDMC, among others, as
follows:
WHEREFORE, x x x. Respondent is further ordered to pay its workers
salaries at the plantsite at Amacan, New Leyte, Maco, Davao del Norte or

351

whenever not possible, through the bank in Tagum, Davao del Norte as
already been practiced subject, however to the provisions of Section 4 of
Rule VIII, Book III of the rules implementing the Labor Code as amended.
Thus, public respondent Labor Arbiter Antonio M. Villanueva correctly
held that:
From the evidence on record, we find that the hours spent by complainants
in collecting salaries at a bank in Tagum, Davao del Norte shall be
considered compensable hours worked. Considering further the distance
between Amacan, Maco to Tagum which is 2 hours by travel and the risks
in commuting all the time in collecting complainants salaries, would justify
the granting of backwages equivalent to two (2) days in a month as prayed
for.
Corollary to the above findings, and for equitable reasons, we likewise hold
respondents liable for the transportation expenses incurred by
complainants at P40.00 round trip fare during pay days.
(p. 10, Decision; p. 207, Vol. 1, Record)
On the contrary, it will be petitioners burden or duty to present
evidence of compliance of the law on labor standards, rather than for
private respondents to prove that they were not paid/provided by
petitioners of their backwages and transportation expenses.
Other than the bare denials of petitioners, the above findings stands
uncontradicted. Indeed we are not at liberty to set aside findings of facts of
the NLRC, absent any capriciousness, arbitrariness, or abuse or complete
lack of basis. In Maya Farms Employees Organizations vs. NLRC, [16] we
held:
This Court has consistently ruled that findings of fact of administrative
agencies and quasi-judicial bodies which have acquired expertise because
their jurisdiction is confined to specific matters are generally accorded not
only respect but even finality and are binding upon this Court unless there
is a showing of grave abuse of discretion, or where it is clearly shown that
they were arrived at arbitrarily or in disregard of the evidence on record.

WHEREFORE, judgment is hereby rendered MODIFYING the assailed

Resolution by SETTING ASIDE and deleting the award for additional
separation pay of 17.5 days for every year of service, and AFFIRMING it in
all other aspects. No costs.
SO ORDERED.

352

G.R. No. 200746

August 6, 2014

BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP and/or VILMA

GENON, EDISA HORTELANO, LOURDES ARANAS, TONY
FORMENTERA, RENEBOY LEYSON, MA. ALONA ACALDO, MA.
CONCEPCION ABAO, TERESITA CALINAWAN, NICIFORO CABANSAG,
STELLA BARONGO, MARILYN POTOT, WELMER ABANID, LORENZO
ALIA, LINO PARADERO, DIOSDADO ANDALES, LUCENA ABESIA, and
ARMANDO YBAEZ, Petitioners,
vs.
BENSON INDUSTRIES, INC., Respondent.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari 1 assailing the
Decision2 dated September 27, 2011 and the Resolution 3 dated January 31,
2012 of the Court of Appeals (CA)in CA-G.R. SP No. 03842 which reversed
and set aside the Decision4 dated October 24, 2008 of the Voluntary
Arbitrator (VA) of the National Conciliation and Mediation Board (NCMB),
and accordingly deleted the award to petitioners Vilma Genon, Edisa
Hortelano, Lourdes Aranas, Tony Formentera, Reneboy Leyson, Ma. Alona
Acaldo, Ma. Concepcion Abao, Teresita Calinawan, Niciforo Cabansag, Stella
Barongo, Marilyn Potot, Welmer Abanid, Lorenzo Alia, Lino Paradero,
Diosdado Andales, Lucena Abesia, and Armando Ybaez (petitioners) of
additional separation pay equivalent to four (4) days of work for every year
of service.
The Facts
Respondent Benson Industries, Inc. (Benson) is a domestic corporation
engaged in the manufacturing of greencoils with the brand name Lion-Tiger
Mosquito Killer. OnFebruary 12, 2008, Benson sent its employees, including
herein petitioners, a notice5 informing them of their intended termination
from employment, to be effected on March 15, 2008 on the ground of
closure and/or cessation of business operations. In consequence, the
majority of Bensons employees resigned.6 Meanwhile, petitioners, through
Benson Industries Employees Union-ALU-TUCP (Union), filed a notice of
strike, claiming that the companys supposed closure was merely a ploy to
replace the union members with lower paid workers, and, as a result,
increase its profit at their expense.7The strike did not, however, push

through due to the parties amicable settlement during the conciliation

proceedings before the NCMB, whereby petitioners accepted Bensons
payment of separation pay, computed at 15 days for every year of service,
as per the parties Memorandum of Agreement8 dated April 9, 2008.9
This notwithstanding, petitioners proffered a claim for the payment of
additional separation pay atthe rate of four (4) days for every year of
service. As basis, petitioners invoked Section 1, Article VIII of the existing
collective bargaining agreement (CBA) executed by and between the Union
and Benson which states that "[Benson]shall pay to any employee/laborer
who is terminated from the service without any fault attributable to him, a
Separation Pay equivalentto not less than nineteen (19) days pay for
every year of service based upon the latest rate of pay of the
employee/laborer concerned."10 Benson opposed petitioners claim,
averring that the separation pay already paid to them was already more
than what the law requires. Reaching an impasse on the conflict, the
parties referred the issue to voluntary arbitration, wherein the validityof
Bensons closure was brought up as well.11
The VA Ruling
In a Decision12 dated October 24, 2008 (October 24, 2008 VA Decision), the
VA ruled in favor of petitioners, and, thus, ordered Benson to pay each of
them separation benefits in "an amount equivalent to four (4) days for
every year of service based on the latest rate of pay of the [individual
petitioner] concerned subject to whatever legally valid deductions
chargeable against [said individual petitioner] whenever applicable." 13
The VA ratiocinated that in computing the amount of separation benefits
due to petitioners, the basis should be the provision of the existing CBA
between Benson and the Union which explicitly states that should the
employees be terminated through no fault of their own, they should be
awarded separation benefits at the rate of 19 days for every year of
service. In this regard, the VA opined that the provisions of the CBA should
be given effect because it expresses the latest agreement of the union and
the company, not to mention the fact that it gives more benefits to the
employees.14
Separately, the VA found adequate proof to support Bensons position that
it was indeed in a state of insolvency, which, therefore, justified its closure
and/or cessation of business operations on the ground of serious business
losses and/or financial reverses.15

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Dissatisfied, Benson elevated the matter on appeal before the CA.

The CA Ruling In a Decision16 dated September 27, 2011, the CA reversed
and set aside the VAs ruling, and accordingly deleted the award of
additional separation benefits equivalent to four (4) days of work for every
year of service. It held that despite the express provision in the CBA stating
that Benson should pay its employees who were terminated without their
fault separation benefits equivalent to at least 19 days pay for every year
of service, Benson cannot be compelled to do so considering its current
financial status.17
Aggrieved, petitioners moved for reconsideration, which was, however,
denied by the CA in a Resolution18 dated January 31, 2012, hence, this
petition.
The Issue Before the Court
The sole issue for the Courts resolution is whether or not the CA correctly
deleted the award to petitioners of additional separation benefits
equivalent to four (4) days of work for every year of service.
The Courts Ruling
The petition is impressed with merit.
Closure of business may be consideredas a reversal of an employers
fortune whereby there is a complete cessation of business operations
and/or an actual locking-up of the doors ofthe establishment, usually due
to financial losses. Under the Labor Code, it is treated as an authorized
cause for termination, aimed at preventing further financial drain upon an
employer who cannot anymore pay its employees since business has
already stopped. As a form of recompense, the employer is required to pay
its employees separation benefits, except when the closure is due to
serious business losses.19 Article 297 (formerly Article 283)20 of the Labor
Code, as amended, states this rule:
Art. 297. 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 ofoperation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, x x x. 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 onehalf (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) monthsshall be considered one (1) whole year.
(Emphasis and underscoring supplied)
While serious business losses generally exempt the employer from paying
separation benefits, it must bepointed that the exemption only pertains to
the obligation of the employer under Article 297 of the Labor Code. This is
because of the laws express parameter thatmandates payment of
separation benefits "in case of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
financial reverses." The policy distinction underlying Article 297 that is,
the distinction between closures due to serious business losses and those
which are not was deftly discussed by the Court in the case of Cama v.
Jonis Food Services, Inc.,21 as follows:
The Constitution, while affording full protection to labor, nonetheless,
recognizes "theright of enterprises to reasonable returns on investments,
and to expansion and growth." In line with this protection afforded to
business by the fundamental law, Article283 [(now, Article 297)] of the
Labor Code clearly makes a policy distinction. It is only in instances 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" that employees whose employment has been
terminated as a result are entitled to separation pay. In other words, Article
283 [(now, Article 297)] of the Labor Code does not obligate an employer
to pay separation benefits when the closure is due to serious losses. To
require anemployer to be generous when it is no longer in a position todo
so, in our view, would be unduly oppressive, unjust, and unfair to the
employer. Ours is a system of laws, and the law in protecting the rights of
the working man, authorizes neither the oppression nor the self-destruction
of the employer. x x x.22 (Emphasis supplied)
When the obligation to pay separation benefits, however, is not sourced
from law (particularly, Article297 of the Labor Code), but from
contract,23 such as an existing collective bargaining agreement between
the employer and its employees, an examination of the latters provisions
becomes necessary in order to determine the governing parameters for the
said obligation. To reiterate, an employer which closes shop due to serious
business losses is exempt from paying separation benefits under Article
297 of the Labor Code for the reason that the said provision explicitly

354

requires the same only when the closure is not due to serious business
losses; conversely, the obligation is maintained when the employers
closure is not due to serious business losses. For a similar exemption to
obtain against a contract, such as a CBA, the tenor ofthe parties
agreement ought to be similar to the laws tenor. When the parties,
however, agree to deviate therefrom, and unqualifiedly covenant the
payment of separation benefits irrespective of the employersfinancial
position, thenthe obligatory force of that contract prevails and its terms
should be carried out to its full effect. Verily, it is fundamental that
obligations arising from contracts have the force of law between the
contracting parties and thus should be complied with in good faith; 24 and
parties are bound by the stipulations, clauses, terms and conditions they
have agreed to, the only limitation being that these stipulations, clauses,
terms and conditions are not contrary to law, morals, public order or public
policy.25 Hence, if the terms of a CBA are clear and there is no doubt as to
the intention ofthe contracting parties, the literal meaning of its
stipulations shall prevail.26 As enunciated in Honda Phils., Inc. v. Samahan
ng Malayang Manggagawa sa Honda:27
A collective bargaining agreement refers to the negotiated contract
between a legitimate labor organization and the employer concerning
wages, hours of work and all other terms and conditions of employment in
a bargaining unit. As in all contracts, the parties in a CBA may establish
such stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties and compliance
therewith is mandated by the express policy of the law. 28
In this case, it is undisputed thata CBA was forged by the employer,
Benson, and its employees, through the Union, to govern their relations
effective July 1, 2005 to June 30, 2010.It is equally undisputed that Benson
agreed to and was thus obligated under the CBA to pay its employees who
had been terminated without any fault attributable to them separation
benefits at the rate of 19 days for every year of service. This is particularly
found in Section 1, Article VIII of the same contract, to wit:
Section 1. Separation Pay The Company shall pay to any
employee/laborer who is terminated from the service without any fault
attributable to him, a "Separation Pay"equivalent to not less than nineteen
(19) days pay for every year of service based upon the latest rate of pay
of the employee/laborer concerned.29

As may be gleaned from the following whereas clauses in a Memorandum

of Agreement30 dated November 20, 2003 between the parties, Benson had
been fully aware of its distressed financial condition even at the time of the
previous CBA (effective from July 1, 2000 to June 30, 2005):
WHEREAS, on February 01, 2001 the Company and the Union entered into
a Collective Bargaining Agreement (CBA) with effectivity from July 01, 2000
to June 30, 2005;
xxxx
WHEREAS, the Company and the Union recognize that the Philippines is at
present in grave economic crisis;
WHEREAS, the Union recognizes and acknowledges that the Company in
particular is in grave financial difficulties and that the Company is hard up
to meet its financial obligations to creditor banksthat said creditor banks
have even threatened to foreclose the mortgages on and toseize the
Companys factory, realties, machineries and assets and in fact, the Bank
of the Philippine Islands, one of the creditor banks scheduled on November
17, 1998 a foreclosure sale of the Companys factory, realties, machineries
and assets in Extrajudicial Foreclosure Case No. EJF-2773-CEB;
x x x x (Emphases supplied)
Benson even admits in its Comment that it was already saddled with loan
from banks as early as 199731 and that it had been unable to service its
loan obligations.32 And yet, nothing appears on record to discount the fact
that it still unqualifiedly and freely agreedto the separation pay provision in
the July 1, 2005 to June 30, 2010 CBA, its distressed financial condition
notwithstanding.
Thus, in view of the foregoing, the Court disagrees with the CA in negating
Bensons obligation to pay petitioners their full separation benefits under
the said agreement. The postulation that Benson had closed its
establishment and ceased operations due to serious business losses
cannot be accepted as an excuse to clear itself of any liability since the
ground of serious business losses is not, unlike Article 297 of the Labor
Code, considered as an exculpatory parameter under the aforementioned
CBA. Clearly, Benson, with full knowledge of its financial situation, freely
and voluntarily entered into such agreement with petitioners. Hence,
having failed to show that the subject CBA provision on separation benefits

355

is contrary to law, morals, public order orpublic policy, or that the same
can be interpreted as one with a condition for instance, that the parties
actually contemplated non-payment of separation benefits in the event of
closure due to serious business losses the Court isconstrained to
reinstate the October 24, 2008 VA Decision ordering Benson to pay each of
the petitioners separation benefits in "an amount equivalent to four (4)
days for every year of service based on the latest rate of pay of the
[individual petitioner] concerned, subject to whatever legallyvalid
deductions chargeable against [said individual petitioner], whenever
applicable."33
Analogous to the foregoing is the Courts disquisition in Lepanto Ceramics,
Inc. v. Lepanto Ceramics Employees Association, 34 whereby the employer
therein was held liable for the payment of Christmas bonus benefits,
considering that the grant thereof was voluntarily and unqualifiedly agreed
upon by the parties under the CBA despite the employers full awareness
of its distressed financial position (as Benson in this case), viz.:
It is a familiar and fundamental doctrine in labor law that the CBA is the
law between the parties and they are obliged to comply with its provisions.
This principle stands strong and true in the case at bar.
A reading of the provision of the CBA reveals that the same provides for
the giving of a "Christmas gift package/bonus" without qualification. Terse
and clear, the said provision did not state that the Christmas package shall
be made to depend on the petitioners financial standing. The records are
also bereft of any showing that the petitioner made it clear during the CBA
negotiations that the bonus was dependent on any condition. Indeed, if the
petitioner and respondent Association intended that the 3,000.00 bonus
would be dependent on the company earnings, such intention should have
been expressed in the CBA.
It is noteworthy that in petitioners 1998 and 1999 financial Statements, it
took note that"the 1997 financial crisis in the Asian region adversely
affected the Philippine economy."
From the foregoing, petitioner cannot insist on business losses as a basis
for disregarding its undertaking. It is manifestly clear that petitioner was
very much aware of the imminence and possibility of business losses owing
to the 1997 financial crisis.In 1998, petitioner suffered a net loss
of P14,347,548.00. Yet it gave a P3,000.00 bonus to the members of the
Association. In 1999, when petitioners very own financial statement
reflected that "the positive developments in the economy have yet to

favorably affect the operations of the company," and reported a loss

of P346,025,733.00, it entered into the CBA with the respondent
Association whereby it contracted to grant a Christmas gift package/bonus
to the latter. Petitioner supposedly continued to incur losses on the years
2000 and 2001. Still and all, this did not deter it from honoring the CBA
provision onChristmas bonus as it continued to give P3,000.00 each to the
members of the respondent Association in the years 1999, 2000 and 2001.
All given, business losses are a feeble ground for petitioner to repudiate its
obligation under the CBA.The rule is settled that any benefit and
supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued oreliminated by the employer. The principle of
non-diminution of benefits is founded on the constitutional mandate to
protect the rights of workers and to promote their welfare and to afford
labor full protection.
Hence, absent any proof that petitioners consent was vitiated by fraud,
mistake or duress, it is presumed that it entered into the CBA voluntarily
and had full knowledge of the contents thereof and was aware of its
commitments under the contract.35 (Emphases and underscoring supplied;
citations omitted)
A similar disposition was also made in the case of Eastern
Telecommunications Philippines, Inc.v. Eastern Telecoms Employees
Union,36 wherein the Court held as follows:
The parties to the contract must be presumed to have assumed the risks of
unfavorable developments.1wphi1 Itis, therefore, only in absolutely
exceptional changes of circumstances that equity demands assistance for
the debtor. In the case at bench, the Court determines that ETPIs claimed
depressed financial state will not release it from the binding effect of the
2001-2004 CBA Side Agreement.
ETPI appears to be well aware ofits deteriorating financial condition when it
entered into the 2001-2004 CBA Side Agreement with ETEU and obliged
itself to pay bonuses to the members of ETEU. Considering that ETPI had
been continuously suffering huge losses from 2000 to 2002, its business
losses in the year 2003 were not exactly unforeseen or unexpected.
Consequently, it cannot be said that the difficulty in complying with its
obligation under the Side Agreement was "manifestly beyond the
contemplation ofthe parties." Besides, as held in Central Bank of the
Philippines v. Court of Appeals, mere pecuniary inability to fulfill
anengagement does not discharge a contractual obligation. Contracts,

356

once perfected, are binding between the contracting parties. Obligations

arising therefrom have the force of law and should be complied with in
good faith. ETPI cannot renege from the obligation it has freely assumed
when it signed the 2001-2004 CBA Side Agreement. 37 (Emphases and
underscoring supplied; citations omitted)
To quell any doubts, it bears pointing out that the CAs reliance on Galaxie
Steel Workers Union (GSWU-NAFLU-KMU) v. NLRC38 and Cama v. Jonis Food
Services, Inc.39 was actually misplaced since no CBA was involved in those
cases. As such, consistent with the parameters of Article 297 of the Labor
Code asabove-discussed, the payment of separation benefits in view of the
employers serious business losses in those cases was not in order. In the
same light, North Davao Mining Corporation v. NLRC40 was speciously
applied by the CA given that the payment of separation benefits in that
case was not sourcedfrom a contractual CBA obligation but merely from a
unilateral company practice which was deemed as an act of generosity on
the part. of the employer. It was in this context that the Court held that "to
require [the company] to continue being generous when it is no longer in a
position to do so would certainly be unduly oppressive, unfair and most
revolting to the conscience."41 The factual dissimilarity of these cases to
Benson and petitioners' situation therefore precludes the application of the
same ruling. Accordingly, finding no cogent reason for Benson not to
comply with its obligations under the July 1, 2005 to June 30, 2010 CBA,
and considering further that the interpretation of any law or provision
affecting labor should be interpreted in favor of labor, 42 the Court hereby
reverses the CA Decision and reinstates the October 24, 2008 VA Decision.
WHEREFORE, the petition is GRANTED. The Decision dated September 27,
2011 and the Resolution dated January 31, 2012 of the Court of Appeals in
CA-G.R. SP No. 03842 are hereby REVERSED and SET ASIDE. The Decision
dated October 24, 2008 of the Voluntary Arbitrator of the National
Conciliation and Mediation Board is REINSTATED.
SO ORDERED.

357

G.R. No. 207253

August 20, 2014

CRISPIN B. LOPEZ, Petitioner,

vs.
IRVINE CONSTRUCTION CORP. and TOMAS SY SANTOS, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 are the Decision2 dated
September 14, 2012 and the Resolution3dated April 12, 2013 of the Court
of Appeals (CA) in CA-GR. SP No. 108385-MIN which annulled and set aside
the Resolutions dated October 31, 20084 and February 12, 20095 of the
National Labor Relations Commission (NLRC) in NLRC LAC No. 01-0004282008, and thereby dismissed petitioner Crispin B. Lopez's (Lopez)
complaint for illegal dismissal.
The Facts
Respondent Irvine Construction Corp. (Irvine) is a construction firm with
office address at San Juan, Manila.6 It initially hired Lopez as laborer in
November 1994 and, thereafter, designated him as a guard at its
warehouse in Dasmarifias, Cavite in the year 2000, with a salary
of P238.00 per day and working hours from 7 o'clock in the morning until 4
o'clock in the afternoon, without any rest day.7 On December 18, 2005,
Lopez was purportedly terminated from his employment, whereupon he
was told "Jkaw ay lay-off muna."8 Thus, on January 10, 2006, he filed a
complaint9 for illegal dismissal with prayer for the payment of separation
benefits against Irvine before the NLRC Sub-Regional Arbitration Branch
No. IV in San Pablo City, Laguna, docketed as NLRC Case No. SRAB-IV 18693-06-Q.
For its part, Irvine denied Lopez's claims, alleging that he was employed
only as a laborer who, however, sometimes doubled as a guard. As laborer,
Lopez's duty was to bring construction materials from the suppliers'
vehicles to the company warehouse when there is a construction project in
Cavite.10 As evidenced by an Establishment Termination Report 11 dated
December 28, 2005 which Irvine previously submitted before the
Department of Labor and Employment (DOLE), Lopez was, however,
temporarily laid-off on December 27, 2005 after the Cavite project was
finished.12 Eventually, Lopez was asked to return to work through a

letter13 dated June 5, 2006 (return to work order), allegedly sent to him
within the six ( 6) month period under Article 286 of the Labor Code which
pertinently provides that "[t]he bona-fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months x x x
shall not terminate employment." As such, Irvine argued that Lopez's filing
of the complaint for illegal dismissal was premature. 14
The LA Ruling
On December 6, 2007, the Labor Arbiter (LA) rendered a Decision15 ruling
that Lopez was illegally dismissed. The LA did not give credence to Irvine's
argument that the lack of its project in Cavite resulted in the interruption of
Lopez's employment in view of Irvine's contradictory averment that Lopez
was merely employed on temporary detail and that he only doubled as a
guard. Granting that Lopez's work as a laborer or as a guard was really
affected by the suspension of the operations of Irvine in Cavite, the LA still
discredited Irvine's lay-off claims considering that the return to work order
Irvine supposedly sent to Lopez was not even attached to its pleadings.
Hence, without any proof that Lopez was asked to return to work, the LA
concluded that the dismissal of Lopez went beyond the six-month period
fixed by Article 286 of the Labor Code and was therefore deemed to be a
permanent one effectuated without a valid cause and due
process.16 Accordingly, Irvine was ordered to pay Lopez the sum
of P272,222.l 7, consisting of Pl 76,905.70 as backwages and other
statutory benefits, andP95,316.00 as separation pay. 17
At odds with the LA's ruling, Irvine elevated the matter on appeal 18 to the
NLRC.
The NLRC Ruling
On October 31, 2008, the NLRC rendered a Resolution 19 upholding the LA's
ruling.
It debunked Irvine's contention that Lopez was not illegally dismissed since
he was merely placed on temporary lay-off due to the lack of project in
Cavite for the reason that there was no indication, much less substantial
evidence, that Lopez was a project employee who was assigned to carry
out a specific project or undertaking, with the duration and scope specified
at the time of the engagement. In this relation, it observed that Lopez
worked with Irvine since 1994 and therefore earned the disputable
presumption that he was a regular employee entitled to security of

358

tenure.20 Thus, since Lopez was not relieved for any just or authorized
cause under Articles 282 and 283 of the Labor Code, the NLRC upheld the
LA's finding that he was illegally dismissed. 21
Dissatisfied, Irvine filed a motion for reconsideration 22 which was, however,
denied in a Resolution23 dated February 12, 2009; hence, it filed a petition
for certiorari24 before the CA.
The CA Ruling
The CA granted Irvine's certiorari petition in a Decision 25 dated September
14, 2012, thereby reversing the NLRC.
It held that Lopez's complaint for illegal dismissal was prematurely filed
since there was no indicia that Lopez was actually prevented by Irvine from
returning to work or was deprived of any work assignments or duties. 26 On
the contrary, the CA found that Lopez was asked to return to work within
the six-month period under Article 286 of the Labor Code. Accordingly, it
concluded that Lopez was merely temporarily laid off, and, thus, he could
not have been dismissed.27
Aggrieved, Lopez sought reconsideration28 but the same was denied in a
Resolution29 dated April 12, 2013, hence, this petition.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the CA erred in
finding that the NLRC gravely abused its discretion in affirming the LA's
ruling that Lopez was illegally dismissed.
The Court's Ruling
The petition is meritorious.
Ruling on the propriety of Irvine's course of action in this case preliminarily
calls for a determination of Lopez's employment status - that is, whether
Lopez was a project or a regular employee.
Case law states that the principal test for determining whether particular
employees are properly characterized as "project employees" as
distinguished from "regular employees," is whether or not the "project
employees" were assigned to carry out a "specific project or undertaking,"

the duration and scope of which were specified at the time the employees
were engaged for that project. The project could either be (1) a particular
job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as
such, from the other undertakings of the company; or (2) a particular job or
undertaking that is not within the regular business of the corporation. In
order to safeguard the rights of workers against the arbitrary use of the
word "project" to prevent employees from attaining the status of regular
employees, employers claiming that their workers are project employees
should not only prove that the duration and scope of the employment was
specified at the time they were engaged, but also that there was indeed a
project.30
In this case, the NLRC found that no substantial evidence had been
presented by Irvine to show that Lopez had been assigned to carry out a
"specific project or undertaking," with its duration and scope specified at
the time of engagement. In view of the weight accorded by the courts to
factual findings of labor tribunals such as the NLRC, the Court, absent any
cogent reason to hold otherwise, concurs with its ruling that Lopez was not
a project but a regular employee.31 This conclusion is bolstered by the
undisputed fact that Lopez had been employed by Irvine since November
1994,32 or more than 10 years from the time he was laid off on December
27, 2005.33 Article 280 of the Labor Code provides that any employee who
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee:
Art. 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee x x x. (Emphasis supplied)

359

As a regular employee, Lopez is entitled to security of tenure, and, hence,

dismissible only if a just or authorized cause exists therefor. Article 279 of
the Labor Code states this fundamental rule:

Court.35 However, a lay-off would be tantamount to a dismissal only if it is

permanent. When a lay-off is only temporary, the employment status of
the employee is not deemed terminated, but merely suspended. 36

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 or
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. (Emphasis supplied)

Pursuant to Article 286 of the Labor Code, the suspension of the operation
of business or undertaking in a temporary lay-off situation must not exceed
six (6) months:37

Among the authorized causes for termination under Article 283 of the
Labor Code is retrenchment, or what is sometimes referred to as a "lay-off':
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 workers and the
Ministry of Labor and Employment 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 one (1) whole year. (Emphases supplied)
It is defined as the severance of employment, through no fault of and
without prejudice to the employee, resorted to by management during the
periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls caused by lack of orders, shortage of materials,
conversion of the plant to a new production program or the introduction of
new methods or more efficient machinery, or of automation. 34 Elsewise
stated, lay-off is an act of the employer of dismissing employees because
of losses in the operation, lack of work, and considerable reduction on the
volume of its business, a right recognized and affirmed by the

ART. 286. When Employment not Deemed Terminated. The bona-fide

suspension of the operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the employee of a military
or civic duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position without loss of
seniority rights if he indicates his desire to resume his work not later than
one (1) month from the resumption of operations of his employer or from
his relief from the military or civic duty. (Emphasis supplied)
Within this six-month period, the employee should either be recalled or
permanently retrenched. Otherwise, the employee would be deemed to
have been dismissed, and the employee held liable therefor. As
pronounced in the case of PT & T Corp. v. NLRC: 38
[Article 283 of the Labor Code as above-cited] x x x speaks of a permanent
retrenchment as opposed to a temporary lay-off as is the case here. There
is no specific provision of law which treats of a temporary retrenchment or
lay-off and provides for the requisites in effecting it or a period or duration
therefor. These employees cannot forever be temporarily laid-off. To
remedy this situation or fill the hiatus, Article 286 may be applied but only
by analogy to set a specific period that employees may remain temporarily
laid-off or in floating status. Six months is the period set by law that the
operation of a business or undertaking may be suspended thereby
suspending the employment of the employees concerned. The temporary
lay-off wherein the employees likewise cease to work should also not last
longer than six months. After six months, the employees should either be
recalled to work or permanently retrenched following the requirements of
the law, and that failing to comply with this would be tantamount to
dismissing the employees and the employer would thus be liable for such
dismissal.39 (Emphasis supplied)
Notably, in both a permanent and temporary lay-off, jurisprudence dictates
that the one-month notice rule to both the DOLE and the employee under
Article 283 of the Labor Code, as above cited, is .mandatory. 40 Also, in both
cases, the lay-off, being an exercise of the employer's management

360

prerogative, must be exercised in good faith - that is, one which is intended
for the advancement of employers' interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws
or under valid agreements.41 Instructive on the nature of a lay-off as a
management prerogative is the following excerpt from the case of
Industrial Timber Corporation v. NLRC:42

employer,47 Irvine should have established the bona fide suspension of its
business operations or undertaking that would have resulted in the
temporary lay-off of its employees for a period not exceeding six (6)
months in accordance with Article 286 of the Labor Code. As enunciated in
Nasipit Lumber Co. v. National Organization of Workingmen
(NOWM),48 citing Somerville Stainless Steel Corporation v. NLRC: 49

Closure or [suspension] of operations for economic reasons is, therefore,

recognized as a valid exercise of management prerogative. The
determination to cease [or suspend] operations is a prerogative of
management, which the State does not usually interfere with, as no
business or undertaking [is] required to continue operating at a loss simply
because it has to maintain its workers in employment. Such an act would
be tantamount to a taking of property without due process of law. 43

[T]he burden of proving, with sufficient and convincing evidence, that such
closure or suspension is bona fide falls upon the employer. As we ruled in
Somerville Stainless Steel Corporation v. NLRC:

In the case at bar, Irvine asserts that it only temporarily laid-off Lopez from
work on December 27, 2005 for the reason that its project in Cavite had
already been finished. To support its claim, it submitted the following
pieces of evidence: (a) a copy of an Establishment Termination
Report44 evidencing Lopez's lay-off; (b) a copy of the return to work order
dated June 5, 2006;45 and (c) an affidavit46 from Irvine's personnel
manager, Aguinaldo Santos, which purports that said return to work order
was sent to Lopez by ordinary mail on June 5, 2006. The CA gave credence
to the foregoing and thus granted Irvine's certiorari petition against the
NLRC ruling which affirmed the LA's finding of illegal dismissal.
The CA is mistaken.
As the NLRC correctly ruled in this case, Lopez, who, as earlier discussed
was a regular employee of Irvine, was not merely temporarily laid off from
work but was terminated from his employment without any valid cause
therefor; thus, the proper disposition is to affirm the LA's ruling that Lopez
had been illegally dismissed.
Although the NLRC did not expound on the matter, it is readily apparent
that the supposed lay-off of Lopez was hardly justified considering the
absence of any causal relation between the cessation of Irvine's project in
Cavite with the suspension of Lopez's work. To repeat, Lopez is a regular
and not a project employee. Hence, the continuation of his engagement
with Irvine, either in Cavite, or possibly, in any of its business locations,
should not have been affected by the culmination of the Cavite project
alone. In light of the well-entrenched rule that the burden to prove the
validity and legality of the termination of employment falls on the

Considering the severe consequences occasioned by retrenchment on the

livelihood of the employee(s) to be dismissed, and the avowed policy of the
State - under Sec. 3, Art. XIII of the Constitution, and Art. 3 of the Labor
Code - to afford full protection to labor and to assure the employee's right
to enjoy security of tenure, the Court reiterates that "not every loss
incurred or expected to be incurred by a company will justify retrenchment.
The losses must be substantial and the retrenchment must be reasonably
necessary to avert such losses. Settled is the rule that the employer bears
the burden of proving this allegation of the existence or imminence of
substantial losses, which by its nature is an affirmative defense. It is the
duty of the employer to prove with Clear and satisfactory evidence that
legitimate business reasons exist to justify retrenchment. Failure to do so
"inevitably results in a finding that the dismissal is. unjustified." And the
determination of whether an employer has sufficiently and successfully
discharged this burden of proof "is essentially a question of fact for the
Labor Arbiter and the NLRC to determine."
Otherwise, such ground for termination would be susceptible to abuse by
scheming employers who might be merely feigning business losses or
reverses in their business ventures to ease out employees. 50 (Emphasis
supplied; citations omitted)
In this case, Irvine failed to prove compliance with the parameters of
Article 286 of the Labor Code. As the records would show, it merely
completed one of its numerous construction projects which does not, by
and of itself, amount to a bona .fide suspension of business operations or
undertaking. In invoking Article 286 of the Labor Code, the paramount
consideration should be the dire exigency of the business of the employer
that compels it to put some of its employees temporarily out of work. 51 This
means that the employer should be able to prove that it is faced with a
clear and compelling economic reason which reasonably forces it to

361

temporarily shut down its business operations or a particular undertaking,

incidentally resulting to the temporary lay-off of its employees.
Due to the grim economic consequences to the employee, case law states
that the employer should also bear the burden of proving that there are no
posts available to which the employee temporarily out of work can be
assigned.52 Thus, in the case of Mobile Protective & Detective Agency v.
Ompad,53 the Court found that the security guards therein were
constructively dismissed considering that their employer was not able to
show any dire exigency justifying the latter's failure to give said employees
any further assignment, viz.:
[Article 286 of the Labor Code] has been applied by analogy to security
guards in a security agency who are placed "off detail" or on "floating"
status. In security agency parlance, to be placed "off detail" or on
"floating" status means "waiting to be posted." Pursuant to Article 286 of
the Labor Code, to be put off detail or in floating status requires no less
than the dire exigency of the employer's bona fide suspension of
operation, business or undertaking. In security services, this happens when
there is a surplus of security guards over available assignments as when
the clients that do not renew their contracts with the security agency are
more than those clients that do and the new ones that the agency gets.
Again, petitioners only alleged that respondent's last assignment was with
VVCC for the period of September 29 to October 31, 1997.1wphi1 He was
not given further assignment as he allegedly went on AWOL and lost
interest to work. As explained, these claims are unconvincing. Worse still,
they are inadequate under the law. The records do not show that there was
a lack of available post after October 1997. It appears that petitioners
simply stopped giving respondent any assignment. Absent any dire
exigency justifying their failure to give respondent further assignment, the
only logical conclusion is that respondent was constructively
dismissed.54 (Emphases supplied)
The same can be said of the employee in this case as no evidence was
submitted by Irvine to show any dire exigency which rendered it incapable
of assigning Lopez to any of its projects. Add to this the fact that Irvine did
not proffer any sufficient justification for singling out Lopez for lay-off
among its other three hundred employees, thereby casting a cloud of
doubt on Irvine's good faith in pursuing this course of action. Verily, Irvine
cannot conveniently suspend the work of any of its employees in the guise
of a temporary lay-off when it has not shown compliance with the legal
parameters under Article 286 of the Labor Code. With Irvine failing to prove

such compliance, the resulting legal conclusion is that Lopez had been
constructively dismissed; and since the same was effected without any
valid cause and due process, the NLRC properly affirmed the LA's ruling
that Lopez's dismissal was illegal.
In light of the foregoing, the CA therefore erred in granting Irvine's
certiorari petition. Indeed, a petition for certiorari should only be granted
when grave abuse of discretion exists - that. is, when a court or tribunal
acts in a capricious or whimsical exercise of judgment as is equivalent to
lack of jurisdiction.55 These qualities of capriciousness and whimsicality the
Court finds wanting in any of the NLRC's actions in this case; as such, the
reversal of the CA's Decision is hereby warranted.
WHEREFORE, the petition is GRANTED. The Decision dated September 14,
2012 and the Resolution dated April 12, 2013 of the Court of Appeals in
CA-G.R. SP No. 108385-MIN are hereby REVERSED and SET ASIDE. The
Resolutions dated October 31, 2008 and February 12, 2009 of the National
Labor Relations Commission in NLRC LAC No. 01-000428-2008 are
REINSTATED.
SO ORDERED.

362

G.R. No. 182800

April 20, 2015

MANILA MINING CORPORATION, Petitioner,

vs.
LOWITO AMOR, ET. AL., Respondents.
DECISION
PEREZ, J.:
Compliance with the requirements for the perfection of an appeal from the
decision of a Labor Arbiter is at issue in this Rule 45 Petition for Review on
Certiorari which primarily seeks the nullification of the 29 November 2007
Decision1 rendered by the then Twenty-Second Division of the Court of
Appeals (CA) in CA-G.R. SP No. 00609,2the decretal portion of which states:
WHEREFORE, the petition is hereby GRANTED. The Resolutions of the NLRC
dated 25 April 2005 and 30 June 2007, respectively, are ANNULLED and
SET ASIDE. The 25 October 2004 Resolution of the Labor Arbiter is
REINSTATED.
SO ORDERED.3
The facts are not in dispute.
Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez
and Fermin Tabili, Jr. were regular employees of petitioner Manila Mining
Corporation, a domestic corporation which operated a mining claim in
Placer, Surigao del Norte, in pursuit of its business of large-scale open-pit
mining for gold and copper ore. In compliance with existing environmental
laws, petitioner maintained Tailing Pond No. 7 (TP No. 7), a tailings
containment facility required for the storage of waste materials generated
by its mining operations. When the mine tailings being pumped into TP No.
7 reached the maximum level in December 2000, petitioner temporarily
shut down its mining operations pending approval of its application to
increase said faciltys capacity by the Department of Environment and
Natural Resources-Environment Management Bureau (DENR-EMB), Butuan
City. Although the DENR-EMB issued a temporary authority on 25 January
2001 for it to be able to continue operating TP No. 7 for another six (6)
months and to increase its capacity, petitioner failed to secure an
extension permit when said temporary authority eventually lapsed. 4

On 27 July 2001, petitioner served a notice, informing its employees and

the Department of Labor and Employment Regional Office No. XII (DOLE) of
the temporary suspension of its operations for six months and the
temporary lay-off of two-thirds of its employees.5 After the lapse of said
period, petitioner notified the DOLE on 11 December 2001 that it was
extending the temporary shutdown of its operations for another six
months.6 Adversely affected by petitioners continued failure to resume its
operations, respondents filed the complaint for constructive dismissal and
monetary claims which was docketed as NLRC Case No. RAB-13-10-002262003 before the Regional Arbitration Branch No. XIII of the National Labor
Relations Commission (NLRC). On 25 October 2004, Executive Labor Arbiter
Benjamin E. Pelaez rendered a Decision holding petitioner liable for
constructive dismissal in view of the suspension of its operations beyond
the six-month period allowed under Article 2867 of the Labor Code of the
Philippines. Finding that the cause of suspension of petitioners business
was not beyond its control,8the Labor Arbiter applied Article 2839 of the
same Code and disposed of the case in the following wise:
WHEREFORE, premises considered, judgment is hereby entered:
1) Declaring [respondents] to have been constructively dismissed from
their employment; and 2) Ordering [petitioner] to pay xxx [respondents]
their separation pay equivalent to one (1) month pay or to 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 whole year, moral
damages and exemplary damages in the amount of Ten Thousand Pesos
(P10,000.00) and Five Thousand Pesos (P5,000.00), respectively, for each
of the [respondents] and attorneys fees equivalent to ten (10%) percent in
the total amount of TWO MILLION ONE HUNDRED THIRTY EIGHT THOUSAND
ONE HUNDRED NINETY & 02/100 PESOS (P2,138,190.02) ONLY x x x x
All other claims are dismissed for lack of merit.
SO ORDERED.10
Aggrieved, petitioner filed its memorandum of appeal before the NLRC11
and moved for the reduction of the appeal bond to P100,000.00, on the
ground that its financial losses in the preceding years had rendered it
unable to put up one in cash and/or surety equivalent to the monetary
award.12 In opposition, respondents moved for the dismissal of the appeal
in view of the fact that, despite receipt of the appealed decision on 24
November 2004, petitioner mailed their copy of the memorandum of
appeal only on 7 February 2005. Respondents also argued that the appeal

363

bond tendered by petitioner was so grossly disproportionate to monetary

award for the same to be considered substantial compliance with the
requirements for the perfection of an appeal from a Labor Arbiters
decision.13 Without addressing the procedural issues raised by
respondents, however, the NLRC Fifth Division went on to render a
Resolution dated 25 April 2005 in NLRC CA No. M-008433-2005, reversing
the appealed decision and dismissing the complaint for lack of merit.
Finding that the continued suspension of petitioners operations was due to
circumstances beyond its control, the NLRC ruled that, under Article 283 of
the Labor Code, respondents were not even entitled to separation pay
considering the eventual closure of their employers business due to
serious business losses or financial reverses. 14
Unfazed by the denial of their motion for reconsideration in the NLRCs 30
June 2005 Resolution,15 respondents filed the Rule 65 petition for certiorari
which was docketed as CA-G.R. SP No. 00609 before the Mindanao Station
of the CA. Insisting that petitioners memorandum of appeal was filed 65
days after the lapse of reglementary period for appeal, respondents called
attention to the fact that, as grossly inadequate as it already was vis--vis
the P2,138,190.0216 monetary award adjudicated in their favor, the check
in the sum of P100,000.00 deposited by petitioner by way of appeal bond
was dishonored upon presentment for payment. Aside from the fact that
the Labor Arbiters25 October 2004 Decision had already attained finality,
respondents faulted the NLRC for applying Article 283 of the Labor Code
absent allegation and proof of compliance with the requirements for the
closure of an employers business due to serious business losses. 17 In its
comment, on the other hand, petitioner claimed that, having caused the
same to be immediately funded, the check it issued for the appeal bond
had since been deposited by the NLRC. Insisting that the cessation of its
operations was due to causes beyond its control, petitioner argued that the
subsequent closure of its business due to business losses exempted it from
paying separation pay.18
On 29 November 2007, the CAs then Twenty-Second Division rendered the
herein assailed decision, granting respondents petition and nullifying the
NLRCs 25 April 2005 Resolution. In reinstating the Labor Arbiters 25
October 2004 Decision, the CA ruled that petitioner failed to perfect its
appeal therefrom considering that the copy of its 3 December 2004
Memorandum of Appeal intended for respondents was served the latter by
registered mail only on 7 February 2005. Aside from posting an unusually
smaller sum as appeal bond, petitioner was likewise faulted for
replenishing the check it issued only on 1 April 2005 or 24 days before the
rendition of the assailed NLRC Decision. Applying the principle that the

right to appeal is merely a statutory remedy and that the party who seeks
to avail of the same must strictly follow the requirements therefor, the CA
decreed that the Labor Arbiters Decision had already attained finality and,
for said reason, had been placed beyond the NLRCs power of
review.19 Petitioners motion for reconsideration of the foregoing decision
was denied for lack of merit in the CAs 2 May 2008 Resolution, 20 hence,
this Rule 45 petition for review on certiorari.21 Petitioner seeks the reversal
of the CAs 29 November 2007 Decision and 2 May 2008 Resolution on the
following grounds:
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONERS
APPEAL FILED WITH THE NATIONAL LABOR RELATIONS COMMISSION WAS
FATALLY DEFECTIVE [SINCE IT] HAD FULLY COMPLIED WITH THE
REQUIREMENTS OF THE LABOR CODE FOR PERFECTING AN APPEAL.
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN
IMMEDIATELY SETTING ASIDE THE DECISION OF THE NLRC WITHOUT
REVIEWING THE MERITS OF THE CASE.
AT THE TIME OF THE PROMULGATION OF THE ASSAILED DECISION BY THE
COURT OFAPPEALS, THE HONORABLE SUPREME COURT HAD ALREADY
AFFIRMED THE FINDING THAT PETITIONER WAS ALREADY PERMANENTLY
CLOSED DUE TO MASSIVE FINANCIAL LOSSES.22
Time and again, it has been held that the right to appeal is not a natural
right or a part of due process; it is merely a statutory privilege, and may be
exercised only in the manner and in accordance with the provisions of
law.23 A party who seeks to avail of the right must, therefore, comply with
the requirements of the rules, failing which the right to appeal is invariably
lost.24 Insofar as appeals from decisions of the Labor Arbiter are concerned,
Article 223 of the Labor Code of the Philippines25 provides that,
"(d)ecisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the [NLRC] by any or both parties within ten (10)
calendar days from the receipt of such decisions, awards or orders." In
case of a judgment involving a monetary award, the same provision
mandates that, "an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the [NLRC] in the amount equivalent to the
monetary award in the judgment appealed from." Alongside the
requirement that "the appellant shall furnish a copy of the memorandum of
appeal to the other party," the foregoing requisites for the perfection of an
appeal are reiterated under Sections 1, 4 and 6, Rule VI of the NLRC Rules

364

of Procedure in force at the time petitioner appealed the Labor Arbiters 25

October 2004 Decision, viz.:
SECTION 1. PERIODS OF APPEAL. - Decisions, resolutions or orders of the
Labor Arbiter shall be final and executory unless appealed to the
Commission by any or both parties within ten (10)calendar days from
receipt of such decisions, resolutions or orders of the Labor Arbiter x x x x.
If the 10th x x x x day x x x x falls on a Saturday, Sunday or a holiday, the
last day to perfect the appeal shall be the next working day.
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall
be filed within the reglementary period as provided in Section 1 of this
Rule; shall be verified by appellant himself in accordance with Section 4,
Rule 7 of the Rules of Court, with proof of payment of the required appeal
fee and the posting of a cash or surety bond as provided in Section 6 of
this Rule; shall be accompanied by memorandum of appeal in three (3)
legibly typewritten copies which shall state the grounds relied upon and
the arguments in support thereof; the relief prayed for; and a statement of
the date when the appellant received the appealed decision, resolution or
order and a certificate of non-forum shopping with proof of service on the
other party of such appeal. A mere notice of appeal without complying with
the other requisites aforestated shall not stop the running of the period for
perfecting an appeal. (Italics supplied)
xxxx
SECTION 6. BOND. - In case the decision of the Labor Arbiter or the
Regional Director involves a monetary award, an appeal by the employer
may be perfected only upon the posting of a cash or surety bond. The
appeal bond shall either be in cash or surety in an amount equivalent to
the monetary award, exclusive of damages and attorneys fees.
xxxx
No motion to reduce bond shall be entertained except on meritorious
grounds and upon the posting of a bond in a reasonable amount in relation
to the monetary award.
The filing of the motion to reduce bond without compliance with the
requisites in the preceding paragraph shall not stop the running of the
period to perfect an appeal.

Having received the Labor Arbiters Decision on 24 November

2004,26 petitioner had ten (10) calendar days or until 4 December 2004
within which to perfect an appeal. Considering that the latter date fell on a
Saturday, petitioner had until the next working day, 6 December 2004,
within which to comply with the requirements for the perfection of its
appeal. Our perusal of the record shows that, despite bearing the date 3
December 2004, petitioners memorandum of appeal was subscribed
before Notary Public Ronald Rex Recidoro only on 6 December
2004.27 Without proof as to the actual date of filing of said pleading being
presented by both parties, the CA discounted the timeliness of its filing in
light of the established fact that the copy thereof intended for respondents
was only served by registered mail on 7 February 2005. 28 Since proof of
service of the memorandum on appeal is required for the perfection of an
appeal from the decision of the Labor Arbiter, the CA ruled that
"respondents filed its appeal not earlier than 07 February 200[5], which is
way beyond the ten-day reglementary period to appeal." 29
As allegation is not evidence, however, the rule is settled that the burden
of evidence lies with the party who asserts the affirmative of an issue. 30 As
the parties claiming the non-perfection of petitioners appeal, it was,
therefore, respondents who had the burden of proving that said
memorandum of appeal was, indeed, filed out of time. By and of itself, the
fact that the copy of memorandum of appeal intended for respondents was
served upon them by registered mail only on 7 February 2005 does not
necessarily mean that petitioners appeal from the Labor Arbiters decision
was filed out of time. On the principle that justice should not be sacrificed
for technicality,31 it has been ruled that the failure of a party to serve a
copy of the memorandum to the opposing party is not a jurisdictional
defect and does not bar the NLRC from entertaining the
appeal.32 Considering that such an omission is merely regarded as a formal
lapse or an excusable neglect,33 the CA reversibly erred in ruling that,
under the circumstances, petitioner could not have filed its appeal earlier
than 7 February 2005.
The question regarding the appeal bond rises from the record which shows
that, in addition to its memorandum of appeal, petitioner filed a 6
December 2004 motion for the reduction of the appeal bond on the ground
that the cash equivalent of the monetary award and/or cost of the surety
bond have proven to be prohibitive in view of the tremendous business
losses it allegedly sustained. As supposed measure of its good faith in
complying with the Rules, petitioner attached to its motion Philam Bank
Check No. 0000627153, dated 6 December2004, in the amount
of P100,000.00 only. As pointed out by respondents, however, said check

365

was subsequently dishonored upon presentment for payment for

insufficiency of funds. In its 1 April 2005 Ex-Parte Manifestation, petitioner
informed the NLRC that it "only learned belatedly that the same check was
dishonored" as there appeared to be "an inadvertent mix-up as other
checks issued for [its] other obligations were negotiated ahead [thereof],
leaving an insufficient balance in its account." As a consequence, petitioner
claimed that "the deficiency in deposit has been promptly and immediately
replenished as soon as the check's dishonor was reported" and that the
same may already be re-deposited at any of NLRC's depositary banks. 34
The issue that has be devilled labor litigation for long has been clarified by
the ruling in McBurnie v. Ganzon, et al.,35 which built on and extended the
ruling that while it is true that reduction of the appeal bond has been
allowed in meritorious cases36 on the principle that substantial justice is
better served by allowing appeals on the merits,37it has been ruled that the
employer should comply with the following conditions: (1) the motion to
reduce the bond shall be based on meritorious grounds; and (2) a
reasonable amount in relation to the monetary award is posted by the
appellant, otherwise the filing of the motion to reduce bond shall not stop
the running of the period to perfect an appeal.38
The McBurnie ruling pronounced:
xxx
Furthermore, on the matter of the filing and acceptance of motions to
reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC
Rules of Procedure, the Court hereby RESOLVES that henceforth, the
following guidelines shall be observed:
(a) The filing of a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following conditions: (1)
there is meritorious ground; and (2) a bond in a reasonable amount
is posted;
(b) For purposes of compliance with condition no. (2), a motion
shall be accompanied by the posting of a provisional cash or surety
bond equivalent to ten percent (10), of the monetary award subject
of the appeal, exclusive of damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to

suspend the running of the 10-day reglementary period to perfect
an appeal from the labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to
reduce bond and determine the final amount of bond that shall be
posted by the appellant, still in accordance with the standards of
meritorious grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or
requires a bond that exceeds the amount of the provisional bond,
the appellant shall be given a fresh period of ten (10) days from
notice of the NLRC order within which to perfect the appeal by
posting the required appeal bond.39
In this case, we see that with no proof to substantiate its claim, petitioner
moved for a reduction of the appeal bond on the proferred basis of serious
losses and reverses it supposedly sustained in the years prior to the
rendition of the Labor Arbiter's decision.
The first condition may be left for the nonce. As to the second condition,
we may consider that the amount ofP100,000.00 supposedly posted was
provisional bond sufficient to suspend the running of the 10-day
reglementary period to perfect an appeal from the Labor Arbiter's decision.
That would however not improve petitioner's position one bit.
Respondent correctly called attention to the fact that the check submitted
by petitioner was dishonored upon presentment for payment, thereby
rendering the tender thereof ineffectual. Although the NLRC chose not to
address the issue of the perfection of the appeal as well as the reduction of
the bond in its Resolution dated 25 April 2005, the record shows that
petitioner only manifested its deposit of the funds for the check 24 days
before the resolution of its appeal or 116 days after its right to appeal the
Labor Arbiters decision had expired. Having filed its motion and
memorandum on the very last day of the reglementary period for appeal,
moreover, petitioner had no one but itself to blame for failing to post the
full amount pending the NLRCs action on its motion for reduction of the
appeal bond. If redundancy be risked it must be emphasized that the
posting of a bond is indispensable to the perfection of an appeal in cases
involving monetary awards from the decision of the Labor Arbiter. Since it
is the posting of a cash or surety bond which confers jurisdiction upon the
NLRC,40 the rule is settled that non-compliance is fatal and has the effect of
rendering the award final and executory.41

366

Viewed in the light of the foregoing considerations, the CA cannot be

faulted for no longer discussing the merits of petitioners
case.1avvphi1 Although appeal is an essential part of our judicial process,
it has been held, time and again, that the right thereto is not a natural
right or a part of due process but is merely a statutory privilege. Thus, the
perfection of an appeal in the manner and within the period prescribed by
law is not only mandatory but also jurisdictional and failure of a party to
conform to the rules regarding appeal will render the judgment final and
executory. Once a decision attains finality, it becomes the law of the case
and can no longer be revised, reviewed, changed or altered. The basic rule
of finality of judgment is grounded on the fundamental principle of public
policy and sound practice that, at the risk of occasional error, the judgment
of courts and the award of quasi-judicial agencies must become final at
some definite date fixed by law.42

No. 00072, entitled Rosita Asumen, et al. v. National Labor Relations

Commission, et al., where its employees' claim for separation pay was
denied on account of the subsequent closure of its business due to serious
business losses and financial reverses.49 Although the employees Rule 45
petition for review on certiorari had been denied in the 7 February 2007
Resolution issued by this Court's Second Division in UDK-13776, 50 the ruling
in said case can hardly be considered binding on respondents who were
not parties thereto. As for the inequality in benefits which would
supposedly result if the CA's assailed decision and resolution were not
reversed, suffice it to say that this Court had sustained the claim for .
separation pay of petitioner's employees in the case of Manila Mining Corp
Employees Association-Federation of Free Workers Chapter, et al. v. Manila
Mining Corporation, et al.51 Stare decisis is inapplicable; the matter of
separation pay for petitioner's employees has been decided case to case.

Without necessarily resulting to a termination of employment, an employer

may at any rate, bona fide suspend the operation of its business for a
period of not exceeding six months under Article 286 of the Labor
Code.43 While the employer is, on the one hand, duty bound to reinstate his
employees to their former positions without loss of seniority rights if the
operation of the business is resumed within six months, employment is
deemed terminated where the suspension exceeds said period. 44 Not
having resumed its operations within six months from the time it
suspended its operations on 27 July 2001, it necessarily follows that
petitioner is liable to pay respondents separation pay45 computed at one
(1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher,46 as well as the damages and attorneys fees
adjudicated by the Labor Arbiter. Without proof of the serious business
losses it allegedly sustained and/or compliance with the reportorial
requirements under Article 283 of the Labor Code, petitioner cannot
expediently plead exemption from said liabilities due to the supposed
financial reverses which led to the eventual closure of its business. It is
essentially required that the alleged losses in business operations must be
proven for, otherwise, said ground for termination would be susceptible to
abuse by scheming employers who might be merely feigning business
losses or reverses in their business ventures in order to ease out
employees.47 The condition of business losses justifying retrenchment is
normally shown by audited financial documents like yearly balance sheets
and profit and loss statements as well as annual income tax returns 48 which
were not presented in this case.

WHEREFORE, premises considered, the petition is DENIED for lack of merit.

Neither can petitioner evade said liabilities on the strength of the 28 July
2005 Decision rendered by the CA's Twenty-Second Division in CAG.R. SP

SO ORDERED.

367

G.R. No. 197011, January 28, 2015

ESSENCIA Q. MANARPIIS, Petitioner, v. TEXAN PHILIPPINES, INC.,
RICHARD TAN AND CATHERINE P. RIALUBIN-TAN, Respondent.
DECISION

SUBJECT : Notice Of Investigation And Grounding

Dear Ms. Manarpiis,
You are hereby notified that an investigation will be conducted on 20
September 2000 at 2:00 p.m. in our office regarding your alleged violation
of company rules and regulations, specifically:ChanRoblesVirtualawlibrary
I (par. B) - - Fraudulent Expense/Disbursement expenses

VILLARAMA, JR., J.:

I (par. G) - - Collusion/Connivance with Intent to Defraud
Before us is a petition for review on certiorari under Rule 45 assailing the
Decision1 dated March 24, 2010, and Resolution2 dated May 19, 2011 of
the Court of Appeals (CA) in CA-G.R. SP No. 106661. The CA reversed and
set aside the Decision3 dated January 25, 2008 and Resolution4 dated
September 22, 2008 of the First Division of the National Labor Relations
Commission (NLRC) in NLRC CA No. 029806-01, which affirmed the
Decision5 dated June 28, 2001 of the Labor Arbiter (LA) in NLRC Case No.
00-08-04110-2000.

II (Section 6) - - Sabotage
II (Section 12) - - Loss of Confidence
III (Section 2) - - Libel/Slander
III (Section 8 par. e) - - Other acts of Insubordination

Texan Philippines, Inc. (TPI), which is owned and managed by Catherine

Rialubin-Tan and her Singaporean husband Richard Tan (respondents), is a
domestic corporation engaged in the importation, distribution and
marketing of imported fragrances and aroma and other specialized
products and services. In July 1999, respondents hired Essencia Q.
Manarpiis (petitioner) as Sales and Marketing Manager of the companys
Aroma Division with a monthly salary of P33,800.00. 6

V (par. C & D) - - AWOL/Abandonment

Claiming insurmountable losses, respondents served a written notice (July

27, 2000) addressed to all their employees that TPI will cease operations
by August 31, 2000.7

Additionally, you are directed to submit to the undersigned your

explanation in writing, within (72) hours from receipt hereof (but in no case
later than 20 September 2000), why no appropriate disciplinary action
and/or penalties may be imposed against you relative to the foregoing.

On August 7, 2000, petitioner filed a complaint for illegal dismissal, nonpayment of overtime pay, holiday pay, service incentive leave pay,
unexpired vacation leave and 13th month pay and with prayer for moral
and actual damages. Subsequently, petitioner amended her complaint to
state the true date of her dismissal which is July 27, 2000 and not August
31, 2000. She averred that on the same day she was served with notice of
company closure, respondents barred her from reporting for work and paid
her last salary up to the end of July 2000.8
On September 18, 2000, petitioner received the following
memorandum9:ChanRoblesVirtualawlibrary
September 15, 2000
MEMO TO : MS. ESSENCIA MANARPIIS
Sales and Marketing Manager
Aroma Division

V (par. I) - - Committing other acts of gross inefficiency or incompetence

said acts constitutive of gross misconduct, gross insubordination and
dishonesty. You may bring your witnesses and counsel if you so desire. In
the meantime, you will not be allowed to perform your usual functions, but
will instead report to the undersigned.

Failure to submit said written explanation within the prescribed period

and/or attend the investigation hearing on 20 September 2000 shall
constitute an implied admission of the charges and waiver on your part to
due process.
For your information and compliance.
(SGD.) RICHARD TAN
(President)
Petitioner alleged that as sales and marketing manager, she received the
agreed commission based on actual sales collection on the first quarter of
2000 and was expecting to also receive such commission on the 2 nd,
3rd and 4th quarters. However, on July 27, 2000, after receiving a text
message from respondent Richard Tan, she proceeded to her office and
learned that her table drawers were forcibly opened and her files
confiscated. She protested the company closure asserting that the alleged

368

business losses were belied by TPIs financial documents. But despite her
pleas, she was asked to pack up her things and by the end of the month
her salary was discontinued. She then received the memorandum
regarding the company closure and was required to turn over the company
car, pager and cellphone. She was told not to report for work anymore. 10
After receiving the September 15, 2000 memorandum, petitioners counsel
sent a reply stating that there was no point in the investigation because
respondents already dismissed petitioner purportedly on the ground of
cessation of business due to insurmountable losses, and also it was
impossible for petitioner to respond to the charges which are devoid of
particulars as to the alleged irregularities she committed. It was pointed
out that respondents should have investigated the supposed violations of
company rules and fraudulent acts earlier and not when petitioner had
filed an illegal dismissal complaint.11
Subsequently, petitioner received the following
memorandum12:ChanRoblesVirtualawlibrary
September 25, 2000
TO : MS. ESSENCIA MANARPIIS
Sales and Marketing Manager
Aroma Division
SUBJECT : NOTICE OF TERMINATION
Ms. Manarpiis,
This is to inform you that your employment with the Company is
terminated effective today, September 25, 2000, due to Dishonesty, Loss
of Confidence, and Abandonment of Work.
An internal audit of the Company shows that several obligations of the
Company were paid twice to the same supplier. Considering the level of
your position, the inescapable conclusion is that you have colluded with
the Company supplier to defraud the Company of its finances.
Moreover, you have fraudulently caused to be reimbursed representation
expenses and other expense statements purporting to be that of your sales
representatives while in truth and in fact they were yours, and you
received the corresponding payments therefor.
Also, your attendance record showed that you have been absent without
official leave (AWOL) since August 3, 2000 up to date.
A notice of AWOL dated September 14, 2000 has been sent to you but you
refused to accept the same, much less, refused to act on it.
For your information and guidance

(SGD.) RICHARD TAN

President
Believing that her dismissal was without just cause, petitioner prayed for
reinstatement if still viable, and if not, award of separation pay with back
wages from August 1, 2000, and payment of her monetary claims for sales
commissions, pro-rated 13th month pay, five days service incentive leave
pay and sick leaves, as well as moral and exemplary damages plus
attorneys fees.13
Respondents denied the charge of illegal dismissal and explained that TPIs
closure was averted by a new financing package obtained by respondent
Richard Tan. They asserted that the requisite notices of business closure to
government authorities and to their employees were complied with, and
notwithstanding that TPI has in fact continued its operations, petitioner
was found to have committed infractions resulting in loss of confidence
which was the ground for the termination of her employment. They
likewise averred that respondent Rialubin-Tan gave specific instructions to
petitioner for her to continue reporting for work even after August 31, 2000
but she instead went AWOL and subsequently abandoned her job, to the
utmost prejudice of the company. 14
On June 28, 2001, LA Melquiades Sol D. Del Rosario rendered a Decision
declaring the dismissal of petitioner as illegal:ChanRoblesVirtualawlibrary
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered
finding complainants dismissal to be illegal. Consequently, she should be
paid in solidum by respondents the following:
a) P304,200.00 as backwages as of May 31, 2001[;]
b) P101,400.00 as separation pay for 3 years[;]
c) 1% of the gross sales of complainant and .75% on other sales as
determined by the parties as complainants commissions;
d) 10% for and as attorneys fees of the money awards.
SO ORDERED.15
Respondents appealed to the NLRC which affirmed the LAs decision. Their
motion for reconsideration was also denied.
In a petition for certiorari filed with the CA, respondents argued that the
subsequent termination of petitioner on the grounds of dishonesty, loss of
confidence and abandonment, after TPI was able to regain financial
viability, was made in view of the fact that commission of the said offenses
surfaced only during the audit investigation conducted after notice of
cessation of business operation was sent to the employees. Despite advice
for her to continue reporting for work after August 31, 2000, the effectivity
date of the intended closure, petitioner just stopped doing so and instead
filed the complaint for illegal dismissal and likewise failed to turn over all
company documents and records in her possession. They also discovered
that petitioner put up her own company Vita VSI Scents, enticing clients
to buy the same products they used to purchase from TPI.

369

By Decision dated March 24, 2010, the CA reversed the NLRC and ruled
that petitioner was validly dismissed:ChanRoblesVirtualawlibrary
WHEREFORE, the petition is hereby GRANTED. The assailed Decision
dated January 25, 2008 and the Resolution dated September 22, 2008 of
the National Labor Relations Commission are hereby REVERSED and SET
ASIDE. Resultantly, Essencia Manarpiis complaint for illegal dismissal
against Texan Philippines, Inc., Richard Tan and Catherine Realubin-Tan is
hereby DISMISSED for lack of merit. No costs.
SO ORDERED.16
Petitioner filed a motion for reconsideration but it was denied by the CA.
Hence, this petition arguing that the CA committed patent reversible errors
when it: (1) granted the unverified/unsworn certification of non-forum
shopping accompanying respondents petition for certiorari; (2) granted
respondents petition for certiorari without finding any grave abuse of
discretion on the part of NLRC; (3) disturbed the consistent factual findings
of the LA and NLRC which were duly supported by substantial evidence and
devoid of any unfairness and arbitrariness; and (4) substituted its own
findings of facts to those of the LA and NLRC, the CAs findings being
unsupported by substantial evidence.17
The petition is meritorious.
We first address petitioners contention on the alleged formal infirmity of
the petition for certiorari filed before the CA. Petitioner argued that the
same was defective as the jurat therein was based on the mere community
tax certificate of respondent Rialubin-Tan, instead of a government-issued
identification card required under the 2004 Rules on Notarial Practice. Such
ground was never raised by herein petitioner in her comment on the CA
petition, thus, it cannot be validly raised by the petitioner at this stage. 18
Furthermore, we have consistently held that verification of a pleading is a
formal, not a jurisdictional, requirement intended to secure the assurance
that the matters alleged in a pleading are true and correct. Thus, the court
may simply order the correction of unverified pleadings or act on them and
waive strict compliance with the rules. It is deemed substantially complied
with when one who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the verification; and when
matters alleged in the petition have been made in good faith or are true
and correct.19
Under the Rules of Court and settled doctrine, a petition for review on
certiorari under Rule 45 of the Rules of Court is limited to questions of law.
As a rule, the findings of fact of the CA are final and conclusive, and this
Court will not review them on appeal.20
However, there are instances in which factual issues may be resolved by
this Court, to wit: (1) the conclusion is a finding grounded entirely on
speculation, surmise and conjecture; (2) the inference made is manifestly

mistaken; (3) there is grave abuse of discretion; (4) the judgment is based
on a misapprehension of facts; (5) the findings of fact are conflicting; (6)
the CA goes beyond the issues of the case and its findings are contrary to
the admissions of both appellant and appellee; (7) the findings of fact of
the CA are contrary to those of the trial court; (8) said findings of facts are
conclusions without citation of specific evidence on which they are based;
(9) the facts set forth in the petition as well as in the petitioners main and
reply briefs are not disputed by the respondent; and (10) the findings of
fact of the CA are premised on the supposed absence of evidence and
contradicted by the evidence on record.21
Considering that the findings of facts and the conclusions of the CA are
contrary to those of the LA and the NLRC, we find it necessary to evaluate
such findings.
On the issue of illegal dismissal, both the LA and NLRC found no just or
authorized cause for the termination of petitioners employment.
LA Del Rosario observed that respondents flip-flopped on the issue of
petitioners termination as when they claimed she was dismissed due to
insurmountable losses so that TPIs personnel were notified of the
company closure effective August 31, 2000, and at the same time they
accused petitioner of fraudulent acts and abandonment of work resulting in
loss of trust and confidence which caused her dismissal. He also found
there was no compliance with the legal requisites of the said grounds for
dismissal under Article 283 (business closure) such as the lack of
termination report sent to the Department of Labor and Employment
(DOLE), financial documents which are audited and signed by an
independent auditor, and the two-notice requirement sent to the last
known address of the employee alleged to have abandoned work under
Book V, Rule XIV, Section 2 of the Omnibus Rules Implementing the Labor
Code. It was noted that while TPIs financial documents have BIR
stampmark, they were not shown to have been prepared by an
independent auditor.
The NLRC upheld the LAs ruling that petitioners dismissal was not
valid, viz:ChanRoblesVirtualawlibrary
As between the above, conflicting allegations, We find the version of the
complainant more credible. Record of the instant case would provide that
other than respondents bare allegations that complainant was instructed
to continue working even beyond 31 August 2000, no evidence was
presented to substantiate the same. If respondents could easily issue a
notice of business closure to all its employees, and at the same time,
immediately require the complainant to surrender all company properties
assigned to her, We could not understand why they could not easily issue
another letter, this time, intended only for the complainant informing her
that her employment was still necessary.
Relative to the companys closure due to business losses, prevailing
jurisprudence would dictate that the same should be substantiated by

370

competent evidence. Financial statements audited by independent

external auditors constitute the normal method of proof of the profit and
loss performance of the company. To exempt an employer [from] the
payment of separation pay, he or she must establish by sufficient and
convincing evidence that the losses were serious, substantial and actual x
x x.
In the instant case, respondents may have presented before the Labor
Arbiter its Statement of Income for the year 1999. While its preparation
may be in compliance with the requirements of the Bureau of Internal
Revenue for taxation purposes, based on the jurisprudence provided
above, the same would not suffice for purposes of respondents defense in
the instant case. In their appeal, respondents alleged that on the basis of
the audited Statement of Income and Retained Earnings For the Year
Ending 31 December 2000, the company incurred a net loss of almost half
a million pesos. Assuming the same to be true since we cannot find a copy
of said statement attached to [the] record, it would appear that the
company had attained a better position in year 2000 as compared to year
1999 when they incurred a net loss of more than Two Million Pesos.
Furthermore, said evidence is already immaterial considering that the
companys intended closure did not actually take effect.
Upon a finding that complainant was not instructed to continue working
even beyond 31 August 2000 but was told not to report to work upon
receipt of the notice of companys closure, it certainly follows that
respondents would no longer inform complainant of the companys
continued operation after respondent Tan had allegedly succeeded in
searching for funds. In fact, We are not even persuaded that the companys
closure was prevented by the new funds sought by respondent Tan when in
the first place, there was no intended closure at all but only a decision to
dismiss complainant in a manner that would enable respondents evade
liabilities under the Labor Code.
With regard to the alleged violation of company rules and regulations, We
agree with the finding that respondent[s] acts of issuing the two notices
setting the case [for] investigation were mere afterthoughts. As highlighted
in the assailed Decision, the first notice was issued after respondents had
already received the summons in the instant case. More importantly, the
above discussion would provide that prior to issuance of said first notice,
complainant was already illegally dismissed. Furthermore, assuming for the
sake of argument that complainant was not yet terminated, a reading of
the said first notice would show that it does not conform with the
requirements of due process. The same had failed to discuss the
circumstances under which each of the charges therein was committed by
the complainant. As can be noted from the letter dated 19 September
2000 sent by complainants counsel to respondent Tan, it was impossible
for his client to submit a written explanation thereto since the notice to
explain is devoid of particulars regarding the alleged irregularities.
As a consequence of complainant[s] double termination, initially through

the purported cessation of business operations, and thereafter, by

imputing offenses violative of company rules and regulations, we agree
with the finding [that] she was illegally dismissed, and as such, entitled to
backwages. She would have been entitled to reinstatement but we believe
that the charges lodged by the respondents against the complainant had
rendered reinstatement non-viable. Thus, she should be granted separation
pay instead.22 (Citations omitted)
The CA, however, considered the evidence of respondents sufficient to
prove the alleged business losses and their good faith in resorting to
closure of the company. It cited the 1999 Annual Income Tax Return
showing a net loss of P2,290,580.48 and financial statement indicating a
net loss of P2,301,228.61 for the year ended December 31, 1999;
respondents claim that it was forced to sell six company cars; and the
DOLE termination report.
On the other grounds invoked by respondents to justify petitioners
termination, the CA cited the following infractions: (a) several company
obligations towards a supplier which were paid twice during her term as
Marketing and Sales Manager; (b) company funds procured by petitioner,
represented to be under the table expenditures for the Bureau of
Customs which she cannot explain when queried; (c) divulging confidential
company matters to the customers; and (d) establishing her own company
while still employed with TPI.
We reverse the CA and reinstate the LAs decision as affirmed by the NLRC.
Closure or cessation of business is the complete or partial cessation of the
operations and/or shut-down of the establishment of the employer. It is
carried out to either stave off the financial ruin or promote the business
interest of the employer. Closure of business as an authorized cause for
termination of employment is governed by Article 283 23 of the Labor Code,
as amended.
If the business closure is due to serious losses or financial reverses, the
employer must present sufficient proof of its actual or imminent losses; it
must show proof that the cessation of or withdrawal from business
operations was bona fide in character.24 A written notice to the DOLE thirty
days before the intended date of closure is also required, the purpose of
which is to inform the employees of the specific date of termination or
closure of business operations, and which must be served upon each and
every employee of the company one month before the date of effectivity to
give them sufficient time to make the necessary arrangement. 25
The ultimate test of the validity of closure or cessation of establishment or
undertaking is that it must be bona fide in character. And the burden of
proving such falls upon the employer.26
After evaluating the evidence on record, we uphold the factual findings and
conclusions of the labor tribunals that petitioner was dismissed without just
or authorized cause, and that the announced cessation of business

371

operations was a subterfuge for getting rid of petitioner. While the

introduction of additional evidence before the NLRC is not proscribed, the
said tribunal was still not persuaded by the company closure purportedly
averted only by the alleged fresh funding procured by respondent Tan, for
the latter claim remained unsubstantiated. The CAs finding of serious
business losses is not borne by the evidence on record. The financial
statements supposedly bearing the stamp mark of BIR were not signed by
an independent auditor. Besides, the non-compliance with the
requirements under Article 283 of the Labor Code, as amended, gains
relevance in this case not for the purpose of proving the illegality of
the company closure or cessation of business, which did not materialize,
but as an indication of bad faith on the part of respondents in hastily
terminating petitioners employment. Under the circumstances, the
subsequent investigation and termination of petitioner on grounds of
dishonesty, loss of confidence and abandonment of work, clearly appears
as an afterthought as it was done only after petitioner had filed an illegal
dismissal case and respondents have been summoned for hearing before
the LA.
We have laid down the two elements which must concur for a valid
abandonment, viz: (1) the failure to report to work or absence without valid
or justifiable reason, and (2) a clear intention to sever the employeremployee relationship, with the second element as the more determinative
factor being manifested by some overt acts.27 Abandonment as a just
ground for dismissal requires the deliberate, unjustified refusal of the
employee to perform his employment responsibilities. Mere absence or
failure to work, even after notice to return, is not tantamount to
abandonment.28
Furthermore, it is well-settled that the filing by an employee of a complaint
for illegal dismissal with a prayer for reinstatement is proof enough of his
desire to return to work, thus, negating the employers charge of
abandonment.29 An employee who takes steps to protest his dismissal
cannot logically be said to have abandoned his work. 30
Abandonment in this case was a trumped up charge, apparently to make it
appear that petitioner was not yet terminated when she filed the illegal
dismissal complaint and to give a semblance of truth to the belated
investigation against the petitioner. Petitioner did not abandon her work
but was told not to report for work anymore after being served a written
notice of termination of company closure on July 27, 2000 and turning over
company properties to respondent Rialubin-Tan.
On the issue of loss of confidence, we have held that proof beyond
reasonable doubt is not needed to justify the loss 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.31 Nonetheless, the right of an
employer to dismiss employees on the ground of loss of trust and
confidence, however, must not be exercised arbitrarily and without just

cause. Unsupported by sufficient proof, loss of confidence is without basis

and may not be successfully invoked as a ground for dismissal. 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, as in the case at bar, and
the loss must be founded on clearly established facts sufficient to warrant
the employees separation from work.32
Here, loss of confidence was belatedly raised by the respondents who
initiated an investigation on the alleged irregularities committed by
petitioner only after the latter had questioned the legality of her earlier
dismissal due to the purported company closure. As correctly observed by
the NLRC, assuming to be true that respondents had not yet actually
dismissed the petitioner, the notice of cessation of operations (memo
dated July 27, 2000) addressed to all employees never mentioned the
supposed charges against the petitioner who was also never issued a
separate memorandum to that effect. Moreover, the turn over of company
properties by petitioner on the same date as demanded by respondent
Rialubin-Tan belies the latters claim that she verbally instructed the former
to continue reporting for work in view of the audit of the companys
finances. Indeed, considering the gravity of the accusations of fraud
against the petitioner, it is strange that respondents have not at least
issued her a separate memorandum on her accountability for the alleged
business losses.
To prove the dishonesty imputed to petitioner, respondents submitted
before the NLRC a letter dated August 4, 2000 from one of TPIs suppliers
advising the company of a supposed double payment made in February
and March 2000. However, there is no showing that such payment was
made or ordered by petitioner, and neither was it shown that this
overpayment was reflected in the account books of TPI. Respondents
likewise failed to prove their accusation that petitioner put up a competing
business while she was still employed with TPI, and their bare allegation
that petitioner divulged confidential company matters to customers. As to
the supposed failure of petitioner to account for funds intended for under
the table transactions at the Bureau of Customs, the same was never
raised before the labor tribunals and not a shred of evidence was
presented by respondent to prove this allegation.
Apropos we recall our pronouncement in Lima Land, Inc., et al. v.
Cuevas33:ChanRoblesVirtualawlibrary
As a final note, the Court is wont to reiterate that while an employer has its
own interest to protect, and pursuant thereto, it may terminate a
managerial employee for a just cause, such prerogative to dismiss or lay
off an employee must be exercised without abuse of discretion. Its
implementation should be tempered with compassion and understanding.
The employer should bear in mind that, in the execution of the said
prerogative, what is at stake is not only the employees position, but his
very livelihood, his very breadbasket. Indeed, the consistent rule is that if
doubts exist between the evidence presented by the employer and the

372

employee, the scales of justice must be tilted in favor of the latter. The
employer must affirmatively show rationally adequate evidence that the
dismissal was for justifiable cause. Thus, when the breach of trust or
loss of confidence alleged is not borne by clearly established
facts, as in this case, such dismissal on the cited grounds cannot
be allowed.34 (Emphasis supplied)
The normal consequences of petitioners illegal dismissal are reinstatement
without loss of seniority rights, and payment of back wages computed from
the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one month salary for every year of service
should be awarded as an alternative. The payment of separation pay is in
addition to payment of back wages.35 Given the strained relations between
the parties, the award of separation pay, in lieu of reinstatement, is in
order.
Finally, on the solidary liability of respondents Richard Tan and Catherine
Rialubin-Tan for the monetary awards. It is basic that a corporation being a
juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents are not
theirs but the direct accountabilities of the corporation they represent.
However, in certain exceptional situations, solidary liability may be
incurred by corporate officers. In labor cases for instance, this Court has
held corporate directors and officers solidarily liable with the corporation
for the termination of employment of employees done with malice or bad
faith.36
We sustain the NLRCs conclusion that the schemes implemented by the
respondents to justify petitioners baseless dismissal, and the manner by
which such schemes were effected showed malice and bad faith on their
part. Consequently, its affirmance of the order of the LA that the amounts
awarded to petitioner are payable in solidum by respondents is proper.
The NLRC likewise correctly upheld the award of attorneys fees
considering that petitioner was assisted by a private counsel to prosecute
her illegal dismissal complaint and enforce her rights under our labor laws.
WHEREFORE, the petition is GRANTED. The Decision dated March 24,
2010 and Resolution dated May 19, 2011 of the Court of Appeals in CA-G.R.
SP No. 106661 are hereby REVERSED and SET ASIDE.
The Decision dated June 28, 2001 of the Labor Arbiter in NLRC Case No. 0008-04110-2000, as affirmed by the Decision dated January 25, 2008 of the
National Labor Relations Commission in NLRC CA No. 029806-01, is
hereby REINSTATED.
No pronouncement as to costs.
SO ORDERED

373

G.R. No. 191154

April 7, 2014

SPI TECHNOLOGIES, INC. and LEA VILLANUEVA, Petitioners,

vs.
VICTORIA K. MAPUA, Respondent.
DECISION
REYES, J.:
The Court remains steadfast on its stand that the determination of the
continuing necessity of a particular officer or position in a business
corporation is a management prerogative, and the courts will not interfere
unless arbitrary or malicious action on the part of management is shown.
Indeed, an employer has no legal obligation to keep more employees than
are necessary for the operation of its business.1 In the instant case
however, we find our intrusion indispensable, to look into matters which we
would otherwise consider as an exercise of management prerogative.
"Management prerogative" are not magic words uttered by an employer to
bring him to a realm where our labor laws cannot reach.
This is a petition for review on certiorari2 under Rule 45 of the Rules of
Court of the Decision3 dated October 28, 2009 and Resolution4 dated
January 18, 2010 of the Court of Appeals (CA) in CA-G.R. SP. No. 107879.
The Facts
Victoria K. Mapua (Mapua) alleged that she was hired in 2003 by SPI
Technologies, Inc. (SPI) and was the Corporate Developments
Research/Business Intelligence Unit Head and Manager of the company.
Subsequently in August 2006, the then Vice President and Corporate
Development Head, Peter Maquera (Maquera) hired Elizabeth Nolan
(Nolan) as Mapuas supervisor. 5
Sometime in October 2006, the hard disk on Mapuas laptop crashed,
causing her to lose files and data. Mapua informed Nolan and her
colleagues that she was working on recovering the lost data and asked for
their patience for any possible delay on her part in meeting deadlines. 6
On November 13, 2006, Mapua retrieved the lost data with the assistance
of National Bureau of Investigation Anti-Fraud and Computer Crimes
Division. Yet, Nolan informed Mapua that she was realigning Mapuas
position to become a subordinate of co-manager Sameer Raina (Raina) due
to her missing a work deadline. Nolan also disclosed that Mapuas
colleagues were "demotivated" [sic] because she was "taking things easy

while they were working very hard," and that she was "frequently absent,
under timing, and coming in late every time [Maquera] goes on leave or on
vacation."7
On November 16, 2006, Mapua obtained a summary of her attendance for
the last six months to prove that she did not have frequent absences or
under time when Maquera would be on leave or vacation. When shown to
Nolan, she was merely told not to give the matter any more importance
and to just move on.8
In December 2006, Mapua noticed that her colleagues began to ostracize
and avoid her. Nolan and Raina started giving out majority of her research
work and other duties under Healthcare and Legal Division to the rank-andfile staff. Mapua lost about 95% of her work projects and job
responsibilities.9
Mapua consulted these work problems with SPIs Human Resource Director,
Lea Villanueva (Villanueva), and asked if she can be transferred to another
department within SPI. Subsequently, Villanueva informed Mapua that
there is an intra-office opening and that she would schedule an exploratory
interview for her. However, due to postponements not made by Mapua, the
interview did not materialize.
On February 28, 2007, Mapua allegedly saw the new table of organization
of the Corporate Development Division which would be renamed as the
Marketing Division. The new structure showed that Mapuas level will be
again downgraded because a new manager will be hired and positioned
between her rank and Rainas.10
On March 21, 2007, Raina informed Mapua over the phone that her
position was considered redundant and that she is terminated from
employment effective immediately. Villanueva notified Mapua that she
should cease reporting for work the next day. Her laptop computer and
company mobile phone were taken right away and her office phone ceased
to function.11
Mapua was shocked and told Raina and Villanueva that she would sue
them. Mapua subsequently called her lawyer to narrate the contents of the
termination letter,12 which reads:
March 21, 2007
xxxx
Dear Ms. MAPUA,

374

xxxx
This notice of separation, effective March 21, 2007 should be regarded as
redundancy. Your separation pay will be computed as one months salary
for every year of service, a fraction of at least six months will be
considered as one year.
Your separation pay will be released on April 20, 2007 subject to your
clearance of accountabilities and as per Company policy.
x x x x13
Mapuas lawyer, in a phone call, advised Villanueva that SPI violated
Mapuas right to a 30-day notice.
On March 27, 2007, Mapua filed with the Labor Arbiter (LA) a complaint for
illegal dismissal, claiming reinstatement or if deemed impossible, for
separation pay. Afterwards, she went to a meeting with SPI, where she was
given a second termination letter,14 the contents of which were similar to
the first one.15
On April 25, 2007, Mapua received through mail, a third Notice of
Termination16 dated March 21, 2007 but the date of effectivity of the
termination was changed from March 21 to April 21, 2007. It further stated
that her separation pay will be released on May 20, 2007 and a notation
was inscribed, "refused to sign and acknowledge" with unintelligible
signatures of witnesses.
On May 13, 2007, a recruitment advertisement17 of SPI was published in
the Philippine Daily Inquirer (Inquirer advertisement, for brevity). It listed
all vacancies in SPI, including a position for Marketing Communications
Manager under Corporate Support the same group where Mapua
previously belonged.
SPI also sent a demand letter18 dated May 15, 2007 to Mapua, asking her
to pay for the remaining net book value of the company car assigned to
her under SPIs car plan policy. Under the said plan, Mapua should pay the
remaining net book value of her car if she resigns within five years from
start of her employment date.
In her Reply19 and Rejoinder,20 Mapua submitted an affidavit21 and alleged
that on July 16, 2007, Prime Manpower Resources Development (Prime
Manpower) posted an advertisement on the website of Jobstreet Philippines
for the employment of a Corporate Development Manager in an unnamed
Business Process Outsourcing (BPO) company located in Paraaque City.
Mapua suspected that this advertisement was for SPI because the writing
style used was similar to Rainas. She also claimed that SPI is the only BPO

office in Paraaque City at that time. Thereafter, she applied for the
position under the pseudonym of "Jeanne Tesoro". On the day of her
interview with Prime Manpowers consultant, Ms. Portia Dimatulac
(Dimatulac), the latter allegedly revealed to Mapua that SPI contracted
Prime Manpowers services to search for applicants for the Corporate
Development Manager position.
Because of these developments, Mapua was convinced that her former
position is not redundant. According to her, she underwent psychiatric
counseling and incurred medical expenses as a result of emotional
anguish, sleepless nights, humiliation and shame from being jobless. She
also averred that the manner of her dismissal was unprofessional and
incongruous with her rank and stature as a manager as other employees
have witnessed how she was forced to vacate the premises on the same
day of her termination.
On the other hand, SPI stated that the company regularly makes an
evaluation and assessment of its corporate/organizational structure due to
the unexpected growth of its business along with its partnership with
ePLDT and the acquisition of CyMed.22 As a result, SPI underwent a
reorganization of its structure with the objective of streamlining its
operations. This was embodied in an Inter-Office Memorandum 23 dated
August 28, 2006 issued by the companys Chief Executive Officer. 24 It was
then discovered after assessment and evaluation that the duties of a
Corporate Development Manager could be performed/were actually being
performed by other officers/managers/departments of the company. As
proof that the duties of Mapua are being/could be performed by other SPI
officers and employees, Villanueva executed an affidavit 25 attesting that
Mapuas functions are being performed by other SPI managers and
employees.
On March 21, 2007, the company, through Villanueva, served a written
notice to Mapua, informing her of her termination effective April 21, 2007.
Mapua refused to receive the notice, thus, Villanueva made a notation
"refused to sign and acknowledge" on the letter. On that same day, SPI
filed an Establishment Termination Report with the Office of the Regional
Director of the Department of Labor and Employment-National Capital
Region (DOLE-NCR) informing the latter of Mapuas termination. Mapua
was offered her separation and final pay, which she refused to receive.
Before the effective date of her termination, she no longer reported for
work. SPI has not hired a Corporate Development Manager since then.
SPI denied contracting the services of Prime Manpower for the hiring of a
Corporate Development Manager and emphasized that Prime Manpower
did not even state the name of its client in the Jobstreet website. SPI also
countered that Dimatulacs alleged revelation to Mapua that its client is SPI
must be struck down as mere hearsay because only Mapua executed an
affidavit to prove that such disclosure was made. While SPI admitted the

375

Inquirer advertisement, the company stated that Mapua was a Corporate

Development Manager and not a Marketing Communications Manager, and
that from the designations of these positions, it is obvious that the
functions of one are entirely different from that of the other. 26

Unrelenting, SPI appealed the LA decision to the National Labor

Relations Commission (NLRC).

LA Decision

On October 24, 2008, the NLRC rendered its Decision,29 with the
fallo, as follows:

On June 30, 2008, the LA rendered a Decision,27 with the following

dispositive portion:
WHEREFORE, prescinding from the foregoing, the redundancy of [Mapuas]
position being in want of factual basis, her termination is therefore hereby
declared illegal. Accordingly, she should be paid her backwages, separation
pay in lieu of reinstatement, moral and exemplary damages and attorneys
fees as follows:
a)

Backwages:

NLRC Ruling

WHEREFORE, the foregoing premises considered, the instant

appeal is hereby GRANTED. The Decision appealed from is
REVERSED and SET ASIDE, and a new one is issued finding the
appellants not guilty of illegal dismissal.
However, appellants are ordered to pay the sum of Three Hundred
Thirty[-]Four Thousand Five Hundred Thirty[-]Eight Pesos and
Thirty[-]Four Centavos ([P]334,538.34) representing her
separation benefits and final pay in the amount of [P]203,988.00
and [P]130,550.34, respectively.

03/21/07-06/30/08
P67,996 x 15.30 mos. =

P1,040,338.8
0

13th Month Pay:

P1,040,338.80/12=
b)

P520,169.40 P1,560,508.20

Separation Pay: (1 mo. per year of service)

12/01/03-06/30/08 = 5.7 or 6 yrs.
P67,996.00 x 6 =

407,976.00

c)

Moral Damages:

P500,000.00

d)

Exemplary Damages:

250,000.00

e)

Attorneys Fees:

196,848.42
Total Award

P2,915,332.6
2

SO ORDERED.30
In ruling so, the NLRC held that "[t]he determination of whether
[Mapuas] position as Corporate Development Manager is
redundant is not for her to decide. It essentially and necessarily
lies within the sound business management."31 As early as August
28, 2006, Ernest Cu, SPIs Chief Executive Officer, announced the
corporate changes in the company.
A month earlier, the officers held their Senior Management
Strategic Planning Session with the theme, "Transformation" or reinvention of SPI purposely to create an organizational structure
that is streamlined, clear and efficient.32 In fact, Nolan and Raina,
Mapuas superiors were actually doing her functions with the
assistance of the pool of analysts, as attested to by Villanueva.
At odds with the NLRC decision, Mapua elevated the case to the
CA by way of petition for certiorari, arguing that based on
evidence, the LA decision should be reinstated.

or a grand total of TWO MILLION NINE HUNDRED FIFTEEN

THOUSAND THREE HUNDRED THIRTY-TWO and 62/100
(P2,915,332.62)Pesos only.

CA Ruling

Respondents are further ordered to award herein complainant the

car assigned to her.

Mapuas petition was initially dismissed by the CA in its

Resolution33 dated March 25, 2009 for lack of counsels MCLE
Compliance number, outdated IBP and PTR numbers of counsel,
and lack of affidavit of service attached to the petition.

SO ORDERED.28

376

Mapua filed a motion for reconsideration which was granted by

the CA, reinstating the petition in its Resolution34 dated May 26,
2009.

THE CA COMPLETELY AFFIRMED THE AWARDS OF

SEPARATION PAY, BACKWAGES, DAMAGES AND ATTORNEYS
FEES IN THE [LAS] DECISION IN TOTAL DISREGARD OF THE
APPLICABLE LAW AND JURISPRUDENCE

On October 28, 2009, the CA promulgated its

Decision,35 reinstating the LAs decree, viz:
WHEREFORE, in view of the foregoing, the assailed decision dated
October 24, 2008, as well as the resolution dated December 23,
2008 of the National Labor Relations Commission in NLRC LAC No.
09-003262-08 (8) NLRC NCR CN. 00-03-02761-07 are hereby
REVERSED and SET ASIDE. The decision of the Labor Arbiter dated
June 30, 2008 in NLRC-NCR Case No. 00-03-02761-07 is hereby
REINSTATED with MODIFICATION in that the amount of 13th month
pay of [P]520,169.40 is hereby reduced to [P]86,694.90.
SO ORDERED.36
SPIs motion for reconsideration was denied on January 18, 2010.
Thus, through a petition for review on certiorari, SPI submitted
the following grounds for the consideration of this Court:

V
THE CA UPHELD THE [LAS] DECISION HOLDING INDIVIDUAL
PETITIONER SOLIDARILY AND PERSONALLY LIABLE TO
[MAPUA] WITHOUT SHOWING ANY BASIS THEREFOR37
Our Ruling
The Court sustains the CAs ruling.
Mapua was dismissed from employment supposedly due to
redundancy. However, she contended that her position as
Corporate Development Manager is not redundant. She cited that
SPI was in fact actively looking for her replacement after she was
terminated. Furthermore, SPI violated her right to procedural due
process when her termination was made effective on the same day
she was notified of it.

I
Article 283 of the Labor Code provides for the following:
THE CA DECLARED AS ILLEGAL [MAPUAS] SEPARATION
FROM SERVICE SOLELY ON THE BASIS OF HER SELFSERVING AND UNFOUNDED ALLEGATION OF A SUPPOSED
JOB ADVERTISEMENT
II
THE CA COMPLETELY DISREGARDED THE FACT THAT
[MAPUA] WAS VALIDLY SEPARATED FROM SERVICE ON THE
GROUND OF REDUNDANCY WHICH IS AN AUTHORIZED
CAUSE FOR TERMINATION OF EMPLOYMENT UNDER ARTICLE
283 OF THE LABOR CODE AND PREVAILING JURISPRUDENCE
III
THE CA FOUND THAT [MAPUA] WAS NOT ACCORDED HER
RIGHT TO DUE PROCESS IN UTTER DEROGATION OF THE
APPLICABLE PROVISIONS OF THE LABOR CODE AND THE
PERTINENT JURISPRUDENCE
IV

ART. 283. Closure of establishment and reduction of personnel.

The employer may also terminate the employment of any
employee due to 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 Department of
Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to installation of laborsaving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least 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
and 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. (Emphasis ours)
Expounding on the above requirements of written notice and
separation pay, this Court in Asian Alcohol Corporation v.

377

NLRC38 pronounced that for a valid implementation of a

redundancy program, the employer must comply with the
following requisites: (1) written notice served on both the
employee and the DOLE at least one month prior to the intended
date of termination; (2) payment of separation pay equivalent to
at least one month pay or at least one month pay for every year of
service, whichever is higher; (3) good faith in abolishing the
redundant position; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant. 39
Anent the first requirement which is written notice served on both
the employee and the DOLE at least one month prior to the
intended date of termination, SPI had discharged the burden of
proving that it submitted a notice to the DOLE on March 21, 2007,
stating therein that the effective date of termination is on April
21, 2007. It is, however, quite peculiar that two kinds of notices
were served to Mapua. One termination letter stated that its date
of effectivity is on the same day, March 21, 2007. The other
termination letter sent through mail to Mapuas residence stated
that the effective date of her termination is on April 21, 2007.
Explaining the discrepancy, SPI alleged that the company served a
notice to Mapua on March 21, 2007, which stated that the
effective date of termination is on April 21, 2007. However she
refused to acknowledge or accept the letter. Later on, Mapua
requested for a copy of the said letter but due to inadvertence
and oversight, a draft of the termination letter bearing a wrong
effectivity date was given to her. To correct the oversight, a copy
of the original letter was sent to her through mail.40
Our question is, after Mapua initially refused to accept the letter,
why did SPI make a new letter instead of just giving her the first
one which the Court notes was already signed and witnessed by
other employees? Curiously, there was neither allegation nor proof
that the original letter was misplaced or lost which would
necessitate the drafting of a new one. SPI did not even explain in
the second letter that the same was being sent in lieu of the one
given to her. Hence, SPI must shoulder the consequence of
causing the confusion brought by the variations of termination
letters given to Mapua.
Also, crucial to the determination of the effective date of
termination was that Mapua was very specific as regards what
happened immediately after: "Ms. Villanueva had Ms. Mapuas
assigned laptop computer and cellphone immediately taken by
Human Resources supervisor, Ms. Dhang Rondael. Within about an
hour, Ms. Mapuas landline phone ceased to function after Ms.
Villanuevas and Mr. Rainas announcement." Her company I.D.

was taken away from her that very same day.41 To counter these
statements, SPI merely stated that before the effective date of
Mapuas termination on April 21, 2007, she no longer reported for
work. To this Court, this is insufficient rebuttal to the precise
narrative of Mapua.
On the matter of separation pay, there is no question that SPI
indeed offered separation pay to Mapua, but the offer must be
accompanied with good faith in the abolishment of the redundant
position and fair and reasonable criteria in ascertaining the
redundant position. It is insignificant that the amount offered to
Mapua is higher than what the law requires because the Court has
previously noted that "a job is more than the salary that it carries.
There is a psychological effect or a stigma in immediately finding
ones self laid off from work."42
Moving on to the issue of the validity of redundancy program, SPI
asserted that an employer has the unbridled right to conduct its
own business in order to achieve the results it desires. To prove
that Villanuevas functions are redundant, SPI submitted an InterOffice Memorandum43 and affidavit executed by its Human
Resources Director, Villanueva. The pertinent portions of the
memorandum read:
ORGANIZATION STRUCTURE
One of the most important elements of successfully effecting
change is to create an organization structure that is streamlined,
clear and efficient. We think we have done that and the new
format is illustrated in Attachment A. The upper part shows my
direct reports who are heads of the various shared services
departments and the lower part shows the set up of the business
units. The important features of the structure are discussed in the
following sections. For brevity, I have purposely not summarized
the roles that will remain the same.
xxxx
Corporate Development
Peter Maquera will continue to head Corporate Development but
the groups scope will be expanded to include Marketing across
the whole company. Essentially, Marketing will be taken out of the
business units and centralized under Corporate Development.
Elizabeth Nolan will move from her role as Publishings VP of Sales
and Marketing to become the head of Global Marketing. The unit
will continue to focus on strengthening the SPI brand, while at the

378

same time maximizing the effectiveness of our spending. Josie

Gonzales, head of Corporate Relations, will also be transitioned to
Corporate Development.44
The memorandum made no mention that the position of the
Corporate Development Manager or any other position would be
abolished or deemed redundant. In this regard, may the affidavit
of Villanueva which enumerated the various functions of a
Corporate Development Manager being performed by other SPI
employees be considered as sufficient proof to uphold SPIs
redundancy program?
In AMA Computer College, Inc. v. Garcia, et al.,45 the Court held
that the presentation of the new table of the organization and the
certification of the Human Resources Supervisor that the positions
occupied by the retrenched employees are redundant are
inadequate as evidence to support the colleges redundancy
program. The Court quotes the related portion of its ruling:
In the case at bar, ACC attempted to establish its streamlining
program by presenting its new table of organization. ACC also
submitted a certification by its Human Resources Supervisor, Ma.
Jazmin Reginaldo, that the functions and duties of many rank and
file employees, including the positions of Garcia and Balla as
Library Aide and Guidance Assistant, respectively, are now being
performed by the supervisory employees. These, however, do not
satisfy the requirement of substantial evidence that a reasonable
mind might accept as adequate to support a conclusion. As they
are, they are grossly inadequate and mainly self-serving. More
compelling evidence would have been a comparison of the old and
new staffing patterns, a description of the abolished and newly
created positions, and proof of the set business targets and
failure to attain the same which necessitated the reorganization
or streamlining.46 (Citations omitted and emphasis ours)
Also connected with the evidence negating redundancy was SPIs
publication of job vacancies after Mapua was terminated from
employment. SPI maintained that the CA erred when it considered
Mapuas self-serving affidavit as regards the Prime Manpower
advertisement because the allegations therein were based on
Mapuas unfounded suspicions. Also, the failure of Mapua to
present a sworn statement of Dimatulac renders the formers
statements hearsay.
Even if we disregard Mapuas affidavit as regards the Prime
Manpower advertisement, SPI admitted that it caused the Inquirer
advertisement for a Marketing Communications Manager
position.47 Mapua alleged that this advertisement belied the claim

of SPI that her position is redundant because the Corporate

Development division was only renamed to Marketing division.
Instead of explaining how the functions of a Marketing
Communications Manager differ from a Corporate Development
Manager, SPI hardly disputed Mapua when it stated that,
"[j]udging from the titles or designation of the positions, it is
obvious that the functions of one are entirely different from that
of the other."48 SPI, being the employer, has possession of valuable
information concerning the functions of the offices within its
organization. Nevertheless, it did not even bother to differentiate
the two positions.
Furthermore, on the assumption that the functions of a Marketing
Communications Manager are different from that of a Corporate
Development Manager, it was not even discussed why Mapua was
not considered for the position. While SPI had no legal duty to hire
Mapua as a Marketing Communications Manager, it could have
clarified why she is not qualified for that position. In fact, Mapua
brought up the subject of transfer to Villanueva and Raina several
times prior to her termination but to no avail. There was even no
showing that Mapua could not perform the duties of a Marketing
Communications Manager.
Therefore, even though the CA based its ruling only on the Prime
Manpower advertisement coupled with the purported disclosure to
Mapua, the Court holds that the confluence of other factors
supports the said ruling.
The Court does not agree with the rationalization of the NLRC that
"[i]f it were true that her position was not redundant and
indispensable, then the company must have already hired a new
one to replace her in order not to jeopardize its business
operations. The fact that there is none only proves that her
position was not necessary and therefore superfluous."49
What the above reasoning of the NLRC failed to perceive is that
"[o]f primordial consideration is not the nomenclature or title
given to the employee, but the nature of his functions."50 "It is not
the job title but the actual work that the employee
performs."51 Also, change in the job title is not synonymous to a
change in the functions. A position cannot be abolished by a mere
change of job title. In cases of redundancy, the management
should adduce evidence and prove that a position which was
created in place of a previous one should pertain to functions
which are dissimilar and incongruous to the abolished office.

379

Thus, in Caltex (Phils.), Inc. (now Chevron Phils., Inc.) v.

NLRC,52 the Court dismissed the employers claim of redundancy
because it was shown that after declaring the employees position
of Senior Accounting Analyst as redundant, the company opened
other accounting positions (Terminal Accountant and Internal
Auditor) for hiring. There was no showing that the private
respondent therein could not perform the functions demanded of
the vacant positions, to which he could be transferred to instead
of being dismissed.

motive of the employer in dismissing the employee is far from

noble.1wphi1 The award of such damages is based not on the
Labor Code but on Article 220 of the Civil Code.55 However, the
Court observes that the CA decision affirming the LAs award
of P500,000.00 and P250,000.00 as moral and exemplary
damages, respectively, is evidently excessive because the purpose
for awarding damages is not to enrich the illegally dismissed
employee. Consequently, the Court hereby reduces the amount
ofP50,000.00 each as moral and exemplary damages.56

On the issue of the solidary obligation of the corporate officers

impleaded vis--vis the corporation for Mapuas illegal dismissal,
"[i]t is hornbook principle that personal liability of corporate
directors, trustees or officers attaches only when: (a) they assent
to a patently unlawful act of the corporation, or when they are
guilty of bad faith or gross negligence in directing its affairs, or
when there is a conflict of interest resulting in damages to the
corporation, its stockholders or other persons; (b) they consent to
the issuance of watered down stocks or when, having knowledge
of such issuance, do not forthwith file with the corporate secretary
their written objection; (c) they agree to hold themselves
personally and solidarily liable with the corporation; or (d) they
are made by specific provision of law personally answerable for
their corporate action."53

Mapua is also entitled to attorneys fees but the Court is

modifying the amount of P196,848.42 awarded by the LA and fix
such attorneys fees in the amount of ten percent (10%) of the
total monetary award, pursuant to Article 11157 of the Labor Code.

While the Court finds Mapuas averments against Villanueva,

Nolan, Maquera and Raina as detailed and exhaustive, the Court
takes notice that these are mostly suppositions on her part. Thus,
the Court cannot apply the above-enumerated exceptions when a
corporate officer becomes personally liable for the obligation of a
corporation to this case.
With respect to the vehicle under the company car plan which the
LA awarded to Mapua, the Court rules that the subject matter is
not within the jurisdiction of the LA but with the regular courts,
the remedy being civil in nature arising from a contractual
obligation, following this Courts ruling in several cases. 54
The Court sustains the CAs award of moral and exemplary
damages. Award of moral and exemplary damages for an illegally
dismissed employee is proper where the employee had been
harassed and arbitrarily terminated by the employer. Moral
damages may be awarded to compensate one for diverse injuries
such as mental anguish, besmirched reputation, wounded
feelings, and social humiliation occasioned by the employers
unreasonable dismissal of the employee. The Court has
consistently accorded the working class a right to recover
damages for unjust dismissals tainted with bad faith; where the

WHEREFORE, the Decision dated October 28, 2009 and Resolution

dated January 18, 2010 of the Court of Appeals in CA-G.R. SP. No.
107879 are hereby AFFIRMED with the following MODIFICATIONS:
1. Moral and exemplary damages is hereby reduced
to P50,000.00 each; and
2. Attorney's fees shall be computed at ten percent (10%)
of the aggregate monetary award.
The monetary awards shall earn interest at the rate of six percent
(6%) per annum from the time of respondent Victoria K. Mapua's
illegal dismissal until finality of this Decision, and twelve percent
(12%) legal interest thereafter until fully paid.
Petitioner SPI Technologies, Inc. shall be liable for the foregoing
awards.
SO ORDERED.

380

G.R. No. 82249

February 7, 1991

WILTSHIRE FILE CO., INC., petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T.
ONG, respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Jose R. Millares & Associates for private respondent.

FELICIANO, J.:
Private respondent Vicente T. Ong was the Sales Manager of petitioner
Wiltshire File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985.
As such, he received a monthly salary of P14,375.00 excluding
commissions from sales which averaged P5,000.00 a month. He also
enjoyed vacation leave with pay equivalent to P7,187,50 per year, as well
as hospitalization privileges to the extent of P10,000.00 per year.
On 13 June 1985, upon private respondent's return from a business and
pleasure trip abroad, he was informed by the President of petitioner
Wiltshire that his services were being terminated. Private respondent
maintains that he tried to get an explanation from management of his
dismissal but to no avail. On 18 June 1985, when private respondent again
tried to speak with the President of Wiltshire, the company's security guard
handed him a letter which formally informed him that his services were
being terminated upon the ground of redundancy.
Private respondent filed, on 21 October 1985, a complaint before the Labor
Arbiter for illegal dismissal alleging that his position could not possibly be
redundant because nobody (save himself) in the company was then
performing the same duties. Private respondent further contended that
retrenching him could not prevent further losses because it was in fact
through his remarkable performance as Sales Manager that the Company
had an unprecedented increase in domestic market share the preceding
year. For that accomplishment, he continued, he was promoted to
Marketing Manager and was authorized by the President to hire four (4)
Sales Executives five (5) months prior to his termination.
In its answer, petitioner company alleged that the termination of
respondent's services was a cost-cutting measure: that in December 1984,
the company had experienced an unusually low volume of orders: and that

it was in fact forced to rotate its employees in order to save the company.
Despite the rotation of employees, petitioner alleged; it continued to
experience financial losses and private respondent's position, Sales
Manager of the company, became redundant.
On 2 December 1986, during the proceedings before the Labor Arbiter,
petitioner, in a letter1 addressed to the Regional Director of the then
Ministry of Labor and Employment, notified that official that effective 2
January 1987, petitioner would close its doors permanently due to
substantial business losses.
In a decision dated 11 March 1987, the Labor Arbiter declared the
termination of private respondent's services illegal and ordered petitioner
to pay private respondent backwages in the amount of P299,000.00,
unpaid salaries in the amount of P22,352.11, accumulated sick and
vacation leaves in the amount of P12,543.91, hospitalization benefit
package in the amount of P10,000.00, unpaid commission in the amount of
P57,500,00, moral damages in the amount of P100,000.00 and attorney's
fees in the amount of P51,639.60.
On appeal by petitioner Wiltshire, the National Labor Relations Commission
("NLRC") affirmed in toto on 9 February 1988 the decision of the Labor
Arbiter. The NLRC held that:
The termination letter clearly spelled out that the main reason in
terminating the services of complainant isREDUNDANT and not
retrenchment.
The supposed duplication of work of herein complainant and Mr.
Deliva, the Vice-President is absent that would justify redundancy. .
..
On the claim for moral damages, the NLRC pointed out that the effective
date of private respondent's termination was 18 July 1985, although it was
only 18 June 1985 that he received the letter of termination, and concluded
that he was not given any opportunity to explain his position on the matter.
The NLRC held that the termination was attended by malice and bad faith
on the part of petitioner, considering the manner of private respondent
was ordered by the President to pack up and remove his personal
belongings from the office. Private respondent was said to have been
embarrassed before his immediate family and other acquaintance due to
his inability to explain the reasons behind the termination of his services.
In this Petition for Certiorari, it is submitted that private respondent's
dismissal was justified and not illegal. Petitioner maintains that it had been
incurring business losses beginning 1984 and that it was compelled to

381

reduce the size of its personnel force. Petitioner also contends that
redundancy as a cause for termination does not necessarily mean
duplication of work but a "situation where the services of an employee are
in excess of what is demanded by the needs of an undertaking . . ."

where it is superfluous, and superfluity of a position or positions may be

the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise. 4

Having reviewed the record of this case, the Court has satisfied itself that
indeed petitioner had serious financial difficulties before, during and after
the termination of the services of private respondent. For one thing, the
audited financial statements of the petitioner for its fiscal year ending on
31 July 1985 prepared by a firm of independent auditors, showed a net loss
in the amount of P4,431,321.00 and a total deficit or capital impairment at
the end of year of P6,776,493.00. 2

The employer has no legal obligation to keep in its payroll more employees
than are necessarily for the operation of its business.

In the preceding fiscal year (1983-1984), while the company showed a net
after tax income of P843,506.00, it actually suffered a deficit or capital
impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally
closed its doors and terminated all operations in the Philippines on January
1987, barely two (2) years after the termination of private respondent's
employment. We consider that finally shutting down business operations
constitutes strong confirmatory evidence of petitioner's previous financial
distress. The Court finds it very difficult to suppose that petitioner Wiltshire
would take the final and irrevocable step of closing down its operations in
the Philippines simply for the sole purpose of easing out a particular officer
or employee, such as the private respondent.
Turning to the legality of the termination of private respondent's
employment, we find merit in petitioner's basic argument. We are unable
to sustain public respondent NLRC's holding that private respondent's
dismissal was not justified by redundancy and hence illegal. In the first
place, we note that while the letter informing private respondent of the
termination of his services used the word "redundant", that letter also
referred to the company having "incur[red] financial losses which [in] fact
has compelled [it] to resort to retrenchment to prevent further losses". 3
Thus, what the letter was in effect saying was that because of financial
losses, retrenchment was necessary, which retrenchment in turn resulted
in the redundancy of private respondent's position.
In the second place, we do not believe that redundancy in an employer's
personnel force necessarily or even ordinarily refers to duplication of work.
That no other person was holding the same position that private
respondent held prior to the termination of his services, does not show that
his position had not become redundant. Indeed, in any well-organized
business enterprise, it would be surprising to find duplication of work and
two (2) or more people doing the work of one person. We believe that
redundancy, for purposes of our Labor Code, exists where the services of
an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant

In the third place, in the case at bar, petitioner Wiltshire, in view of the
contraction of its volume of sales and in order to cut down its operating
expenses, effected some changes in its organization by abolishing some
positions and thereby effecting a reduction of its personnel. Thus, the
position of Sales Manager was abolished and the duties previously
discharged by the Sales Manager simply added to the duties of the General
Manager, to whom the Sales Manager used to report.
It is of no legal moment that the financial troubles of the company were
not of private respondent's making. Private respondent cannot insist on the
retention of his position upon the ground that he had not contributed to the
financial problems of Wiltshire. The characterization of private
respondent's services as no longer necessary or sustainable, and therefore
properly terminable, was an exercise of business judgment on the part of
petitioner company. The wisdom or soundness of such characterization or
decision was not subject to discretionary review on the part of the Labor
Arbiter nor of the NLRC so long, of course, as violation of law or merely
arbitrary and malicious action is not shown. It should also be noted that the
position held by private respondent, Sales Manager, was clearly
managerial in character. In D.M. Consunji, Inc. v. National Labor Relations
Commission,5the Court held:
An employer has a much wider discretion in terminating the
employment relationship of managerial personnel as compared to
rank and file employees. However, such prerogative of
management to dismiss or lay off an employee must be made
without abuse of discretion, for what is at stake is not only the
private respondent's position but also his means of livelihood . . . . 6
The determination of the continuing necessity of a particular officer or
position in a business corporation is management's prerogative, and the
courts will not interfere with the exercise of such so long as no abuse of
discretion or merely arbitrary or malicious action on the part of
management is shown.7
On the issue of moral damages, petitioner assails the finding of the NLRC
that the dismissal was done in bad faith. Petitioner argues that it had
complied with the one-month notice required by law; that there was no
need for private respondent to be heard in his own defense considering
that the termination of his services was for a statutory or authorized cause;

382

and that whatever humiliation might have been suffered by private

respondent arose from a lawful cause and hence could not be the basis of
an award of moral damages.
Termination of an employee's services because of retrenchment to prevent
further losses or redundancy, is governed by Article 283 of the Labor Code
which provides as follows:
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 workers and the
Ministry of Labor and Employment 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 of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year.
Termination of services for any of the above described causes should be
distinguished from termination of employment by reason of some
blameworthy act or omission on the part of the employee, in which case
the applicable provision is Article 282 of the Labor Code which provides as
follows:
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;
and
(e) Other causes analogous to the foregoing.
Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the
"Rules to Implement the Labor Code" read as follows:
Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a
worker shall furnish him a written notice stating the particular acts
or omission constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the worker's
last known address.
xxx

xxx

xxx

Sec. 5. Answer and hearing. The worker may answer the

allegations stated against him in the notice of dismissal within a
reasonable period from receipt of such notice. The employer shall
afford the worker ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires.
(emphasis supplied)
We note that Section 2 of Rule XIV quoted above requires the notice to
specify "the particular acts or omissions constituting the ground for his
dismissal", a requirement which is obviously applicable where the ground
for dismissal is the commission of some act or omission falling within
Article 282 of the Labor Code. Again, Section 5 gives the employee the
right to answer and to defend himself against "the allegations stated
against him in the notice of dismissal". It is such allegations by the
employer and any counter-allegations that the employee may wish to
make that need to be heard before dismissal is effected. Thus, Section 5
may be seen to envisage charges against an employee constituting one or
more of the just causes for dismissal listed in Article 282 of the Labor Code.
Where, as in the instant case, the ground for dismissal or termination of
services does not relate to a blameworthy act or omission on the part of
the employee, there appears to us no need for an investigation and
hearing to be conducted by the employer who does not, to begin with,
allege any malfeasance or non-feasance on the part of the employee. In
such case, there are no allegations which the employee should refute and
defend himself from. Thus, to require petitioner Wiltshire to hold a hearing,
at which private respondent would have had the right to be present, on the
business and financial circumstances compelling retrenchment and
resulting in redundancy, would be to impose upon the employer an
unnecessary and inutile hearing as a condition for legality of termination.

383

This is not to say that the employee may not contest the reality or good
faith character of the retrenchment or redundancy asserted as grounds for
termination of services. The appropriate forum for such controversion
would, however, be the Department of Labor and Employment and not an
investigation or hearing to be held by the employer itself. It is precisely for
this reason that an employer seeking to terminate services of an employee
or employees because of "closure of establishment and reduction of
personnel", is legally required to give a written notice not only to the
employee but also to the Department of Labor and Employment at least
one month before effectivity date of the termination. In the instant case,
private respondent did controvert before the appropriate labor authorities
the grounds for termination of services set out in petitioner's letter to him
dated 17 June 1985.
We hold, therefore, that the NLRC's finding that private respondent had not
been accorded due process, is bereft of factual and legal bases. The award
of moral damages that rests on such ground must accordingly fall.
While private respondent may well have suffered personal embarrassment
by reason of termination of his services, such fact alone cannot justify the
award of moral damages. Moral damages are simply a species of damages
awarded to compensate one for injuries brought about by a wrongful
act.8 As discussed above, the termination of private respondent's services
was not a wrongful act. There is in this case no clear and convincing
evidence of record showing that the termination of private respondent's
services, while due to an authorized or statutory cause, had been carried
out in an arbitrary, capricious and malicious manner, with evident personal
ill-will. Embarrassment, even humiliation, that is not proximately caused by
a wrongful act does not constitute a basis for an award of moral damages.
Private respondent is, of course, entitled to separation pay and other
benefits under Act 283 of the Labor Code and petitioner's letter dated 17
June 1985.
ACCORDINGLY, the Court Resolved to GRANT due course to the Petition
for Certiorari. The Resolutions of the National Labor Relations Commission
dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and
NULLIFIED. The Temporary Restraining Order issued by this Court on 21
March 1988 is hereby made PERMANENT. No pronouncement as to costs.
SO ORDERED.

384

[G.R. No. 99359. September 2, 1992.]

ORLANDO M. ESCAREAL, Petitioner, v. NATIONAL LABOR
RELATIONS COMMISSION, HON. MANUEL P. ASUNCION, Labor
Arbiter, NLRC, National Capital Region, PHILIPPINE REFINING
COMPANY, INC., CESAR BAUTISTA and GEORGE B.
DITCHING, Respondents.
R.S. Arlanza & Associates for Petitioner.
Siguion Reyna, Montecillo & Ongsiako for Private Respondents.

SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT;

REDUNDANCY IN PERSONNEL FORCE AS A GROUND; DEFINED. In
Wiltshire File Co., Inc. v. NLRC, (193 SCRA 665 [1991]) this Court held that
redundancy, for purposes of the Labor Code, exists where the services of
an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise; a position is redundant when it is
superfluous, and superfluity of a position or positions may be the outcome
of a number of factors, such as the overhiring of workers, a decreased
volume of business or the dropping of a particular product line or service
activity previously manufactured or undertaken by the enterprise.
Redundancy in an employers personnel force, however, does not
necessarily or even ordinarily refer to duplication of work. That no other
person was holding the same position which the dismissed employee held
prior to the termination of his services does not show that his position had
not become redundant.
2. ID.; ID.; ID.; NOT JUSTIFIED IN CASE AT BAR; REASON THEREFOR.
Private respondent PRC had no valid and acceptable basis to declare the
position of Pollution Control and Safety Manager redundant as the same
may not be considered as superfluous; by the express mandate of the
provisions earlier cited, said positions are required by law. Thus, it cannot
be gainsaid that the services of the petitioner are in excess of what is
reasonably required by the enterprise. Otherwise, PRC would not have
allowed ten (10) long years to pass before opening its eyes to that fact;
neither would it have increased the petitioners salary to P23,100.00 a
month effective 1 April 1988. The latter by itself is an unequivocal
admission of the specific and special need for the position and an open
recognition of the valuable services rendered by the petitioner. Such
admission and recognition are inconsistent with the proposition that
petitioners positions are redundant. If based on the ground of redundancy,
a substitution of the petitioner by Miguelito S. Navarro would be invalid as
the creation of said position is mandated by the law; the same cannot
therefore be declared redundant. If the change was effected to consolidate

the functions of the pollution control and safety officer with the duties of
the Industrial Engineering Manager, as private respondent postulates, such
substitution was done in bad faith for as had already been pointed out,
Miguelito S. Navarro was hardly qualified for the position. If the aim was to
generate savings in terms of the salaries that PRC would not be paying the
petitioner any more as a result of the streamlining of operations for
improved efficiency, such a move could hardly be justified in the face of
PRCs hiring of ten (10) fresh graduates for the position of Management
Trainee and advertising for vacant positions in the Engineering/Technical
Division at around the time of the termination. Besides, there would seem
to be no compelling reason to save money by removing such an important
position. As shown by their recent financial statements, PRCs year-end net
profits had steadily increased from 1987 to 1990. While concededly, Article
283 of the Labor Code does not require that the employer should be
suffering financial losses before he can terminate the services of the
employee on the ground of redundancy, it does not mean either that a
company which is doing well can effect such a dismissal whimsically or
capriciously. The fact that a company is suffering from business losses
merely provides stronger justification for the termination.
3. ID.; ID.; RIGHT OF EMPLOYEE ILLEGALLY DISMISSED; RULE; CASE AT BAR.
Since We have concluded that the petitioners dismissal was illegal and
can not be justified under a valid redundancy initiative, Article 283 of the
Labor Code, as amended, on the benefits to be received by the dismissed
employee in the case of redundancy, retrenchment to prevent losses,
closure of business or the installation of labor saving devices, is not
applicable. Instead, We apply Article 279 thereof which provides, in part,
that 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.
4. ID.; RIGHT OF EMPLOYEE TO SECURITY OF TENURE; CONSTRUED IN CASE
AT BAR. It is evident that petitioners right to security of tenure was
violated by the private respondent PRC. Both the Constitution (Section 3,
Article XIII) and the Labor Code (Article 279, P.D. 442, as amended)
enunciate this right as available to an employee. In a host of cases, this
Court has upheld the employees right to security of tenure in the face of
oppressive management behavior and management prerogative. (Dosch v.
NLRC, 123 SCRA 296 [1983]; Tolentino v. NLRC, 152 SCRA 717 [1987]; Cebu
Royal Plant v. Deputy Minister of Labor, 153 SCRA 38 [1987]; PT&T v. NLRC,
183 SCRA 451 [1990]; Filipinas Manufacturers Bank v. NLRC, 182 SCRA 848
[1990]; Batongbacal v. Associated Bank, 168 SCRA 600 [1988];
International Harvester Macleod v. NLRC, 149 SCRA 641 [1987]; Remerco
Garments v. Minister of Labor, 135 SCRA 167 [1985]; Cebu Royal Plant v.
Deputy Minister of Labor, 153 SCRA 38 [1987]) Security of tenure is a right
which may not be denied on mere speculation of any unclear and nebulous
basis. (Tolentino v. NLRC, 152 SCRA 717 [1987]) In this regard, it could be
concluded that the respondent PRC was merely in a hurry to terminate the

385

services of the petitioner as soon as possible in view of the latters

impending retirement; it appears that said company was merely trying to
avoid paying the retirement benefits the petitioner stood to receive upon
reaching the age of sixty (60). PRC acted in bad faith.
5. ID.; EMPLOYMENT CONTRACT; PERIOD OF EMPLOYMENT STIPULATED
THEREIN; EXPLAINED; CASE AT BAR. An examination of the contents of
the contract of employment yields the conclusion arrived at by the Solicitor
General. There is no indication that PRC intended to offer uninterrupted
employment until the petitioner reached the mandatory retirement age; it
merely informs the petitioner of the compulsory retirement age and the
terms pertaining to the retirement. In Brent School, Inc. v. Zamora, (181
SCRA 702 [1990]) this Court, in upholding the validity of a contract of
employment with a fixed or specific period, declared that the "decisive
determinant in term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by
the parties for the commencement and termination of their employment
relationship, a day certain being understood to be that which must
necessarily come, although it may not be known when." (Id., citing Article
1193 (third paragraph), Civil Code) The term period was further defined to
be, "Length of existence; duration. A point of time marking a termination
as of a cause or an activity; an end, a limit, a bound; conclusion;
termination. A series of years, months or days in which something is
completed. A time of definite length. . . . the period from one fixed date to
another fixed date . . . ." (Id., citing Capiral v. Manila Electric Co., 119 Phil.
124 [1963], cited in MORENO, Philippine Law Dictionary, 3rd ed.)
6. ID.; SEPARATION PAY; DISTINGUISHED FROM BACKWAGES. In Torillo v.
Leogardo, Jr., (197 SCRA 471 [1991]) an amplification was made on Article
279 of the Labor Code and the distinction between separation pay and
backwages. Citing the case of Santos v. NLRC, (154 SCRA 166 [1987]), We
held in the former: "The normal consequences of a finding that an
employee has been illegally dismissed are, firstly, that the employee
becomes entitled to reinstatement to his former position without loss of
seniority rights and, secondly, the payment of backwages corresponding to
the period from his illegal dismissal up to actual reinstatement . . . Though
the grant of reinstatement commonly carries with it an award to
backwages, the inappropriateness or non-availability of one does not carry
with it the inappropriateness or non-availability the other . . . Put a little
differently, payment of backwages is a form of relief that restores the
income that was lost by reason of unlawful dismissal; separation pay, in
contrast, is oriented towards the immediate future, the transitional period
the dismissed employee must undergo before locating a replacement job."

Petitioner seeks to set aside the Decision 1 dated 14 January 1991 and the
Resolution 2 dated 13 May 1991 of the respondent National Labor
Relations Commission (hereinafter, NLRC) in NLRC Case No. 00-08-0341288 entitled Orlando M. Escareal v. Philippine Refining Company, Inc. The
said Decision affirmed with modification the 19 February 1990 Decision 3
of the respondent Labor Arbiter Manuel P. Asuncion while the Resolution
denied the motion for a reconsideration of the former.cralawnad
The dispositive portion of the respondent Labor Arbiters Decision
reads:jgc:chanrobles.com.ph
"WHEREFORE, the respondent is hereby ordered to pay the complainant his
redundancy pay in accordance with existing company policy on the matter.
This is without prejudice to the grant of additional benefits offered by the
respondent during the negotiation stage of the case, though it never
materialized for failure of the parties to reach an agreement.
SO ORDERED."cralaw virtua1aw library
The controversy stemmed from the dismissal of the petitioner from the
private respondent Philippine Refining Company, Inc. (hereinafter, PRC)
after almost eleven (11) years of gainful employment.
Petitioner was hired by the PRC for the position of Pollution Control
Manager effective on 16 September 1977 with a starting monthly pay of
P4,230 00; 4 the employment was made permanent effective on 16 March
1978. 5 The contract of employment provides, inter alia, that his
"retirement date will be the day you reach your 60th birthday, but there is
provision (sic) for voluntary retirement when you reach your 50th birthday.
Bases for the hiring of the petitioner are Letter of Instruction (LOI) No. 588
implementing the National Pollution Control Decree, P.D No. 984, dated 19
August 1977, the pertinent portion of which reads:jgc:chanrobles.com.ph
"1. All local governments, development authorities, government-owned or
controlled corporations, industrial, commercial and manufacturing
establishments, and all other public and private entities, whose functions
involve the discharge or emission of pollutants into the water, air and/or
land resources or the operation, installation or construction of any antipollution device, treatment work or facility, sewerage or sewerage disposal
system, shall each appoint and/or designate a Pollution Control
Officer." chanrobles law library
and Memorandum Circular No. 02, 6 dated 3 August 1981 and
implementing LOI No. 588, which amended Memorandum Circular No. 007,
Series of 1977, issued by the National Pollution Control Commission
(NPCC), the pertinent portions of which read:jgc:chanrobles.com.ph

DECISION

DAVIDE, JR., J.:

386

"Section 3. Appointment/Designation of Pollution Control Officer. All local

governments, development authorities, government-owned or controlled
corporations, industrial and manufacturing establishments, and public and
private entities falling within the purview of Letter of Instruction No. 588,
shall each appoint and/or designate a Pollution Control Officer.
x

Section 6. Employment Status-In the employment of Pollution Control

Officer, the following additional requirements shall be
observed:chanrob1es virtual 1aw library
x

(b) Private Entities

1. Industrial and Manufacturing establishment and other private entities
with capitalization of one million pesos and above shall employ a full time
pollution control officer.
x

Section 9. Accreditation of Pollution Control Officer. A (sic) duly

appointed and/or designated pollution control officers shall submit copies
of their designation and/or appointments to the Commission within thirty
(30) days from the date of such designation/appointment together with
their biodata and curriculum vitae for accreditation purposes. In case of the
termination of the appointment/designation of a pollution control officer for
any reason whatsoever, it shall be the responsibility of his employer to
inform the Commission of the same immediately to appoint/designate his
successor within thirty (30) days after said termination. (Emphasis
supplied)"

employment."cralaw virtua1aw library

In addition, the pertinent rules on Occupational Health and Safety
implementing the Labor Code provide for the designation of full-time safety
men to ensure compliance with the safety requirements prescribed by the
Bureau of Labor Standards. 7 Consequently, petitioners designation was
changed to Pollution Control and Safety Manager.
In the course of his employment, petitioners salary was regularly
upgraded; the last pay hike was granted on 28 March 1988 when he was
officially informed 8 that his salary was being increased to P23,100.00 per
month effective 1 April 1988. This last increase is indisputably a far cry
from his starting monthly salary of P4,230.00.
Sometime in the first week of November 1987, private respondent George
B. Ditching, who was then PRCs Personnel Administration Manager,
informed petitioner about the companys plan to declare the position of
Pollution Control and Safety Manager redundant. Ditching attempted to
convince petitioner to accept the redundancy offer or avail of the
companys early retirement plan. Petitioner refused and instead insisted on
completing his contract as he still had about three and a half (3 1/2) years
left before reaching the mandatory retirement age of sixty (60).
On 15 June 1988, Jesus P. Javelona, PRCs Engineering Department
Manager and petitioners immediate superior, formally informed the
petitioner that the position of "Safety and Pollution Control Manager will be
declared redundant effective at the close of work hours on 15th July 1988."
9 Petitioner was also notified that the functions and duties of the position
to be declared redundant will be absorbed and integrated with the duties
of the Industrial Engineering Manager; as a result thereof, the petitioner
"will receive full separation benefits provided under the PRC Retirement
Plan and additional redundancy payment under the scheme applying to
employees who are 50 years old and above and whose jobs have been
declared redundant by Management." chanrobles law library : red

On 1 April 1979, petitioner was also designated as Safety Manager

pursuant to Article 162 of the Labor Code (P.D. 442, as amended) and the
pertinent implementing rule thereon. At the time of such designation,
petitioner was duly accredited as a Safety Practitioner by the Bureau of
Labor Standards, Department of Labor and Employment (DOLE) and the
Safety Organization of the Philippines. Article 162 of the Labor Code, as
amended, provides:chanrobles virtual lawlibrary

Petitioner protested his dismissal via his 22 June 1988 letter to Javelona. 10
This notwithstanding, the PRC unilaterally circulated a clearance 11 dated
12 July 1988, to take effect on 15 July 1988, indicating therein that its
purpose is for the petitioners "early retirement" and not redundancy.
Petitioner confronted Javelona; the latter, in his letter dated 13 July 1988,
advised the former that the employment would be extended for another
month, or up to 15 August 1988. 12 Petitioner responded with a letter
dated 25 July 1988 threatening legal action. 13

ARTICLE 162. Safety and Health Standard. The Secretary of Labor shall,
by appropriate orders, set and enforce mandatory occupational safety and
health standards to eliminate or reduce occupational safety and health
hazards in all workplaces and institute new, and update existing, programs
to ensure safe and healthful working conditions in all places of

Subsequently, or on 14 July 1988, Bernardo N. Jambalos III, respondent

companys Industrial Relations Manager, sent a Notice of Termination 14 to
the Ministry of Labor and Employment (MOLE) informing the latter that the
petitioner was being terminated on the ground of redundancy effective 15
August 1988.

387

On 5 August 1988, petitioner had a meeting with private respondent Cesar

Bautista and Dr. Reynaldo Alejandro, PRCs President and Corporate Affairs
Director, respectively. To his plea that he be allowed to finish his contract of
employment as he only had three (3) years left before reaching the
mandatory retirement age, Bautista retorted that the termination was final.
On 8 August 1988, petitioner presented to Javelona a computation 15
showing the amount of P2,436,534.50 due him (petitioner) by way of
employee compensation and benefits.
On the date of the effectivity of his termination, petitioner was only fiftyseven (57) years of age. He had until 21 July 1991, his sixtieth (60th) birth
anniversary, before he would have been compulsorily retired.
Also, on the date of effectivity of petitioners termination, 16 August 1988,
Miguelito S. Navarro, PRCs Industrial Engineering Manager, was
designated as the Pollution Control and Safety Officer. Such appointment is
evidenced by two (2) company correspondences. In its letter dated 6
September 1988 to the Laguna Lake Development Authority, 16 PRC
informed the said Authority, to wit:jgc:chanrobles.com.ph
"With effect from 16 August 1988 the functions and duties of our Safety
and Pollution Control Officer has (sic) been integrated and absorbed with
those of our Industrial Engineering Manager.
x

The main tasks of our Industrial Engineering Manager, Mr. Miguelito S.

Navarro, now includes (sic) safety and pollution
control.chanrobles.com:cralaw:red
Attached to (sic) the bio-data of Mr. Navarro for your accreditation as our
designated Pollution Control Officer."cralaw virtua1aw library
In its letter to the Safety Organization of the Philippines 17 dated 14
December 1988, PRC articulated Mr. Miguelito S. Navarros designation as
"Safety Officer of Phil. Refining Company."cralaw virtua1aw library
In view of all this, petitioner filed a complaint for illegal dismissal with
damages against the private respondent PRC before the Arbitration Branch,
NLRC, National Capital Region; the case was docketed as NLRC-NCR Case
No. 00-08-03412-88. 18 After trial, respondent Labor Arbiter Manuel P.
Asuncion rendered a decision dated 19 February 1990, the dispositive
portion of which was quoted earlier.
Petitioner appealed the said decision to the NLRC which, in its decision of
14 January 1991, made the following findings:jgc:chanrobles.com.ph
"Respondent contended that complainant Orlando M. Escareal was

employed as Safety and Pollution Control Engineer on September 16, 1977;

that as part of the Companys policy to streamline the work force and to
keep the Organization more effective, it allegedly declared redundant
several positions from all levels and departments of the company; that the
position of Safety and Pollution Control Manager which the herein
complainant was holding at the time of dismissal, is one of those that were
affected; that the functions of Mr. Escareal were fused with the Industrial
Engineering Department, the latter being under the control and
supervision of Mr. Miguelito S. Navarro; that no replacement and/or new
appointment to said questioned position have (sic) been made; that
respondent terminated complainant on the ground of redundancy and
offered him P458,929.00 a separation pay; and that the above mentioned
amount, is far above what complainant can get under the Labor Code, as
amended.
x

The determination as to the usefulness of a particular department or

section as an integral aspect of company prerogative, may not be
questioned, the objective of which being to (sic) achieve profitability.
(Special Events Control Shipping Office Workers Union v. San Miguel
Corporation, 122 SCRA 557).
x

To submit to the argument of herein Complainant that there is no basis in

the managements decision to declare his position redundant is to deny the
company of its inherent prerogative, without due process of law.
x

Turning to another issue of whether or not a fixed period of employment

has been concluded, suffice it to say that it lacks legal and factual
basis.chanrobles virtual lawlibrary
x

If indeed, a fixed period of contract of employment has been concluded

under the circumstances, the complainant would not have acceded to have
undergone a probationary period. The (sic) latter being a condition sinequa non before he became a regular worker. Consequently, the averment
of breach of Contract pursuant to Article 1159, 1306 and 1308 of the New
Civil Code of the Phils., is not in point. Additionally, to subscribe to the
protestation of herein complainant that the reference of the retirement age
at 60 in the companys letter dated August 22, 1977 meant fixed duration

388

is to tie the hands of management in doing what is necessary to meet the

exigencies of the business . . ."cralaw virtua1aw library
and then ruled that:jgc:chanrobles.com.ph
"WHEREFORE, the appealed decision is hereby Affirmed, with modification
ordering respondent-company to pay complainant his retirement pay in
accordance with the company policy and other benefits granted to him
thereunder, less outstanding obligations of the complainant with the
company at the time of his dismissal." 19
Undaunted by this second setback, the petitioner filed a Motion for
Reconsideration 20 of this decision on 25 January 1991. Private respondent
PRC also filed its own motion for reconsideration on the ground that
petitioner is entitled to only one (1) benefit, and not to both. In a
Resolution promulgated on 13 May 1991, the NLRCs First Division 21 ruled
as follows:jgc:chanrobles.com.ph
"WHEREFORE, in view thereof, the complainants motion for
reconsideration other than his pecuniary interest is hereby Dismissed for
lack of merit. Accordingly, respondent-company (PRC) is ordered to pay Mr.
Escareals redundancy benefits in accordance with the company policy on
the matter as follows:chanrob1es virtual 1aw library
(a) Retirement credit of 1.5 months pay for every year of service in the
amount of P363,825.00; and
(b) Ex-gratia, amounting to:chanrob1es virtual 1aw library
P81,496.80

TOTAL P445,321.80"

RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN (sic) EXCESS OF JURISDICTION IN AFFIRMING
THE DECISION OF THE RESPONDENT LABOR ARBITER THAT PETITIONERS
TERMINATION AS POLLUTION CONTROL AND SAFETY MANAGER OF
RESPONDENT PRC ON THE GROUND OF REDUNDANCY WAS VALID
TOTALLY IGNORING THE FACT THAT PETITIONERS POSITION WAS NEVER
ABOLISHED BUT WAS MERELY GIVEN TO ANOTHER EMPLOYEE (MIGUELITO
S. NAVARRO) WHO WAS IMMEDIATELY DESIGNATED AS A REPLACEMENT.
II
RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN (sic) EXCESS OF JURISDICTION IN DECLARING
THAT PETITIONERS WRITTEN CONTRACT OF EMPLOYMENT WITH
RESPONDENT PRC WAS NOT FOR A DEFINITE PERIOD, AND THAT IT IS NOT
VIOLATED NOTWITHSTANDING THE FACT THAT RESPONDENT PRC
PREMATURELY SHORTENED PETITIONERS RETIREMENT AGE AT 57 INSTEAD
OF 60.
III
RESPONDENT NLRC COMMITTED A VERY SERIOUS ERROR AMOUNTING TO
LACK OR IN (sic) EXCESS OF JURISDICTION IN DECLARING THAT THE
PETITIONER IS NOT ENTITLED TO ANY SEPARATION PAY SUCH AS CASH
EQUIVALENT OF HIS ACCUMULATED VACATION AND SICK LEAVE CREDITS,
REDUNDANCY PAY, BONUSES, ETC., BUT ONLY TO HIS RETIREMENT
BENEFITS UNDER THE PRC RETIREMENT PLAN UP TO AUGUST 16, 1988
(DATE OF HIS TERMINATION).
IV

As a consequence thereof, the instant petition was filed on 29 May 1991.

22 Private respondent PRC filed its Comment on 21 August 1991 23 while
the public respondent, through the Office of the Solicitor General, filed its
Comment on 10 October 1991. 24
On 16 October 1991, 25 this Court resolved, inter alia, to give due course
to the petition and require the parties to file their respective Memoranda
Petitioner complied with this Resolution on 12 December 1991; 26 public
respondent NLRC, on the other hand, filed its Memorandum only on 24
March 1992. 27
In his thorough and exhaustive Memorandum, herein petitioner makes the
following assignment of errors:chanrobles law library : red
"I

RESPONDENT NLRC SERIOUSLY ERRED IN DECLARING THAT PETITIONER IS

NOT ENTITLED TO DAMAGES, NOTWITHSTANDING RESPONDENT PRCS AND
ITS OFFICERS EVIDENT BAD FAITH, WANTON AND PATENT VIOLATION OF
PETITIONERS WRITTEN CONTRACT OF EMPLOYMENT.
V
RESPONDENT NLRC GRAVELY ERRED IN NOT AWARDING PETITIONER AN
AMOUNT FOR ATTORNEYS FEE EQUIVALENT TO TEN (10%) PERCENT OF
THE AMOUNT DUE, NOTWITHSTANDING THAT PETITIONER WAS COMPELLED
TO LITIGATE BY REASON OF HIS ILLEGAL DISMISSAL AND OF RESPONDENT
PRCS AND ITS OFFICERS MALICIOUS AND WANTON ACTS." 28

389

We find for the petitioner.chanrobles law library : red

Article 283 of the Labor Code provides:jgc:chanrobles.com.ph
"ARTICLE 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 workers and the
Ministry of Labor and Employment 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 one (1) whole year."cralaw virtua1aw library
In Wiltshire File Co., Inc. v. NLRC, 29 this Court held that redundancy, for
purposes of the Labor Code, exists where the services of an employee are
in excess of what is reasonably demanded by the actual requirements of
the enterprise; a position is redundant when it is superfluous, and
superfluity of a position or positions may be the outcome of a number of
factors, such as the overhiring of workers, a decreased volume of business
or the dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. 30 Redundancy in an
employers personnel force, however, does not necessarily or even
ordinarily refer to duplication of work. That no other person was holding
the same position which the dismissed employee held prior to the
termination of his services does not show that his position had not become
redundant.
Private respondent PRC had no valid and acceptable basis to declare the
position of Pollution Control and Safety Manager redundant as the same
may not be considered as superfluous; by the express mandate of the
provisions earlier cited, said positions are required by law. Thus, it cannot
be gainsaid that the services of the petitioner are in excess of what is
reasonably required by the enterprise. Otherwise, PRC would not have
allowed ten (10) long years to pass before opening its eyes to that fact;
neither would it have increased the petitioners salary to P23,100.00 a
month effective 1 April 1988. The latter by itself is an unequivocal
admission of the specific and special need for the position and an open
recognition of the valuable services rendered by the petitioner. Such
admission and recognition are inconsistent with the proposition that
petitioners positions are redundant. It cannot also be argued that the said

functions were duplicative, and hence could be absorbed by the duties

pertaining to the Industrial Engineering Manager. If indeed they were, and
assuming that the Industrial Engineering department of the PRC had been
created earlier, petitioners positions should not have been created and
filled up. If, on the other hand, the department was created later, and there
is no evidence to this effect, and it was to absorb the petitioners positions,
then there would be no reason for the unexplained delay in its
implementation, the restructuring then should have been executed long
before the salary increases in petitioners favor. That petitioners positions
were not duplicitous is best evidenced by the PRCs recognition of their
imperative need thereof, this is underscored by the fact that Miguelito S.
Navarro, the companys Industrial Engineering Manager, was designated as
Pollution Control and Safety Manager on the very same day of petitioners
termination. While the petitioner had over ten (10) years of experience as
a pollution control and safety officer, Navarro was a virtual greenhorn
lacking the requisite training and experience for the assignment. A cursory
perusal of his bio-data 31 reveals that it was only several months after his
appointment that he attended his first Occupational Safety & Health
Seminar (14-17 November 1988), moreover, it was only after his second
seminar (Loss Control Management Seminar 6-9 December 1988) that
the PRC requested his accreditation with the Safety Organization of the
Philippines. 32 In trying to prop up Navarros competence for the position,
PRC alleges that the former finished from the University of the Philippines
with a degree in Chemical Engineering, took some units in pollution in the
process and had "undergone job training in pollution in cement firms
through the Bureau of Mines." 33 Compared to the training and experience
of the petitioner, Navarros orientation would seem to pale.chanrobles
virtual lawlibrary
The private respondent alleges further 34 that its decision to declare
petitioners position as redundant "stemmed from its well-considered view
that in order for the corporations safety and pollution program to be more
effective, such program would have to be tied up with the functions of the
Industrial Engineering Manager." It is further posited that since the job of
safety and pollution engineer "requires coordination with operating
departments, knowledge of the manufacturing processes, and adequate
presence in plant areas, a task which the companys safety and pollution
control officer would not be up to as he works singlehandedly, it is only the
Industrial Engineer, commanding a department of five (5) engineers and
one (1) clerk, who can live up to corporate expectations. Indeed, the
proposition that a department manned by a number of engineers
presumably because of the heavy workload, could still take on the
additional responsibilities which were originally reposed in an altogether
separate section headed by the petitioner, is difficult to accept. It seems
more reasonable to view the set-up which existed before the termination
as being more conducive to efficient operations. And even if We were to
sustain PRCs explanation, why did it so suddenly incorporate functions
after the separate position of Pollution and Safety Control Manager had
existed for over ten (10) years? No effort whatsoever was undertaken to
gradually integrate both functions over this span of time. Anent this

390

specific point, all that the private respondent has to say is that the
declaration of redundancy was made pursuant to its continuing program,
which has been ongoing for the past ten (10) years, of streamlining the
personnel complement and maintaining a lean and effective organization.
35
Furthermore, if PRC felt that either the petitioner was incompetent or that
the task could be performed by someone more qualified, then why is it that
the person designated to the position hardly had any experience in the
field concerned? And why reward the petitioner, barely five (5) months
before the dismissal, with an increase in salary? Assuming PRCs good
faith, it would still seem quite surprising that it did not at least provide a
transition period wherein the Industrial Engineering Manager would be
adequately trained for his new assignment; such reckless conduct is not
the expected behavior of a well-oiled and progressive multinational
company. Petitioner himself could have very well supervised a training and
familiarization program which could have taken the remaining three (3)
years of his employment. But no such move was initiated. Instead, a clever
scheme to oust the petitioner from a position held for so long was hatched
and implemented. On the very same day of petitioners termination, the
position vacated was resurrected and reconstituted as a component of the
position of Industrial Engineering Manager. After more than ten (10) years
of unwavering service and loyalty to the company, the petitioner was so
cruelly and callously dismissed.chanrobles.com:cralaw:red
What transpired then was a substitution of the petitioner by Miguelito S.
Navarro. If based on the ground of redundancy, such a move would be
invalid as the creation of said position is mandated by the law; the same
cannot therefore be declared redundant. If the change was effected to
consolidate the functions of the pollution control and safety officer with the
duties of the Industrial Engineering Manager, as private respondent
postulates, such substitution was done in bad faith for as had already been
pointed out, Miguelito S. Navarro was hardly qualified for the position. If
the aim was to generate savings in terms of the salaries that PRC would
not be paying the petitioner any more as a result of the streamlining of
operations for improved efficiency, such a move could hardly be justified in
the face of PRCs hiring of ten (10) fresh graduates for the position of
Management Trainee 36 and advertising for vacant positions in the
Engineering/Technical Division at around the time of the termination. 37
Besides, there would seem to be no compelling reason to save money by
removing such an important position. As shown by their recent financial
statements, PRCs year-end net profits had steadily increased from 1987 to
1990. 38 While concededly, Article 283 of the Labor Code does not require
that the employer should be suffering financial losses before he can
terminate the services of the employee on the ground of redundancy, it
does not mean either that a company which is doing well can effect such a
dismissal whimsically or capriciously. The fact that a company is suffering
from business losses merely provides stronger justification for the
termination.

The respondent NLRC 39 relied on Wiltshire File Co., v. NLRC 40 in declaring

that the employer has no legal obligation to keep in its payroll more
employees than are necessary for the operation of its business. Aside from
the fact that in the case at bar, there was no compelling reason to dismiss
the petitioner as the company was not incurring any losses, the position
declared redundant in the Wiltshire case was that of a Sales Manager, a
management created position. In the case at bar, petitioners position is
one created by law.
The NLRC adds further that the termination was effected in the exercise of
management prerogative and that account should also be taken of the "life
of the company which is . . . an active pillar of our economy and upon
whose existence still depends the livelihood of a great number of workers."
41 It goes on to observe that" [t]he records are bereft of proof which could
have been the basis of vengeful termination other than the companys
legitimate objective to trim its work force." 42 In the face of the
circumstances surrounding the dismissal, this Court finds it extremely
difficult to give credence to such conclusions.
Thus, it is evident from the foregoing that petitioners right to security of
tenure was violated by the private respondent PRC. Both the Constitution
(Section 3, Article XIII) and the Labor Code (Article 279, P.D. 442, as
amended) enunciate this right as available to an employee. In a host of
cases, this Court has upheld the employees right to security of tenure in
the face of oppressive management behavior and management
prerogative. 43 Security of tenure is a right which may not be denied on
mere speculation of any unclear and nebulous basis. 44
In this regard, it could be concluded that the respondent PRC was merely in
a hurry to terminate the services of the petitioner as soon as possible in
view of the latters impending retirement; it appears that said company
was merely trying to avoid paying the retirement benefits the petitioner
stood to receive upon reaching the age of sixty (60). PRC acted in bad
faith.chanrobles law library : red
Both the Labor Arbiter and the respondent NLRC clearly acted with grave
abuse of discretion in disregarding the facts and in deliberately closing
their eyes to the unlawful scheme resorted to by the PRC.
We cannot, however, subscribe to the theory of petitioner that his
employment was for a fixed definite period to end at the celebration of his
sixtieth (60th) birthday because of the stipulation as to the retirement age
of sixty (60) years. The Solicitor Generals refutation, to
wit:jgc:chanrobles.com.ph
"A perusal of the provision in the August 22, 1977 letter cited by petitioner
merely informs him of the company policy which pegs the compulsory
retirement age of its employees at 60 and which commences on the date
of the employees 60th birthday. It likewise informs him that the company
recognizes the right of the employee to retire voluntarily, which option can

391

be availed of when the employee reaches his 50th birthday. Clearly, the
cited provision is limited solely to the pertinent issue of retirement." 45
is correct.
An examination of the contents of the contract of employment 46 yields
the conclusion arrived at by the Solicitor General. There is no indication
that PRC intended to offer uninterrupted employment until the petitioner
reached the mandatory retirement age, it merely informs the petitioner of
the compulsory retirement age and the terms pertaining to the retirement.
In Brent School, Inc. v. Zamora, 47 this Court, in upholding the validity of a
contract of employment with a fixed or specific period, declared that the
"decisive determinant in term employment should not be the activities that
the employee is called upon to perform, but the day certain agreed upon
by the parties for the commencement and termination of their employment
relationship, a day certain being understood to be that which must
necessarily come, although it may not be known when." 48 The term
period was further defined to be, "Length of existence; duration. A point of
time marking a termination as of a cause or an activity; an end, a limit, a
bound; conclusion; termination. A series of years, months or days in which
something is completed. A time of definite length. . . . the period from one
fixed date to another fixed date . . ." 49
The letter to the petitioner confirming his appointment does not
categorically state when the period of employment would end. It stands to
reason then that petitioners employment was not one with a specific
period.chanrobles law library
Coming to the third assigned error, since We have concluded that the
petitioners dismissal was illegal and can not be justified under a valid
redundancy initiative, Article 283 of the Labor Code, as amended, on the
benefits to be received by the dismissed employee in the case of
redundancy, retrenchment to prevent losses, closure of business or the
installation of labor saving devices, is not applicable. Instead, We apply
Article 279 thereof which provides, in part, that 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."cralaw virtua1aw library
In Torillo v. Leagardo, Jr., 50 an amplification was made on Article 279 of
the Labor Code and the distinction between separation pay and
backwages. Citing the case of Santos v. NLRC, 51 We held in the
former:jgc:chanrobles.com.ph
"The normal consequences of a finding that an employee has been illegally
dismissed are, firstly, that the employee becomes entitled to reinstatement
to his former position without loss of seniority rights and, secondly, the

payment of backwages corresponding to the period from his illegal

dismissal up to actual reinstatement.
x

Though the grant of reinstatement commonly carries with it an award of

backwages, the inappropriateness or non-availability of one does not carry
with it the inappropriateness or non-availability of the other.
x

Put a little differently, payment of backwages is a form of relief that

restores the income that was lost by reason of unlawful dismissal,
separation pay, in contrast, is oriented towards the immediate future, the
transitional period the dismissed employee must undergo before locating a
replacement job."cralaw virtua1aw library
Reinstatement then of the petitioner would have been proper. However,
since he reached the mandatory retirement age on 21 July 1991,
reinstatement is no longer feasible. He should thus be awarded his
backwages from 16 August 1988 to 21 July 1991, inclusive of allowances
and the monetary equivalent of the other benefits due him for that period,
plus retirement benefits under the PRCs compulsory retirement scheme
which he would have been entitled to had he not been illegally dismissed.
Finally, anent the last two (2) assigned errors, this Court notes that in his
complaint and the attached Affidavit-Complaint, 52 petitioner does not
mention any claim for damages and attorney s fees; furthermore, no
evidence was offered to prove them. An award therefor would not be
justified.chanroblesvirtualawlibrary
WHEREFORE, judgment is hereby rendered GRANTING the petition,
SETTING ASIDE the Decision and Resolution of respondent National Labor
Relations Commission, dated 14 January 1991 and 13 May 1991,
respectively in Labor Case No. NLRC-NCR-00-08-03412-88 and ORDERING
private respondent Philippine Refining Co., Inc. to pay petitioner Orlando M.
Escareal his backwages from 16 August 1988 to 21 July 1991 inclusive of
allowances and the monetary equivalent of other benefits due him for that
period, as well as his retirement pay and other benefits provided under the
formers compulsory retirement scheme. The respondent Labor Arbiter or
his successor is hereby directed to make the appropriate computation of
these awards within twenty (20) days from receipt of a copy of this
Decision, which respondent Philippine Refining Co., Inc. shall pay to the
petitioner within ten (10) days from notice thereof.
Costs against private respondent Philippine Refining Co.,
Inc.chanrobles.com : virtual law library

392

SO ORDERED

393

G.R. No. 101539 September 4, 1992

CECILE DE OCAMPO, WILFREDO SAN PEDRO, REYNALDO DOVICAR,
BIEN MEDINA, CESAR ABRIOL, ARTEMIO CASTRO, LARRY
ALCANTARA, MICHAEL NOCUM, JESUS DEO JR., PUBLEO DARAG,
EDUARDO BINO, EDUARDO VELES, ERVIN DAVID, PROTACIO PEREZ,
NOEL VICTOR, ELENO DACATIMBAN, ANTONIO BERNARDO, CARLITO
VICTORIA, TIMOTEO MIJARES, ALEX RAMOS, REYNALDO CRUZ,
MODESTO MAMESIA, DOMINGO SILARDE, RENATO PUENTAS, RENE
VILLANUEVA, MARCELO DELA CRUZ and HERNANDO
LEGASPI, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION and BALIWAG
MAHOGANY CORPORATION, respondents.

MEDIALDEA, J.:
This Petition for certiorari seeks to annul and set aside the resolution
issued by the respondent National Labor Relations Commission on July 8,
1991, in Certified Case No. 0548 entitled "In Re: Labor Dispute at Baliwag
Mahogany Corporation," affirming with modification its previous decision
dated October 23, 1990, declaring the union officers and/or members who
participated in the illegal strike staged on February 6, 1990 to have lost
their status of employment; and directing private respondent Baliwag
Mahogany Corporation to pay separation pay to certain employees and to
reinstate without backwages all union Members not found to have
committed prohibited acts.
The antecedent facts are as follows:
Petitioners Cecile de Ocampo, Wilfredo San Pedro, Reynaldo Dovicar, Bien
Medina, Cesar Abriol, Artemio Castro, Larry Alcantara, Michael Nocum,
Jesus Deo, Jr., Publeo Darag, Eduardo Bino, Eduardo Veles, Ervin David,
Prostacio Perez, Noel Victor, Eleno Dacatimban, Antonio Bernardo, Carlito
Victoria, Timoteo Mijares, Alex Ramos, Reynaldo Cruz, Modesto Mamesia,
Domingo Silarde, Renato Puertas, Rene Villanueva, Marcelo dela Cruz and
Hernando Legaspi are employees of private respondent Baliwag Mahogany
Corporation. They are either officers or members of the Baliwag Mahogany
Corporation Union-CFW, the existing collective bargaining agent of the
rank and file employees in the company. Private respondent Baliwag

Mahogany Corporation is an enterprise engaged in the production of

wooden doors and furniture and has a total workforce of about 900
employees.
In 1988, private respondent Baliwag Mahogany Corporation (company) and
Baliwag Mahogany Corporation Union-CFW (union) entered into a collective
bargaining agreement containing, among other things, provisions on
conversion into cash of unused vacation and sick leaves; grievance
machinery procedure; and the right of the company to schedule work on
Sundays and holidays.
In November, 1989, the union made several requests from the company,
one of which was the cash conversion of unused vacation and sick leave
for 1987-1988 and 1988-1989.
Acting on the matter, the company ruled to allow payment of unused
vacation and sick leaves for the period of 1987-1988 but disallowed cash
conversion of the 1988-1989 unused leaves.
On January 3, 1990, the company issued suspension orders affecting
twenty (20) employees for failure to render overtime work on December
30, 1989. The suspension was for a period of three (3) days effective
January 3, 1996 to January 5, 1990.
On the same day, the union filed a notice of strike on the grounds of unfair
labor practice particularly the violation of the CBA provisions on nonpayment of unused leaves and illegal dismissal of seven (7) employees in
November, 1989.
On January 13, 1990, the company issued a notice of termination to three
(3) employees or union members, namely, Cecile de Ocampo, Rene
Villanueva and Marcelo dela Cruz, of the machinery department, allegedly
to effect cost reduction and redundancy.
The members of the union conducted a picket at the main gate of the
company on January 18, 1990.
On the same day, the company filed a petition to declare the strike illegal
with prayer for injunction against the union, Cecile de Ocampo, Wilfredo
San Pedro and Rene Aguilar.

394

An election of officers was conducted by the union on January 19, 1990.

Consequently, Cecile de Ocampo was elected as president.

On February 25, 1990, the company caused the publication of his return to
work order in two (2) newspapers, namely NGAYON and ABANTE.

During the conciliation meeting held at National Conciliation and Mediation

Board (NCMB) on January 22, 1990 relative to the notice of strike filed by
the union on January 3, 1990, the issue pertaining to the legality of the
termination of three (3) union members was raised by the union. However,
both parties agreed to discuss it separately.

In its letter dated February 27, 1990, the union, through its President Cecile
de Ocampo, requested the Regional Director of DOLE, Region III to
intervene in the existing dispute with management.

Subsequently, in a letter dated January 28, 1990, the union requested for
the presence of a NCMB representative during a strike vote held by the
union. The strike vote resulted to 388 votes out of 415 total votes in favor
of the strike.

Meanwhile, the company extended the February 26, 1990 deadline for the
workers to return to work until March 15, 1990.
The respondent Commission rendered a decision on October 23, 1990,
declaring the strikes staged on January 18, 1990 and February 6, 1990
illegal, the dispositive portion of which provides as follows, to wit:

Consequently, the union staged a strike on February 6, 1990.

WHEREFORE, judgment is hereby rendered as follows:

On February 7, 1990, the company filed a petition to assume jurisdiction

with the Department of Labor and Employment.

1. The strike staged on January 18, 1990 is hereby declared

illegal and all employees who participated therein are
reprimanded therefor or an further warned that future
similar acts shall be dealt more severely;

On February 16, 1990, the company filed an amended petition, praying

among other things, that the strike staged by the union on February 6,
1990 be declared illegal, there being no genuine strikeable issue and the
violation of the no-strike clause of the existing CBA between the parties.
The Secretary of Labor in an order dated February 15, 1990, certified the
entire labor dispute to the respondent Commission for compulsory
arbitration and directed all striking workers including the dismissed
employees to return to work and the management to accept them back.
The company filed an urgent motion for assignment of a sheriff to enforce
the order of the Secretary.
In an order dated February 22, 1990, the Secretary of Labor directed
Sheriff Alfredo Antonio, Jr., to implement the order.
On February 23, 1990, the sheriff, with the assistance of the PC/INP of San
Rafael, removed the barricades and opened the main gate of the company.
Criminal complaints for illegal assembly, grave threats, and grave coercion
were filed against Cecile de Ocampo, Timoteo Mijares, Modesto Mamesia
and Domingo Silarde by the local police authorities on February 24, 1990.

2. The strike staged on February 6, 1990 is hereby declared

illegal and the Union officers/members are deemed
suspended from March 15, 1990 the last deadline of the
company for them to report to the date of promulgation of
this Decision. In short, the Union officers/members are
ordered reinstated to their positions but without
backwages;.
3. Baliwag Mahogany Corporation is hereby directed to
immediately reinstate Cecile de Ocampo, Rene Villanueva
and Marcelo dela Cruz to their former positions without loss
of seniority rights to pay them full backwages for the
period from January 17, 1990 to March 15, 1990 only;
4. The Baliwag Mahogany Corporation is hereby directed to
immediately reinstate Alex Ramos, Ronaldo Cruz, Fernando
Hernandez, Renato Puertas, Hernando Legaspi to their
former positions and to pay them backwages from date of
dismissal to March 15, 1990 only;

395

5. The Baliwag Mahogany Corporation is hereby

exonerated of the charge of unfair labor practice;
6. The Baliwag Mahogany Corporation is directed to pay its
employment the cash equivalent of unused sick leaves for
year 1989;
7. The Baliwag Mahogany Corporation is directed to remit
to the Union the dues for the month of January 1990.
SO ORDERED. (Rollo, pp. 68-69)
Such decision prompted the company to file a motion for reconsideration
substantially on the ground that public respondent seriously erred in not
dismissing the employees particularly the union officers, who participated
in the illegal strike.
In its supplemental motion for reconsideration, the company contended
that as a result of the strike, it failed to meet the purchase orders for the
quarter valued at fifteen million pesos.
Petitioners filed an opposition to the company's motion for reconsideration
and subsequently a supplemental comment/opposition to motion for
reconsideration.
On December 13, 1990, the respondent Commission directed the Labor
Arbiter to receive evidence on the issues raised in the motion for
reconsideration and additional evidence on the issues already passed upon
and to submit a report thereon.
On July 8, 1991, the respondent Commission rendered a resolution
affirming with modification the decision dated October 23, 1990, the
dispositive portion of which provides as follows:
WHEREFORE, premises considered, the Decision of October
23, 1990 is hereby MODIFIED, to wit:
1. The strike staged on February 6, 1990 is hereby declared
illegal and the Union officers/members who participated in
said strike committed prohibited acts are deemed to have
lost their status of employment, to wit:

1. Cecile de Ocampo
2. Wilfredo San Pedro
3. Reynaldo Aguilar
4. Bren Medina (Bien Medina)
5. Cesar Abriol
6. Artemio Castro
7. Larry Alcantara
8. Melie Nocum (Michael Nocum)
9. Jesus Deo, Jr.
10. Publeo Darag
11. Eduardo Bino
12. Eduardo Vices (Eduardo Veles)
13. Abroin David (Ervin David)
14. Protacio Perez (Prostacio Perez)
15. Celso Sarmiento
16. Neol Vicbon (Noel Victor)
17. Alano Dacatimban (Eleno Dacatimban)
18. Antonio Bernardo
19. Carlito Victoria
20. Timoteo Mijares
21. Alex Ramos
22. Reynaldo Cruz
23. Modesto Manesia
24. Domingo Silarde
25. Renato Puertas
26. Hernando Legaspi
2. The Baliwag Mahogany Corporation is directed to pay
Cecile de Ocampo, Rene Villanueva and Marcelo Cruz
separation pay computed at one month per year of service
in addition to one month pay as indemnification pay for
lack of notice (Art. 283, Labor Code).
3. The Baliwag Mahogany Corporation is directed to pay
Alex Ramos, Reynaldo Cruz, Renato Puertas, Hernando
Legaspi separation pay computed at one (1) month per
year of service in addition to backwages limited to six (6)
months.
4. The Baliwag Mahogany Corporation is directed to
reinstate but without backwages all Union members not
found herein to have committed prohibited acts nor found

396

to have accepted settlement from it nor have voluntarily

left the Company for reasons of their own.
5. All other findings in the questioned Decision are
affirmed.
SO ORDERED. (Rollo, pp. 45-47)
Hence, this present petition raising three (3) issues, to wit:
1. Whether or not there is legal basis for declaring the loss
of employment status by petitioners on account of the
strike in respondent Company.
2. Whether or not the dismissals of petitioners Cecile de
Ocampo, Rene Villanueva, and Marcelo dela Cruz from their
positions by the company on the ground of redundancy
was done in good faith.
3. Whether or not respondent NLRC acted correctly in
allowing respondent company to submit additional
evidence in support of its Motion for Reconsideration and in
giving credence to the said evidence despite the fact that
the same were not newly-discovered evidence as defined
under the Rules of Court. (Rollo, p. 11)
After a careful review of the records of this case, the Court finds the
petition devoid of merit.
Petitioners insist that there is no specific finding by the respondent
commision regarding the particular participation of the individual
petitioners in the supposed acts of violence or commission of prohibited
acts during the strike such as denial of free ingress to the premises of the
company and egress therefrom as well as illegal acts of coercion during the
February, 1990 strike.
The Solicitor General disagrees and claims that it is undisputed that the
union resorted to illegal acts during the strike arguing that private
respondent's personnel manager specifically identified the union officers
and members who committed the prohibited acts and actively participated
therein.

Moreover, the Solicitor General maintains that the illegality of the strike
likewise stems from the failure of the petitioners to honor the certification
order and heed the return-to-work order issued by the Secretary of Labor.
Answering this contention, the petitioners argued that their failure to
immediately return to work was not impelled by any malicious or
malevolent motive but rather, by their apprehension regarding their
physical safety due to the presence of military men in the factory who
might cause them harm.
The law on the matter is Article 264 (a) of the Labor Code, to wit:
Article 264. (a) Prohibited activities. (a)
No strike or lockout shall be declared after assumption of
jurisdiction by the President or the Minister or after
certification or submission of the dispute to compulsory or
voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout.
Any worker whose employment has been terminated as a
consequence of an unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who
knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission
of illegal acts during a strike may be declared to have lost
his employment status: Provided, That mere participation
of a worker in a lawful strike shall not constitute sufficient
ground for termination of his employment, even if a
replacement had been hired by the employer during such
lawful strike.
The clear mandate of the aforequoted article was stressed in the case
of Union of Filipro Employees v. Nestle Philippines, Inc. (G.R. Nos. 8871013, December 19, 1990, 192 SCRA 396, 411) where it was held that a
strike that is undertaken despite the issuance by the Secretary of Labor of
an assumption or certification order becomes a prohibited activity and thus
illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as
Amended and the Union officers and members, as a result, are deemed to
have lost their employment status for having knowingly participated in an
illegal act.

397

Unrebutted evidence shows that the individual petitioners defied the

return-to-work order of the Secretary of Labor issued on February 15, 1990.
As a matter of fact, it was only on February 23, 1990 when the barricades
were removed and the main gate of the company was opened. Hence, the
termination of the services of the individual petitioners is justified on this
ground alone.
Anent the contention that the respondent Commission gravely abused its
discretion when it allowed the presentation of additional evidence to prove
the loss suffered by the company despite the fact that they were mere
afterthoughts and just concocted by the company, time and again, We
emphasize that "technical rules of evidence are not binding in labor cases.
Labor officials should use every and reasonable means to ascertain the
facts in each case speedily and objectively, without regard to technicalities
of law or procedure, all in the interest of due process" (Philippine Telegraph
and Telephone Corporation v. National Labor Relations Commission, G.R.
No. 80600, March 21, 1990, 183 SCRA 451, 457).
Turning to the legality of the termination of three (3) of the individual
petitioners, petitioners contend that the company acted in bad faith when
it terminated the services of the three mechanics because the positions
held by them were not at all abolished but merely given to Gemac
Machineries.
On the contrary, the company stresses that when it contracted the services
of Gemac Machineries for the maintenance and repair of its industrial
machinery, it only adopted a cost saving and cost-consciousness program
in order to improve production efficiency.
We sustain respondent Commission's finding that petitioners' dismissal was
justified by redundancy due to superfluity and hence legal.
We believe that redundancy, for purposes of our Labor Code, exists where
the services of an employee are in excess of what is reasonably demanded
by the actual requirement of the enterprise. Succinctly put, a position is
redundant where it is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as over hiring of workers,
decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise.
The employer had no legal obligation to keep in its payroll more
employees, than are necessary for the operation of its business. (Wiltshire
File Co., Inc. v. National Labor Relations Commission, G.R. No. 82249,
February 7, 1991; 193 SCRA 665,672).

The reduction of the number of workers in a company made necessary by

the introduction of the services of Gemac Machineries in the maintenance
and repair of its industrial machinery is justified. There can be no question
as to the right of the company to contract the services of Gemac
Machineries to replace the services rendered by the terminated mechanics
with a view to effecting more economic and efficient methods of
production.
In the same case, We ruled that "(t)he characterization of (petitioners')
services as no longer necessary or sustainable, and therefore properly
terminable, was an exercise of business judgment on the part of (private
respondent) company. The wisdom or soundness of such characterization
or decision was not subject to discretionary review on the part of the Labor
Arbiter nor of the NLRC so long, of course, as violation of law or merely
arbitrary and malicious action is not shown" (ibid, p. 673).
In contracting the services of Gemac Machineries, as part of the company's
cost-saving program, the services rendered by the mechanics became
redundant and superfluous, and therefore properly terminable. The
company merely exercised its business judgment or management
prerogative. And in the absence of any proof that the management abused
its discretion or acted in a malicious or arbitrary manner, the court will not
interfere with the exercise of such prerogative.
Well-settled is the rule that the factual findings of administrative bodies are
entitled to great weight, and these findings are accorded not only respect
but even finality when supported by substantial evidence (Family Planning
Organization of the Philippines, Inc. v. National Labor Relations
Commission, G.R. No. 75987, March 23, 1992, p. 7 citing Asian
Construction and Development Corporation v. National Labor Relations
Commission, G.R. No. 85866, July 24, 1998, 187 SCRA 784, 787). Hence,
the truth or the falsehood of alleged facts is not for this Court now to reexamine.
In the light of the foregoing considerations, it is clear that the assailed
resolution of the respondent Commission is not tainted with arbitrariness
nor grave abuse of discretion.
ACCORDINGLY, the petition is DISMISSED for lack of merit and the
resolution of the respondent Commission dated July 8, 1991 is hereby
AFFIRMED.

398

SO ORDERED.

399

[G.R. No. 142293. February 27, 2003]

VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION,
and SBT[1] TRUCKING CORPORATION, petitioners, vs. HON.
COURT OF APPEALS and JAIME SAHOT, respondents.
DECISION
QUISUMBING, J.:
This petition for review seeks the reversal of the decision [2] of the
Court of Appeals dated February 29, 2000, in CA-G.R. SP No. 52671,
affirming with modification the decision [3] of the National Labor Relations
Commission promulgated on June 20, 1996 in NLRC NCR CA No. 01052696. Petitioners also pray for the reinstatement of the decision [4] of the
Labor Arbiter in NLRC NCR Case No. 00-09-06717-94.
Culled from the records are the following facts of this case:
Sometime in 1958, private respondent Jaime Sahot [5] started working
as a truck helper for petitioners family-owned trucking business named
Vicente Sy Trucking. In 1965, he became a truck driver of the same family
business, renamed T. Paulino Trucking Service, later 6Bs Trucking
Corporation in 1985, and thereafter known as SBT Trucking Corporation
since 1994.Throughout all these changes in names and for 36 years,
private respondent continuously served the trucking business of
petitioners.
In April 1994, Sahot was already 59 years old. He had been incurring
absences as he was suffering from various ailments. Particularly causing
him pain was his left thigh, which greatly affected the performance of his
task as a driver. He inquired about his medical and retirement benefits with
the Social Security System (SSS) on April 25, 1994, but discovered that his
premium payments had not been remitted by his employer.
Sahot had filed a week-long leave sometime in May 1994. On May
27th, he was medically examined and treated for EOR, presleyopia,
hypertensive retinopathy G II (Annexes G-5 and G-3, pp. 48, 104,
respectively),[6] HPM, UTI, Osteoarthritis (Annex G-4, p. 105), [7] and heart
enlargement (Annex G, p. 107). [8] On said grounds, Belen Paulino of the
SBT Trucking Service management told him to file a formal request for

extension of his leave. At the end of his week-long absence, Sahot applied
for extension of his leave for the whole month of June, 1994. It was at this
time when petitioners allegedly threatened to terminate his employment
should he refuse to go back to work.
At this point, Sahot found himself in a dilemma. He was facing
dismissal if he refused to work, But he could not retire on pension because
petitioners never paid his correct SSS premiums. The fact remained he
could no longer work as his left thigh hurt abominably. Petitioners ended
his dilemma. They carried out their threat and dismissed him from work,
effective June 30, 1994. He ended up sick, jobless and penniless.
On September 13, 1994, Sahot filed with the NLRC NCR Arbitration
Branch, a complaint for illegal dismissal, docketed as NLRC NCR Case No.
00-09-06717-94. He prayed for the recovery of separation pay and
attorneys fees against Vicente Sy and Trinidad Paulino-Sy, Belen Paulino,
Vicente Sy Trucking, T. Paulino Trucking Service, 6Bs Trucking and SBT
Trucking, herein petitioners.
For their part, petitioners admitted they had a trucking business in the
1950s but denied employing helpers and drivers. They contend that
private respondent was not illegally dismissed as a driver because he was
in fact petitioners industrial partner. They add that it was not until the year
1994, when SBT Trucking Corporation was established, and only then did
respondent Sahot become an employee of the company, with a monthly
salary that reached P4,160.00 at the time of his separation.
Petitioners further claimed that sometime prior to June 1, 1994, Sahot
went on leave and was not able to report for work for almost seven
days. On June 1, 1994, Sahot asked permission to extend his leave of
absence until June 30, 1994. It appeared that from the expiration of his
leave, private respondent never reported back to work nor did he file an
extension of his leave. Instead, he filed the complaint for illegal dismissal
against the trucking company and its owners.
Petitioners add that due to Sahots refusal to work after the expiration
of his authorized leave of absence, he should be deemed to have
voluntarily resigned from his work. They contended that Sahot had all the
time to extend his leave or at least inform petitioners of his health
condition. Lastly, they cited NLRC Case No. RE-4997-76, entitled Manuelito
Jimenez et al. vs. T. Paulino Trucking Service, as a defense in view of the

400

alleged similarity in the factual milieu and issues of said case to that of
Sahots, hence they are in pari material and Sahots complaint ought also to
be dismissed.
The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel
Cadiente Santos, ruled that there was no illegal dismissal in Sahots case.
Private respondent had failed to report to work. Moreover, said the Labor
Arbiter, petitioners and private respondent were industrial partners before
January 1994. The Labor Arbiter concluded by ordering petitioners to pay
financial assistance of P15,000 to Sahot for having served the company as
a regular employee since January 1994 only.
On appeal, the National Labor Relations Commission modified the
judgment of the Labor Arbiter. It declared that private respondent was an
employee, not an industrial partner, since the start. Private respondent
Sahot did not abandon his job but his employment was terminated on
account of his illness, pursuant to Article 284 [9] of the Labor Code.
Accordingly, the NLRC ordered petitioners to pay private respondent
separation pay in the amount of P60,320.00, at the rate of P2,080.00 per
year for 29 years of service.
Petitioners assailed the decision of the NLRC before the Court of
Appeals. In its decision dated February 29, 2000, the appellate court
affirmed with modification the judgment of the NLRC. It held that private
respondent was indeed an employee of petitioners since 1958. It also
increased the amount of separation pay awarded to private respondent to
P74,880, computed at the rate of P2,080 per year for 36 years of service
from 1958 to 1994. It decreed:
WHEREFORE, the assailed decision is hereby AFFIRMED with
MODIFICATION. SB Trucking Corporation is hereby directed to pay
complainant Jaime Sahot the sum of SEVENTY-FOUR THOUSAND EIGHT
HUNDRED EIGHTY (P74,880.00) PESOS as and for his separation pay. [10]
Hence, the instant petition anchored on the following contentions:
I
RESPONDENT COURT OF APPEALS IN PROMULGATING THE QUESTION[ED]
DECISION AFFIRMING WITH MODIFICATION THE DECISION OF NATIONAL
LABOR RELATIONS COMMISSION DECIDED NOT IN ACCORD WITH LAW AND
PUT AT NAUGHT ARTICLE 402 OF THE CIVIL CODE. [11]

II
RESPONDENT COURT OF APPEALS VIOLATED SUPREME COURT RULING
THAT THE NATIONAL LABOR RELATIONS COMMISSION IS BOUND BY THE
FACTUAL FINDINGS OF THE LABOR ARBITER AS THE LATTER WAS IN A
BETTER POSITION TO OBSERVE THE DEMEANOR AND DEPORTMENT OF THE
WITNESSES IN THE CASE OF ASSOCIATION OF INDEPENDENT UNIONS IN
THE PHILIPPINES VERSUS NATIONAL CAPITAL REGION (305 SCRA 233).[12]
III
PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY RESPONDENT SBT
TRUCKING CORPORATION.[13]
Three issues are to be resolved: (1) Whether or not an employeremployee relationship existed between petitioners and respondent Sahot;
(2) Whether or not there was valid dismissal; and (3) Whether or not
respondent Sahot is entitled to separation pay.
Crucial to the resolution of this case is the determination of the first
issue. Before a case for illegal dismissal can prosper, an employeremployee relationship must first be established.[14]
Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente
Santos which found that respondent Sahot was not an employee but was in
fact, petitioners industrial partner.[15] It is contended that it was the Labor
Arbiter who heard the case and had the opportunity to observe the
demeanor and deportment of the parties. The same conclusion, aver
petitioners, is supported by substantial evidence. [16] Moreover, it is argued
that the findings of fact of the Labor Arbiter was wrongly overturned by the
NLRC when the latter made the following pronouncement:
We agree with complainant that there was error committed by the Labor
Arbiter when he concluded that complainant was an industrial partner prior
to 1994. A computation of the age of complainant shows that he was only
twenty-three (23) years when he started working with respondent as truck
helper. How can we entertain in our mind that a twenty-three (23) year old
man, working as a truck helper, be considered an industrial partner. Hence
we rule that complainant was only an employee, not a partner of
respondents from the time complainant started working for respondent. [17]

401

Because the Court of Appeals also found that an employer-employee

relationship existed, petitioners aver that the appellate courts decision
gives an imprimatur to the illegal finding and conclusion of the NLRC.
Private respondent, for his part, denies that he was ever an industrial
partner of petitioners. There was no written agreement, no proof that he
received a share in petitioners profits, nor was there anything to show he
had any participation with respect to the running of the business. [18]
The elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employees conduct. The most important element is
the employers control of the employees conduct, not only as to the result
of the work to be done, but also as to the means and methods to
accomplish it.[19]
As found by the appellate court, petitioners owned and operated a
trucking business since the 1950s and by their own allegations, they
determined private respondents wages and rest day. [20] Records of the case
show that private respondent actually engaged in work as an employee.
During the entire course of his employment he did not have the freedom to
determine where he would go, what he would do, and how he would do it.
He merely followed instructions of petitioners and was content to do so, as
long as he was paid his wages. Indeed, said the CA, private respondent had
worked as a truck helper and driver of petitioners not for his own pleasure
but under the latters control.
Article 1767[21] of the Civil Code states that in a contract of partnership
two or more persons bind themselves to contribute money, property or
industry to a common fund, with the intention of dividing the profits among
themselves.[22] Not one of these circumstances is present in this case. No
written agreement exists to prove the partnership between the parties.
Private respondent did not contribute money, property or industry for the
purpose of engaging in the supposed business. There is no proof that he
was receiving a share in the profits as a matter of course, during the period
when the trucking business was under operation. Neither is there any proof
that he had actively participated in the management, administration and
adoption of policies of the business. Thus, the NLRC and the CA did not err
in reversing the finding of the Labor Arbiter that private respondent was an
industrial partner from 1958 to 1994.

On this point, we affirm the findings of the appellate court and the
NLRC. Private respondent Jaime Sahot was not an industrial partner but an
employee of petitioners from 1958 to 1994. The existence of an employeremployee relationship is ultimately a question of fact [23] and the findings
thereon by the NLRC, as affirmed by the Court of Appeals, deserve not only
respect but finality when supported by substantial evidence. Substantial
evidence is such amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. [24]
Time and again this Court has said that if doubt exists between the
evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter. [25]Here, we entertain no
doubt. Private respondent since the beginning was an employee of, not an
industrial partner in, the trucking business.
Coming now to the second issue, was private respondent validly
dismissed by petitioners?
Petitioners contend that it was private respondent who refused to go
back to work. The decision of the Labor Arbiter pointed out that during the
conciliation proceedings, petitioners requested respondent Sahot to report
back for work. However, in the same proceedings, Sahot stated that he
was no longer fit to continue working, and instead he demanded
separation pay. Petitioners then retorted that if Sahot did not like to work
as a driver anymore, then he could be given a job that was less strenuous,
such as working as a checker. However, Sahot declined that suggestion.
Based on the foregoing recitals, petitioners assert that it is clear that Sahot
was not dismissed but it was of his own volition that he did not report for
work anymore.
In his decision, the Labor Arbiter concluded that:
While it may be true that respondents insisted that complainant continue
working with respondents despite his alleged illness, there is no direct
evidence that will prove that complainants illness prevents or incapacitates
him from performing the function of a driver. The fact remains that
complainant suddenly stopped working due to boredom or otherwise when
he refused to work as a checker which certainly is a much less strenuous
job than a driver.[26]
But dealing the Labor Arbiter a reversal on this score the NLRC,
concurred in by the Court of Appeals, held that:

402

While it was very obvious that complainant did not have any intention to
report back to work due to his illness which incapacitated him to perform
his job, such intention cannot be construed to be an abandonment.
Instead, the same should have been considered as one of those falling
under the just causes of terminating an employment. The insistence of
respondent in making complainant work did not change the scenario.
It is worthy to note that respondent is engaged in the trucking business
where physical strength is of utmost requirement (sic). Complainant
started working with respondent as truck helper at age twenty-three (23),
then as truck driver since 1965. Complainant was already fifty-nine
(59) when the complaint was filed and suffering from various illness
triggered by his work and age.
x x x[27]
In termination cases, the burden is upon the employer to show by
substantial evidence that the termination was for lawful cause and validly
made.[28] Article 277(b) of the Labor Code puts the burden of proving that
the dismissal of an employee was for a valid or authorized cause on the
employer, without distinction whether the employer admits or does not
admit the dismissal.[29] For an employees dismissal to be valid, (a) the
dismissal must be for a valid cause and (b) the employee must be afforded
due process.[30]
Article 284 of the Labor Code authorizes an employer to terminate an
employee on the ground of disease, viz:
Art. 284. Disease as a ground for termination- An employer may terminate
the services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or
prejudicial to his health as well as the health of his co-employees: xxx
However, in order to validly terminate employment on this ground,
Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor
Code requires:
Sec. 8. Disease as a ground for dismissal- Where the employee suffers
from a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the employer
shall not terminate his employment unless there is a certification by
competent public health authority that the disease is of such nature or at

such a stage that it cannot be cured within a period of six (6) months even
with proper medical treatment. If the disease or ailment can be cured
within the period, the employer shall not terminate the employee but shall
ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his
normal health. (Italics supplied).
As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC,
the requirement for a medical certificate under Article 284 of the Labor
Code cannot be dispensed with; otherwise, it would sanction the unilateral
and arbitrary determination by the employer of the gravity or extent of the
employees illness and thus defeat the public policy in the protection of
labor.
[31]

In the case at bar, the employer clearly did not comply with the
medical certificate requirement before Sahots dismissal was effected. In
the same case of Sevillana vs. I.T. (International) Corp., we ruled:
Since the burden of proving the validity of the dismissal of the employee
rests on the employer, the latter should likewise bear the burden of
showing that the requisites for a valid dismissal due to a disease have
been complied with. In the absence of the required certification by a
competent public health authority, this Court has ruled against the validity
of the employees dismissal. It is therefore incumbent upon the private
respondents to prove by the quantum of evidence required by law that
petitioner was not dismissed, or if dismissed, that the dismissal was not
illegal; otherwise, the dismissal would be unjustified. This Court will not
sanction a dismissal premised on mere conjectures and suspicions, the
evidence must be substantial and not arbitrary and must be founded on
clearly established facts sufficient to warrant his separation from work. [32]
In addition, we must likewise determine if the procedural aspect of
due process had been complied with by the employer.
From the records, it clearly appears that procedural due process was
not observed in the separation of private respondent by the management
of the trucking company. The employer is required to furnish an employee
with two written notices before the latter is dismissed: (1) the notice to
apprise the employee of the particular acts or omissions for which his
dismissal is sought, which is the equivalent of a charge; and (2) the notice
informing the employee of his dismissal, to be issued after the employee
has been given reasonable opportunity to answer and to be heard on his
defense.[33] These, the petitioners failed to do, even only for record

403

purposes. What management did was to threaten the employee with

dismissal, then actually implement the threat when the occasion presented
itself because of private respondents painful left thigh.
All told, both the substantive and procedural aspects of due process
were violated. Clearly, therefore, Sahots dismissal is tainted with invalidity.
On the last issue, as held by the Court of Appeals, respondent Jaime
Sahot is entitled to separation pay. The law is clear on the matter. An
employee who is terminated because of disease is entitled to separation
pay equivalent to at least one month salary or to one-half month salary for
every year of service, whichever is greater xxx. [34] Following the formula
set in Art. 284 of the Labor Code, his separation pay was computed by the
appellate court at P2,080 times 36 years (1958 to 1994) or P74,880. We
agree with the computation, after noting that his last monthly salary was
P4,160.00 so that one-half thereof is P2,080.00. Finding no reversible error
nor grave abuse of discretion on the part of appellate court, we are
constrained to sustain its decision. To avoid further delay in the payment
due the separated worker, whose claim was filed way back in 1994, this
decision is immediately executory. Otherwise, six percent (6%) interest per
annum should be charged thereon, for any delay, pursuant to provisions of
the Civil Code.
WHEREFORE, the petition is DENIED and the decision of the Court of
Appeals dated February 29, 2000 is AFFIRMED. Petitioners must pay
private respondent Jaime Sahot his separation pay for 36 years of service
at the rate of one-half monthly pay for every year of service, amounting to
P74,880.00, with interest of six per centum (6%) per annum from finality of
this decision until fully paid. Costs against petitioners. SO ORDERED.

404

ROMEO VILLARUEL,
Petitioner,

G.R. No. 169191

-versus-

YEO HAN GUAN, doing business

under the name and style YUHANS
ENTERPRISES,
Respondent.

Present:

Subsequently, in his Amended Complaint and Position Paper [4] dated

CARPIO, J., Chairperson,

NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

December 6, 1999, petitioner alleged that in June 1963, he was employed

as a machine operator by Ribonette Manufacturing Company, an enterprise
engaged in the business of manufacturing and selling PVC pipes and is
owned and managed by herein respondent Yeo Han Guan. Over a period of

Promulgated:

almost twenty (20) years, the company changed its name four times.
June 1, 2011

Starting in 1993 up to the time of the filing of petitioner's complaint in

1999,

the

company

was

operating

under

the

name

of

Yuhans

Enterprises. Despite the changes in the company's name, petitioner

remained in the employ of respondent. Petitioner further alleged that on
October 5, 1998, he got sick and was confined in a hospital; on December
x-----------------------------------------------------------------------------------------x

12, 1998, he reported for work but was no longer permitted to go back
because of his illness; he asked that respondent allow him to continue

DECISION

working but be assigned a lighter kind of work but his request was denied;
instead, he was offered a sum of P15,000.00 as his separation pay;

PERALTA, J.:

however, the said amount corresponds only to the period between 1993
Assailed in the present petition are the Decision

of the

and 1999; petitioner prayed that he be granted separation pay computed

Court of Appeals (CA) dated February 16, 2005 and August 2, 2005,

from his first day of employment in June 1963, but respondent refused.

respectively, in CA-G.R. SP No. 79105. The CA Decision modified the March

Aside from separation pay, petitioner prayed for the payment of service

31, 2003 Decision of the National Labor Relations Commission (NLRC) in

incentive leave for three years as well as attorney's fees.

[1]

and Resolution

[2]

NLRC NCR CA 028050-01, while the CA Resolution denied petitioner's

Motion for Reconsideration.

On the other hand, respondent averred in his Position Paper [5] that
petitioner was hired as machine operator from March 1, 1993 until he

The antecedents of the case are as follows:

stopped working sometime in February 1999 on the ground that he was

suffering from illness; after his recovery, petitioner was directed to report

On February 15, 1999, herein petitioner filed with the NLRC, National

for work, but he never showed up. Respondent was later caught by

Capital Region, Quezon City a Complaint

surprise when petitioner filed the instant case for recovery of separation

against Yuhans Enterprises.

[3]

for payment of separation pay

pay. Respondent claimed that he never terminated the services of

405

petitioner and that during their mandatory conference, he even told the

Respondent filed a Motion for Reconsideration, [8] but the same was denied

latter that he could go back to work anytime but petitioner clearly

by the NLRC in a Resolution[9] dated May 30, 2003.

manifested that he was no longer interested in returning to work and

instead asked for separation pay.

Respondent then filed with the CA a petition for certiorari under Rule 65 of
the Rules of Court.

On November 27, 2000, the Labor Arbiter handling the case rendered
judgment in favor of petitioner. The dispositive portion of the Labor

On February 16, 2005, the CA promulgated its presently assailed Decision

Arbiter's Decision reads, thus:

disposing as follows:

WHEREFORE, premises considered, judgment is hereby

rendered in favor of the complainant and against herein
respondent, as follows:
1. Ordering the respondents to pay separation benefits
equivalent to one-half () month salary per year of service, a
fraction of six months equivalent to one year to herein
complainant based on the complainant's length of service
reckoned from June 1963 up to October 1998 as provided
under Article 284 of the Labor Code, the same computed
by the Computation and Examination Unit which we hereby
adopt and approved (sic) as our own in the amount of
NINETY-ONE THOUSAND FOUR HUNDRED FORTY-FIVE
PESOS (P91,445.00);
2. Ordering the respondents to pay service incentive leave
equivalent to fifteen days salary in the amount of THREE
THOUSAND FIFTEEN PESOS (P3,015.00).
All other claims are dismissed for lack of merit.
SO ORDERED.[6]

Aggrieved, respondent filed an appeal with the NLRC.

WHEREFORE, premises considered, the petition is partially

GRANTED. The award of separation pay is hereby DELETED,
but the Decision insofar as it awards private respondent
[herein petitioner] service incentive leave pay of three
thousand and fifteen pesos (P3,015.00) stands. The NLRC is
permanently ENJOINED from partially executing its Decision
dated November 27, 2000 insofar as the award of
separation pay is concerned; or if it has already effected
execution, it should order the private respondent to
forthwith restitute the same.
SO ORDERED.[10]

Herein petitioner filed his Motion for Reconsideration [11] of the CA Decision,
but it was denied by the CA via a Resolution[12] dated August 2, 2005.

Hence, the instant petition based on the following assignment of errors:

I
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
ITS FAILURE TO APPRECIATE THE ADMISSION BY
[PETITIONER] OF THE FACT AND VALIDITY OF HIS
TERMINATION BY THE [RESPONDENT].

On March 31, 2003, the Third Division of the NLRC rendered its
Decision[7] dismissing respondent's appeal and affirming the Labor Arbiter's
Decision.

II

406

[THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED]

IN DENYING [PETITIONER'S] ENTITLEMENT TO SEPARATION
PAY UNDER ARTICLE 284 OF THE LABOR CODE AND UNDER
THE OMNIBUS RULES IMPLEMENTING THE LABOR CODE.
III
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
ITS FINDING THAT THE BURDEN OF PROOF THAT AN
EMPLOYEE IS SUFFERING FROM DISEASE THAT HAS TO BE
TERMINATED REST[S] UPON THE EMPLOYER IN ORDER FOR
THE EMPLOYEE TO BE ENTITLED TO SEPARATION PAY.
IV
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
ORDERING THE DELETION OF THE AWARD OF SEPARATION
PAY TO THE [PETITIONER].[13]

by law or is prejudicial to his health as well as to the health of his coemployees. It does not contemplate a situation where it is the employee
who severs his or her employment ties. This is precisely the reason why
Section 8,[14] Rule 1, Book VI of the Omnibus Rules Implementing the Labor
Code, directs that an employer shall not terminate the services of the
employee unless there is a certification by a competent public health
authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical
treatment.

Hence, the pivotal question that should be settled in the present case is
The Court finds the petition without merit.

The assigned errors in the instant petition essentially boil down to the
question of whether petitioner is entitled to separation pay under the
provisions of the Labor Code, particularly Article 284 thereof, which reads
as follows:
An employer may terminate the services of an employee
who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his coemployees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half ()
month salary for every year of service whichever is greater,
a fraction of at least six months being considered as one
(1) whole year.

whether respondent, in fact, dismissed petitioner from his employment.

A perusal of the Decisions of the Labor Arbiter and the NLRC would show,
however, that there was no discussion with respect to the abovementioned
issue. Both lower tribunals merely concluded that petitioner is entitled to
separation pay under Article 284 of the Labor Code without any
explanation. The Court finds no convincing justification, in the Decision of
the Labor Arbiter on why petitioner is entitled to such pay. In the same
manner, the NLRC Decision did not give any rationalization as the gist
thereof simply consisted of a quoted portion of the appealed Decision of
the Labor Arbiter.

On the other hand, the Court agrees with the CA in its observation of the
following circumstances as proof that respondent did not terminate

A plain reading of the abovequoted provision clearly presupposes that it is

the employer who terminates the services of the employee found to be
suffering from any disease and whose continued employment is prohibited

petitioner's employment: first, the only cause of action in petitioner's

original complaint is that he was offered a very low separation
pay; second, there was no allegation of illegal dismissal, both in

407

petitioner's

original

and

amended

complaints

and

position

paper;

Labor Code and its implementing rules and regulations nor the exceptions

and, third, there was no prayer for reinstatement.

apply because petitioner was not dismissed from his employment and

In consonance with the above findings, the Court finds that petitioner was

there is no evidence to show that payment of separation pay is stipulated

the one who initiated the severance of his employment relations with

in his employment contract or sanctioned by established practice or policy

respondent. It is evident from the various pleadings filed by petitioner that

of herein respondent, his employer.

he never intended to return to his employment with respondent on the

ground that his health is failing. Indeed, petitioner did not ask for

Since petitioner was not terminated from his employment and, instead, is

reinstatement. In fact, he rejected respondent's offer for him to return to

deemed to have resigned therefrom, he is not entitled to separation pay

work. This is tantamount to resignation.

under the provisions of the Labor Code.

Resignation is defined as the voluntary act of an employee who finds

The foregoing notwithstanding, this Court, in a number of cases, has

himself in a situation where he believes that personal reasons cannot be

granted financial assistance to separated employees as a measure of

sacrificed in favor of the exigency of the service and he has no other

social and compassionate justice and as an equitable concession. Taking

choice but to disassociate himself from his employment.

into consideration the factual circumstances obtaining in the present case,

[15]

the Court finds that petitioner is entitled to this kind of assistance.

It may not be amiss to point out at this juncture that aside from Article 284
of the Labor Code, the award of separation pay is also authorized in the

Citing Eastern Shipping Lines, Inc. v. Sedan,[20] this Court, in the more

situations dealt with in Article 283[16] of the same Code and under Section 4

recent case of Eastern Shipping Lines v. Antonio,[21] held:

(b), Rule I, Book VI of the Implementing Rules and Regulations of the said
Code[17] where there is illegal dismissal and reinstatement is no longer
feasible. By way of exception, this Court has allowed grants of separation
pay to stand as a measure of social justice where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on
his moral character.[18] However, there is no provision in the Labor Code
which grants separation pay to voluntarily resigning employees. In fact, the
rule is that an employee who voluntarily resigns from employment is not
entitled to separation pay, except when it is stipulated in the employment
contract or CBA, or it is sanctioned by established employer practice or
policy.[19] In the present case, neither the abovementioned provisions of the

But we must stress that this Court did

allow, in several instances, the grant of
financial assistance. In the words of Justice
Sabino de Leon, Jr., now deceased, financial
assistance may be allowed as a measure of
social
justice
and
exceptional
circumstances, and as an equitable
concession. The instant case equally calls
for balancing the interests of the employer
with those of the worker, if only to
approximate what Justice Laurel calls
justice
in
its
secular
sense.
In this instance, our attention has been
called to the following circumstances: that

408

private respondent joined the company

when he was a young man of 25 years and
stayed on until he was 48 years old; that
he had given to the company the best
years of his youth, working on board ship
for almost 24 years; that in those years
there was not a single report of him
transgressing any of the company rules
and regulations; that he applied for
optional retirement under the company's
non-contributory plan when his daughter
died and for his own health reasons; and
that it would appear that he had served the
company well, since even the company
said that the reason it refused his
application for optional retirement was that
it still needed his services; that he denies
receiving the telegram asking him to report
back to work; but that considering his age
and health, he preferred to stay home
rather than risk further working in a ship at
sea.
In
our
view,
with
these
special
circumstances, we can call upon the same
"social and compassionate justice" cited in
several cases allowing financial assistance.
These circumstances indubitably merit
equitable concessions, via the principle of
"compassionate justice" for the working
class. x x x

waited for more than one year to embark on the vessel as

2nd Engineer, but the position was not given to him, as it
was occupied by another person known to one of the
stockholders. Consequently, for having been deprived of
continued employment with petitioner's vessel, respondent
opted to apply for optional retirement. In addition, records
show that respondent's seaman's book, as duly noted and
signed by the captain of the vessel was marked "Very
Good," and "recommended for hire." Moreover, respondent
had no derogatory record on file over his long years of
service
with
the
petitioner.
Considering all of the foregoing and in line with Eastern,
the ends of social and compassionate justice would be
served best if respondent will be given some equitable
relief. Thus, the award ofP100,000.00 to respondent as
financial assistance is deemed equitable under the
circumstances.[22]

While the abovecited cases authorized the grant of financial assistance in

lieu of retirement benefits, the Court finds no cogent reason not to employ
the same guiding principle of compassionate justice applied by the Court,
taking into consideration the factual circumstances obtaining in the
present case. In this regard, the Court finds credence in petitioner's
contention that he is in the employ of respondent for more than 35 years.
In the absence of a substantial refutation on the part of respondent, the
Court agrees with the findings of the Labor Arbiter and the NLRC that

In the present case, respondent had been employed with

the petitioner for almost twelve (12) years. On February 13,
1996, he suffered from a "fractured left transverse process
of fourth lumbar vertebra," while their vessel was at the
port of Yokohama, Japan. After consulting a doctor, he was
required to rest for a month. When he was repatriated to
Manila and examined by a company doctor, he was
declared fit to continue his work. When he reported for
work, petitioner refused to employ him despite the
assurance of its personnel manager. Respondent patiently

respondent company is not distinct from its predecessors but, in fact,

merely continued the operation of the latter under the same owners and
the same business venture. The Court further notes that there is no
evidence on record to show that petitioner has any derogatory record
during his long years of service with respondent and that his employment
was severed not by reason of any infraction on his part but because of his
failing physical condition. Add to this the willingness of respondent to give

409

him financial assistance. Hence, based on the foregoing, the Court finds
that the award of P50,000.00 to petitioner as financial assistance is
deemed equitable under the circumstances.

WHEREFORE, the instant petition is DENIED. The assailed Decision and

Resolution of the Court of Appeals are AFFIRMED with MODIFICATION by
awarding petitioner with financial assistance in the amount of P50,000.00.

SO ORDERED.

410

WUERTH PHILIPPINES, INC.,

Petitioner,

G.R. No. 175932

Manager (NSM) for Automotive. As NSM, respondent was required to travel
Present:

versus

RODANTE YNSON,
Respondent.

to different parts of the country so as to supervise the sales activities of

CARPIO,* J..,
PERALTA, Acting Chairperson the companys sales managers, make a schedule of activities geared
ABAD,
MENDOZA, and
towards increasing the sales of petitioner's products, and submit said
PEREZ,** JJ.
schedule to Marlon Ricanor, Chief Executive Officer of petitioner company.
Promulgated:
February 15, 2012

x-----------------------------------------------------------------------------------------x

In an electronic mail (e-mail)[3] dated January 4, 2003 sent to Ricanor,

respondent furnished the former with a copy of his sales targets for the
year 2003 and coverage plan for the month of January 2003, and indicated

DECISION

PERALTA, J.:

that he intends to be on leave from January 23 to 24, 2003. However,

respondent was not able to follow the said coverage plan starting January
26, 2003, as he failed to report to work since then. It turned out that on
January 24, 2003, he suffered a stroke, and on the succeeding days, he

Before this Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, seeking to set aside the Decision [1] dated July 13, 2006 and

was confined at the Davao Doctor's Hospital. He immediately informed

petitioner about his ailment.

the Resolution[2] dated December 6, 2006 of the Court of Appeals (CA), in

CA-G.R. SP No. 00845, which affirmed with modification the Resolutions of
the National Labor Relations Commission (NLRC), Fifth Division, Cagayan
de Oro City, in NLRC CA NO. M-008246-2004 (RAB 11-09-00949-03), dated
July 29, 2005 and November 24, 2005.

On

March

27,

2003,

Dr.

Daniel

de

la

Paz,

Neurologist-

Electroencephalographer in Davao City, issued a Certification [4] stating that

respondent has been under his care since January 24, 2003 and was
confined in the hospital from January 24 to February 3, 2003 due to sudden
weakness on the left side of his body. In another Medical Certificate [5]dated

The factual antecedents are as follows:

June 4, 2003, Dr. De la Paz certified that respondent may return to work,
but advised him to continue with his rehabilitation regimen for another

On August 15, 2001, petitioner Wuerth Philippines, Inc., a subsidiary of

Wuerth Germany, hired respondent Rodante Ynson, as its National Sales

month and a half.

411

Dr. Bernard S. Chiew, a specialist on Adult Cardiology, also issued

On June 18, 2003, Knapp sent an e-mail[11] to respondent, informing

an undated Medical Certificate[6] stating that he examined respondent who

him that his request for detail in Davao was disapproved, as petitioner did

was diagnosed with primary hypertension, diabetes mellitus II, S/P stroke

not have any branch in Davao and there was no available administrative

on June 4, 2003, and recommended that the latter should continue with his

work for him. Meanwhile, petitioner company bewailed that its sales

physical rehabilitation until July 2003.

suffered, as nobody was performing the duties of the NSM and the office
space reserved for respondent remained vacant.

On June 9, 2003, respondent sent an e-mail[7] to Hans Sigrit of

Wuerth Germany, informing the latter that he can return to work on June

Later, Ricanor sent two letters, [12] dated July 4, 2003 and July 31,

19, 2003, but in view of the recommendation of doctors that he should

2003, to respondent, resetting the investigation to July 25, 2003, at 9:00

continue with his rehabilitation until July, he requested that administrative

a.m., and August 18, 2003, respectively. Both letters reiterated the

work be given to him while in Davao City, until completion of his therapy.

contents of his first letter to respondent dated June 12, 2003, but included

On June 10, 2003, Alexandra Knapp, Secretary of the Management Board

gross inefficiency as an additional ground for possible suspension or

of Wuerth Germany, forwarded the e-mail[8] to Ricanor.

dismissal.

Thereafter, Ricanor sent a letter[9] dated June 12, 2003 to

In his letters[13] dated July 21, 2003 and August 12, 2003,

respondent, directing him to appear before the formers office in Manila, on

respondent

reiterated

the

reasons

for

his

inability

to

attend

the

July 1, 2003 at 9:00 a.m., for an investigation, relative to the following

investigation proceedings in Manila and, instead, suggested that Ricanor

violations which carry the penalty of suspension and/or dismissal, based on

come to Davao and conduct the investigation there.

the following alleged violations: (1) absences without leave since January
24, 2003 to date, and (2) abandonment of work. In a letter[10] dated June

Finally, in a letter[14] dated August 27, 2003, Ricanor informed

26, 2003, respondent replied that his attending physician advised him to

respondent of the decision of petitioner's management to terminate his

refrain from traveling, in order not to disrupt his daily schedule for therapy

employment, effective upon date of receipt, on the ground of continued

and medication.

absences without filing a leave of absence.

412

Respondents salary at the time of the termination of his

Petitioner and Ricanor appealed to the NLRC (Cagayan de Oro City), which

employment was P175,000.00 per month.

affirmed with modification the Decision of the Labor Arbiter in a

On September 5, 2003, respondent filed a Complaint against petitioner and

Resolution[17] dated July 29, 2005, reducing the total awards of moral and

Ricanor, in his capacity as petitioner company's Chief Executive Officer, for

exemplary damages from P3,000,000.00 to P600,000.00 and P300,000.00,

illegal dismissal and non-payment of allowances, with claim for moral and

respectively, and the attorneys fees adjusted in an amount equivalent to

exemplary damages and attorneys fees, in the NLRC, Regional Arbitration

ten (10%) percent of the total monetary award.

Branch No. XI in Davao City.

The parties submitted their respective Position Papers. Thereafter, Labor
Arbiter Amado M. Solamo rendered a Decision [15] dated July 15, 2004, the

On August 26, 2005, petitioner and Ricanor filed their Motion for

dispositive portion thereof reads:

Reconsideration.[18]

WHEREFORE, judgment is hereby rendered:

In a Resolution[19] dated November 24, 2005, the NLRC modified its
1. Finding respondents guilty of illegal dismissal;
2. Ordering respondents to reinstate complainant
to his former position without loss of seniority rights and
privileges immediately upon receipt hereof. In case of
appeal, respondents are hereby ordered to reinstate
complainant in the payroll;
3. Ordering respondents to pay complainant, the following:
a) Full backwages
(Aug. 29, 2003 to July15, 2004)
(11 months x P175,000.00) ...... P1,925,000.00
b) Medical benefits.......... 300,000.00
c) 13th month pay Y2003.................. 175,000.00
d) Moral and Exemplary Damages ................. 3,000,000.00
e) 10%
of
the
total
award
as
attorneys
fees........ 540,000.00
TOTAL AMOUNT: P5,940,000.00
SO ORDERED.[16]

Decision, further reducing the awards of moral damages from P600,000.00

to P150,000.00, and exemplary damages from P300,000.00 to P50,000.00,
respectively.
Aggrieved,

petitioner

and

Ricanor

filed

before

the

CA

Petition

for Certiorari with Application for the Issuance of a Temporary Restraining

Order and Preliminary Injunction.

On July 13, 2006, the CA rendered a Decision, [20] finding the petition partly
meritorious. It found that petitioner had the right to terminate the
employment of respondent, and that it had observed due process in
terminating his

employment. While the CA deleted the awards

of

backwages and moral and exemplary damages, it nonetheless ordered

petitioner

to

pay

respondent

the

following

amounts: P1,225,000.00

413

(representing his salary from February 2003 to August 29, 2003), medical
expenses of P94,100.00, temperate damages of P100,000.00, 13th month

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR

WHEN IT AWARDED ATTORNEYS FEES IN FAVOR OF THE
PRIVATE RESPONDENT.[22]

pay of P175,000.00, and attorneys fees of 10% of the total monetary

Petitioner insists that the ground for the dismissal of the respondent was

award.

his gross dereliction of duties as NSM.

Petitioner filed a Motion for Reconsideration, which the CA denied in a
Resolution[21] dated December 6, 2006.

The CA ruled that pursuant to Article 284 of the Labor Code, respondents
illness is considered an authorized cause to justify his termination from

Petitioner filed this present Petition for Review on Certiorari, raising the
following assignment of errors:

employment. The CA ruled that although petitioner did not comply with the
medical certificate requirement before respondents dismissal was effected,
this was offset by respondent's absence for more than the six (6)-month
period that the law allows an employee to be on leave in order to recover

I.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
WHEN IT AWARDED P1,225,000.00 REPRESENTING THE
PRIVATE RESPONDENTS MONTHLY SALARY OFP175,000.00
FROM FEBRUARY 2003 TO AUGUST 29, 2003.
II.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
WHEN IT AWARDED MEDICAL EXPENSES OF P94,100.00 TO
THE PRIVATE RESPONDENT.
III.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
WHEN IT AWARDED TEMPERATE DAMAGES OF P100,000.00
IN FAVOR OF THE PRIVATE RESPONDENT.
IV.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
WHEN IT AWARDED 13TH MONTH PAY OF P175,000.00 IN
FAVOR OF THE PRIVATE RESPONDENT.
V.

from an ailment.
We agree. With regard to disease as a ground for termination, Article 284
of the Labor Code provides that an employer may terminate the services of
an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his
health, as well as to the health of his co-employees.

In order to validly terminate employment on this ground, Section 8, Rule I,

Book VI of the Omnibus Rules Implementing the Labor Code requires that:
Section 8. Disease as a ground for dismissal.
Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to
his health or to the health of his co-employees, the
employer shall not terminate his employment unless there
is a certification by a competent public health authority

414

that the disease is of such nature or at such a stage that it

cannot be cured within a period of six (6) months even with
proper medical treatment. If the disease or ailment can be
cured within the period, the employer shall not terminate
the employee but shall ask the employee to take a leave.
The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal
health.

been advised to continue with his present regimen for at least

another month and a half.[24]

Thus, as of June 4, 2003, respondent would have been capable of returning

to work. However, despite notices sent by the petitioner, i.e., letter[25] dated
June 12, 2003, requiring respondent to attend an investigation set on July
14, 2003; letter[26] dated July 4, 2003, requiring respondent to appear on

In Triple Eight Integrated Services, Inc. v. NLRC,[23] the Court held that the
requirement for a medical certificate under Article 284 of the Labor Code
cannot be dispensed with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the gravity or extent of the
employees illness and, thus, defeat the public policy on the protection of
labor. In the present case, there was no showing that prior to terminating
respondent's employment, petitioner secured the required certification
from a competent public health authority that the disease he suffered was
of such nature or at such a stage that it cannot be cured within six months
despite proper medical treatment, pursuant to Section 8, Rule I, Book VI of
the Omnibus Rules Implementing the Labor Code.

July 25, 2003 for investigation; and letter [27] dated July 31, 2003, requiring
respondent to appear for the hearing and investigation on August 18,
2003, respondent refused to report to his office, either to resume work or
attend the investigations set by the petitioner. Even considering the
directive of respondent's doctor to continue with his present regimen for at
least another month and a half, it could be safely deduced that, counted
from June 4, 2003, respondent's rehabilitation regimen ended on July 19,
2003. Despite the completion of his treatment, respondent failed to attend
the investigations set on July 25, 2003 and August 18, 2003. Thus, his
unexplained absence in the proceedings should be construed as waiver of
his right to be present therein in order to adduce evidence that would have
justified his continued absence from work.

The medical certificate, dated June 4, 2003, issued by the attending

physician of respondent, shows the following:
DATE HOSPITALIZED and/or TREATED: January 24, 2003
to present.
DIAGNOSIS: Hypertension,
Diabetes
Mellitus
(adult
onset), Hypercholesterolemia, Status Post Stroke, Ischemic-RMCA
RECOMMENDATION: Though the patient is allowed to
resume work, in view of his recovery with rehabilitation, he has

In an undated Certification, Dr. Melanie Theresa P. Herrera of the East Asia

Orthopaedic and Rehabilitation Institute in Davao City stated that
respondent

had

been

undergoing

physical

rehabilitation,

and

recommended that he may resume work, but the nature of his work had to
be modified so as to give time for his strengthening and maintenance
program. Thus,

415

This is to certify that Mr. Rodante N. Ynson is under my

care and is currently undergoing physical rehabilitation.
Diagnosis: S/P CVA, Acute Ischemic Infarction (L) Temporal Lobe
(R) Frontal
Lobe
Reflex
Sympathetic
Dystrophy
Hypertension Stage I LUE.
Recommendation:
1) Continue physical rehabilitation at San Pedro Hospital.
2) He may resume work but has to modify it to give time
for strengthening program home program and maintenance
program at the center in SPH, Davao City.[28]
Respondent alleged in his letters[29] dated July 21, 2003 and August 12,
2003 that he is not capable of returning to work, because he is still
undergoing medications and therapy.However, apart from the clearance
of respondent's doctors allowing him to return to work, he has failed to
provide competent proof that he was actually undergoing therapy and
medications. It is puzzling why despite respondent's submission that he
was still undergoing treatment in July and August 2003, he failed to submit
official receipts showing the medical expenses incurred and physicians
professional fees paid by reason of such treatment. This casts serious
doubt on the true condition of the respondent during the prolonged period
he was absent from work and investigations, and as to whether he is still
suffering from any form of illness from July to August 2003.

and monitoring of respondent's sales area which is vital to the companys

orderly operation and viability. He did not even show any sincere effort to
return to work.

Clearly, since there is no more hindrance for him to return to work

and attend the investigations set by petitioner, respondent's failure to do
so was without any valid or justifiable reason. Respondent's conduct shows
his indifference and utter disregard of his work and his employer's interest,
and displays his clear, deliberate, and gross dereliction of duties.
It bears stressing that respondent was not an ordinary rank-and-file
employee. With the nature of his position, he was reposed with managerial
duties to oversee petitioner's business in his assigned area. As a
managerial employee, respondent was tasked to perform important and
crucial functions and, thus, bound by more exacting work ethic. He should
have realized that such sensitive position required the full trust and
confidence of his employer in every exercise of managerial discretion
insofar as the conduct of the latter's business is concerned. [30] The power to
dismiss an employee is a recognized prerogative inherent in the
employer's right to freely manage and regulate his business. The law, in

Being the NSM, respondent should have reported back to work or attended
the investigations conducted by petitioner immediately upon being
permitted to work by his doctors, knowing that his position remained

protecting the rights of the laborers, authorizes neither oppression nor selfdestruction of the employer. The worker's right to security of tenure is not
an absolute right, for the law provides that he may be dismissed for cause.
[31]

vacant for a considerable length of time. During his absence, nobody was
performing the duties of NSM, which included, among others, supervising

As a general rule, employers are allowed wide latitude of discretion in

terminating the employment of managerial personnel. The mere existence

of a basis for believing that such employee has breached the trust and

416

confidence of his employer would suffice for his dismissal. [32] Needless to

We modify. In Leonardo v. National Labor Relations Commission, [35] We held

say, an irresponsible employee like respondent does not deserve a place in

that where the employee's failure to work was occasioned neither by his

the workplace, and it is petitioner's management prerogative to terminate

abandonment nor by a termination, the burden of economic loss is not

his employment. To be sure, an employer cannot be compelled to continue

rightfully shifted to the employer; each party must bear his own loss. [36] In

with the employment of workers when continued employment will prove

the same manner, respondent's inability to work from January 24 to June 4,

inimical to the employer's interest.[33]

2003, was neither due to petitioners fault nor due to his willful conduct, but

To condone such conduct will certainly erode the discipline that an

because he suffered a stroke on January 24, 2003. Hence, each must bear

employer should uniformly apply so that it can expect compliance with the

the loss accordingly.

same rules and regulations by its other employees. Otherwise, the rules
necessary and proper for the operation of its business would be gradually

Beginning June 5, 2003, respondent should have reported back to work,

rendered ineffectual, ignored, and eventually become meaningless. [34] As

but he failed to do so. Consequently, he can only be entitled to

applied to the present case, it would be the height of unfairness and

compensation for the actual number of work days. It would be unfair to

injustice if the employer would be left hanging in the dark as to when

allow respondent to recover something he has not earned and count not

respondent could report to work or be available for the scheduled hearings,

have earned, since he could not discharge his work as NSM. Petitioner

which becomes detrimental to the orderly daily operations of petitioner's

should be exempted from the burden of paying backwages. The age-old

business.

rule governing the relation between labor and capital, or management and
employee, of a fair day's wage for a fair day's labor remains as the basic

As regards the monetary awards, the CA ordered the petitioner to pay

factor in determining employee's wages. If there is no work performed by

respondent the amount of P1,225,000.00, representing his salary from

the employee, there can be no wage or pay unless, of course, the laborer

February 2003 to August 29, 2003, medical expenses of P94,100.00,

was able, willing and ready to work but was illegally locked out, suspended

temperate damages of P100,000.00, 13th month pay of P175,000.00, and

or dismissed, or otherwise illegally prevented from working, a situation

attorneys fees of 10% of the total monetary award, but deleted the award

which is not prevailing in the present case.[37]

of backwages and moral and exemplary damages.

417

Petitioner claims that assuming that respondent may be considered on sick

proved. Damages, to be recoverable, must not only be capable of proof,

leave for the duration that he did not report to work, the period should

but must be actually proved with a reasonable degree of certainty. [41] The

cover only up to June 2003.

Court cannot simply rely on speculation, conjecture or guesswork in

determining the amount of damages.[42] Actual proof of expenses incurred

We agree. Being entitled to sick leave pay during the time that respondent

for the purchase of medicines and other medical supplies necessary for his

was incapable of working, the Court deems it best that the reckoning date

treatment and rehabilitation should have been presented by respondent, in

should be from January 24, 2003 [38] to June 4, 2003[39] (not from February

the form of official receipts, to show the exact cost of his medication, and

2003 to August 29, 2003 as ruled by the CA), he may be entitled to salary,

to prove that, indeed, he went through medication and rehabilitation. Aside

chargeable against his accrued sick leave benefits and other similar leave

from the letter of Dr. De la Paz, respondent miserably failed to produce

benefits, if any, as may be provided by existing company policy of

even a single receipt showing his alleged medical and rehabilitation

petitioner.

expenses. By reason thereof, petitioner should not be held liable for

the P94,000.00 medical expenses of respondent as actual or compensatory

Petitioner next assails the CAs award of medical expenses to respondent in

damages, for lack of basis. Verily, in the absence of official receipts or

the amount of P94,100.00, merely on the basis of the Certification [40] dated

other competent evidence to prove the actual expenses incurred, the CA's

March 27, 2003 of Dr. De la Paz, which states that respondent spent

award of medical expenses in favor of respondent should be negated.

approximately P350.00

daily

on

medicines

and

that

his

continued

rehabilitation would cost P250.00 per day. It contends that the bare

Under Article 2224 of the Civil Code, temperate or moderate damages are

statements made by Dr. De la Paz, without actual proof of receipts, cannot

more than nominal but less than compensatory, and may be recovered

suffice to warrant the payment of medical expenses.

when the court finds that some pecuniary loss has been suffered, but the
amount cannot, from the nature of the case, be proved with certainty. The

In order to justify a grant of actual or compensatory damages, it is

CA found that respondent paid for the doctor's professional fees and

necessary to prove, with a reasonable degree of certainty, premised upon

incurred other hospital expenses; however, the records failed to show that

competent proof and on the best evidence obtainable by the injured party,

he presented proof of the actual amount of expenses therein, which served

the actual amount of loss. One is entitled to an adequate compensation

as the basis for the CA to award temperate damages in the amount

only for such pecuniary loss suffered by him as he has adequately

of P100,000.00.

418

reckoned from June 5, 2003 (i.e., the day after he was declared fit to return
However, We reduce the amount of temperate damages awarded by the

to work, but failed to do so), and lack of evidence that his dismissal was

CA, from P100,000.00 to P50,000.00, considering that the stroke suffered

tainted with bad faith, the grant of 10% of the total monetary award as

by respondent was not debilitating in nature and the records showed that

attorney's fees cannot be sustained.

his health condition remained stable. Moreover, there were no instances of

subsequent or recurring ailment that necessitates prolonged medical
attention.

WHEREFORE, the petition is PARTLY GRANTED. The dispositions in the

Decision dated July 13, 2006 and the Resolution dated December 6, 2006
of the Court of Appeals, in CA-G.R. SP No. 00845, which affirmed with
modification the Resolutions of the National Labor Relations Commission,

Anent the CA's ruling that respondent should be entitled to 13 th month pay,
We clarify that the 13th Month Pay Law, which provides the rules on the

Fifth Division, Cagayan de Oro City, in NLRC CA NO. M-008246-2004 (RAB

11-09-00949-03), are MODIFIED as follows:

entitlement and computation of the 13th month pay, cannot be applied to

him because he is a managerial employee, and the law applies only to
rank- and-file employees.[43] Be that as it may, although he is not covered
by the said law, records showed that he is entitled to this benefit.
[44]

However, the Court cannot make a proper determination as to the exact

amount either full or pro-rated amount of the 13 th month pay, if any, that
he would be entitled to. Thus, reference should be made in consonance
with the existing company policy on the payment of the 13 th month
pay vis--vis the number of days that he actually worked.
On the matter of attorney's fees, We have ruled that attorney's fees may
be awarded only when the employee is illegally dismissed in bad faith, and
is compelled to litigate or incur expenses to protect his rights by reason of
the unjustified acts of his employer. [45] In view of Our findings that
respondent was validly dismissed for unauthorized absences, amounting to
gross dereliction of duties under Article 282 (e) of the Labor Code,

a. The award of salary of respondent Rodante Ynson from February 2003 to

August 29, 2003, amounting to P1,225,000.00, is deleted; however, he is
entitled to the payment of his salary, chargeable against his accrued sick
leave benefits and other similar leave benefits, if any, from January 24 to
June 4, 2003, as may be provided by existing company policy of petitioner
Wuerth Philippines, Inc.;
b. The award of temperate damages, in the amount of P100,000.00, is
reduced to P50,000.00;
c. While the award of 13th month pay, in the amount of P175,000.00 is
deleted; however, respondent may still be entitled to the 13 th month pay,
either full or pro-rated amount, in consonance with existing company policy
of petitioner; and

419

d. The award of medical expenses amounting to P94,100.00 and attorney's

fees of 10% of the total monetary award are deleted.

The case is REMANDED to the National Labor Relations Commission, Fifth

Division, Cagayan de Oro City, for proper computation of the awards that
respondent may be entitled to, in accordance with this Decision, and shall
report compliance thereon within thirty (30) days from notice of this
Decision.
SO ORDERED.

420

[G.R. No. 148241. September 27, 2002]

HANTEX TRADING CO., INC., and/or MARIANO CHUA, petitioners,
vs. COURT OF APPEALS, Special Former Tenth Division, and
BERNARDO SINGSON, respondents.
DECISION
BELLOSILLO, J.:
This petition seeks to review the Decision of the Court of
Appeals[1] affirming in toto the decision of the National Labor Relations
Commission (NLRC), which in turn sustained the Labor Arbiter's finding that
respondent was illegally dismissed and therefore entitled to reinstatement,
backwages and 13th month pay.
Private respondent Bernardo Singson was employed by petitioner
Hantex Trading Co., Inc. (HANTEX) on 8 November 1994 as sales
representative. HANTEX was engaged in selling laminating machines and
ID supplies. He was paid a regular salary of P165.00/day in addition
to P500.00 travelling allowance and a 3% - 5% commission from his
sales. Sometime in February 1996 the management of HANTEX called the
attention of Singson regarding his deteriorating sales performance. Despite
thereof, Singson's performance showed no sign of improvement as it
remained inadequate and unsatisfactory. Thus, HANTEX, through its
president, petitioner Mariano Chua, held a "one-on-one" conference with
him on 5 August 1996.
The parties presented conflicting versions of what actually transpired
during the conference. Singson alleged that petitioner Mariano Chua asked
for his resignation from the company, and required him to submit a
resignation letter otherwise his separation pay, 13th month pay and other
monetary benefits would not be paid. When he refused, petitioner Mariano
Chua ejected him from the premises of HANTEX and left instructions to the
guards on-duty to refuse him admittance.
On the other hand, petitioners denied that they dismissed Singson
and maintained that the conference was merely intended to motivate him
"to exert more effort in his job and mend his work attitude;" and that
Singson apparently resented petitioner Chua for it that he never reported
back for work after the conference.

On 8 August 1996 Singson filed a complaint with the Labor Arbiter for
illegal dismissal with prayer for reinstatement asserting that he was
dismissed from his employment without prior notice and hearing. [2] On the
contrary, HANTEX averred that Singson was not dismissed but abandoned
his job after he was reprimanded.
On 5 May 1998 the Labor Arbiter rendered a decision finding private
respondent Singson to have been illegally dismissed and ordering HANTEX
to reinstate him to his former or substantially equivalent position, as well
as to pay him P234,848.38 as backwages and P8,992.60 as 13th month
pay.[3]
HANTEX appealed to the National Labor Relations Commission (NLRC),
which affirmed the Labor Arbiter's finding of illegal dismissal but ordered
the reduction of backwages, holding that the computation thereof should
start not from the date complainant was hired in 1994 as held by the Labor
Arbiter, but from the date he was illegally dismissed in 1996. The NLRC
observed The respondents would want us to believe that on August 5, 1996, they
merely reprimanded complainant for his poor performance (p. 10, Appeal,
p. 109, Record). However, they have not submitted any proof thereon,
unlike on November 21, 1995 when they sent him a memorandum, which
he duly received, calling attention to his work deportment x x x x Just
because respondent asked him to assume duties during the hearing before
the Labor Arbiter on September 30, 1996 (p. 7, Record) does not
necessarily prove that they in fact did not dismiss him in the first place. On
the contrary, that offer could be a tacit admission of respondents that they
erred in dismissing him verbally and without observance of both
substantive and procedural due process x x x x On the matter of
complainants alleged abandonment x x x xsuffice it to say that his mere
filing of a case for illegal dismissal already negates the theory of
abandonment x x x x However, we find merit in respondents argument
regarding the award of backwages. Indeed, it was glaring error to base the
computation thereof from the date complainant was hired in 1994. Rather,
the computation should
start from the date he was found to have been illegally dismissed x x x x [4]
On 8 June 2000 HANTEX and/or Mariano Chua, undaunted by reverses,
elevated the case to the Court of Appeals on a petition for
certiorari[5] arguing that: (a) the complaint for illegal dismissal was a mere
ploy of private respondent to get back at them; (b) there was no

421

termination letter which is the best evidence of the alleged illegal

dismissal, consequently, the NLRC should have adjudged that private
respondent was not dismissed but had voluntarily abandoned his
employment; and, (c) private respondent's rejection of petitioners' offer for
him to resume his employment during the preliminary conference before
the Labor Arbiter was an overt act of abandonment. The appellate court,
however, likewise ruled against petitioners An ordinary member of the working class will not put at stake his primary
source of income just to satisfy his egoistic feeling of revenge. The
expense of a protracted legal battle against a well-equipped employer
coupled with the uncertainty of winning and the prospect of a prolonged
unemployment are factors that negate petitioners
supposition. Furthermore, a letter of dismissal is not the only material
evidence to establish the fact of termination. For in cases of constructive
dismissal, as when the employee was compelled to resign because
continued employment has become impossible, unreasonable and unlikely,
his quitting his job amounts to constructive discharge or illegal dismissal.
Likewise, we find petitioners argument in support of their abandonment
theory as misplaced x x x that offer could be a tacit
admission of petitioners that they erred in dismissing him verbally and
without observance of both substantive and procedural due process x x x x
Its motion for reconsideration having been denied by the Court of
Appeals on 10 May 2001, petitioners now hope to secure relief from this
Court. Relying once more on their defense of abandonment, petitioners
insist that other than the bare allegations of private respondent that he
was illegally dismissed, the records are bereft of any evidence to prove
that petitioners indeed terminated his services; that moreover, no notice or
letter of dismissal was ever issued by petitioners to private respondent, as
there was no intent to dismiss him when he was called to a conference on
5 August 1996; and, that he was not prevented from returning to work as
in fact he was asked repeatedly to return to work, but he defiantly refused
to do so.
To avoid delay in the disposition of the case, it appearing from the
records that the parties had already fully ventilated and exhaustively
argued their respective positions before the Labor Arbiter, the NLRC and
the Court of Appeals, and even before this Court, through their respective
petition, comment and reply, we dispensed with the usual practice of
requiring the parties to submit their memoranda and would now proceed to
decide the case.

The pivotal issue in the present recourse is whether private

respondent Bernardo Singson deliberately abandoned his employment, or
was illegally dismissed by the management of petitioner HANTEX.
We deny the petition. Plainly, the petition raises a fundamentally
factual issue, which we are not at liberty to review because our jurisdiction
is limited to reviewing errors of law that may have been committed by the
lower court. The resolution of factual questions is the primary and often the
final task of lower courts. This Court is not a trier of facts and it is not our
function to examine and evaluate all over again the probative value of all
evidence presented to the concerned tribunal which formed the basis of its
impugned decision, resolution or order.[6]
We reiterate time and again the much-repeated but not so wellheeded rule that findings of fact of the Court of Appeals, particularly where
it is in absolute agreement with that of the NLRC and the Labor Arbiter, as
in this case, are accorded not only respect but even finality and are
deemed binding upon this Court so long as they are supported by
substantial evidence.[7]
In any event, we waded into the records of this case and found no
compelling reason to disturb the unanimous findings and conclusions of
the Court of Appeals, NLRC and the Labor Arbiter. Indeed, petitioners'
persistent refrain, ad nauseam, that private respondent Singson was not
dismissed but voluntarily abandoned his employment, fails to persuade.
Considering the hard times in which we are in, it is incongruous for
respondent to simply give up his work after receiving a mere reprimand
from his employer. No employee would recklessly abandon his job knowing
fully well the acute unemployment problem and the difficulty of looking for
a means of livelihood nowadays. With a family to support, we doubt very
much that respondent would so easily sacrifice his only source of income
and unduly expose his family to hunger and untold hardships. Certainly, no
man in his right mind would do such thing.
What is more telling is that on 8 June 1996, or three (3) days after his
employment was terminated, respondent immediately instituted the
instant case for illegal dismissal with a prayer for reinstatement against his
employer. An employee who loses no time in protesting his layoff cannot
by any reasoning be said to have abandoned his work, for it is already a
well-settled doctrine that the filing by an employee of a complaint for
illegal dismissal with a prayer for reinstatement is proof enough of his
desire to return to work, thus negating the employer's charge of

422

abandonment. Verily, it would be illogical for respondent Singson to have

left his job and thereafter file the complaint against his employer. As we
held in Villar v. National Labor Relations Commission [8] x x x x It is clear from the records that sometime in August 1994,
immediately after petitioners supposedly refused to work having lost
earlier in the certification election, several complaints for illegal dismissal
against HI-TECH were filed by petitioners. These are sufficient proofs that
they were never guilty of leaving their jobs. The concept of abandonment
of work is inconsistent with the immediate filing of complaints for illegal
dismissal. An employee who took steps to protest his layoff could not by
any logic be said to have abandoned his work.
Abandonment is a matter of intention and cannot lightly be presumed
from certain equivocal acts. For abandonment to exist, it is essential (a)
that the employee must have failed to report for work or must have been
absent without valid or justifiable reason; and, (b) that there must have
been a clear intention to sever the employer-employee relationship
manifested by some overt acts - the second element is the more
determinative factor. Mere absence of the employee is not sufficient. The
burden of proof is on the employer to show a clear and deliberate intent on
the part of the employee to discontinue employment without any intention
of returning.
Petitioners dismally failed to discharge their burden. Their evidence,
consisting entirely of cash vouchers of respondent SINGSON and his cosalesman Raul Hista, for the months of May, June and July 1996, [9] is grossly
anemic - if not totally irrelevant - to establish that respondent Singson
indeed deliberately and unjustifiably abandoned his job. At best,
these cash vouchers merely show respondent's lackluster performance
during those months, and that he paled in comparison with his cosalesman Raul Hista in terms of sales output. As astutely observed by the
Court of Appeals x x x x Neither can we see any evidentiary relevance of the vouchers of
Raul Hista in comparison with that of private respondent. They do not in
any way vouch petitioners claim of abandonment nor do they refute the
fact that private respondent was illegally dismissed because of petitioners
failure to observe the substantive as well as the procedural requirements
of the law. If at all, they merely show the unsatisfactory performance of
private respondent which does not in any way authorizes the abrupt
dismissal of private respondent sans observance of due process.

At any rate, petitioners undoubtedly could have presented better

evidence to buttress their claim of abandonment. After all, being the
employers, they are in possession of documents relevant to this case. For
instance, they could have at least presented in evidence copies of
respondent's daily time records, which are on-file in its office, to prove the
dates respondent was on AWOL (absence without leave); or any letter
wherein they required respondent to report for work and explain his
unauthorized absences. But, as it is, petitioners' defense of abandonment
cannot be given credence for lack of evidentiary support.
Petitioners maintain that during the initial hearing before Labor Arbiter
Bugarin on 30 September 1996 they made an offer to reinstate private
respondent to his former position, but he"defiantly" refused the offer
despite the fact that in his complaint he was asking for
reinstatement. Again, petitioners extended the offer in their position paper
filed with the Labor Arbiter but was likewise rejected by respondent. They
assert that these circumstances are clear indications of respondent's lack
of further interest to work and effectively negate respondent's claim of
illegal dismissal.
We hold otherwise. As we see it, respondent's refusal to be reinstated
is more of a symptom of strained relations between the parties, rather than
an indicium of abandonment of work as obstinately insisted by
petitioners. While respondent desires to have his job back, it must have
later dawned on him that the filing of the complaint for illegal dismissal
and the bitter incidents that followed have sundered the erstwhile
harmonious relationship between the parties. Respondent must have
surely realized that even if reinstated, he will find it uncomfortable to
continue working under the hostile eyes of the employer who had been
forced to reinstate him. He had every reason to fear that if he accepted
petitioners' offer, their watchful eyes would thereafter be focused on him,
to detect every small shortcoming of his as a ground for vindictive
disciplinary action.[10] In such instance, reinstatement would no longer be
beneficial to him.
Neither
does
the
fact
that
petitioners
made offers
to
reinstate respondent legally disproves illegal dismissal. We agree with the
observation of the Court of Appeals that the offer may very well be "a tacit
admission of petitioners that they erred in dismissing him verbally and
without observance of both substantive and procedural due
process." Curiously, petitioners' offer of reinstatement was made only after
more than one (1) month from the date of the filing of the illegal dismissal
case. Their belated gesture of goodwill is highly suspect. If petitioners were

423

indeed sincere in inviting respondent back to work in the company, they

could have made the offer much sooner. In any case, their intentions in
making the offer are immaterial, for the offer to re-employ respondent
could not have the effect of validating an otherwise arbitrary dismissal.
In sum, we are convinced that respondent did not quit his job as
insisted by petitioners, but was unceremoniously dismissed therefrom
without observing the twin requirements of due process, i.e., due notice
and hearing. While we recognize the right of the employer to terminate the
services of an employee for a just or authorized cause, nevertheless, the
dismissal of employees must be made within the parameters of law and
pursuant to the tenets of equity and fair play. Truly, the employer's power
to discipline its workers may not be exercised in an arbitrary manner as to
erode the constitutional guarantee of security of tenure.
Whatever doubts, uncertainties or ambiguities remain in this case
should ultimately be resolved in favor of the worker in line with the social
justice policy of our labor laws and the Constitution. The consistent rule is
that the employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause, failing in which makes the
termination illegal.
Upon the foregoing considerations, the normal consequences of
respondent's illegal dismissal are reinstatement without loss of seniority
rights, and payment of back wages computed from the time his
compensation was withheld from him, that is, 5 August 1996, up to the
date of his actual reinstatement. These remedies give life to the workers'
constitutional right to security of tenure. However, under the
circumstances, reinstatement would be impractical and would hardly
promote the best interest of the parties. As heretofore discussed, the
resentment and enmity between HANTEX and Singson which culminated in
and was compounded by the illegal dismissal suit necessarily strained the
relationship between them or even provoked antipathy and
antagonism. Where
reinstatement is
no
longer viable as
an
option, separation pay equivalent to one (1) month salary for every year of
service should be awarded as an alternative. This has been our consistent
ruling in the award of separation pay to illegally dismissed employees in
lieu of reinstatement.[11]
WHEREFORE, the petition is DENIED and the assailed decision dated
23 October 2000 of the Court of Appeals is AFFIRMED. Petitioners Hantex
Trading Co., Inc., and Mariano Chua are directed jointly and severally to
pay respondent Bernardo Singson separation pay in lieu of reinstatement

in the amount equivalent to one (1) month pay for every year of service,
backwages computed from 5 August 2002, the time his compensation was
withheld from him, up to the finality of this decision, plus the accrued 13th
month pay.
SO ORDERED.

424

KING OF KINGS TRANSPORT, G.R. No. 166208

INC., CLAIRE DELA FUENTE,
and MELISSA LIM, Present:
Petitioners,
QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
- versus - TINGA, and
VELASCO, JR., JJ.
Promulgated:
SANTIAGO O. MAMAC,
Respondent. June 29, 2007
x-----------------------------------------------------------------------------------------x

Respondent Mamac was hired as bus conductor of Don Mariano Transit

Corporation (DMTC) on April 29, 1999. The DMTC employees including
respondent

formed

theDamayan

at Conductor-Transport
Department

of

Labor

Workers
and

ng

Union

mga
and

Manggagawa,
registered

Employment. Pending

the

it

Tsuper

with

holding

the
of

certification election in DMTC, petitioner KKTI was incorporated with the

Securities and Exchange Commission which acquired new buses. Many
DMTC employees were subsequently transferred to KKTI and excluded from
the election.

DECISION

The KKTI employees later organized the Kaisahan ng mga Kawani sa King
VELASCO, JR., J.:

of Kings (KKKK) which was registered with DOLE. Respondent was elected
KKKK president.

Is a verbal appraisal of the charges against the employee a breach

of the procedural due process? This is the main issue to be resolved in this
plea for review under Rule 45 of the September 16, 2004 Decision

Respondent was required to accomplish a Conductors Trip Report

of the

and submit it to the company after each trip. As a background, this report

Court of Appeals (CA) in CA-GR SP No. 81961. Said judgment affirmed the

indicates the ticket opening and closing for the particular day of duty. After

dismissal of bus conductor Santiago O. Mamac from petitioner King of

submission, the company audits the reports. Once an irregularity is

Kings Transport, Inc. (KKTI), but ordered the bus company to pay full

discovered, the company issues an Irregularity Report against the

backwages for violation of the twin-notice requirement and 13th-month

employee, indicating the nature and details of the irregularity. Thereafter,

pay. Likewise assailed is the December 2, 2004 CA Resolution

the concerned employee is asked to explain the incident by making a

[2]

[1]

rejecting

KKTIs Motion for Reconsideration.

written statement or counter-affidavit at the back of the same Irregularity

Report. After considering the explanation of the employee, the company
then makes a determination of whether to accept the explanation or

The Facts

impose upon the employee a penalty for committing an infraction. That

decision shall be stated on said Irregularity Report and will be furnished to

Petitioner KKTI is a corporation engaged in public transportation and

the employee.

managed by Claire Dela Fuente and Melissa Lim.

Upon

audit

of

the October

28,

2001 Conductors

Report

of

respondent, KKTI noted an irregularity. It discovered that respondent

425

declared several sold tickets as returned tickets causing KKTI to lose an

leave and 13th-month pay because he was paid on commission or

income of eight hundred and ninety pesos. While no irregularity report was

percentage basis.

prepared on the October 28, 2001 incident, KKTI nevertheless asked

respondent to explain the discrepancy. In his letter,[3] respondent said that
the erroneous declaration in his October 28, 2001 Trip Report was

On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered

judgment dismissing respondents Complaint for lack of merit. [6]

unintentional. He explained that during that days trip, the windshield of the
bus assigned to them was smashed; and they had to cut short the trip in
order to immediately report the matter to the police. As a result of the

Aggrieved,

respondent

appealed

to

the

National

Labor

Relations

Commission (NLRC). On August 29, 2003, the NLRC rendered a Decision,

the dispositive portion of which reads:

incident, he got confused in making the trip report.

WHEREFORE, the decision dated 16 September

2002 is MODIFIED in that respondent King of Kings
Transport Inc. is hereby ordered to indemnify complainant
in the amount of ten thousand pesos (P10,000) for failure
to comply with due process prior to termination.

On November 26, 2001, respondent received a letter [4] terminating

his employment effective November 29, 2001. The dismissal letter alleged
that the October 28, 2001irregularity was an act of fraud against the

The other findings are AFFIRMED.

company. KKTI also cited as basis for respondents dismissal the other

SO ORDERED.[7]

offenses he allegedly committed since 1999.

On December 11, 2001, respondent filed a Complaint for illegal
dismissal, illegal deductions, nonpayment of 13th-month pay, service

Respondent moved for reconsideration but it was denied through

the November 14, 2003 Resolution[8] of the NLRC.

incentive leave, and separation pay.He denied committing any infraction

and

alleged

that

his

dismissal

was

intended

to

bust

union

activities. Moreover, he claimed that his dismissal was effected without

Thereafter, respondent filed a Petition for Certiorari before the CA

urging the nullification of the NLRC Decision and Resolution.

due process.
The Ruling of the Court of Appeals
In

its April

3,

2002 Position

Paper,[5] KKTI

contended

that

respondent was legally dismissed after his commission of a series of

misconducts and misdeeds. It claimed that respondent had violated the
trust and confidence reposed upon him by KKTI. Also, it averred that it had
observed due process in dismissing respondent and maintained that
respondent was not entitled to his money claims such as service incentive

Affirming the NLRC, the CA held that there was just cause for respondents
dismissal. It ruled that respondents act in declaring sold tickets as returned
tickets x x x constituted fraud or acts of dishonesty justifying his dismissal.
[9]

426

Also, the appellate court sustained the finding that petitioners

The petition is partly meritorious.

failed to comply with the required procedural due process prior to

respondents termination. However, following the doctrine in Serrano v.
NLRC,

[10]

it modified the award of PhP 10,000 as indemnification by

awarding full backwages from the time respondents employment was

The disposition of the first assigned error depends on whether

petitioner KKTI complied with the due process requirements in terminating
respondents employment; thus, it shall be discussed secondly.

terminated until finality of the decision.

Non-compliance with the Due Process Requirements
Moreover, the CA held that respondent is entitled to the 13thDue process under the Labor Code involves two aspects: first,

month pay benefit.

substantivethe valid and authorized causes of termination of employment

Hence, we have this petition.

under the Labor Code; andsecond, proceduralthe manner of dismissal.

[12]

In the present case, the CA affirmed the findings of the labor arbiter and

the NLRC that the termination of employment of respondent was based on

The Issues
Petitioner raises the following assignment of errors for our
consideration:

a just cause. This ruling is not at issue in this case. The question to be
determined is whether the procedural requirements were complied with.

Art. 277 of the Labor Code provides the manner of termination of

Whether the Honorable Court of Appeals erred in awarding

in favor of the complainant/private respondent, full back
wages, despite the denial of his petition for certiorari.
Whether the Honorable Court of Appeals erred in ruling
that KKTI did not comply with the requirements of
procedural due process before dismissing the services of
the complainant/private respondent.
Whether the Honorable Court of Appeals rendered an
incorrect decision in that [sic] it awarded in favor of the
complaint/private respondent, 13th month pay benefits
contrary to PD 851.[11]

The Courts Ruling

employment, thus:
Art. 277. Miscellaneous Provisions.x x x
(b) Subject to the constitutional right of workers to
security of tenure and their right to be protected against
dismissal except for a just and authorized cause without
prejudice to the requirement of notice under Article 283 of
this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice
containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if
he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of
the worker to contest the validity or legality of his dismissal
by filing a complaint with the regional branch of the

427

National Labor Relations Commission. The burden of

proving that the termination was for a valid or authorized
cause shall rest on the employer.

(1) The first written notice to be served on the employees should

contain the specific causes or grounds for termination against them, and a
directive that the employees are given the opportunity to submit their

Accordingly, the implementing rule of the aforesaid provision

states:

written explanation within a reasonable period. Reasonable opportunity

under

SEC. 2. Standards of due process; requirements of

notice.In all cases of termination of employment, the
following standards of due process shall be substantially
observed:
I. For termination of employment based on just
causes as defined in Article 282 of the Code:

the

Omnibus

Rules

means

every

kind

of

assistance

that

management must accord to the employees to enable them to prepare

adequately for their defense.[15] This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a
union official or lawyer, gather data and evidence, and decide on the

(a)
A written notice served on the
employee specifying the ground or grounds
for termination, and giving said employee
reasonable opportunity within which to
explain his side.

defenses they will raise against the complaint. Moreover, in order to enable

(b) A hearing or conference during

which the employee concerned, with the
assistance of counsel if he so desires is
given opportunity to respond to the charge,
present his evidence, or rebut the evidence
presented against him.

description of the charge will not suffice. Lastly, the notice should

(c) A written notice of termination

served on the employee, indicating that
upon due consideration of all the
circumstances,
grounds
have
been
established to justify his termination. [13]
In case of termination, the foregoing notices shall
be served on the employees last known address.[14]

the employees to intelligently prepare their explanation and defenses, the

notice should contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the employees. A general

specifically mention which company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged against the
employees.

(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given
the opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend

To clarify, the following should be considered in terminating the services of

themselves personally, with the assistance of a representative or counsel

employees:

of their choice. Moreover, this conference or hearing could be used by the

parties as an opportunity to come to an amicable settlement.

428

(3) After determining that termination of employment is justified, the

reports did not even state a company rule or policy that the employee had

employers

of

allegedly violated. Likewise, there is no mention of any of the grounds for

termination indicating that: (1) all circumstances involving the charge

termination of employment under Art. 282 of the Labor Code. Thus, KKTIs

against the employees have been considered; and (2) grounds have been

standard charge sheet is not sufficient notice to the employee.

shall

serve

the

employees

a written

notice

established to justify the severance of their employment.

Third, no
In the instant case, KKTI admits that it had failed to provide
respondent with a charge sheet.

hearing

was

conducted. Regardless

of

respondents

written explanation, a hearing was still necessary in order for him to clarify

However, it maintains that it had

and present evidence in support of his defense. Moreover, respondent

substantially complied with the rules, claiming that respondent would not

made the letter merely to explain the circumstances relating to the

have issued a written explanation had he not been informed of the charges

irregularity in his October 28, 2001 Conductors Trip Report. He was

against him.[17]

unaware that a dismissal proceeding was already being effected. Thus, he

[16]

was surprised to receive the November 26, 2001 termination letter

We are not convinced.

indicating as grounds, not only hisOctober 28, 2001 infraction, but also his
previous infractions.

First, respondent was not issued a written notice charging him of

committing an infraction. The law is clear on the matter. A verbal appraisal

Sanction for Non-compliance with Due Process Requirements

of the charges against an employee does not comply with the first notice
As stated earlier, after a finding that petitioners failed to comply

requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the Court held that
consultations or conferences are not a substitute for the actual observance
of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,[19] the

with the due process requirements, the CA awarded full backwages in favor
of respondent in accordance with the doctrine in Serrano v. NLRC.
[20]

Court,

sanctioning

the employer

for

disregarding

the

due

process

requirements, held that the employees written explanation did not excuse
the fact that there was a complete absence of the first notice.

However,

the

doctrine

in Serrano had

already

been

abandoned

in Agabon v. NLRC by ruling that if the dismissal is done without due

process, the employer should indemnify the employee with nominal
damages.[21]

Second, even assuming that petitioner KKTI was able to furnish

respondent an Irregularity Report notifying him of his offense, such would
not comply with the requirements of the law. We observe from the
irregularity reports against respondent for his other offenses that such
contained merely a general description of the charges against him. The

Thus, for non-compliance with the due process requirements in the

termination of respondents employment, petitioner KKTI is sanctioned to
pay respondent the amount of thirty thousand pesos (PhP 30,000) as
damages.

429

above the statutory minimum, are entitled to a 13th-month pay equivalent

Thirteenth (13th)-Month Pay

Section

of

the

Rules

to one-twelfth of their total earnings during the calendar year.

Implementing

Presidential

Decree

No.

On the other hand, in his Complaint, [24] respondent admitted that he was

851[22] provides the exceptions in the coverage of the payment of the 13th-

paid on commission only. Moreover, this fact is supported by his pay

month benefit. The provision states:

slips[25] which indicated the varying amount of commissions he was

receiving each trip. Thus, he was excluded from receiving the 13th-month

SEC. 3. Employers covered.The Decree shall apply to all

employers except to:

pay benefit.
WHEREFORE, the petition is PARTLY GRANTED and the September 16,

xxxx

2004 Decision of the CA is MODIFIED by deleting the award of backwages

e) Employers of those who are paid on purely commission,
boundary, or task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the
time consumed in the performance thereof, except where
the workers are paid on piece-rate basis in which case the
employer shall be covered by this issuance insofar as such
workers are concerned.

and 13th-month pay. Instead, petitioner KKTI is ordered to indemnify

respondent the amount of thirty thousand pesos (PhP 30,000) as nominal
damages for failure to comply with the due process requirements in
terminating the employment of respondent.

No costs.
Petitioner KKTI maintains that respondent was paid on purely
commission basis; thus, the latter is not entitled to receive the 13th-month
pay

benefit. However,

applying

the

ruling

in Philippine

Agricultural

Commercial and Industrial Workers Union v. NLRC,[23] the CA held that

respondent is entitled to the said benefit.
It was erroneous for the CA to apply the case of Philippine Agricultural
Commercial and Industrial Workers Union. Notably in the said case, it was
established that the drivers and conductors praying for 13th- month pay
were not paid purely on commission. Instead, they were receiving a
commission in addition to a fixed or guaranteed wage or salary.Thus, the
Court held that bus drivers and conductors who are paid a fixed or
guaranteed minimum wage in case their commission be less than the
statutory minimum, and commissions only in case where they are over and

SO ORDERED.

430

[G.R. No. 151378. March 28, 2005]

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN
PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON
DOMINGO,
RHOEL
LESCANO
and
JONATHAN
CAGABCAB, respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this appeal by way of a petition
for review on certiorari under rule 45 of the Rules of Court are the following
issuances of the Court of Appeals in CA-G.R. SP. No. 59847, to wit:
1. Decision dated 16 November 2001, [1] reversing and setting
aside an earlier decision of the National Labor Relations
Commission (NLRC); and
2. Resolution dated 8 January 2002,[2] denying petitioners
motion for reconsideration.
The material facts may be briefly stated, as follows:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon
Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by
petitioner JAKA Foods Processing Corporation (JAKA, for short) until the
latter terminated their employment on August 29, 1997 because the
corporation was in dire financial straits. It is not disputed, however, that
the termination was effected without JAKA complying with the requirement
under Article 283 of the Labor Code regarding the service of a written
notice upon the employees and the Department of Labor and Employment
at least one (1) month before the intended date of termination.
In time, respondents separately filed with the regional Arbitration
Branch of the National Labor Relations Commission (NLRC) complaints for
illegal dismissal, underpayment of wages and nonpayment of service
incentive leave and 13th month pay against JAKA and its HRD Manager,
Rosana Castelo.

After
due
proceedings,
the
Labor
Arbiter
rendered
a
decision[3] declaring the termination illegal and ordering JAKA and its HRD
Manager to reinstate respondents with full backwages, and separation pay
if reinstatement is not possible. More specifically the decision dispositively
reads:
WHEREFORE, judgment is hereby rendered declaring as illegal the
termination of complainants and ordering respondents to reinstate them to
their positions with full backwages which as of July 30, 1998 have already
amounted to P339,768.00. Respondents are also ordered to pay
complainants the amount of P2,775.00 representing the unpaid service
incentive leave pay of Parohinog, Lescano and Cagabcab an the amount of
P19,239.96 as payment for 1997 13th month pay as alluded in the above
computation.
If complainants could not be reinstated, respondents are ordered to pay
them separation pay equivalent to one month salary for very (sic) year of
service.
SO ORDERED.
Therefrom, JAKA went on appeal to the NLRC, which, in a decision
dated August 30, 1999,[4] affirmed in toto that of the Labor Arbiter.
JAKA filed a motion for reconsideration. Acting thereon, the NLRC
came out with another decision dated January 28, 2000,[5] this time
modifying its earlier decision, thus:
WHEREFORE, premises considered, the instant motion for reconsideration
is hereby GRANTED and the challenged decision of this Commission
[dated] 30 August 1999 and the decision of the Labor Arbiter xxx are
hereby modified by reversing an setting aside the awards of backwages,
service incentive leave pay. Each of the complainants-appellees shall be
entitled to a separation pay equivalent to one month. In addition,
respondents-appellants is (sic) ordered to pay each of the complainantsappellees the sum of P2,000.00 as indemnification for its failure to observe
due process in effecting the retrenchment.
SO ORDERED.

431

Their motion for reconsideration having been denied by the NLRC in

its resolution of April 28, 2000, [6] respondents went to the Court of
Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No.
59847.
As stated at the outset hereof, the Court of Appeals, in a decision
dated November 16, 2000, applying the doctrine laid down by this Court
in Serrano vs. NLRC,[7] reversed and set aside the NLRCs decision of
January 28, 2000, thus:
WHEREFORE, the decision dated January 28, 2000 of the National Labor
Relations Commission is REVERSED and SET ASIDE and another one
entered ordering respondent JAKA Foods Processing Corporation to pay
petitioners separation pay equivalent to one (1) month salary, the
proportionate 13th month pay and, in addition, full backwages from the
time their employment was terminated on August 29, 1997 up to the time
the Decision herein becomes final.
SO ORDERED.
This time, JAKA moved for a reconsideration but its motion was denied
by the appellate court in its resolution of January 8, 2002.
Hence, JAKAs present recourse, submitting, for our consideration, the
following issues:
I. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY
AWARDED FULL BACKWAGES TO RESPONDENTS.
II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY
AWARDED SEPARATION PAY TO RESPONDENTS.
As we see it, there is only one question that requires
resolution, i.e. what are the legal implications of a situation where an
employee is dismissed for cause but such dismissal was effected without
the employers compliance with the notice requirement under the Labor
Code.
This, certainly, is not a case of first impression. In the very recent case
of Agabon vs. NLRC,[8] we had the opportunity to resolve a similar question.
Therein, we found that the employees committed a grave
offense, i.e., abandonment, which is a form of a neglect of duty which, in

turn, is one of the just causes enumerated under Article 282 of the Labor
Code. In said case, we upheld the validity of the dismissal despite noncompliance with the notice requirement of the Labor Code. However, we
required the employer to pay the dismissed employees the amount of
P30,000.00, representing nominal damages for non-compliance with
statutory due process, thus:
Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights, as ruled in Reta vs. National Labor
Relations Commission. The indemnity to be imposed should be stiffer to
discourage the abhorrent practice of dismiss now, pay later, which we
sought to deter in the Serrano ruling. The sanction should be in the nature
of indemnification or penalty and should depend on the facts of each case,
taking into special consideration the gravity of the due process violation of
the employer.
xxx xxx xxx
The violation of petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal
damages. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case
at bar, we deem it proper to fix it at P30,000.00. We believe this form
of damages would serve to deter employers from future violations of the
statutory due process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the latter
under the Labor Code and its Implementing Rules, (Emphasis supplied).
The difference between Agabon and the instant case is that in the
former, the dismissal was based on a just cause under Article 282 of the
Labor Code while in the present case, respondents were dismissed due to
retrenchment, which is one of the authorized causes under Article 283 of
the same Code.
At this point, we note that there are divergent implications of a
dismissal for just cause under Article 282, on one hand, and a dismissal for
authorized cause under Article 283, on the other.

432

A dismissal for just cause under Article 282 implies that the
employee concerned has committed, or is guilty of, some violation against
the employer, i.e. the employee has committed some serious misconduct,
is guilty of some fraud against the employer, or, as in Agabon, he has
neglected his duties. Thus, it can be said that the employee himself
initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article
283 does not necessarily imply delinquency or culpability on the part of the
employee. Instead, the dismissal process is initiated by the employers
exercise of his management prerogative, i.e. when the employer opts to
install labor saving devices, when he decides to cease business operations
or when, as in this case, he undertakes to implement a retrenchment
program.
The clear-cut distinction between a dismissal for just cause under
Article 282 and a dismissal for authorized cause under Article 283 is further
reinforced by the fact that in the first, payment of separation pay, as a
rule, is not required, while in the second, the law requires payment of
separation pay.[9]
For these reasons, there ought to be a difference in treatment when
the ground for dismissal is one of the just causes under Article 282, and
when based on one of the authorized causes under Article 283.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a
just cause under Article 282 but the employer failed to comply with the
notice requirement, the sanction to be imposed upon him should
be tempered because the dismissal process was, in effect, initiated by an
act imputable to the employee; and (2) if the dismissal is based on an
authorized cause under Article 283 but the employer failed to comply with
the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employers exercise of his
management prerogative.
The records before us reveal that, indeed, JAKA was suffering from
serious business losses at the time it terminated respondents employment.
As aptly found by the NLRC:
A careful study of the evidence presented by the respondent-appellant
corporation shows that the audited Financial Statement of the corporation
for the periods 1996, 1997 and 1998 were submitted by the respondent-

appellant corporation, The Statement of Income and Deficit found in the

Audited Financial Statement of the respondent-appellant corporation
clearly shows the following in 1996, the deficit of the respondent-appellant
corporation was P188,218,419.00 or 94.11% of the stockholders [sic]
equity which amounts to P200,000,000.00. In 1997 when the retrenchment
program of respondent-appellant corporation was undertaken, the deficit
ballooned to P247,222,569.00 or 123.61% of the stockholders equity, thus
a capital deficiency or impairment of equity ensued. In 1998, the deficit
grew to P355,794,897.00 or 177% of the stockholders equity. From 1996 to
1997, the deficit grew by more that (sic) 31% while in 1998 the deficit grew
by more than 47%.
The Statement of Income and Deficit of the respondent-appellant
corporation to prove its alleged losses was prepared by an independent
auditor, SGV & Co. It convincingly showed that the respondent-appellant
corporation was in dire financial straits, which the complainants-appellees
failed to dispute. The losses incurred by the respondent-appellant
corporation are clearly substantial and sufficiently proven with clear and
satisfactory evidence. Losses incurred were adequately shown with
respondent-appellants audited financial statement. Having established the
loss incurred by the respondent-appellant corporation, it necessarily
necessarily (sic) follows that the ground in support of retrenchment existed
at the time the complainants-appellees were terminated. We cannot
therefore sustain the findings of the Labor Arbiter that the alleged losses of
the respondent-appellant was [sic] not well substantiated by substantial
proofs. It is therefore logical for the corporation to implement a
retrenchment program to prevent further losses.[10]
Noteworthy it is, moreover, to state that herein respondents did not
assail the foregoing finding of the NLRC which, incidentally, was also
affirmed by the Court of Appeals.
It is, therefore, established that there was ground for respondents
dismissal, i.e., retrenchment, which is one of the authorized causes
enumerated under Article 283 of the Labor Code. Likewise, it is established
that JAKA failed to comply with the notice requirement under the same
Article. Considering the factual circumstances in the instant case and the
above ratiocination, we, therefore, deem it proper to fix the indemnity at
P50,000.00.
We likewise find the Court of Appeals to have been in error when it
ordered JAKA to pay respondents separation pay equivalent to one (1)

433

month salary for every year of service. This is because in Reahs

Corporation vs. NLRC,[11] we made the following declaration:
The rule, therefore, is that in all cases of business closure or cessation of
operation or undertaking of the employer, the affected employee is
entitled to separation pay. This is consistent with the state policy of
treating labor as a primary social economic force, affording full protection
to its rights as well as its welfare. The exception is when the closure of
business or cessation of operations is due to serious business
losses or financial reverses; duly proved, in which case, the right
of affected employees to separation pay is lost for obvious
reasons. xxx. (Emphasis supplied)
WHEREFORE, the instant petition is GRANTED. Accordingly, the
assailed decision and resolution of the Court of Appeals respectively dated
November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new
one entered upholding the legality of the dismissal but ordering petitioner
to pay each of the respondents the amount of P50,000.00, representing
nominal damages for non-compliance with statutory due process.
SO ORDERED.

434

EN BANC
Acting

FELIX B. PEREZ and G.R. No. 152048

AMANTE G. DORIA,
Petitioners,

on

an alleged

unsigned

letter

regarding

anomalous

transactions at the Shipping Section, respondents formed a special audit

Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIAMARTINEZ,*

team to investigate the matter. It was discovered that the Shipping Section
jacked up the value of the freight costs for goods shipped and that the
duplicates

of

the shipping documents

allegedly showed traces

of

tampering, alteration and superimposition.

- v e r s u s - CORONA,
CARPIO MORALES,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION and
PERALTA, JJ.
PHILIPPINE TELEGRAPH AND
TELEPHONE COMPANY and
JOSE LUIS SANTIAGO,
Respondents. Promulgated:

On September 3, 1993, petitioners were placed on preventive

suspension for 30 days for their alleged involvement in the anomaly.
[1]

Their suspension was extended for 15 days twice: first on October 3,

1993[2] and second on October 18, 1993.[3]

On October 29, 1993, a memorandum with the following tenor was

issued by respondents:

April 7, 2009
x-------------------------------------------------x
DECISION
CORONA, J.:

Petitioners Felix B. Perez and Amante G. Doria were employed by

respondent Philippine Telegraph and Telephone Company (PT&T) as
shipping clerk and supervisor, respectively, in PT&Ts Shipping Section,
Materials Management Group.

In line with the recommendation of the AVP-Audit as

presented in his report of October 15, 1993 (copy
attached) and the subsequent filing of criminal charges
against the parties mentioned therein, [Mr. Felix Perez and
Mr. Amante Doria are] hereby dismissed from the service
for having falsified company documents.[4] (emphasis
supplied)

On November 9, 1993, petitioners filed a complaint for illegal

suspension and illegal dismissal.[5] They alleged that they were dismissed

435

on November 8, 1993, the date they received the above-mentioned

memorandum.

RESPONDENTS FAILED TO PROVE JUST

CAUSE AND TO OBSERVE DUE PROCESS

The labor arbiter found that the 30-day extension of petitioners

The CA, in upholding the NLRCs decision, reasoned that there was
suspension and their subsequent dismissal were both illegal. He ordered
sufficient basis for respondents to lose their confidence in petitioners [8] for
respondents to pay petitioners their salaries during their 30-day illegal
allegedly

tampering

with

the

shipping

documents.

Respondents

suspension, as well as to reinstate them with backwages and 13 th month

emphasized the importance of a shipping order or request, as it was the
pay.
basis of their liability to a cargo forwarder.[9]
The National Labor Relations Commission (NLRC) reversed the
We disagree.
decision of the labor arbiter. It ruled that petitioners were dismissed for just
Without undermining the importance of a shipping order or
cause, that they were accorded due process and that they were illegally
request,

we

find

respondents

evidence

insufficient

to

clearly

and

suspended for only 15 days (without stating the reason for the reduction of
convincingly establish the facts from which the loss of confidence resulted.
the period of petitioners illegal suspension).[6]
[10]

Other than their bare allegations and the fact that such documents

Petitioners appealed to the Court of Appeals (CA). In its January 29,

came into petitioners hands at some point, respondents should have

2002 decision,[7] the CA affirmed the NLRC decision insofar as petitioners

provided evidence of petitioners functions, the extent of their duties, the

illegal suspension for 15 days and dismissal for just cause were concerned.

procedure in the handling and approval of shipping requests and the fact

However, it found that petitioners were dismissed without due process.

that no personnel other than petitioners were involved. There was,

Petitioners now seek a reversal of the CA decision. They contend

that there was no just cause for their dismissal, that they were not
accorded due process and that they were illegally suspended for 30 days.
We rule in favor of petitioners.

therefore, a patent paucity of proof connecting petitioners to the alleged

tampering of shipping documents.
The alterations on the shipping documents could not reasonably be
attributed to petitioners because it was never proven that petitioners alone

436

had control of or access to these documents. Unless duly proved or

process in the dismissal of an employee, an employer must furnish the

sufficiently substantiated otherwise, impartial tribunals should not rely only

worker with two written notices: (1) a written notice specifying the grounds

on the statement of the employer that it has lost confidence in its

for termination and giving to said employee a reasonable opportunity to

employee.[11]

explain his side and (2) another written notice indicating that, upon due
consideration of all circumstances, grounds have been established to

Willful breach by the employee of the trust reposed in him by his

justify the employer's decision to dismiss the employee. [16]
employer or duly authorized representative is a just cause for termination.
[12]

However, in General Bank and Trust Co. v. CA,[13] we said:

[L]oss 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 an earlier action taken in bad faith.

Petitioners were neither apprised of the charges against them nor

given a chance to defend themselves. They were simply and arbitrarily
separated from work and served notices of termination in total disregard of
their rights to due process and security of tenure. The labor arbiter and the
CA correctly found that respondents failed to comply with the two-notice

The burden of proof rests on the employer to establish that the

requirement for terminating employees.

dismissal is for cause in view of the security of tenure that employees

Petitioners likewise contended that due process was not observed

enjoy under the Constitution and the Labor Code. The employers evidence

in the absence of a hearing in which they could have explained their side

must clearly and convincingly show the facts on which the loss of

and refuted the evidence against them.

confidence in the employee may be fairly made to rest. [14] It must be

There is no need for a hearing or conference. We note a marked
adequately proven by substantial evidence. [15] Respondents failed to
difference in the standards of due process to be followed as prescribed in
discharge this burden.
the Labor Code and its implementing rules. The Labor Code, on one hand,
Respondents illegal act of dismissing petitioners was aggravated
by their failure to observe due process. To meet the requirements of due

provides that an employer must provide the employee ample opportunity

437

(i) A written notice served on the employee

specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which
to explain his side.

to be heard and to defend himself with the assistance of his representative

if he so desires:
ART. 277. Miscellaneous provisions. x x x
(b) Subject to the constitutional right of workers to security
of tenure and their right to be protected against dismissal
except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of
this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice
containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard
and to defend himself with the assistance of his
representative if he so desires in accordance with
company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be
without prejudice to the right of the worker to contest the
validity or legality of his dismissal by filing a complaint with
the regional branch of the National Labor Relations
Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the
employer. (emphasis supplied)

(ii) A hearing or conference during which the

employee concerned, with the assistance of counsel
if he so desires, is given opportunity to respond to
the charge, present his evidence or rebut the
evidence presented against him.
(iii) A written notice of termination served on the
employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his
termination. (emphasis supplied)

Which one should be followed? Is a hearing (or conference)

mandatory in cases involving the dismissal of an employee? Can the
apparent conflict between the law and its IRR be reconciled?

At the outset, we reaffirm the time-honored doctrine that, in case

of

conflict,

the

law

prevails

over

the

administrative

regulations

The omnibus rules implementing the Labor Code, on the other

implementing it.[18] The authority to promulgate implementing rules

hand, require a hearing and conference during which the employee

proceeds from the law itself. To be valid, a rule or regulation must conform

concerned is given the opportunity to respond to the charge, present his

to and be consistent with the provisions of the enabling statute. [19]As such,

evidence or rebut the evidence presented against him:[17]

it cannot amend the law either by abridging or expanding its scope. [20]

Section 2. Security of Tenure. x x x

(d) In all cases of termination of employment, the
following standards of due process shall be substantially
observed:
For termination of employment based on just
causes as defined in Article 282 of the Labor Code:

Article 277(b) of the Labor Code provides that, in cases of

termination for a just cause, an employee must be given ample
opportunity to be heard and to defend himself.Thus, the opportunity to be
heard afforded by law to the employee is qualified by the word ample

438

which ordinarily means considerably more than adequate or sufficient. [21] In

degree of flexibility or adaptability to meet the peculiarities of a given

this regard, the phrase ample opportunity to be heard can be reasonably

situation. To confine it to a single rigid proceeding such as a formal hearing

interpreted as extensive enough to cover actual hearing or conference. To

will defeat its spirit.

this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code is in conformity with Article 277(b).

Significantly, Section 2(d), Rule I of the Implementing Rules of Book

VI of the Labor Code itself provides that the so-called standards of due
process outlined therein shall be observed substantially, not strictly. This is

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book

a recognition that while a formal hearing or conference is ideal, it is not an
VI of the Labor Code should not be taken to mean that holding an actual
absolute, mandatory or exclusive avenue of due process.
hearing or conference is a condition sine qua non for compliance with the
due process requirement in termination of employment. The test for the

An employees right to be heard in termination cases under Article

fair procedure guaranteed under Article 277(b) cannot be whether there

277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of

has been a formal pretermination confrontation between the employer and

Book VI of the Labor Code should be interpreted in broad strokes. It is

the employee. The ample opportunity to be heard standard is neither

satisfied not only by a formal face to face confrontation but by any

synonymous nor similar to a formal hearing. To confine the employees right

meaningful opportunity to controvert the charges against him and to

to be heard to a solitary form narrows down that right. It deprives him of

submit evidence in support thereof.

other equally effective forms of adducing evidence in his defense.

A hearing means that a party should be given a chance to adduce
Certainly, such an exclusivist and absolutist interpretation is overly
his evidence to support his side of the case and that the evidence should
restrictive. The very nature of due process negates any concept of
be taken into account in the adjudication of the controversy. [23] To be heard
inflexible procedures universally applicable to every imaginable situation.
does not mean verbal argumentation alone inasmuch as one may be heard
[22]

just as effectively through written explanations, submissions or pleadings.

The standard for the hearing requirement, ample opportunity, is
couched in general language revealing the legislative intent to give some

[24]

Therefore, while the phrase ample opportunity to be heard may in fact

include an actual hearing, it is not limited to a formal hearing only. In other

439

words, the existence of an actual, formal trial-type hearing, although

preferred, is not absolutely necessary to satisfy the employees right to be
heard.

This Court has consistently ruled that the due process requirement
in cases of termination of employment does not require an actual or formal
hearing. Thus, we categorically declared in Skippers United Pacific, Inc. v.
Maguad:[25]
The Labor Code does not, of course, require a formal
or trial type proceeding before an erring employee
may be dismissed. (emphasis supplied)

In Autobus Workers Union v. NLRC,[26] we ruled:

The twin requirements of notice and hearing
constitute the essential elements of due process. Due
process of law simply means giving opportunity to be
heard before judgment is rendered. In fact, there is no
violation of due process even if no hearing was
conducted, where the party was given a chance to
explain his side of the controversy. What is frowned
upon is the denial of the opportunity to be heard.
xxxxxxxxx
A formal trial-type hearing is not even
essential to due process. It is enough that the
parties are given a fair and reasonable opportunity
to explain their respective sides of the controversy
and to present supporting evidence on which a fair
decision can be based. This type of hearing is not even
mandatory in cases of complaints lodged before the Labor
Arbiter. (emphasis supplied)

In Solid Development Corporation Workers Association v. Solid

Development Corporation,[27] we had the occasion to state:
[W]ell-settled is the dictum that the twin requirements of
notice and hearing constitute the essential elements of due
process in the dismissal of employees. It is a cardinal rule
in our jurisdiction that the employer must furnish the
employee with two written notices before the termination
of employment can be effected: (1) the first apprises the
employee of the particular acts or omissions for which his
dismissal is sought; and (2) the second informs the
employee of the employers decision to dismiss him. The
requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity
to be heard, and not necessarily that an actual
hearing was conducted.
In separate infraction reports, petitioners were both
apprised of the particular acts or omissions constituting the
charges against them. They were also required to submit
their written explanation within 12 hours from receipt of
the reports. Yet, neither of them complied. Had they found
the 12-hour period too short, they should have requested
for an extension of time. Further, notices of termination
were also sent to them informing them of the basis of their
dismissal. In fine, petitioners were given due process
before they were dismissed. Even if no hearing was
conducted, the requirement of due process had
been met since they were accorded a chance to explain
their side of the controversy. (emphasis supplied)

Our holding in National Semiconductor HK Distribution, Ltd. v.

NLRC[28] is of similar import:
That
the
investigations
conducted
by
petitioner
may
not
be
considered formal or recorded hearings
or
investigations is immaterial. A formal or trial type
hearing is not at all times and in all instances

440

essential to due process, the requirements of which are

satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy. It is
deemed sufficient for the employer to follow the natural
sequence of notice, hearing and judgment.

as part of employment pretermination procedure. To this extent, we refine

the decisions we have rendered so far on this point of law.

This interpretation of Section 2(d), Rule I of the Implementing Rules

The above rulings are a clear recognition that the employer may

of Book VI of the Labor Code reasonably implements the ample opportunity

provide an employee with ample opportunity to be heard and defend

to be heard standard under Article 277(b) of the Labor Code without

himself with the assistance of a representative or counsel in ways other

unduly restricting the language of the law or excessively burdening the

than a formal hearing. The employee can be fully afforded a chance to

employer. This not only respects the power vested in the Secretary of

respond to the charges against him, adduce his evidence or rebut the

Labor and Employment to promulgate rules and regulations that will lay

evidence against him through a wide array of methods, verbal or written.

down the guidelines for the implementation of Article 277(b). More

importantly, this is faithful to the mandate of Article 4 of the Labor Code

After receiving the first notice apprising him of the charges against
that [a]ll doubts in the implementation and interpretation of the provisions
him, the employee may submit a written explanation (which may be in the
of [the Labor Code], including its implementing rules and regulations shall
form of a letter, memorandum, affidavit or position paper) and offer
be resolved in favor of labor.
evidence in support thereof, like relevant company records (such as his
201 file and daily time records) and the sworn statements of his witnesses.
For this purpose, he may prepare his explanation personally or with the

In sum, the following are the guiding principles in connection with

the hearing requirement in dismissal cases:

assistance of a representative or counsel. He may also ask the employer to

(a) ample opportunity to be heard means any meaningful

provide him copy of records material to his defense. His written

opportunity (verbal or written) given to the employee to

explanation may also include a request that a formal hearing or conference

answer the charges against him and submit evidence in

be held. In such a case, the conduct of a formal hearing or conference

support of his defense, whether in a hearing, conference or

becomes mandatory, just as it is where there exist substantial evidentiary

some other fair, just and reasonable way.

disputes[29] or where company rules or practice requires an actual hearing

441

(b) a formal hearing or conference becomes mandatory only when

allowances, and other benefits or their monetary equivalent computed

requested by the employee in writing or substantial

from the time the compensation was not paid up to the time of actual

evidentiary disputes exist or a company rule or practice

reinstatement.[31] In this case, however, reinstatement is no longer possible

requires it, or when similar circumstances justify it.

because of the length of time that has passed from the date of the incident

(c) the ample opportunity to be heard standard in the Labor Code

to final resolution.[32] Fourteen years have transpired from the time

prevails over the hearing or conference requirement in the

petitioners were wrongfully dismissed. To order reinstatement at this

implementing rules and regulations.

PETITIONERS WERE ILLEGALLY
SUSPENDED FOR 30 DAYS

juncture will no longer serve any prudent or practical purpose. [33]

WHEREFORE, the petition is hereby GRANTED. The decision of

the Court of Appeals dated January 29, 2002 in CA-G.R. SP No. 50536
An employee may be validly suspended by the employer for just
finding that petitioners Felix B. Perez and Amante G. Doria were not
cause provided by law. Such suspension shall only be for a period of 30
illegally dismissed but were not accorded due process and were illegally
days, after which the employee shall either be reinstated or paid his wages
suspended for 15 days, is SET ASIDE. The decision of the labor arbiter
during the extended period.[30]
dated
In this case, petitioners contended that they were not paid during
the two 15-day extensions, or a total of 30 days, of their preventive

December

27,

there was no due process, Article 279 of the Labor Code, as amended,
mandates that the employee is entitled to reinstatement without loss of
seniority rights and other privileges and full backwages, inclusive of

NLRC

NCR

paid their separation pay in lieu of reinstatement.

SO ORDERED

Where the dismissal was without just or authorized cause and

in

CN.

11-06930-93

is

hereby AFFIRMED with the MODIFICATION that petitioners should be

suspension. Respondents failed to adduce evidence to the contrary. Thus,

we uphold the ruling of the labor arbiter on this point.

1995

442

SYLLABUS
1. REMEDIAL LAW; EVIDENCE; HEARSAY EVIDENCE RULE; THE COPY OF AN
OFFICIAL ENTRY IN THE SHIP CAPTAIN'S LOGBOOK CAN BE USED AS A
VITAL EVIDENCE IN THE DISMISSAL OF RESPONDENT SEAMEN
PROVIDED THAT AN INVESTIGATION WAS CONDUCTED BEFORE THE
DISMISSAL. - We agree with petitioners that the ship captain's logbook
is a vital evidence as Article 612 of the Code of Commerce requires
him to keep a record of the decisions he had adopted as the vessel's
head. Thus, in Haverton Shipping Ltd. v. NLRC, the Court held that a
copy of an official entry in the logbook is legally binding and serves as
an exception to the hearsay rule. However, the Haverton Shipping
ruling does not find unqualified application in the case at bar. In said
case, an investigation of the incident which led to the seamen's
dismissal was conducted before he was dismissed.Consequently, the
facts appearing in the logbook were supported by the facts gathered
at the investigation. In this case, because no investigation was
conducted by the ship captain before repartriating private respondent,
the contents of the logbook have to be duly identified and
authenticated lest an injustice result from a blind adoption of such
contents which merely serve as prima facie evidence of the incident in
question. Moreover, what was presented in the Haverton Shipping
case was a copy of the official entry from the logbook itself. In this
case, petitioners did not submit as evidence to the POEA the logbook
itself, or even authenticated copies of pertinent pages thereof, which
could have been easily xeroxed or photocopied considering the
present technology on reproduction of documents. What was offered
in evidence was merely a typewritten collation of excerpts from what
could be the logbook because by their format, they could have been
lifted from other records kept in the vessel in accordance with Article
612 of the Code of Commerce.
2. LABOR AND SOCIAL LEGISLATION; LABOR CODE; TERMINATION OF
EMPLOYMENT; EMPLOYER'S PREROGATIVE TO DISMISS OR LAY-OFF AN
EMPLOYEE; SUBJECT TO REGULATION BY THE STATE IN THE EXERCISE
OF ITS POLICE POWER. - An employer may dismiss or lay off an
employee only for the just an authorized causes enumerated in
Articles 282 and 283 of the Labor Code. However, this basic and
normal prerogative of an employer is subject to regulation by the
State in the exercise of its paramount police power inasmuch as the
preservation of lives of citizens, as well as their means of lievelihood,
is a basic duty of the State more vital than the preservation of

corporate profits. One's employment, profession, trade or calling is a

property right within the protection of the constitutional quaranty if
due process of law.
3. ID.; ID.; ID.; CANNOT BE JUSTIFIED IN THE ABSENCE OF A MORE
DETAILED NARRATION IN THE SHIP CAPTAIN'S LOGBOOK OF THE
CIRCUMSTANCES SURROUNDING THE ALLEGED ASSAULT. - The
aforequoted entry in the logbook is so sketchy that, unsupported by
value at all, petitioners' cause must fail. Their failure to discharge the
onus probandi properly may have no other result than a finding that
the dismissal of private respondent is unjustified.
4. ID.; ID.; ID.; NOTICE AND HEARING; A CONDITION SINE QUA NON. Petitioners' failure to substantiate the grounds for valid dismissal was
aggravated by the manner by which the employment of private
respondent was terminated. It must be borne in mind that the right of
an employer to dismiss an employee is to be distinguished from and
should be confused with the manner in which such right is
exercised. Dismissal from employment must not be effected abusively
and oppressively as it affects one's person and property. Thus, Batas
Pambansa Blg. 130, amending paragraph (b) of Article 278 of the
Labor Code, imposed as a condition sine qua non that any termination
of employment under the grounds provided in Article 283 must be
done only after notice and formal investigation have been accorded
the supposed errant worker. That the workers involved in the incident
were "mustered" or convened thereafter by the captain is
inconsequential. It is insufficient compliance with the law which
requires, as a vital component of due process, ebservance of the twin
requirements of notice and hearing before dismissing an employee. As
regards the notice requirement, the Court has stated: "On the issue of
due process ..., the law requires the employer to furmish the worker
whose employment is sought to be terminated a written notice
containing a statement of the cause or causes for termination and
shall afford him ample opportunity to be heard and to defend himself
with the assistance of a representative. Specifically, the employer
must furnish the worker with two (2) written notices before
termination of employment can be legally effected: (a) notice which
apprises the employee of the particular acts or omissions for which his
dismissal is sought; and (b) the subsequent notice which informs the
employee of the employer's decision to dismiss him."

443

5. ID.; ID.; ID.; ID.; CANNOT BE DISPENSED WITH BY THE MERE FACT THAT
THE SHIP CAPTAIN WITNESSED THE ALTERCATION. - Neither is the ship
captain's having witnessed the altercation an excuse for dispensing
with the notice and hearing requirements. Serving notice to private
respondent under the circumstances cannot be regarded as an
"absurdity and superfluity."
6. ID.; ID.; CONTRACT OF EMPLOYMENT; STRICTLY INTERPRETED IN FAVOR
OF LABOR. - In this regard, it should be clarified that this Court does
not tolerate nor sanction assault in any form. Physical violence against
anyone at anytime and any place is reprehensible. However, in cases
such as this, where a person's livelihood is at stake, strict
interpretation of the contract of employment in favor of the worker
must be observed to affirm the constitutional provision on protection
to labor.
[G.R. No. 108433. October 15, 1996]
WALLEM
MARITIME
SERVICES,
INC.
and
WALLEM
SHIPMANAGEMENT LTD., petitioners, vs. NATIONAL LABOR
RELATIONS
COMMISSION
and
JOSELITO
V.
MACATUNO, respondents.
DECISION
ROMERO, J.:
This petition for certiorari seeks to annul and set aside the
Resolution[1] of the National Labor Relations Commission (NLRC) affirming
the Decision[2] of the Philippine Overseas Employment Administration
(POEA) which disposed of POEA Case No. (M)89-09-865 as follows:
WHEREFORE, in view of the foregoing, respondents Wallem Maritime
Services, Inc. and Wallem Shipmanagement Ltd. are hereby ordered jointly
and severally, to pay complainant the following in Philippine currency at
the prevailing rate of exchange at the time of payment:
a) THREE HUNDRED THREE US DOLLARS
(US$303.00) representing salary for the month of June
1989;

b) THREE THOUSAND FIFTY FOUR US DOLLARS

(US$3,054.00) representing salaries for the unexpired
portion of the contract (July-December 1989); and
c) ONE HUNDRED SIX & 50/100 US DOLLARS
(US$106.50) or five percent (5%) of the total award as and
by way of attorneys fees.
The claim against Prudential Guarantee and Assurance Inc. is dismissed for
lack of merit.
SO ORDERED.
Private respondent Joselito V. Macatuno was hired by Wallem
Shipmanagement Limited thru its local manning agent, Wallem Maritime
Services, Inc., as an able-bodied seaman on board the M/T Fortuna, a
vessel of Liberian registry. Pursuant to the contract of employment, private
respondent was employed for ten (10) months covering the period
February 26, 1989 until December 26, 1989 with a monthly salary of two
hundred seventy-six US dollars (US $276); hourly overtime rate of one
dollar and seventy-two cents (US $1.72), and a monthly tanker allowance
of one hundred twenty-seven dollars and sixty cents (US $127.60), with six
(6) days leave with pay for each month.
On June
24,
1989,
while
the
vessel
was
berthed
at
the port of Kawasaki, Japan, an altercation took place between private
respondent and fellow Filipino crew member, Julius E. Gurimbao, on the
one hand, and a cadet/apprentice officer of the same nationality as the
captain of the vessel on the other hand. The master entered the incident in
the tankers logbook.
As a consequence, private respondent and Gurimbao were repatriated
to the Philippines where they lost no time in lodging separate complaints
for illegal dismissal with the POEA. [3]According to the affidavit private
respondent executed before a POEA administering officer, the following
facts led to the filing of the complaint.
At about 5:50 a.m. of June 24, 1989, private respondent was on duty
along with Gurimbao, checking the manifold of the vessel and looking for
oil leakages, when a cadet/apprentice who was of the same nationality as

444

the vessels captain (Singh), approached them. He ordered Gurimbao to use

a shovel in draining the water which, mixed with oil and dirt, had
accumulated at the rear portion of the upper deck of the vessel.
Gurimbao explained to the cadet/apprentice that throwing dirty and
oily water overboard was prohibited by the laws of Japan; in fact, port
authorities were roaming and checking the sanitary conditions of the
port. The cadet/apprentice got mad and, shouting, ordered Gurimbao to
get a hose and siphon off the water. To avoid trouble, Gurimbao used a
shovel in throwing the dirty water into the sea.
Having finished his job, Gurimbao complained to private respondent
about the improper and unauthorized act of the cadet/apprentice. The two
went to the cadet/apprentice who was idly standing in a corner. They
reminded him that as a mere apprentice and not an officer of the vessel,
he had no right whatsoever to order around any member of the
crew. However, the cadet/apprentice reacted violently - shouting invectives
and gesturing as if challenging the two to a fight. To prevent him from
intimidating them, private respondent pushed twice the cadet/apprentices
chest while Gurimbao mildly hit his arm. Frantic and shouting, the
cadet/apprentice ran to the captain who happened to witness the incident
from the cabins window.
The captain summoned private respondent and Gurimbao. With their
bosun (head of the deck crew), they went to the captains cabin. The
captain told them to pack up their things as their services were being
terminated. They would disembark at the next port, the Port of Ube, from
where they would be flown home to the Philippines, the repatriation
expenses to be shouldered by them. The two attempted to explain their
side of the incident but the captain ignored them and firmly told them to
go home.
Before disembarking, they were entrusted by the bosun with a letter
of their fellow crew members, addressed to Capt. Dio, attesting to their
innocence. At the Port of Ube, an agent of the company handed them their
plane tickets and accompanied them the following day to
the Fukoka Airport where they boarded a Cathay Pacific airplane bound
for Manila.
A few days after their arrival in Manila or on July 1, 1989, the two gave
the letter to Capt. Dio and conferred with him and Mr. James Nichols. The
latter told private respondent that they could not secure a reimbursement
of their repatriation expenses nor could they get their salaries for the

month of June. Private respondent, in a letter addressed to Capt. Dio, asked

for a reconsideration of their dismissal but the latter did not
respond. Frustrated, private respondent sought the assistance of a lawyer
who wrote Wallem a demand letter dated August 28, 1989but the same
was ignored.[4]
Petitioners, defending their position, alleged that the incident was not
the first infraction committed by the two. As shown by the logbook, on June
19, 1989, while the vessel was docked in Batangas, they left it during
working hours without asking permission. For this offense, they were given
a warning. On June 27, 1989 (sic), while the vessel was anchored at the
Port of Kawasaki, Japan, they assaulted the officer on watch for the day, Mr.
V.S. Sason. The three were mustered and it was found that Sason was
attacked with a spanner without provacition (sic). The two were severely
warned that they will be dealt according to the rules and regulation of their
contact of employment (sic). When the vessel was about to sail that day,
the two went ashore inspite of the warning given them. They were arrested
by Japanese authorities but the vessels departure was delayed for five (5)
hours. The agency in Manila was informed that their wages should be
settled after deducting recoveries or fines and air fare. Their dismissal from
the service was also recommended.[5]
In his aforementioned decision of September 14, 1990 finding private
respondents dismissal to be illegal, POEA Deputy Administrator Manuel G.
Imson held:
We find complainants dismissal to be without just and valid cause. We
cannot give much weight and credence to the certified true copy of the
official logbook (Annex 1, answer) because the alleged entries therein were
only handpicked and copied from the official logbook of the vessel M/V
Fortuna. There is no way of verifying the truth of these entries and whether
they actually appear in the log entries for the specific dates
mentioned. The pages in the official logbook where these entries appear
should have been the ones reproduced to give the same a taint of
credence. Moreover, no documentary evidence was submitted to support
the alleged official logbook, like the Masters report and the police report or
any report by the Japanese authorities by reason of their arrest. Finally, the
copy of the alleged official logbook was not properly authenticated. The
authentication is necessary specially so since this document is the only
piece of evidence submitted by respondents.
Granting that the entries in the logbook are true, a perusal thereof will
readily show that complainant was not afforded due process. The warnings

445

allegedly given to complainant were not submitted in evidence. Likewise,

no investigation report was presented to prove that complainant was given
the opportunity to air his side of the incident.
It is also noteworthy to mention that complainant was able to describe with
particularity the circumstances which led to his misunderstanding with the
cadet/apprentice and which we believe is not sufficient to warrant his
dismissal.[6]
As stated above, the NLRC affirmed the decision of the POEA, adopting
as its own the latters findings and conclusions. Hence, the instant petition
contending that both the POEA and the NLRC gravely abused their
discretion in finding that private respondent was illegally terminated from
his employment.
As with G.R. No. 107865, where herein petitioners likewise questioned
the NLRC decision affirming that of POEA Case No. (M) 88-11-1078 finding
the dismissal from employment of Gurimbao to be illegal, [7] the Court sees
no merit in the instant petition.

no investigation was conducted by the ship captain before repatriating

private respondent, the contents of the logbook have to be duly identified
and authenticated lest an injustice result from a blind adoption of such
contents which merely serve as prima facie evidence of the incident in
question.[12]
Moreover, what was presented in the Haverton Shipping case was a
copy of the official entry from the logbook itself. In this case, petitioners did
not submit as evidence to the POEA the logbook itself, or even
authenticated copies of pertinent pages thereof, which could have been
easily xeroxed or photocopied considering the present technology on
reproduction of documents.[13] What was offered in evidence was merely a
typewritten
collation
of
excerpts
from
what could be
the
logbook[14] because by their format, they could have been lifted from other
records kept in the vessel in accordance with Article 612 of the Code of
Commerce.[15]
Furthermore, the alleged entry in the logbook states, as regards the
June 27, 1989 (sic) incident, as follows:

KAWASAKI KAWASAKI This is to place on record that at the time, date

An employer may dismiss or lay off an employee only for just and
authorized causes enumerated in Articles 282 and 283 of the Labor
Code. However, this basic and normal prerogative and
of an
place
employer
mentioned
is Mr. J.V. MACATUNO (Sr. No. 147) and Mr. J.E. GURIMBAO (Sr
subject to regulation by the State in the exercise of its paramount police
No. 156) attacked and assaulted
power inasmuch as the preservation of lives of citizens, as well as their
apprentice officer Mr. V.S. SASON while on
means of livelihood, is a basic duty of the State more vital them the
duty. All three were mustered and it was
preservation of corporate profits.[8] Ones employment, profession, trade or
found that Mr. SASON was attacked with a
calling is a property right within the protection of the constitutional
spanner without provacition (sic). Both
guaranty of due process of law.[9]
the seaman (sic) have been severely
warned that they will be dealt according
to the rules and regulation of their
We agree with petitioners that the ship captains logbook is a vital
contract of employment.[16]
evidence as Article 612 of the Code of Commerce requires him to keep a
record of the decisions he had adopted as the vessels head. Thus,
in Haverton Shipping Ltd. v. NLRC,[10] the Court held that a copy of an
official entry in the logbook is legally binding and serves as an exception to
the hearsay rule.
However, the Haverton Shipping ruling does not find unqualified
application in the case at bar. In said case, an investigation of the incident
which led to the seamans dismissal was conducted before he was
dismissed.[11] Consequently, the facts appearing in the logbook were
supported by the facts gathered at the investigation. In this case, because

Under the Table of Offenses and Corresponding Administrative

Penalties appended to the contract of employment entered into by
petitioners and private respondent, the offense described by the logbook
entry may well fall under insubordination and may constitute assaulting
a superior officer with the use of deadly weapon punishable with
dismissal[17] if the victim is indeed a superior officer. However, an
apprentice officer cannot be considered a superior officer. An apprentice is
a person bound in the form of law to a master, to learn from him his art,
trade, or business, and to serve him during the time of his apprenticeship.

446

[18]

In other words, Mr. V.S. Sason was merely a learner or a trainee and not
a regular officer on board M/T Fortuna.

dismissing an employee. As regards the notice requirement, the Court has

stated:

In this regard, it should be clarified that this Court does not tolerate
nor sanction assault in any form. Physical violence against anyone at any
time and any place is reprehensible.However, in cases such as this, where
a persons livelihood is at stake, strict interpretation of the contract of
employment in favor of the worker must be observed to affirm the
constitutional provision on protection to labor.

On the issue of due process . . ., the law requires the employer to furnish
the worker whose employment is sought to be terminated a written notice
containing a statement of the cause or causes for termination and shall
afford him ample opportunity to be heard and to defend himself with the
assistance of a representative. Specifically, the employer must furnish the
worker with two (2) written notices before termination of employment can
be legally effected: (a) notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (b) the
subsequent notice which informs the employee of the employers decision
to dismiss him. (Underscoring supplied.)[22]

Moreover, the aforequoted entry in the logbook is so sketchy that,

unsupported by other evidence, it leaves so many questions
unanswered. Although private respondent candidly admitted in his affidavit
having hit Sason on the chest twice, he did not admit using a spanner. The
conflicting versions of the incident rendered it impossible to determine
whether it was private respondent or Gurimbao who wielded said tool. In
the absence of a more detailed narration in the logbook entry of the
circumstances surrounding the alleged assault, the same cannot constitute
a valid justification to terminate private respondents employment. [19]
Hence, as the typewritten excerpts from the logbook were the only
pieces of evidence presented by petitioners to support the dismissal of
private respondent, have no probative value at all, petitioners cause must
fail. Their failure to discharge the onus probandi properly may have no
other result than a finding that the dismissal of private respondent is
unjustified.[20]
Petitioners failure to substantiate the grounds for a valid dismissal was
aggravated by the manner by which the employment of private respondent
was terminated. It must be borne in mind that the right of an employer to
dismiss an employee is to be distinguished from and should not be
confused with the manner in which such right is exercised. Dismissal from
employment must not be effected abusively and oppressively as it affects
ones person and property. Thus, Batas Pambansa Blg. 130, amending
paragraph (b) of Article 278 of the Labor Code, imposed as a condition sine
qua non that any termination of employment under the grounds provided
in Article 283 must be done only after notice and formal investigation have
been accorded the supposed errant worker.[21]
That the workers involved in the incident were mustered or convened
thereafter by the captain is inconsequential. It is insufficient compliance
with the law which requires, as a vital component of due process,
observance of the twin requirements of notice and hearing before

Neither is the ship captains having witnessed the altercation an

excuse for dispensing with the notice and hearing requirements. Serving
notice to private respondent under the circumstances cannot be regarded
as an absurdity and superfluity.[23]
ON ALL THE FOREGOING CONSIDERATIONS, the petition at bar is
DISMISSED and the Resolution of respondent National Labor Relations
Commission is hereby AFFIRMED in toto.
SO ORDERED.

447

QUIRICO LOPEZ,
Petitioner,

G.R. No. 191008

Present:
CARPIO MORALES,
Chairperson, J.,
BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

- versus

ALTURAS
GROUP
OF
COMPANIES
and/or MARLITO UY,
Respondents.

Finding

petitioners

explanation

unsatisfactory,

respondent

company terminated his employment by Notice of Termination [2] effective

December 14, 2007 on the grounds of loss of trust and confidence, and of
violation of company rules

and regulations. In issuing the

Notice,

respondent company also took into account the result of an investigation

showing that petitioner had been smuggling out its cartons which he had

Promulgated:

sold, in conspiracy with one Maritess Alaba, for his own benefit to thus
prompt it to file a criminal case for Qualified Theft [3] against him before the

April 11, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

Regional Trial Court (RTC) of Bohol. It had in fact earlier filed another
criminal case for Qualified Theft[4] against petitioner arising from the theft

DECISION
CARPIO MORALES, J.:

of the scrap iron.

Petitioner thereupon filed a complaint against respondent company

for illegal dismissal and underpayment of wages. He claimed that the

Quirico Lopez (petitioner) was hired by respondent Alturas Group of

smuggling charge against him was fabricated to justify his illegal

Companies in 1997 as truck driver. Ten years later or sometime in

dismissal; that the filing of the charge came about after he reported the

November 2007, he was dismissed after he was allegedly caught by

loss of the original copy of his pay slip, which report, he went on to claim,

respondents security guard in the act of attempting to smuggle out of the

respondent company took to mean that he could use the pay slip as

company premises 60 kilos of scrap iron worth P840 aboard respondents

evidence for filing a complaint for violation of labor laws; and that on

Isuzu Cargo Aluminum Van with Plate Number PHP 271 that was then

account of the immediately stated concern of respondent, it forced him

assigned to him. When questioned, petitioner allegedly admitted to the

into executing an affidavit that if the pay slip is eventually found, it could

security guard that he was taking out the scrap iron consisting of lift

not be used in any proceedings between them.

springs out of which he would make axes.

By Decision[5] of June 30, 2008, the Labor Arbiter, holding that the
Petitioner, in compliance with the Show Cause Notice [1] dated

pendency of the criminal case involving the scrap iron did not warrant the

December 5, 2007 issued by respondent companys Human Resource

suspension of the proceedings before him, held that petitioners dismissal

Department Manager, denied the allegations by a handwritten explanation

was justified, for he, a truck driver, held a position of trust and confidence,

written in the Visayan dialect.

and his act of stealing company property was a violation of the trust
reposed upon him.

448

established through the affidavits of Patrocinio Borja and Zalde Tare,

Respecting the charge of underpayment of wages, the Labor

supervisor

Arbiter noted that on the basis of the records, petitioner had been paid the

Motorpool.

and

junior

supervisor,

respectively,

of

its

Supermarket

correct wages and benefits mandated by law.

The appellate court further held that the evidence supporting the
The Labor Arbiter accordingly dismissed petitioners complaint.

criminal charge, found after preliminary investigation are [sic] sufficient to

show prima facie guilt, which constitutes just cause for [petitioners

On appeal, the National Labor Relations Commissions (NLRC) Fourth

dismissal] based on loss of trust and confidence; and that petitioners

Division

by

subsequent acquittal in the criminal case did not automatically preclude a

dated December 22, 2008, finding that respondents evidence

determination that he is guilty of acts inimical to the employers interest

(Cebu

Decision

[6]

City) set

aside the

Labor

Arbiters

Decision

did not suffice to warrant the termination of petitioners services; and that

resulting in loss of trust and confidence.

petitioners alleged admission of taking the scrap iron was belied by his
vehement denial, as even the security guard, one Gerardo Luega, who

Albeit the appellate court found that petitioners dismissal was for a

allegedly witnessed the asportation and before whom the alleged

just cause, it held that due process was not observed when respondent

admission was made, did not even execute an affidavit in support thereof.

company failed to give him a chance to defend his side in a proper

hearing. Following Agabon v. NLRC,[10] the appellate court thus ordered

Citing Salaw v. NLRC,[7] the NLRC went on to hold that petitioner

respondent to pay nominal damages of P30,000.

should have been afforded, or at least advised of the right to counsel. It

thus held that any evaluation which was based only on the explanation to
the

show-cause

letter

and

any

so-called

investigation but

Thus the appellate court disposed:

without

confrontation of the vital witnesses, do[es] not suffice.

Respondent companys motion for reconsideration was denied by

Resolution[8] of April 30, 2009, hence, it appealed to the Court of Appeals.

WHEREFORE, in view of the foregoing, the

Decision of the NLRC dated December 22, 2008 is
hereby MODIFIED. Private respondents dismissal from
employment is upheld on the ground of loss of trust and
confidence, a just cause for termination. However, for
failure to comply fully with the procedural due
process, petitioner is ORDERED to pay private respondent
the amount of P30,000.00 as nominal damages.
[11]
(underscoring supplied)

By Report[9] of December 18, 2009, the appellate court reversed the NLRC
ruling. It held that respondent company was justified in terminating
petitioners employment on the ground of loss of trust and confidence, his
alleged act of smuggling out the scrap iron having been sufficiently

Hence, the present petition for review on certiorari.

449

Dismissals have two facets: the legality of the act of dismissal,

which

constitutes

substantive

due

process,

and

the

legality

of

the manner of dismissal which constitutes procedural due process. [12]

As to substantive due process, the Court finds that respondent

companys loss of trust and confidence arising from petitioners smuggling
out of the scrap iron, conpounded by his past acts of unauthorized selling
cartons belonging to respondent company, constituted just cause for
terminating his services.

employees covers employees occupying a position of trust who are proven

have

breached

Petitioner, a driver assigned with a specific vehicle, was entrusted with the
transportation

of

respondent

companys

goods

and

property,

and

consequently with its handling and protection, hence, even if he did not
occupy a managerial position, he can be said to be holding a position of
responsibility. As to his actprincipal ground for his dismissal his attempt to

Loss of trust and confidence as a ground for dismissal of

to

confidence with respect to delicate matters, such as

the handling or care and protection of the property
and assets of the employer. The betrayal of this trust is
the essence of the offense for which an employee is
penalized. (emphasis and underscoring supplied)

the

trust

and

them. Apropos is Cruz v. Court of Appeals

[13]

confidence

reposed

on

which explains the basis and

quantum of evidence of loss of trust and confidence, viz:

In addition, the language of Article 282(c) of the Labor
Code states that the loss of trust and confidence must be
based on willful breach of the trust reposed in the
employee by his employer. 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. Moreover,
it
must
be
based
on substantial evidence and not on the employers
whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the
employer. Loss of confidence must not be indiscriminately
used as a shield by the employer against a claim that the
dismissal of an employee was arbitrary. And, in order to
constitute a just cause for dismissal, the act complained
of must be work-related and shows that the
employee concerned is unfit to continue working for
the employer. In addition, loss of confidence as a
just cause for termination of employment is
premised on the fact that the employee concerned
holds a position of responsibility, trust and confidence
or that the employee concerned is entrusted with

smuggle out the scrap iron belonging to respondent company, the same is
undoubtedly work-related.

Respondent companys charge against petitioner was amply proven by

substantial evidence consisting of the affidavits of various employees of
respondent. Contrary to the NLRCs observation, the security guard who
apprehended

petitioner,

Gerardo

Luega,

actually

executed

statement[14] relative to the smuggling out of scrap iron, which was

attached to, and served as basis for the filing of, the corresponding
complaint for Qualified Theft. Petitioners claim that he was framed up after
he allegedly lost his pay slip to draw respondent company to suspect that
he might file a labor complaint for underpayment does not inspire
credence.

It is, however, with respect to the appellate courts finding that

petitioner was not afforded procedural due process that the Court deviates
from. Procedural due process has been defined as giving an opportunity to
be heard before judgment is rendered.[15] In termination cases, Perez v.
Philippine Telegraph and Telephone Company, [16] illuminates on the correct

450

proceedings to be followed therein in order to comply with the due process

requirement:
Parenthetically, the Court finds that it was error for the NLRC to
The above rulings are a clear recognition that the
employer may provide an employee with ample
opportunity to be heard and defend himself with the
assistance of a representative or counsel in ways other
than a formal hearing. The employee can be fully
afforded a chance to respond to the charges against him,
adduce his evidence or rebut the evidence against him
through a wide array of methods, verbal or written.
After receiving the first notice apprising him of the
charges against him, the employee may submit a
written explanation (which may be in the form of a
letter, memorandum, affidavit or position paper) and
offer evidence in support thereof, like relevant
company records (such as his 201 file and daily time
records) and
the
sworn
statements
of
his
witnesses. For this purpose, he may prepare his
explanation personally or with the assistance of a
representative or counsel. He may also ask the
employer to provide him copy of records material
to his defense. His written explanation may
also include a request that a formal hearing or
conference be held. In such a case, the conduct of
a
formal
hearing
or
conference
becomes
mandatory, just as it is where there exist
substantial
evidentiary
disputes
or
where
company rules or practice requires an actual
hearing as part of employment pretermination
procedure. (emphasis and underscoring supplied)

Petitioner was given the opportunity to explain his side when he

was informed of the charge against him and required to submit his written
explanation with which he complied. That there might have been no
hearing is of no moment, for as Autobus Workers Union v. NLRC[17] holds:
This Court has held that there is no violation of due
process even if no hearing was conducted, where
the party was given a chance to explain his side of
the controversy. What is frowned upon is the denial of
the opportunity to be heard. (emphasis supplied)

opine that petitioner should have been afforded counsel or advised of the
right to counsel. The right to counsel and the assistance of one in
investigations involving termination cases is neither indispensable nor
mandatory, except when the employee himself requests for one or that he
manifests that he wants a formal hearing on the charges against him. In
petitioners case, there is no showing that he requested for a formal hearing
to be conducted or that he be assisted by counsel. Verily, since he was
furnished a second notice informing him of his dismissal and the grounds
therefor, the twin-notice requirement had been complied with to call for a
deletion of the appellate courts award of nominal damages to petitioner.
As for the subsequent dismissal of the criminal cases [18] filed
against petitioner, criminal and labor proceedings are distinct and separate
from each other. Each requires a different quantum of proof, arising though
they are from the same set of facts or circumstances. As Vergara v.
NLRC[19] holds:
An employees acquittal in a criminal case does not
automatically preclude a determination that he has been
guilty of acts inimical to the employers interest resulting in
loss of trust and confidence. Corollarily, the ground for the
dismissal of an employee does not require proof beyond
reasonable doubt; as noted earlier, the quantum of proof
required is merely substantial evidence. More importantly,
the trial court acquitted petitioner not because he did not
commit the offense, but merely because of the failure of
the prosecution to prove his guilt beyond reasonable
doubt.. In other words, while the evidence presented
against petitioner did not satisfy the quantum of
proof required for conviction in a criminal case, it
substantially proved his culpability which warranted
his dismissal from employment. (emphasis supplied)

451

WHEREFORE, the petition is DENIED. The Report dated December

18, 2009 of the Court of Appeals dismissing petitioners complaint
is AFFIRMED withMODIFICATION

in that the

damages in the amount of P30,000 is DELETED.

Costs against petitioner.

SO ORDERED.

award

of

nominal

452

PHILIPPINE DAILY INQUIRER, INC.,

Petitioner,

G.R. No. 164532

Present:

The factual antecedents are undisputed:

- versus -

LEON M. MAGTIBAY, JR. and PHILIPPINE

DAILY INQUIRER
EMPLOYEES UNION (PDIEU),
Respondents.

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
Promulgated:

On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for

a period of five months from February 17, 1995, the regular phone
operator. Before the expiration of Magtibays contractual employment, he
and PDI agreed to a fifteen-day contract extension, or from July 17,
1995 up to July 31, 1995, under the same conditions as the existing
contract.

July 24, 2007

x---------------------------------------------------x

After the expiration of Magtibays contractual employment, as extended,

PDI announced the creation and availability of a new position for a second

DECISION

telephone

operator

who

would

undergo

probationary

employment. Apparently, it was PDIs policy to accord regular employees

preference for new vacancies in the company. Thus, Ms. Regina M.
GARCIA, J.:

Layague, a PDI employee and member of respondent PDI Employees Union

(PDIEU), filed her application for the new position. However, she later

By this petition for review on certiorari under Rule 45 of the Rules

of Court, petitioner Philippine Daily Inquirer, Inc. (PDI) seeks the reversal

withdrew her application, paving the way for outsiders or non-PDI

employees, like Magtibay in this case, to apply.

and setting aside of the decision [1] dated May 25, 2004 of the Court of
Appeals (CA) in CA G.R. SP No. 78963, affirming the resolution dated
September 23, 2002 of the National Labor Relations Commission (NLRC) in

After the usual interview for the second telephone operator slot, PDI chose

NLRC Case No. 00-03-01945-96. The affirmed NLRC resolution reversed an

to hire Magtibay on a probationary basis for a period of six (6) months. The

earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC Case No.

signing of a written contract of employment followed.

011800-96, which dismissed the complaint for illegal dismissal filed by the
herein respondent Leon Magtibay, Jr. against the petitioner.

453

On March

13,

1996,

or a week before the end the agreed

6-month

probationary period, PDI officer Benita del Rosario handed Magtibay his
termination paper, grounded on his alleged failure to meet company
standards. Aggrieved, Magtibay immediately filed a complaint for illegal
dismissal and damages before the Labor Arbiter. PDIEU later joined the fray
by filing a supplemental complaint for unfair labor practice.

After due proceedings, the Labor Arbiter found for PDI and accordingly
dismissed Magtibays complaint for illegal dismissal. The Labor Arbiter
premised

his

holding

on

the

validity

of

the

previous

contractual

employment of Magtibay as an independent contract. He also declared as

binding the stipulation in the contract specifying a fixed period of

Magtibay anchored his case principally on the postulate that he had

employment. According to the Labor Arbiter, upon termination of the

become a regular employee by operation of law, considering that he had

period stated therein, the contractual employment was also effectively

been employed by and had worked for PDI for a total period of ten

terminated, implying that Magtibay was merely on a probationary status

months, i.e., four months more than the maximum six-month period

when his services were terminated inasmuch as the reckoning period for

provided for by law on probationary employment. He also claimed that he

probation should be from September 21, 1995 up to March 31, 1996as

was not apprised at the beginning of his employment of the performance

expressly provided in their probationary employment contract. In fine, it

standards of the company, hence, there was no basis for his dismissal.

was the Labor Arbiters position that Magtibays previous contractual

Finally, he described his dismissal as tainted with bad faith and effected

employment, as later extended by 15 days, cannot be considered as part

without due process.

of his subsequent probationary employment.

PDI, for its part, denied all the factual allegations of Magtibay, adding that

Apart from the foregoing consideration, the Labor Arbiter further ruled that

his previous contractual employment was validly terminated upon the

Magtibays dismissal from his probationary employment was for a valid

expiration of the period stated therein. Pressing the point, PDI alleged that

reason. Albeit the basis for termination was couched in the abstract, i.e.,

the period covered by the contractual employment cannot be counted with

you did not meet the standards of the company, there were three specific

or tacked to the period for probation, inasmuch as there is no basis to

reasons for Magtibays termination, to wit: (1) he repeatedly violated the

consider Magtibay a regular employee. PDI additionally claimed that

company

Magtibay was dismissed for violation of company rules and policies, such

telephone operators room; (2) he intentionally omitted to indicate in his

as allowing his lover to enter and linger inside the telephone operators

application form his having a dependent child; and (3) he exhibited lack of

booth and for failure to meet prescribed company standards which were

sense of responsibility by locking the door of the telephone operators room

allegedly made known to him at the start through an orientation seminar

on March 10, 1996 without switching the proper lines to the company

conducted by the company.

guards so that incoming calls may be answered by them.

rule

prohibiting

unauthorized

persons

from

entering

the

454

Magtibay may at most be classified as just causes for the

termination of the latters employment. x x x.
The Labor Arbiter likewise dismissed allegations of denial of due process
and the commission by PDI of unfair labor practice.

xxxxxxxxx

PDIEU and Magtibay appealed the decision of the Labor Arbiter to the
NLRC. As stated earlier, the NLRC reversed and set aside said decision,
effectively ruling that Magtibay was illegally dismissed. According to the
NLRC, Magtibays probationary employment had ripened into a regular one.

Finally, the three questionable grounds also relied

upon by petitioner PDI in dismissing respondent Magtibay
may be considered as just causes. However, petitioner PDI
did not raise the same as an issue in the present petition
because the procedure it adopted in dismissing respondent
Magtibay fell short of the minimum requirements provided
by law.

With the NLRCs denial of its motion for reconsideration, PDI went to the CA
on a petition for certiorari. Eventually, the CA denied due course to PDIs
petition on the strength of the following observations:

We agree with the findings of respondent NLRC.

Petitioner PDI failed to prove that such rules and

regulations were included in or form part of the standards
that were supposed to be made known to respondent
Magtibay at the time of his engagement as telephone
operator. Particularly, as regards the first stated infraction
xxx petitioner PDI, contrary to its assertion, stated in its
position paper, motion for reconsideration and in this
petition that respondent Magtibay failed to abide by the
rules and regulations of the company issued by Ms. Benita
del Rosario regarding the entry of persons in the operators
booth when respondent was already working for petitioner
PDI. Further, nowhere can it be found in the list of Basic
Responsibility and Specific Duties and Responsibilities
(Annex D of the petition) of respondent Magtibay that he
has to abide by the duties, rules and regulations that he
has allegedly violated. The infractions considered by
petitioner PDI as grounds for the dismissal of respondent

PDI filed a motion for reconsideration but to no avail.

Hence, this recourse by PDI on the following submissions:

I.

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN

FINDING THAT A PROBATIONARY EMPLOYEES FAILURE TO
FOLLOW AN EMPLOYERS RULES AND REGULATIONS
CANNOT BE DEEMED FAILURE BY SAID EMPLOYEE TO MEET
THE STANDARDS OF HIS EMPLOYER THUS EMASCULATING
PETITIONERS RIGHT TO CHOOSE ITS EMPLOYEES.

II.

455

THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN

REFUSING TO FIND THAT PROCEDURAL DUE PROCESS AS
LAID DOWN IN SECTION 2, RULE XXIII OF THE
IMPLEMENTING RULES OF THE LABOR CODE HAD BEEN
OBSERVED BY THE PETITIONER.

envisaged to give those who have less in life more in law. Article 279 of the
Labor Code which gives employees the security of tenure is one playing
field leveling measure:

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 or when authorized
by this Title. x x x.

We GRANT the petition.

This Court, to be sure, has for a reason, consistently tended to be

partial in favor of workers or employees in labor cases whenever social
legislations are involved. However, in its quest to strike a balance between

But hand in hand with the restraining effect of Section 279, the

the employers prerogative to choose his employees and the employees

same Labor Code also gives the employer a period within which to

right to security of tenure, the Court remains guided by the gem of a

determine whether a particular employee is fit to work for him or not. This

holding in an old but still applicable case of Pampanga Bus, Co. v.

employers prerogative is spelled out in the following provision:

Pambusco Employees Union, Inc.

[2]

In it, the Court said:

The right of a laborer to sell his labor to such

persons as he may choose is, in its essence, the same as
the right of an employer to purchase labor from any person
whom it chooses. The employer and the employee have
thus an equality of right guaranteed by the Constitution. If
the employer can compel the employee to work against
the latters will, this is servitude. If the employee can
compel the employer to give him work against the
employers will, this is oppression.

Management and labor, or the employer and the employee are

more often not situated on the same level playing field, so to speak.
Recognizing this reality, the State has seen fit to adopt measures

Art.
281.
Probationary
employment. Probationary employment shall not exceed
six (6) months from the date the employee started
working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis
may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with
reasonable standards made known by the employer to the
employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be
considered a regular employee.

456

In International Catholic Migration Commission v. NLRC, [3] we have

elucidated what probationary employment entails:

Within

the

limited

probationary employees
x x x. A probationary employee, as understood
under Article 282 (now Article 281) of the Labor Code, is
one who is on trial by an employer during which the
employer determines whether or not he is qualified for
permanent employment. A probationary appointment is
made to afford the employer an opportunity to observe the
fitness of a probationer while at work, and to ascertain
whether he will become a proper and efficient
employee. The word probationary, as used to describe the
period of employment, implies the purpose of the term or
period but not its length.

legal

six-month

probationary

period,

are still entitled to security of tenure.

It is

expressly provided in the afore-quoted Article 281 that a probationary

employee may be terminated only on two grounds: (a) for just cause, or (b)
when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the
time of his engagement.[4]

PDI invokes the second ground under the premises. In claiming

that it had adequately apprised Magtibay of the reasonable standards

Being in the nature of a trial period the essence of

a probationary period of employment fundamentally lies in
the purpose or objective sought to be attained by both the
employer and the employee during said period. The length
of time is immaterial in determining the correlative rights
of both in dealing with each other during said period. While
the employer, as stated earlier, observes the fitness,
propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment,
the probationer, on the other, seeks to prove to the
employer, that he has the qualifications to meet the
reasonable standards for permanent employment.

against which his performance will be gauged for purposes of permanent

employment, PDI cited the one-on-one seminar between Magtibay and its
Personnel Assistant, Ms. Rachel Isip-Cuzio. PDI also pointed to Magtibays
direct superior, Benita del Rosario, who diligently briefed him about his
responsibilities in PDI. These factual assertions were never denied nor
controverted by Magtibay. Neither did he belie the existence of a specific
rule prohibiting unauthorized persons from entering the telephone
operators booth and that he violated that prohibition. This notwithstanding,
the NLRC and the CA proceeded nonetheless to rule that the records of the
case are bereft of any evidence showing that these rules and regulations

It is well settled that the employer has the right or

is at liberty to choose who will be hired and who will be
denied employment. In that sense, it is within the exercise
of the right to select his employees that the employer may
set or fix a probationary period within which the latter may
test and observe the conduct of the former before hiring
him permanently. x x x.

form part of the so-called company standards.

We do not agree with the appellate court when it cleared the NLRC
of commission of grave abuse of discretion despite the latters disregard of
clear and convincing evidence that there were reasonable standards made

457

known by PDI to Magtibay during his probationary employment. It is on

It does not.

record that Magtibay committed obstinate infractions of company rules

and regulations, which in turn constitute sufficient manifestations of his
inadequacy to meet reasonable employment norms. The suggestion that

Unlike under the first ground for the valid termination of

Magtibay ought to have been made to understand during his briefing and

probationary employment which is for just cause, the second ground does

orientation that he is expected to obey and comply with company rules

not require notice and hearing. Due process of law for this second ground

and regulations strains credulity for acceptance. The CAs observation that

consists of making the reasonable standards expected of the employee

nowhere can it be found in the list of Basic Responsibility and Specific

during his probationary period known to him at the time of his probationary

Duties and Responsibilities of respondent Magtibay that he has to abide by

employment. By the very nature of a probationary employment, the

the duties, rules and regulations that he has allegedly violated is a strained

employee knows from the very start that he will be under close

rationalization of an unacceptable conduct of an employee. Common

observation and his performance of his assigned duties and functions

industry practice and ordinary human experience do not support the CAs

would be under continuous scrutiny by his superiors. It is in apprising him

posture. All employees, be they regular or probationary, are expected to

of the standards against which his performance shall be continuously

comply with company-imposed rules and regulations, else why establish

assessed where due process regarding the second ground lies, and not in

them in the first place. Probationary employees unwilling to abide by such

notice and hearing as in the case of the first ground.

rules have no right to expect, much less demand, permanent employment.

We, therefore find sufficient factual and legal basis, duly established by
substantial evidence, for PDI to legally terminate Magtibays probationary
employment effective upon the end of the 6-month probationary period.

Even if perhaps he wanted to, Magtibay cannot deny as he has not

denied PDIs assertion that he was duly apprised of the employment
standards expected of him at the time of his probationary employment
when

he

underwent

one-on-one

orientation

with

It is undisputed that PDI apprised Magtibay of the ground of his

PDIs personnel assistant, Ms. Rachel Isip-Cuzio. Neither has he denied

termination, i.e., he failed to qualify as a regular employee in accordance

nor rebutted PDIsfurther claim that his direct superior, Benita del Rosario,

with reasonable standards made known to him at the time of engagement,

briefed him regarding his responsibilities in PDI.

only a week before the expiration of the six-month probationary period.

Given this perspective, does this make his termination unlawful for being
violative of his right to due process of law?

Lest it be overlooked, Magtibay had previously worked for PDI as

telephone operator from February 7, 1995 to July 31, 1995 as a contractual

458

employee. Thus, the Court entertains no doubt that when PDI took him in
on September 21, 1995, Magtibay was already very much aware of the
level of competency and professionalism PDI wanted out of him for the
entire duration of his probationary employment.

PDI was only exercising its statutory hiring prerogative when it

refused to hire Magtibay on a permanent basis upon the expiration of the
six-month

probationary

period.

This

was

established

during

the

proceedings before the labor arbiter and borne out by the records and the
pleadings before the Court. When the NLRC disregarded the substantial
evidence establishing the legal termination of Magtibays probationary
employment and rendered judgment grossly and directly contradicting
such

clear

evidence, the NLRCcommits grave abuse

of

discretion

amounting to lack or excess of jurisdiction. It was, therefore, reversible

error on the part of the appellate court not to annul and set aside such void
judgment of the NLRC.

WHEREFORE, the assailed decision dated May 25, 2004 of the CA

in CA G.R. SP No. 78963 is hereby REVERSED and SET ASIDE, and the
earlier resolution dated September 23, 2002 of the NLRC in NLRC Case No.
00-03-01945-96

is

declared NULL and VOID. The earlier

decision

dated July 29, 1996 of the Labor Arbiter in NLRC Case No. 011800-96,
dismissing respondent Leon Magtibay, Jr.s complaint for alleged illegal
dismissal, is REINSTATED.
No pronouncement as to costs.

SO ORDERED.

459

G.R. No. 192571

April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE,

EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C.
BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for
Reconsideration dated August 23, 2013 of the Court's Decision dated July
23, 2013 (Decision).1
At the outset, there appears to be no substantial argument in the said
motion sufficient for the Court to depart from the pronouncements made in
the initial ruling. But if only to address Akaraz's novel assertions, and to so
placate any doubt or misconception in the resolution of this case, the Court
proceeds to shed light on the matters indicated below.
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing
of evidence since a petition for review on certiorari under Rule 45 of the
Rules of Court (Rules) is limited to the review of questions of law. She
submits that since what was under review was a ruling of the Court of
Appeals (CA) rendered via a petition for certiorari under Rule 65 of the
Rules, the Court should only determine whether or not the CA properly
determined that the National Labor Relations Commission (NLRC)
committed a grave abuse of discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court
actually resolved the controversy under the above-stated framework of
analysis. Essentially, the Court found the CA to have committed an error in
holding that no grave abuse of discretion can be ascribed to the NLRC
since the latter arbitrarily disregarded the legal implication of the
attendant circumstances in this case which should have simply resulted in
the finding that Alcaraz was apprised of the performance standards for her

regularization and hence, was properly a probationary employee. As the

Court observed, an employees failure to perform the duties and
responsibilities which have been clearly made known to him constitutes a
justifiable basis for a probationary employees non-regularization. As
detailed in the Decision, Alcaraz was well-apprised of her duties and
responsibilities as well as the probationary status of her employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)]
caused the publication in a major broadsheet newspaper of its
need for a Regulatory Affairs Manager, indicating therein the job
description for as well as the duties and responsibilities attendant
to the aforesaid position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;
(b) In Abbotts December 7, 2004 offer sheet, it was stated that
Alcaraz was to be employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract
which specifically stated, inter alia, that she was to be placed on
probation for a period of six (6) months beginning February 15,
2005 to August 14, 2005;
(d) On the day Alcaraz accepted Abbotts employment offer,
Bernardo sent her copies of Abbotts organizational structure and
her job description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation
where [Allan G. Almazar] informed her that she had to implement
Abbotts Code of Conduct and office policies on human resources
and finance and that she would be reporting directly to [Kelly
Walsh];
(f) Alcaraz was also required to undergo a training program as part
of her orientation;
(g) Alcaraz received copies of Abbotts Code of Conduct and
Performance Modules from [Maria Olivia T. Yabut-Misa] who
explained to her the procedure for evaluating the performance of
probationary employees; she was further notified that Abbott had
only one evaluation system for all of its employees; and

460

(h) Moreover, Alcaraz had previously worked for another

pharmaceutical company and had admitted to have an "extensive
training and background" to acquire the necessary skills for her
job.2
Considering the foregoing incidents which were readily observable from the
records, the Court reached the conclusion that the NLRC committed grave
abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a
regular and not a probationary employee, the Court finds that the NLRC
committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise
that Alcarazs receipt of her job description and Abbotts Code of Conduct
and Performance Modules was not equivalent to being actually informed of
the performance standards upon which she should have been evaluated
on. It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein which should have warranted a contrary
finding that Alcaraz was indeed a probationary and not a regular employee
more particularly the fact that she was well-aware of her duties and
responsibilities and that her failure to adequately perform the same would
lead to her non-regularization and eventually, her termination. 3
Consequently, since the CA found that the NLRC did not commit grave
abuse of discretion and denied the certiorari petition before it, the reversal
of its ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their
nature, final and executory4 and, hence, not subject to appellate
review,5 the Court is not precluded from considering other questions of law
aside from the CAs finding on the NLRCs grave abuse of discretion. While
the focal point of analysis revolves on this issue, the Court may deal with
ancillary issues such as, in this case, the question of how a probationary
employee is deemed to have been informed of the standards of his
regularization if only to determine if the concepts and principles of labor
law were correctly applied or misapplied by the NLRC in its decision. In
other words, the Courts analysis of the NLRCs interpretation of the
environmental principles and concepts of labor law is not completely
prohibited in as it is complementary to a Rule 45 review of labor cases.

Finally, if only to put to rest Alcarazs misgivings on the manner in which

this case was reviewed, it bears pointing out that no "factual appellate
review" was conducted by the Court in the Decision. Rather, the Court
proceeded to interpret the relevant rules on probationary employment as
applied to settled factual findings. Besides, even on the assumption that a
scrutiny of facts was undertaken, the Court is not altogether barred from
conducting the same. This was explained in the case of Career Philippines
Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the
credibility of witnesses, or substitute the findings of fact of the NLRC, an
administrative body that has expertise in its specialized field. Nor do we
substitute our "own judgment for that of the tribunal in determining where
the weight of evidence lies or what evidence is credible." The factual
findings of the NLRC, when affirmed by the CA, are generally conclusive on
this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our
discretionary appellate jurisdiction may be urged to look into factual issues
raised in a Rule 45 petition. For instance, when the petitioner persuasively
alleges that there is insufficient or insubstantial evidence on record to
support the factual findings of the tribunal or court a quo, as Section 5,
Rule 133 of the Rules of Court states in express terms that in cases filed
before administrative or quasi-judicial bodies, a fact may be deemed
established only if supported by substantial evidence. 7 (Emphasis supplied)
B. Standards for regularization;
conceptual underpinnings.
Alcaraz posits that, contrary to the Courts Decision, ones job description
cannot by and of itself be treated as a standard for regularization as a
standard denotes a measure of quantity or quality. By way of example,
Alcaraz cites the case of a probationary salesperson and asks how does
such employee achieve regular status if he does not know how much he
needs to sell to reach the same.
The argument is untenable.
First off, the Court must correct Alcarazs mistaken notion: it is not the
probationary employees job description but the adequate performance of
his duties and responsibilities which constitutes the inherent and implied
standard for regularization. To echo the fundamental point of the Decision,

461

if the probationary employee had been fully apprised by his employer of

these duties and responsibilities, then basic knowledge and common sense
dictate that he must adequately perform the same, else he fails to pass the
probationary trial and may therefore be subject to termination.8
The determination of "adequate performance" is not, in all cases,
measurable by quantitative specification, such as that of a sales quota in
Alcarazs example. It is also hinged on the qualitative assessment of the
employees work; by its nature, this largely rests on the reasonable
exercise of the employers management prerogative. While in some
instances the standards used in measuring the quality of work may be
conveyed such as workers who construct tangible products which follow
particular metrics, not all standards of quality measurement may be
reducible to hard figures or are readily articulable in specific preengagement descriptions. A good example would be the case of
probationary employees whose tasks involve the application of discretion
and intellect, such as to name a few lawyers, artists, and journalists. In
these kinds of occupation, the best that the employer can do at the time of
engagement is to inform the probationary employee of his duties and
responsibilities and to orient him on how to properly proceed with the
same. The employer cannot bear out in exacting detail at the beginning of
the engagement what he deems as "quality work" especially since the
probationary employee has yet to submit the required output. In the
ultimate analysis, the communication of performance standards should be
perceived within the context of the nature of the probationary employees
duties and responsibilities.
The same logic applies to a probationary managerial employee who is
tasked to supervise a particular department, as Alcaraz in this
case.1wphi1 It is hardly possible for the employer, at the time of the
employees engagement, to map into technical indicators, or convey in
precise detail the quality standards by which the latter should effectively
manage the department. Factors which gauge the ability of the managerial
employee to either deal with his subordinates (e.g., how to spur their
performance, or command respect and obedience from them), or to
organize office policies, are hardly conveyable at the outset of the
engagement since the employee has yet to be immersed into the work
itself. Given that a managerial role essentially connotes an exercise of
discretion, the quality of effective management can only be determined
through subsequent assessment. While at the time of engagement, reason
dictates that the employer can only inform the probationary managerial
employee of his duties and responsibilities as such and provide the
allowable parameters for the same. Verily, as stated in the Decision, the

adequate performance of such duties and responsibilities is, by and of

itself, an implied standard of regularization.
In this relation, it bears mentioning that the performance standard
contemplated by law should not, in all cases, be contained in a specialized
system of feedbacks or evaluation. The Court takes judicial notice of the
fact that not all employers, such as simple businesses or small-scale
enterprises, have a sophisticated form of human resource management, so
much so that the adoption of technical indicators as utilized through
"comment cards" or "appraisal" tools should not be treated as a
prerequisite for every case of probationary engagement. In fact, even if a
system of such kind is employed and the procedures for its implementation
are not followed, once an employer determines that the probationary
employee fails to meet the standards required for his regularization, the
former is not precluded from dismissing the latter. The rule is that when a
valid cause for termination exists, the procedural infirmity attending the
termination only warrants the payment of nominal damages. This was the
principle laid down in the landmark cases of Agabon v. NLRC 9 (Agabon) and
Jaka Food Processing Corporation v. Pacot10 (Jaka). In the assailed Decision,
the Court actually extended the application of the Agabon and Jaka rulings
to breaches of company procedure, notwithstanding the employers
compliance with the statutory requirements under the Labor
Code.11 Hence, although Abbott did not comply with its own termination
procedure, its non-compliance thereof would not detract from the finding
that there subsists a valid cause to terminate Alcarazs employment.
Abbott, however, was penalized for its contractual breach and thereby
ordered to pay nominal damages.
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano 12 (Aliling)
since the same is not squarely applicable to the case at bar. The employee
in Aliling, a sales executive, was belatedly informed of his quota
requirement. Thus, considering the nature of his position, the fact that he
was not informed of his sales quota at the time of his engagement
changed the complexion of his employment. Contrarily, the nature of
Alcaraz's duties and responsibilities as Regulatory Affairs Manager negates
the application of the foregoing. Records show that Alcaraz was terminated
because she (a) did not manage her time effectively; (b) failed to gain the
trust of her staff and to build an effective rapport with them; (c) failed to
train her staff effectively; and (d) was not able to obtain the knowledge
and ability to make sound judgments on case processing and article review
which were necessary for the proper performance of her duties. 13 Due to
the nature and variety of these managerial functions, the best that Abbott
could have done, at the time of Alcaraz's engagement, was to inform her of

462

her duties and responsibilities, the adequate performance of which, to

repeat, is an inherent and implied standard for regularization; this is unlike
the circumstance in Aliling where a quantitative regularization standard, in
the term of a sales quota, was readily articulable to the employee at the
outset. Hence, since the reasonableness of Alcaraz's assessment clearly
appears from the records, her termination was justified. Bear in mind that
the quantum of proof which the employer must discharge is only
substantial evidence which, as defined in case law, means that amount of
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise.14 To the Court's mind, this threshold of
evidence Abbott amply overcame in this case.
All told, the Court hereby denies the instant motion for reconsideration and
thereby upholds the Decision in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the
Court's Decision dated July 23, 2013 in this case is hereby DENIED.
SO ORDERED.

463

G.R. No. 192924

November 26, 2014

PHILIPPINE AIRLINES, INC., Petitioner,

vs.
REYNALDO V. PAZ, Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 filed under Rule 45 of
the Rules of Court by Philippine Airlines, Inc. (PAL), seeking to annul and
set aside the Amended Decision2 dated June 29, 2010 of the Court of
Appeals (CA) in CA-G.R. SP No. 75618. Reynaldo V. Paz (respondent) was a
former commercial pilot of PAL and a member of the Airlines Pilots
Association of the Philippines (ALPAP), the sole and exclusive bargaining
representative of all the pilots in PAL.
On December 9, 1997, ALPAP filed a notice of strike with the National
Conciliation and Mediation Board of the Department of Labor and
Employment (DOLE). Pursuant to Article 263(g) of the Labor Code, the
DOLE Secretary assumed jurisdiction over the labor dispute and enjoined
the parties from committing acts which will further exacerbate the
situation.3
On June 5, 1998, notwithstanding the directive of the DOLE Secretary, the
ALPAP officers and members staged a strike and picketed at the PALs
premises. To control the situation, the DOLE Secretary issued a return-towork order on June 7, 1998, directing all the striking officers and members
of ALPAP to return to work within 24 hours from notice of the order. The
said order was served upon the officers of ALPAP on June 8, 1998 by the
DOLE Secretary himself. Even then, the striking members of ALPAP did not
report for work.4
On June 25, 1998, Atty. Joji Antonio, the counsel for ALPAP, informed the
members of the union that she has just received a copy of the return-towork order and that they have until the following day within which to
comply. When the striking members of the ALPAP reported for work on the
following day, the security guards of PAL denied them entry. 5
On June 13, 1998, the DOLE Secretary issued a resolution on the case from
which both parties filed a motion for reconsideration. Pending the

resolution of the motions, PAL filed a petition for approval of rehabilitation

plan and for appointment of a rehabilitation receiver with the Securities
and Exchange Commission (SEC), claiming serious financial distress
brought about by the strike. Subsequently, on June 23, 1998, the SEC
appointed a rehabilitation receiver for PAL and declared the suspension of
all claims against it.6
On June 1, 1999, the DOLE Secretary resolved the motions for
reconsideration filed by both parties and declared the strike staged by
ALPAP illegal and that the participants thereof are deemed to have lost
their employment.7
On June 25, 1999, the respondentfiled a complaint for illegal dismissal
against PAL for not accepting him back towork, claiming non-participation
in the illegal strike. In his position paper, he alleged that on the day the
ALPAP staged a strike onJune 5, 1998, he was off-duty from work and was
in Iligan City. However, when he reported back to work on June 12, 1998,
after a week-long break, he was no longer allowed to enter PALs premises
in Nichols, Pasay City.8
The respondent further alleged that on June 25, 1998, he learned that the
DOLE Secretary issued a return-to-work order, requiring all the striking
pilots to return to work within 24 hours from notice. Notwithstanding his
non-participation in the strike, he signed the logbook at the entrance of
PALs office on the following day. When he tried to report for work,
however, he was denied entry by the PALs security guards. 9
For its part, PAL claimed that the respondent was among the participants of
the strike staged by ALPAP on June 5, 1998 who did not heed to the returnto-work order issued on June 7, 1998 by the DOLE Secretary. The said order
directed all the participants of the strike to return to work within 24 hours
from notice thereof. However, ALPAP and its counsel unjustifiably refused
to receive the copy of the order and was therefore deemed served. The 24hour deadline for the pilots to return to work expired on June 9, 1998,
without the respondent reporting back to work. Subsequently, the DOLE
Secretary issued the Resolution dated June 1, 1999, declaring that the
striking pilots have lost their employment for defying the return-to-work
order. Thus, PAL argued that the respondents charge of illegal dismissal is
utterly without merit.10
On March 5, 2001, the Labor Arbiter (LA) rendered a Decision, 11 holding
that the respondentwas illegally dismissed and ordered that he be
reinstated to his former position without loss of seniority rights and other

464

privileges and paid his full backwages inclusive of allowances and other
benefits computed from June 12, 1998 up to his actual reinstatement. The
dispositive portion of the decision reads, as follows:

Rice Subsidy (P600.00 x 27 months). 16,200.00

13th Month Pay (P93,265.00 x 2 years)..
188,030.00

WHEREFORE, judgment is hereby rendered:

Longevity Pay (P500.00 x 2 years) 1,000.00
1. Declaring that this Arbitration Branch has jurisdiction over the
causes of action raised by the [respondent] in this case;
2. Declaring that the causes of action raised in the complaint in
this case have not been barred by prior judgment of the Secretary
of Labor and Employment in his Resolution of June 1, 1999; 3.
Declaring that the termination of the services of the [respondent]
was not for any just or authorized cause and also without due
process and therefore illegal;
4. Ordering Philippine Airlines, Inc. to reinstate immediately upon
receipt of this decision [respondent] Reynaldo V. Paz to his former
position as commercial pilot without loss of seniority rights and
other privileges and to pay him his full backwages inclusive of
allowances and other benefits or their monetary equivalent
computed from June 12, 1998 up to his actual reinstatement even
pending appeal but the respondent has the option to actually
reinstate [the respondent] to his former position or to reinstate him
merely in payroll. As of September 5, 2000, the full backwages due
to the [respondent] total P2,629,420.00;
5. Ordering Philippine Airlines, Inc. to pay the [respondent] the
following:
Productivity Pay (P22,383.62 x 27 months P604,357.74
Retirement Fund Contribution
(P9,800.00 x 27 months). .. P264,600.00
PODF (P4,663.25 x 27 months)..... 125,907.75

6. Ordering Philippine Airlines, Inc. to pay [the respondent]

attorneys fees equivalent to 10% of the whole monetary award
(Art. III, Labor Code);
7. Ordering Philippine Airlines, Inc. to pay [the respondent] moral
damages equivalent to Five Hundred Thousand Pesos
(P500,00[0].00) and exemplary damages of Five Hundred
Thousand
Pesos (P500,000.00)
SO ORDERED.12
Unyielding, PAL appealed the foregoing decision to the National Labor
Relations Commission (NLRC). Pending appeal, the respondent filed a
motion for partial execution of the reinstatement aspect of the decision.
The LA granted the said motion and issued a partial writ of execution on
May 25, 2001.
Subsequently, on June 27, 2001, the NLRC rendered a
Resolution,13 reversing the LA decision. The NLRC ruled that the pieces of
evidence presented by PAL proved that the respondent participated in the
strike and defied the return-to-work order of the DOLE Secretary; hence, he
is deemed to have lost his employment. The pertinent portions of the
decision read:
Indeed, other than [the respondents] self-serving assertions, he has failed
to substantiate his claim that he was in Iligan City and that he reported for
work a week after June5, 1998. [PAL], on the other hand, has presented
photographs of the complainant picketing [at the PALs] premises on June
15 & 26, 1998. x x x

Sick Leave (P3,000.62 x 42 days).. 126,026.04

Vacation Leave (P3,000.62 x 42 days).. 125,026.04

x x x x In sum, [PALs] concrete evidence submitted in the proceedings

below should prevail over the self-serving assertions of [the respondent].
Consequently, we are of the view that [PAL] acted within its rights when it

465

refused to accept [the respondent] when he reported for work on June 26,
1998. This is consistent with the finding[s] of the DOLE Secretary when he
declared the strikers to have lost their employment status. x x x.

Unperturbed, PAL filed a petition for certiorari with the CA, questioning the
NLRC Resolution dated June 28, 2002. Subsequently, in a Decision 20 dated
January 31, 2005, the CA affirmed with modification the NLRC Resolution
dated June 28, 2002, the dispositive portion of which reads, as follows:

xxxx
WHEREFORE, premises considered, the appeal is hereby GRANTED, and the
decision dated March 5, 2001, is REVERSED and SET ASIDE for utter lack of
merit.
SO ORDERED.14
Notwithstanding the reversal of the LA decision, the respondent pursued
his move for the issuance of a writ of execution, claiming that he was
entitled to reinstatement salaries which he supposedly earned during the
pendency of the appeal to the NLRC. On August 28, 2001, the LA granted
the motion and issued the corresponding writ of execution. 15
On September 17, 2001, the LA issued an Order, 16 clarifying the
respondents entitlement to reinstatement salaries. He ratiocinated that
the order of reinstatement is immediately executory even pending appeal
and that under Article 223 of the Labor Code, the employer has the option
to admit the employee back towork or merely reinstate him in the payroll.
Considering, however, that there was no physical reinstatement, the
respondent, as a matter of right, must be reinstated in the payroll. The
accrued salaries may now be the subject of execution despite the NLRCs
reversal of the decision.
PAL appealed the LA Order dated September 17, 2001 to the NLRC, arguing
that the writ of execution lackedfactual and legal basis considering that the
NLRC reversed and set aside the LA decision and categorically declared the
order of reinstatement as totally devoid of merit. It contended that
entitlement to salaries pending appeal presupposes a finding that the
employee is entitled to reinstatement. Absent such finding, the employee
is not entitled to reinstatement salaries and the writ of execution issued
pursuant thereto is a complete nullity.17
On June 28, 2002, the NLRC rendered a Resolution,18 sustaining the award
of reinstatement salaries to the respondent albeit suspending its execution
in view of the fact that PAL was under rehabilitation receivership. PAL filed
a motion for reconsideration but the NLRC denied the same in its
Resolution19 dated November 22, 2002.

WHEREFORE, the NLRC Resolution dated June 28, 2002 is AFFIRMED with
the MODIFICATION that, in lieu of reinstatement salaries, petitioner
Philippine Airlines, Inc. is ordered to pay respondent Paz separation pay
equivalent to one month salary for every year of service, to be computed
from the time respondent commenced employment with petitioner PAL
until the time the Labor Arbiter issued the writ ordering respondents
reinstatement, i.e., on May 25, 2001.
SO ORDERED.21
The CA ruled that while the respondent is entitled to reinstatement, the
prevailing circumstances rendered the same difficult if not impossible to
execute. It noted that at the time the reinstatement was ordered, there
was no vacant B747-400 pilot position available for the respondent. Further
complicating the situation is the fact that PAL has been under receivership
since July 1998. Thus, in lieu of reinstatement salaries, the CA ordered PAL
to pay the respondent separation pay equivalent to one (1) month salary
for every year of service.22
PAL filed a motion for reconsideration of the CA decision. Subsequently, the
CA rendered the assailed Amended Decision 23 dated June 29, 2010, holding
thus:
Accordingly, compliance with the reinstatement order is not affected by the
fact that private respondents previous position had been filled-up. In
reinstatement pending appeal, payroll reinstatement is an alternative to
actual reinstatement. Hence, public respondent did not err when it upheld
the Labor Arbiter that private respondent is entitled to reinstatement
salaries during the period of appeal.
WHEREFORE, premises considered, the modification contained in Our
January 31, 2005 Decision is DELETED and SET ASIDE. The June 28, 2002
Resolution of the National Labor Relations Commission is hereby
REINSTATED in toto.
SO ORDERED.24

466

On August 3, 2010, PAL filed the instant petition with the Court, contending
that the CA acted in a manner contrary to law and jurisprudence when it
upheld the award of reinstatement salaries to the respondent. 25
The petition is meritorious.
The same issue had been raised and addressed by the Court in the case of
Garcia v. Philippine Airlines, Inc.26 In the said case, the Court deliberated on
the application of Paragraph 3, Article 223 of the Labor Code in light of the
apparent divergence in its interpretation, specifically on the contemplation
of the reinstatement aspectof the LA decision. The pertinent portion of the
provision reads, thus:
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspectis concerned,
shall immediately be executory, pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of the employer,
merely reinstated inthe payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement provided herein. 27 (Emphasis
and underscoring in the original)
Briefly, in Garcia, the petitioners were dismissed by their employer,
respondent PAL, after they were allegedly caught in the act of sniffing
shabu when a team of company security personnel and law enforcers
raided the PAL Technical Centers Toolroom Section. After they filed a
complaint for illegal dismissal, respondent PAL was placed under
rehabilitation receivership due to serious financial losses. Eventually, the
LA resolved the case in favor of the petitioners and ordered their
immediate reinstatement. Upon appeal, however, the NLRC reversed the
LA decision and dismissed the complaint. Even then, the LA issued a writ of
execution, with respect to the reinstatement aspect of the decision, and
issued a notice of garnishment. Respondent PAL filed an urgent petition for
injunction with the NLRC but the latter, by way of Resolutions dated
November 26, 2001 and January 28, 2002, affirmed the validity of the writ
and the notice issued by the LA but suspended and referred the action to
the rehabilitation receiver. On appeal, the CA ruled in favor of respondent
PAL and nullified the NLRC resolutions, holding that (1) a subsequent
finding of a valid dismissal removes the basis for the reinstatement aspect
of a LA decision, and (2) the impossibility to comply with the reinstatement
order due to corporate rehabilitation justifies respondent PALs failure to
exercise the options under Article 223 of the Labor Code. When the case
was further elevated to this Court, the petition was partially granted and

reinstated the NLRC resolutions insofar as it suspended the proceedings.

Subsequently, respondent PAL notified the Court that it has exited from the
rehabilitation proceedings. The Court then proceeded to determine the
main issue of whether the petitioners therein are entitled to collect salaries
pertaining to the period when the LAs order of reinstatement is pending
appeal to the NLRC until it was reversed.
The factual milieu of the instant case resembles that of Garcia. The
respondent herein obtained a favorable ruling from the LA in the complaint
for illegal dismissal case he filed against PAL but the same was reversed on
appeal by the NLRC. Also, PAL was under rehabilitation receivership during
the entire period that the illegal dismissal case was being heard. A similar
question is now being raised, i.e., whether the respondent may collect
reinstatement salaries which he is supposed to have received from the
time PAL received the LA decision, orderinghis reinstatement, until the
same was overturned by the NLRC.
The rule is that the employee is entitled to reinstatement salaries
notwithstanding the reversal of the LA decision granting him said relief. In
Roquero v. Philippine Airlines,28 the Court underscored that it is obligatory
on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal untilreversal by the higher
court. This is so because the order of reinstatement is immediately
executory. Unless there is a restraining order issued, it is ministerial upon
the LA to implement the order of reinstatement. The unjustified refusal of
the employer to reinstate a dismissed employee entitles him to payment of
his salaries effective from the time the employer failed to reinstate him. 29
In Garcia, however, the Court somehow relaxed the rule by taking into
consideration the cause of delay in executing the order of reinstatement of
the LA. It was declared, thus:
After the labor arbiters decision is reversed by a higher tribunal, the
employee may be barred from collecting the accrued wages, if it is shown
that the delay in enforcing the reinstatement pending appeal was without
fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the
order of reinstatement pending appeal was not executed prior to its
reversal; and (2) the delay must not be due to the employers unjustified
act or omission. If the delay is due to the employers unjustified refusal, the
employer may still be required to pay the salaries notwithstanding the

467

reversal of the LaborArbiters decision.30 (Italics ours and emphasis and

underscoring deleted)
It is clear from the records that PAL failed to reinstate the respondent
pending appeal of the LA decision to the NLRC.1wphi1 It can be recalled
that the LA rendered the decision ordering the reinstatement of the
respondent on March 5, 2001. And, despite the self-executory nature of the
order of reinstatement, the respondent nonetheless secured a partial writ
of execution on May 25, 2001. Even then, the respondent was not
reinstated to his former position or even through payroll.
A scrutiny of the circumstances, however, will show that the delay in
reinstating the respondent was not due to the unjustified refusal of PAL to
abide by the order but because of the constraints of corporate
rehabilitation. It bears noting that a year before the respondent filed his
complaint for illegal dismissal on June 25, 1999, PAL filed a petition for
approval of rehabilitation plan and for appointment of a rehabilitation
receiver with the SEC. On June 23, 1998, the SEC appointed an Interim
Rehabilitation Receiver. Thereafter, the SEC issued an Order 31 dated July 1,
1998, suspending all claims for payment against PAL.
The inopportune event of PALs entering rehabilitation receivership justifies
the delay or failure to complywith the reinstatement order of the LA. Thus,
in Garcia, the Court held:
It is settled that upon appointment by the SEC of a rehabilitation receiver,
all actions for claims beforeany court, tribunal or board against the
corporation shall ipso jurebe suspended. As stated early on, during the
pendency of petitioners complaint before the Labor Arbiter, the SEC
placed respondent under an Interim Rehabilitation Receiver. After the Labor
Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation
Receiver with a Permanent Rehabilitation Receiver.
Case law recognizes that unless there is a restraining order, the
implementation of the order of reinstatement is ministerial and mandatory.
This injunction or suspension of claimsby legislative fiat partakes of the
nature of a restraining order that constitutes a legal justification for
respondent's non-compliance with the reinstatement order. Respondent's
failure to exercise the alternative options of actual reinstatement and
payroll reinstatement was thus justified. Such being the case, respondent's
obligation to pay the salaries pending appeal, as the normal effect of the
non-exercise of the options, did not attach.32 (Citations omitted)

In light of the fact that PAL's failure to comply with the reinstatement order
was justified by the exigencies of corporation rehabilitation, the respondent
may no longer claim salaries which he should have received during the
period that the LA decision ordering his reinstatement is still pending
appeal until it was overturned by the NLRC. Thus, the CA committed a
reversible error in recognizing the respondent's right to collect
reinstatement salaries albeit suspending its execution while PAL is still
under corporate rehabilitation.
WHEREFORE, the petition is GRANTED. The Amended Decision dated June
29, 2010 of the Court of Appeals in CA-G.R. SP No. 75618 is hereby
REVERSED and SET ASIDE. Respondent Reynaldo V. Paz is not entitled to
the payment of reinstatement salaries.
SO ORDERED.

468

JUANITO A. GARCIA and ALBERTO J.

DUMAGO,
Petitioners,

- versus -

PHILIPPINE AIRLINES, INC.,

Respondent.

G.R. No. 164856

Present:

SO ORDERED.[2]

PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO, and
BRION, JJ.

The case stemmed from the administrative charge filed by PAL against its
employees-herein petitioners[3] after they were allegedly caught in the act
of sniffing shabu when a team of company security personnel and law
enforcers raided the PAL Technical Centers Toolroom Section on July 24,
1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for

transgressing the PAL Code of Discipline, [4] prompting them to file a
complaint for illegal dismissal and damages which was, by Decision of

Promulgated:

January 11, 1999,[5] resolved by the Labor Arbiter in their favor, thus

January 20, 2009

x-----------------------------------------------------------------------------------------x

ordering PAL to, inter alia, immediately comply with the reinstatement
aspect of the decision.

DECISION

Prior to the promulgation of the Labor Arbiters decision, the Securities and

CARPIO MORALES, J.:

Exchange Commission

(SEC)

placed

PAL (hereafter

referred to

as

Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5,

respondent), which was suffering from severe financial losses, under an

2003 Decision and April 16, 2004 Resolution of the Court of Appeals

Interim Rehabilitation Receiver, who was subsequently replaced by a

[1]

in

CA-G.R. SP No. 69540 which granted the petition for certiorari of

Permanent Rehabilitation Receiver on June 7, 1999.

respondent, Philippine Airlines, Inc. (PAL), and denied petitioners Motion for
Reconsideration, respectively. The dispositive portion of the assailed

From the Labor Arbiters decision, respondent appealed to the NLRC which,

Decision reads:

by Resolution of January 31, 2000, reversed said decision and dismissed

WHEREFORE, premises considered and in view of the

foregoing, the instant petition is hereby GIVEN DUE
COURSE. The assailed November 26, 2001 Resolution as
well as the January 28, 2002 Resolution of public
respondent National Labor Relations Commission [NLRC] is
hereby ANNULLED and SET ASIDE for having been issued
with grave abuse of discretion amounting to lack or excess
of jurisdiction. Consequently, the Writ of Execution and the
Notice of Garnishment issued by the Labor Arbiter are
hereby likewise ANNULLED and SET ASIDE.

petitioners complaint for lack of merit.[6]

Petitioners Motion for Reconsideration was denied by Resolution

of April 28, 2000 and Entry of Judgment was issued on July 13, 2000.[7]

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of

Execution (Writ) respecting the reinstatement aspect of his January 11,

469

1999 Decision,

and

on October

25,

2000,

he

issued

Notice

of

Garnishment (Notice). Respondent thereupon moved to quash the Writ and

to lift the Notice while petitioners moved to release the garnished amount.

In a related move, respondent filed an Urgent Petition for Injunction with

the NLRC which, by Resolutions of November 26, 2001 and January 28,
2002, affirmed the validity of the Writ and the Notice issued by the Labor

with only the matter of reinstatement pending appeal being

the issue this Court deems it legally expedient to suspend
the proceedings in this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in
that the instant proceedings herein are SUSPENDED until
further notice from this Court. Accordingly, respondent
Philippine Airlines, Inc. is hereby DIRECTED to quarterly
update the Court as to the status of its ongoing
rehabilitation. No costs.
SO ORDERED.[8] (Italics in the original; underscoring supplied)

Arbiter but suspended and referred the action to the Rehabilitation

Receiver for appropriate action.

By Manifestation and Compliance of October 30, 2007, respondent

informed the Court that the SEC, by Order of September 28, 2007, granted

Respondent elevated the matter to the appellate court which issued the
herein challenged Decision and Resolution nullifying the NLRC Resolutions
on two grounds, essentially espousing that: (1) a subsequent finding of a
valid dismissal removes the basis for implementing the reinstatement
aspect of a labor arbiters decision (the first ground), and (2) the
impossibility to comply with the reinstatement order due to corporate
rehabilitation provides a reasonable justification for the failure to exercise

its request to exit from rehabilitation proceedings.[9]

In view of the termination of the rehabilitation proceedings, the Court now
proceeds

to

resolve

the remaining

issue for

consideration, which

is whether petitioners may collect their wages during the period

between the Labor Arbiters order of reinstatement pending appeal
and the NLRC decision overturning that of the Labor Arbiter, now
that respondent has exited from rehabilitation proceedings.

the options under Article 223 of the Labor Code (the second ground).

By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present
petition

and

effectively

reinstated the

NLRC

Resolutions insofar

it suspended the proceedings, viz:

as

Amplification of the First Ground

The appellate court counted on as its first ground the view that a
subsequent finding of a valid dismissal removes the basis for implementing

Since petitioners claim against PAL is a money claim for

their wages during the pendency of PALs appeal to the
NLRC, the same should have been suspended pending the
rehabilitation proceedings. The Labor Arbiter, the NLRC, as
well as the Court of Appeals should have abstained from
resolving petitioners case for illegal dismissal and should
instead have directed them to lodge their claim before PALs
receiver.
However, to still require petitioners at this time to re-file
their labor claim against PAL under peculiar circumstances
of the case that their dismissal was eventually held valid

the reinstatement aspect of a labor arbiters decision.

On this score, the Courts attention is drawn to seemingly divergent

decisions
the option

concerning
of

reinstatement

payroll

pending

reinstatement. On

appeal
the

one

or, particularly,
hand

is

the

jurisprudential trend as expounded in a line of cases including Air

470

If the decision of the labor arbiter is later reversed on

appeal upon the finding that the ground for dismissal is
valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to
refund the salaries s/he received while the case was
pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to
receive from his/her employer under existing laws,
collective bargaining agreement provisions, and company
practices. However, if the employee was reinstated to work
during the pendency of the appeal, then the employee is
entitled to the compensation received for actual services
rendered without need of refund.
Considering that Genuino was not reinstated to work or
placed on payroll reinstatement, and her dismissal is based
on a just cause, then she is not entitled to be paid the
salaries stated in item no. 3 of the fallo of the September 3,
1994 NLRC Decision.[14] (Emphasis, italics and underscoring
supplied)

Philippines Corp. v. Zamora,[10] while on the other is the recent case

of Genuino v. National Labor Relations Commission.[11] At the core of the
seeming divergence is the application of paragraph 3 of Article 223 of the
Labor Code which reads:
In any event, the decision of the Labor Arbiter reinstating a
dismissed
or
separated
employee,
insofar
as
the reinstatement
aspect is
concerned,
shall immediately be executory, pending appeal. The
employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal
or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement
provided herein. (Emphasis and underscoring supplied)

The view as maintained in a number of cases is that:

x x x [E]ven if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages
of the dismissed employee during the period of
appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the
appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever
salary he received for he is entitled to such, more so if he
actually rendered services during the period.[12] (Emphasis
in the original; italics and underscoring supplied)

It has thus been advanced that there is no point in releasing the wages to
petitioners since their dismissal was found to be valid, and to do so would
constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a

dispositive portion where the employee was required to refund the salaries
received on payroll reinstatement.In fact, in a catena of cases, [15] the Court

In other words, a dismissed employee whose case was favorably decided

did not order the refund of salaries garnished or received by payroll-

by the Labor Arbiter is entitled to receive wages pending appeal upon

reinstated employees despite a subsequent reversal of the reinstatement

reinstatement,

order.

which

is

immediately

executory. Unless

there

is

restraining order, it is ministerial upon the Labor Arbiter to implement the

order of reinstatement and it is mandatory on the employer to comply
therewith.[13]

The dearth of authority supporting Genuino is not difficult to fathom for it

would otherwise render inutile the rationale of reinstatement pending
appeal.

The opposite view is articulated in Genuino which states:

x x x [T]he law itself has laid down a compassionate policy

which, once more, vivifies and enhances the provisions of
the 1987 Constitution on labor and the working man.

471

xxxx
These duties and responsibilities of the State are imposed
not so much to express sympathy for the workingman as to
forcefully and meaningfully underscore labor as a primary
social and economic force, which the Constitution also
expressly affirms with equal intensity. Labor is an
indispensable partner for the nation's progress and stability.

a final unfavorable decision. It is mirage of a stop-gap leading the

employee to a risky cliff of insolvency.

Advisably, the sum is better left unspent. It becomes more logical and
practical for the employee to refuse payroll reinstatement and simply find

xxxx
x x x In short, with respect to decisions reinstating
employees, the law itself has determined a sufficiently
overwhelming reason for its execution pending appeal.

work elsewhere in the interim, if any is available. Notably, the option of

xxxx
x x x Then, by and pursuant to the same power (police
power), the State may authorize an immediate
implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is
designed to stop, although temporarily since the appeal
may be decided in favor of the appellant, a continuing
threat or danger to the survival or even the life of the
dismissed or separated employee and his family. [16]

to refuse payroll reinstatement. In the face of the grim possibilities, the rise

payroll reinstatement belongs to the employer, even if the employee is

able and raring to return to work. Prior to Genuino, it is unthinkable for one

of concerned employees declining payroll reinstatement is on the horizon.

Further, the Genuino ruling not only disregards the social justice principles
behind the rule, but also institutes a scheme unduly favorable to
management. Under

such

scheme,

the

salaries

dispensed pendente

lite merely serve as a bond posted in installment by the employer. For in

The social justice principles of labor law outweigh or render
inapplicable the civil law doctrine of unjust enrichment espoused
by Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional
and statutory precepts portray the otherwise unjust situation as a condition
affording full protection to labor.

Even outside the theoretical trappings of the discussion and into the
mundane realities of human experience, the refund doctrine easily
demonstrates how a favorable decision by the Labor Arbiter could harm,
more than help, a dismissed employee. The employee, to make both ends
meet, would necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum in case of

the

event

of

reversal

of

the

Labor

Arbiters

decision

ordering

reinstatement, the employer gets back the same amount without having to
spend ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the posting of a bond [even a cash bond]
by the employer shall not stay the execution for reinstatement. [17]

In playing down the stray posture in Genuino requiring the dismissed

employee on payroll reinstatement to refund the salaries in case a final
decision upholds the validity of the dismissal, the Court realigns the proper
course of the prevailing doctrine on reinstatement pending appeal vis--vis
the effect of a reversal on appeal.

472

further than may be necessary to achieve its specific

purpose. Statutes, as a rule, are to be construed in the light
of the purpose to be achieved and the evil sought to be
remedied. x x x In introducing a new rule on the
reinstatement aspect of a labor decision under Republic Act
No. 6715, Congress should not be considered to be
indulging in mere semantic exercise. x x x [20] (Italics in the
original; emphasis and underscoring supplied)

Respondent insists that with the reversal of the Labor Arbiters

Decision, there is no more basis to enforce the reinstatement aspect of the
said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr.
supports

this

argument

and

finds

the

prevailing

doctrine

in Air

Philippines and allied cases inapplicable because, unlike the present case,
the writ of execution therein was secured prior to the reversal of the Labor

The Court reaffirms the prevailing principle that even if the order of

Arbiters decision.

reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on

The proposition is tenuous. First, the matter is treated as a mere race

the part of the employer to reinstate and pay the wages of the dismissed

against time. The discussion stopped there without considering the cause

employee during the period of appeal until reversal by the higher court.

of the delay. Second, it requires the issuance of a writ of execution despite

[21]

It settles the view that the Labor Arbiter's order of reinstatement

the immediately executory nature of the reinstatement aspect of the

is immediately executory and the employer has to either re-admit them to

decision. In Pioneer

work under the same terms and conditions prevailing prior to their

Texturing

Corp.

v.

NLRC,[18] which

was

inPanuncillo v. CAP Philippines, Inc.,[19] the Court observed:

x x x The provision of Article 223 is clear that an award [by
the Labor Arbiter] for reinstatement shall be immediately
executory even pending appeal and the posting of a bond
by the employer shall not stay the execution for
reinstatement. The legislative intent is quite obvious, i.e., to
make an award of reinstatement immediately enforceable,
even pending appeal. To require the application for and
issuance of a writ of execution as prerequisites for the
execution of a reinstatement award would certainly
betray and run counter to the very object and intent
of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for
a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of
a scheduled hearing, for instance, or an inaction on the part
of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict
mandate and noble purpose envisioned by Article 223. In
other words, if the requirements of Article 224 [including
the issuance of a writ of execution] were to govern, as we
so declared in Maranaw, then the executory nature of a
reinstatement order or award contemplated by Article 223
will be unduly circumscribed and rendered ineffectual. In
enacting the law, the legislature is presumed to have
ordained a valid and sensible law, one which operates no

cited

dismissal, or to reinstate them in the payroll, and that failing to exercise

the options in the alternative, employer must pay the employees salaries.
[22]

Amplification of the Second Ground

The remaining issue, nonetheless, is resolved in the negative on the

strength of the second ground relied upon by the appellate court in the
assailed issuances. The Court sustains the appellate courts finding that the
peculiar predicament of a corporate rehabilitation rendered it impossible
for respondent to exercise its option under the circumstances.

The spirit of the rule on reinstatement pending appeal animates the

proceedings once the Labor Arbiter issues the decision containing an order
of reinstatement. The immediacy of its execution needs no further

473

elaboration. Reinstatement pending appeal necessitates its immediate

In a situation like that in International Container Terminal Services, Inc. v.

execution during the pendency of the appeal, if the law is to serve its noble

NLRC[27] where it was alleged that the employer was willing to comply with

purpose. At the same time, any attempt on the part of the employer to

the order and that the employee opted not to pursue the execution of the

evade or delay its execution, as observed in Panuncillo and as what

order, the Court upheld the self-executory nature of the reinstatement

actually

order and ruled that the salary automatically accrued from notice of the

[25]

transpired

and Roquero,

[26]

in Kimberly,[23]Composite,[24] Air Philippines,

should not be countenanced.

Labor Arbiter's order of reinstatement until its ultimate reversal by the

NLRC. It was later discovered that the employee indeed moved for the

After the labor arbiters decision is reversed by a higher tribunal,

the employee may be barred from collecting the accrued wages, if
it is shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part of the employer.

issuance of a writ but was not acted upon by the Labor Arbiter. In that
scenario where the delay was caused by the Labor Arbiter, it was ruled that
the inaction of the Labor Arbiter who failed to act upon the employees
motion for the issuance of a writ of execution may no longer adversely
affect the cause of the dismissed employee in view of the self-executory

The test is two-fold: (1) there must be actual delay or the fact that the

nature of the order of reinstatement.[28]

order of reinstatement pending appeal was not executed prior to its

reversal; and (2) the delay must not be due to the employers unjustified
act or omission. If the delay is due to the employers unjustified refusal, the
employer may still be required to pay the salaries notwithstanding the
reversal of the Labor Arbiters decision.

The new NLRC Rules of Procedure, which took effect on January 7, 2006,
now require the employer to submit a report of compliance within 10
calendar days from receipt of the Labor Arbiters decision, [29] disobedience
to which clearly denotes a refusal to reinstate. The employee need not file
a motion for the issuance of the writ of execution since the Labor

In Genuino, there was no showing that the employer refused to reinstate

the employee, who was the Treasury Sales Division Head, during the short
span of four months or from the promulgation on May 2, 1994 of the Labor
Arbiters Decision up to the promulgation on September 3, 1994 of the
NLRC Decision. Notably, the former NLRC Rules of Procedure did not lay
down a mechanism to promptly effectuate the self-executory order of
reinstatement, making it difficult to establish that the employer actually
refused to comply.

Arbiter shall thereafter motu proprio issue the writ. With the new rules
in

place,

there

is

hardly

any

difficulty

in

determining

the

employers intransigence in immediately complying with the order.

In the case at bar, petitioners exerted efforts [30] to execute the Labor
Arbiters order of reinstatement until they were able to secure a writ of
execution, albeit issued on October 5, 2000 after the reversal by the NLRC
of the Labor Arbiters decision. Technically, there was still actual delay
which brings to the question of whether the delay was due to
respondents unjustified act or omission.

474

It is apparent that there was inaction on the part of respondent to

The parallelism between a judicial order of corporation rehabilitation as a

reinstate them, but whether such omission was justified depends on the

justification for the non-exercise of its options, on the one hand, and a

onset of the exigency of corporate rehabilitation.

claim

of

actual

and

imminent

substantial

losses

as

ground

for

retrenchment, on the other hand, stops at the red line on the financial
It is settled that upon appointment by the SEC of a rehabilitation receiver,

statements. Beyond the analogous condition of financial gloom, as

all actions for claims before any court, tribunal or board against the

discussed by Justice Leonardo Quisumbing in his Separate Opinion, are

corporation shall ipso jure be suspended.[31] As stated early on, during the

more

pendency of petitioners complaint before the Labor Arbiter, the SEC placed

contemplated in a retrenchment case, the state of corporate rehabilitation

respondent under an Interim Rehabilitation Receiver.After the Labor Arbiter

was judicially pre-determined by a competent court and not formulated for

rendered his decision, the SEC replaced the Interim Rehabilitation Receiver

the first time in this case by respondent.

salient

distinctions. Unlike

the

ground

of

substantial

losses

with a Permanent Rehabilitation Receiver.

More importantly, there are legal effects arising from a judicial order
Case law recognizes that unless there is a restraining order, the

placing a corporation under rehabilitation. Respondent was, during the

implementation of the order of reinstatement is ministerial and mandatory.

period material to the case, effectively deprived of the alternative choices

This injunction or suspension of claims by legislative fiat [33] partakes of

under Article 223 of the Labor Code, not only by virtue of the statutory

the nature of a restraining order that constitutes a legal justification for

injunction but also in view of the interim relinquishment of management

respondents non-compliance with the reinstatement order.Respondents

control to give way to the full exercise of the powers of the rehabilitation

failure to exercise the alternative options of actual reinstatement and

receiver. Had there been no need to rehabilitate, respondent may have

payroll reinstatement was thus justified. Such being the case, respondents

opted for actual physical reinstatement pending appeal to optimize the

obligation to pay the salaries pending appeal, as the normal effect of the

utilization of resources. Then again, though the management may think

non-exercise of the options, did not attach.

this wise, the rehabilitation receiver may decide otherwise, not to mention

[32]

the subsistence of the injunction on claims.

While reinstatement pending appeal aims to avert the continuing threat or
danger to the survival or even the life of the dismissed employee and his

In sum, the obligation to pay the employees salaries upon the employers

family, it does not contemplate the period when the employer-corporation

failure to exercise the alternative options under Article 223 of the Labor

itself is similarly in a judicially monitored state of being resuscitated in

Code is not a hard and fast rule, considering the inherent constraints of

order to survive.

corporate rehabilitation.

475

WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the

Court of Appeals Decision of December 5, 2003 and Resolution of April 16,
2004 annulling the NLRC Resolutions affirming the validity of the Writ of
Execution and the Notice of Garnishment are concerned, the Court finds no
reversible error.

SO ORDERED.

476

G.R. No. 99034. April 12, 1993.

JEAN C. AURELIO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NORTHWESTERN COLLEGE,
BEN A. NICOLAS, ERNESTO B. ASUNCION, JOFFREY AURELIO, JOSE G.
CASTRO, FRANCISCO SANTELLA, ALBA B. CADAY, LILIA PAZ, WILFRED A.
NICOLAS, GLENN AQUINO, LUCIDIA RUIZ-FLOREZ, respondents.
Pedro Q. Qadra for petitioner.
Ponce, Enrile, Cayetano, & Reyes & Manalastas for private respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; RULES
OF EMPLOYMENT REGARDING MANAGERIAL EMPLOYEES; EMPLOYERS
ALLOWED A GREATER LATITUDE. The rules on termination of
employment, penalties for infractions, and resort to concerted actions,
insofar as managerial employees are concerned, are not necessarily the
same as those applicable to termination of employment of ordinary
employees. Employers, generally, are allowed a wider latitude of discretion
in terminating the employment of managerial personnel or those of similar
rank performing functions which by their nature require the employer's
trust and confidence, than in the case of ordinary rank-and-file employees
(Cruz vs. Medina, 177 SCRA 565 [1989]).
2. ID.; ID.; ID.; LOSS OF TRUST AND CONFIDENCE, VALID GROUND FOR
DISMISSING MANAGERIAL EMPLOYEE. Under Article 282(c) of the Labor
Code, loss of trust and confidence is a valid ground for dismissing an
employee. Termination of employment on this ground does not require
proof beyond reasonable doubt. All that is needed is for the employer to
establish sufficient basis for the dismissal of the employee (Cruz vs.
Medina, supra).

3. ID.; ID.; ID.; TERMINATION; REQUIREMENTS FOR VALIDITY THEREOF.

Under Section 1, Rule XIV of the Implementing Rules and Regulations of the
Labor Code, the dismissal of an employee must be for a just or authorized
cause and after due process. The two requirements of this legal provision
are: 1. The legality of the act of dismissal, that is, dismissal under the
ground provided under Article 283 of the New Labor Code; and 2. The
legality in the manner of dismissal, that is, with due observance of the
procedural requirements of Sections 2, 5, and 6 of Batas Pambansa Blg.
130 (Shoemart vs. NLRC, 176 SCRA 385 [1989]).
4. ID.; ID.; ID.; ID.; ID.; NON-OBSERVANCE OF DUE PROCESS ENTITLES
EMPLOYEE TO AWARD OF P1,000.00; CASE AT BAR. In cases where there
was a valid ground to dismiss an employee but there was non-observance
of due process, this Court held that only a sanction must be imposed upon
the employer for failure to give formal notice and to conduct an
investigation required by law before dismissing the employee in
consonance with the ruling in Wenphil v. NLRC, 170 SCRA 69 [1989];
Shoemart, Inc. vs. NLRC, supra; and in Pacific Mills, Inc. vs. Zenaida Alonzo,
199 SCRA 617 [1991]). Public respondent's finding that petitioner was not
afforded due process is correct but the Commission erred when it awarded
separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and
Wenphil cases, this Court merely awarded P1,000.00 as penalty for nonobservance of due process. The decision under review is hereby AFFIRMED
with the MODIFICATION that the award of separation pay is DELETED and
that private respondents are ORDERED to pay petitioner the amount of
One Thousand Pesos (P1,000.00) as indemnity for non-observance of due
process.
5. ID.; ID.; ID.; MANAGEMENT, AT LIBERTY TO ABOLISH POSITIONS NO
LONGER NECESSARY. The prerogative of management to conduct its own
business affairs to achieve its purposes cannot be denied (San Miguel
Brewery Sales Force Union [PTGHWO] vs. Ople, 110 SCRA 25 [1981]; Abbot
Laboratories vs. NLRC, 154 SCRA 713 [1987]). Management is at liberty,
absent any malice on its part, to abolish positions which it deems no longer
necessary (Great Pacific Life Assurance Corp. vs. NLRC, 188 SCRA 139
[1990]). When petitioner was stripped by the Board of her positions as
Executive Vice President and Vice President for Administration, with a
corresponding reduction in salary, the Board did not act in a capricious,
whimsical, and arbitrary manner, thus negating malice and bad faith.
DECISION
MELO, J p:

477

The appeal before us has reference to the decision of the National Labor
Relations Commission (NLRC) dated March 27, 1991 which modified the
decision of the Labor Arbiter involving petitioner's charge of illegal
dismissal. The reviewing authority merely awarded separation pay
equivalent to one-half month pay for every year of service and denied
petitioner's prayer for reinstatement, backwages, moral and exemplary
damages, including attorney's fees (p. 89, Rollo).
Petitioner started as clinical instructor of the College of Nursing of
Northwestern College (NWC) in June 1917 with a basic salary of P600.00 a
month. In October 1979, petitioner was appointed Dean of the College of
Nursing with a starting salary of P3,000.00 a month. In September 1981,
petitioner was promoted to College Administrator or Vice-President for
Administration, retaining concurrently her position of Dean of the College
of Nursing, with an increased salary of P3,500.00 per month. She was later
promoted to Executive Vice-President with the corresponding salary of
P7,500.00.
On April 10, 1988, petitioner's husband, Oscar Aurelio, a stockholder of
respondent NWC, was elected Auditor. On May 1, 1988, the individual
respondents, as Board of Directors, took over the management of
respondent NWC. This new management unleashed a series of
reorganization affecting the petitioner and her husband, Oscar Aurelio, to
wit:
(a) On May 30, 1988, petitioner's husband, then in the United States, was
removed as Auditor of the college;
(b) Without prior notice, petitioner's office was stripped of its facilities.
First, the airconditioner, then the refrigerator;
(c) Respondents asked petitioner, "to justify," the continued use of the
conference room which was used for team teaching; the librarian of the
College of Nursing was removed and assigned as secretary of the
Chairman of Academic Matters and all the facilities of the College of
Nursing were taken over by the individual respondents;
(d) Petitioner's salary was reduced from P7,500.00 to P5,000.00 then to
P2,500.00 a month;

(e) While petitioner was absent because of influenza, respondents assigned

her office room to the Chairman on Management and Planning; the Nursing
conference room was assigned as the lounge room of the members of the
Board of Directors;
Because of the indignities and humiliation suffered by the petitioner, she
wrote a letter on September 20, 1988 informing the President of
Northwestern College that she was going on an indefinite leave, thus:
Dear Sir:
This is to inform your office that I am taking an indefinite leave of absence
effective immediately due to the following reasons:
1. My having been demoted in rank from Executive Vice-President to VicePresident for Administration to Dean of the College of Nursing without prior
notice and without any dialogue whatsoever with management. This
mote(s) of the administration was coupled with innuendos perpetuated by
some people close to management giving rise to speculations that
besmirched my reputation and character.
2. Since the new management took over on May 1, 1988, my office has
been stripped of its facilities one after the other, again without prior notice.
First, the air-conditioner was removed, then the refrigerator.
3. My efforts and that of my staff to complete and improve our physical
plant and facilities such as the conference room, library, team teaching
requirements and nutrition laboratory did not get any support from
management. In fact, our efforts were even seen as mere exercises to
satisfy our personal whims. Imagine being asked to "justify" the continued
use of our conference room which is a basic requirement for team
teaching? To make matters worse, our librarian was assigned as secretary
to the Chairman of Academic Matters and our facilities were taken over by
same officers of the college.
4. My salary was reduced from P7,500.00 per month to P5,000.00, and
then finally to P2,500.00 per month since May 1, 1980. This defies logic
because in 1979, I had the starting salary of P3,000.00. Nine years later, I
am to be paid P2,500.00 per month.
5. To cap all these, while I was absent because of influenza, management
decided to assign my office to the Chairman on Management Planning, and

478

the Nursing conference room to the members of the board to be used as

their lounging room. This singular act has caused me extreme anguish and
embarrassment which I feel I don't deserve and it has caused much
damage to my integrity.

moral and exemplary damages, and attorney's fees. At the arbitration

level, petitioner and private respondents submitted their respective
position papers. On December 29, 1989, the labor arbiter issued a decision
dismissing the complaint.

Because of the above-cited development, I feel that I have been inflicted

with an injustice that has caused irreparable damage to my reputation, and
has rendered me ineffective in discharging my duties as member of
administration and as Dean of the College of Nursing.

It appears that private respondent Northwestern College is managed by its

Board of Directors elected annually by the stockholders and who serve as
such for the ensuing year until their successors shall have been duly
elected and qualified.

Yours truly,

The individual respondents Ben Nicolas, Ernesto Asuncion, Joffrey Aurelio,

Alva B. Caday, Lilia Paz, Wilfredo Santillan, and Glen Aquino, are members
of the Board of Directors of Northwestern College of which Jean C. Aurelio is
a stockholder.

(SGD) Jean C. Aurelio

(pp. 6-7, Rollo.)
On September 21, 1988, petitioner sent a copy of the above letter to the
Secretary of Education, Culture and Sports praying for assistance. On
October 26, 1988, the Secretary of Education, Culture and Sports-referred
the letter to the DECS Director of Region I. On October 28, 1988, the
Director of the Bureau of Higher Education ordered the DECS Regional
Director of Region I through telegram "to investigate NWC College of
Nursing, Laoag City immediately PRC recommends suspension of the
operation of College of Nursing due to lack of Dean and faculty to
supervise students." On November 3, 1988, the Regional Director informed
respondent Northwestern College of the order of investigation and that
pursuant thereto, the Director was sending her representatives "to look
into the problem stated thereon which is apparently facing the College of
Nursing." On November 7, 1988, the representatives of the Regional
Director submitted their official findings and recommendations confirming
the truth of the allegations of petitioner in her September 20, 1988 letter.
The DECS also confirmed the willingness of petitioner to withdraw her
indefinite leave of absence. The matter of petitioner's resumption of her
position as Dean of the College of Nursing was addressed by the DECS to
the attention of respondents who were given up to November 13, 1988 to
make their decision. On November 7, 1988, the Regional Director sent a
telegram stating: "Please submit written decision status position dean
college of nursing not later than November 14, 1988 pd."
Private respondents did not answer. They refused to accept petitioner. On
November 16, 1988, petitioner filed her complaint for illegal dismissal
against private respondents and prayed for reinstatement plus backwages,

On April 30, 1988, the annual regular meeting of stockholders was held at
the principal office of the corporation in Laoag City. Elected Directors were
the following: Alva Caday, Lucidia Flores, Nicolas Nicolas, Oscar Aurelio,
Cherry Caday, Lilia Paz, Ben Nicolas, Joffrey Aurelio, Francisco Santella,
Glenn Aquino, and Wilfredo Nicolas. The following members were elected
as officers of the Northwestern College: Alva Caday, Chairman of the
Board; Ben Nicolas, Vice-Chairman and President; Joffrey Aurelio, Treasurer;
Oscar Aurelio, Corporate Auditor and Lucidia Flores, Corporate Secretary.
Nicolas Nicolas, Oscar Aurelio, and Cherry Caday later resigned and in their
stead, Atty. Ernesto Asuncion, Atty. Jose Castro, and Dr. Juanito Chan were
elected by the stockholders.
Since their election into office, the Board members have taken effective
control of the management of the college and have regularly exercised
their corporate powers. The new Board conducted a preliminary audit
which revealed that the college was financially distressed, unable to meet
its maturing obligations with its creditor bank. The new management
headed by its President, Ben Nicolas, embarked on a realignment of
positions and functions of the different department in order to minimize
expenditures.
As a result of the audit, NWC was compelled to abolish the administrative
positions held by petitioner, which she did not contest, because of the
following reasons:

479

a) In 1988, NWC realized that it was violating the Administrative Manual for
Private Schools. Thus, the position of Administrator/Vice President had to
be eliminated;
b) At that time, NWC was reeling from the effects of ,j its failure to meet its
obligations with its creditors and all efforts to minimize expenditures were
being undertaken;
c) NWC realized after a study of the realignment of the positions that the
functions and duties of Administrator/Vice President for Administration
were being performed by the President. Consequently, the former positions
had become redundant.
During the first semester of the school year 1988-1989, Northwestern
College uncovered irregularities allegedly committed by the petitioner, to
wit:
a) She personally exacted without receipt P25.00 from every student in the
College of Nursing for the maintenance of the College Library.
b) She did not remit nor liquidate the sum of P600.00 out of the P1,295.91
Related Learning Experience (RLE) fee paid by all students in the College of
Nursing. The total sum thereof in the amount of P114,280.00 suspiciously
remained unremitted and unliquidated for an unreasonable length of time.
c) She drew salaries for teaching in the College of Nursing although she did
not have a teaching load. Before the investigation could be concluded,
petitioner sent a letter to the President of the college on September 20,
1988 manifesting that she is on an indefinite leave of absence.
On December 29, 1989, the labor arbiter dismissed the complaint on the
basis of these findings which were adopted by the NLRC:
. . . Undoubtedly, complainant had occupied managerial positions, thus the
rule of loss of trust and confidence applies. This office is however aware
that allegations of loss of trust and confidence must have some basis and
such is not lacking on record.
Respondent had alleged and submitted evidence of irregularities of
complainant during her tenure at the college. The complainant instead of
refuting the charges cited alleged irregularities committed by the
respondents in their respective offices. Needless to state, the allegation

does not detract anything from the charges of irregularities against her by
the respondent school. As the records of this case stand, our complainant
has not sufficiently explained the substantiated charges of Northwestern
College anent exaction of P25.00 from every student of the College of
nursing, receipt of salaries for alleged teaching services for which she did
not have any teaching load and failure to remit nor liquidate a total
amount of P120,000.00. (p. 29 and 94, Rollo.)
It must be emphasized that the rules of dismissal for managerial
employees are different from those governing ordinary employees for it
would be unjust and inequitable to compel an employer to continue with
the employment of a person who occupies a managerial and sensitive
position despite loss of trust and confidence. At the very least, the
relationship must be considered seriously strained, foreclosing the remedy
of reinstatement. We find that the allegations of irregularities were
sufficiently substantiated thus justifying petitioner's separation.
Moreover, and still on the issue of dismissal, the records disclose that in
holding on to the two positions, petitioner violated the Administrative
Manual for Private Schools. Thus, the respondent had no other recourse but
to take away one of the positions from her or abolish the same.
Undoubtedly, the College Board of Directors has the authority to reorganize
and streamline the operations of the college with the end in view of
minimizing expenditures.
We believe that the instant case was an offshoot of a corporate
reorganization, a prerogative reposed on the Board of Directors of the
College.
The NLRC found that:
Admittedly, complainant was a managerial employee who has to have the
complete trust and confidence of respondents. While it may be true that
complainant was not strictly an accountable employee primarily
responsible for disbursement of whatever funds, respondents had some
basis in losing its trust and confidence in complainant. Respondents'
evidence showed that under the principle of command responsibility,
complainant was in a sense responsible in the monitoring of monetary
transactions involving funds from library collections and from Related
Learning Science collection (pp. 29-32, 136). For it has been held that in
case of termination due to loss of trust and confidence proof beyond
reasonable doubt of misconduct is not necessary but some basis being
sufficient (Villadolid vs. Inciong, 121 SCRA 205).

480

However, we find that complainant was not accorded notice and

investigation prior to termination. Indeed, circumstances herein resulted in
constructive dismissal. We lend credence to complainant's allegation that
investigation was conducted after she tendered her indefinite leave. Law
and jurisprudence mandate due process prior to termination (Century
Textile vs. NLRC, 161 SCRA 528). Considering the circumstances obtaining
and in the spirit of compassionate justice, we find complainant entitled to
separation pay, equivalent to one-half month per year of service based on
her salary of P7,500.00 or the total amount of P32,750.00.
Except for the allegation on constructive dismissal, this petition is a
repetition of what petitioner had already alleged below and which the labor
arbiter and the NLRC dismissed for lack of merit.
Petitioner's claim of constructive dismissal stems from her alleged removal
from the positions of Administrator, Vice President for Administration and
Executive Vice President. From the time petitioner assumed the position of
Executive Vice President, she did not possess any legal right to claim
security of tenure concerning this position because she assumed the same
without authority from the Board of Directors. Petitioner cannot claim that
she was dismissed from the position of Administrator and Vice-President for
Administration because her continuous occupation of the positions is at the
discretion or pleasure of the Board of Directors.
In La Sallete of Santiago, Inc. vs. NLRC (195 SCRA 80 [1991]), this Court
explained:
The acquisition of security of tenure by the teacher in the manner
indicated signifies that he shall thenceforth have the right to remain in
employment as such teacher until he reaches the compulsory retirement
age in accordance with the rules of the school or the law. That tenure, once
acquired, cannot be adversely affected or defeated by requiring the
teacher to execute contracts stipulating the termination of his employment
upon the expiration of a fixed period or term. Contracts of that sort are
anathema and will be struck down as null and void.
Now, a teacher may also be appointed as a department head or
administrative officer of the school, e.g., as member of the school's
governing council, as college dean or assistant dean, as high school
principal, as college secretary. Except in the case of a clear and explicit
agreement to the contrary, the acceptance by a teacher of an
administrative position offered to him or to which he might have aspired,
does not operate as a relinquishment or loss by him of his security of

tenure as a faculty member; he retains his tenure as a teacher during all

the time that he occupies the additional position of department head or
administrative officer of the school. Indeed, the agreement between him
and the school may very well include a provision for him to continue
teaching even on a part-time basis.
The teacher designated as administrative officer ordinarily serves for a
definite term or at the pleasure of the school head or board of trustees or
regents depending on the rules of the school and the agreement he may
enter into with the institution. This appears to the Court to be the
invariable practice in most private schools, the purpose being, as the Court
en banc has also had occasion to point out, to afford to as many of the
teaching staff as possible the opportunity to serve as dean or principal or
as administrative officer of one type or another. There is, to be sure,
nothing whatever amiss in said practice of having teachers serve as
administrative officials for a fixed term or in a non-permanent capacity.
xxx xxx xxx
A distinction should thus be drawn between the teaching staff of private
educational institutions, on one hand teachers, assistant instructors,
assistant professors, associate professors, full professors and
department or administrative heads or officials on the other college or
department secretaries, principals, directors," assistant, deans, deans. The
teaching staff, the faculty members, may and should acquire tenure in
accordance with the rules and regulations of the Department of Education
and Culture and the school's own rules and standards. On the other hand,
teachers appointed to serve as administrative officials do not normally and
should not expect to, acquire a second or additional tenure. The acquisition
of such an additional tenure is not normal, is the exception rather than the
rule, and should therefore be clearly and specifically provided by law or
contract. (at pp. 82-83, and 85.)
The management of NWC rests on its Board of Directors including the
selection of members of the faculty who may be allowed to assume other
positions in the college aside from that of teacher or instructor. In 1988,
when the then new Board of Directors abolished the additional positions
held by the petitioner, it was merely exercising its right.
The Board abolished the positions not because the petitioner was the
occupant thereof but because the positions had become redundant with
functions overlapping those of the President of the college. The Board
realized that the college was violating the Administrative Manual for

481

Private School which requires that all collegiate departments should have a
full-time head.
In Philippine School of Business Administration, et al. vs. Labor Arbiter
Lacandola S. Leano and Rufino R. Tan (127 SCRA 778 [1984]), this Court
held:
This is not a case of dismissal. The situation is that of a corporate office
having been declared vacant, and of TAN's not having been elected
thereafter, The matter of whom to elect is a prerogative that belongs to the
Board, and involves the exercise of deliberate choice and the faculty of
discriminative selection. Generally speaking, the relationship of a person to
a corporation, whether as officer or agent or employee, is not determined
by the nature of the services performed, but by the incidents of the
relationship as they actually exist. (At p. 783.).
The Board of Directors of NWC merely exercised rights vested in it by the
Articles of Incorporation. Petitioner failed to refute the evidence proffered
by NWC before the labor arbiter. In her appeal to the NLRC, petitioner also
failed to rebut the findings of the labor arbiter. In the instant petition, she
has again failed to overturn private respondents' evidence as well as the
findings of the labor arbiter which were affirmed by the NLRC.
Petitioner's application for an indefinite leave of absence was not approved
by the college authorities, but this notwithstanding, she failed to follow-up
her application and did not report for work. Believing she was dismissed,
petitioner filed the complaint for illegal dismissal, illegal deductions,
underpayment, unpaid wages or commissions and for moral damages and
attorney's fees on November 16, 1988.
As pointed out earlier, the rules on termination of employment, penalties
for infractions, and resort to concerted actions, insofar as managerial
employees are concerned, are not necessarily the same as those
applicable to termination of employment of ordinary employees.
Employers, generally, are allowed a wider latitude of discretion in
terminating the employment of managerial personnel or those of similar
rank performing functions which by their nature require the employer's
trust and confidence, than in the case of ordinary rank-and-file employees
(Cruz vs. Medina, 177 SCRA S65 [1989]).

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 his duly authorized representative."
Under this provision, loss of trust and confidence is a valid ground for
dismissing an employee. Termination of employment on this ground does
not require proof beyond reasonable doubt. All that is needed is for the
employer to establish sufficient basis for the dismissal of the employee
(Cruz vs. Medina, supra)
Both the labor arbiter and the public respondent NLRC found that there is
some basis for respondent NWC's loss of trust and confidence on
petitioner.
The dismissal of the petitioner was for a just and valid cause. However,
public respondent gave credence to petitioner's allegation that she was not
accorded notice and hearing prior to termination. It appears on record that
the investigation of petitioner's alleged irregularities was conducted after
the filing of the complaint for illegal dismissal.
Under Section 1, Rule XIV of the Implementing Rules and Regulations of the
Labor Code, the dismissal of an employee must be for a just or authorized
cause and after due process.
The two requirements of this legal provision are:
1. The legality of the act of dismissal, that is, dismissal under the ground
provided under Article 283 of the New Labor Code; and
2. The legality in the manner of dismissal, that is, with due observance of
the procedural requirements of Sections 2, 5, and 6 of Batas Pambansa
Blg. 130 (Shoemart vs. NLRC, 176 SCRA 385 [1989]).
While the Labor Code treats of the nature and the remedies available with
regard to the first, such as: (a) reinstatement to his former position without
loss of seniority rights, and (b) payment of backwages corresponding to the
period from his illegal dismissal up to actual reinstatement, said Code does
not deal at all with the second, that is, the manner of dismissal, which is
therefore, governed exclusively by the Civil Code (Primero vs. IAC, 156
SCRA 436 [1987]; Shoemart vs. NLRC, supra).

482

In cases where there was a valid ground to dismiss an employee but there
was non-observance of due process, this Court held that only a sanction
must be imposed upon the employer for failure to give formal notice and to
conduct an investigation required by law before dismissing the employee
in consonance with the ruling in Wenphil v. NLRC, 170 SCRA 69 (1989);
Shoemart, Inc. vs. NLRC, supra; and in Pacific Mills, Inc. vs. Zenaida Alonzo,
199 SCRA 617 (1991).
In Wenphil, we held:
However, the petitioner must nevertheless be held to account for failure to
extend to private respondent his right to an investigation before causing
his dismissal. The rule is explicit as discussed above. The dismissal of an
employee must be for just or authorized cause and after due process
(Emphasis in the original). Petitioner committed an infraction of the second
requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before
dismissing petitioner from employment. Considering the circumstance of
this case petitioner must indemnify the private respondent the amount of
P1,000.00. The measure of this award depends on the facts of each case
and the gravity of the omission committed by the employer. (at p. 76,
reiterated in Pacific Mills, supra, at p. 261.)
Public respondent's finding that petitioner was not afforded due process is
correct but the Commission erred when it awarded separation pay in the
amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil cases, this
Court merely awarded P1,000.00 as penalty for non-observance of due
process.
The Board of Directors, composed of the individual private respondents
herein, has the power granted by the Corporation Code to implement a
reorganization of respondent college's offices, including the abolition of
various positions, since it is implied or incidental to its power to conduct
the regular business affairs of the corporation.
The prerogative of management to conduct its own business affairs to
achieve its purposes cannot be denied (San Miguel Brewery Sales Force
Union [FTGHWO] vs. Ople, 110 SCRA 25 [1981]; Abbot Laboratories vs.
NLRC, 154 SCRA 713 [1987]). Management is at liberty, absent any malice
on its part, to abolish positions which it deems no longer necessary (Great
Pacific Life Assurance Corp. vs. NLRC, 188 SCRA 139 [1990]).

When petitioner was stripped by the Board of her positions as Executive

Vice President and Vice President for Administration, with a corresponding
reduction in salary, the Board did not act in a capricious, whimsical, and
arbitrary manner, thus negating malice and bad faith.
WHEREFORE, the decision under review is hereby AFFIRMED with the
MODIFICATION that the award of separation pay is DELETED and that
private respondents are ORDERED to pay petitioner the amount of One
Thousand Pesos (P1,000.00) as indemnity for non-observance of due
process.
SO ORDERED.

483

REYNALDO G. CABIGTING,
G.R. No. 167706
Petitioner,

Before this Court is a Petition for Review on certiorari[1] under Rule 45 of the Rul
assailing the August 31, 2004 Decision[2] and April 5, 2005 Resolution[3] of the
Appeals (CA) in CA-G.R. SP No. 82810. The CA declared the dismissal of petitione
and ordered the payment of his full backwages, but did not decree his reinstateme

Present:
The facts of the case:
- versus -

QUISUMBING,* J.,
CARPIO, J., Chairperson,
CHICO-NAZARIO,

Petitioner Reynaldo G. Cabigting was hired as a receiver/ issuer at the San

Miguel Corporation, Feeds and Livestock Division (B-Meg) on February 16,
1984 and after years of service, he was promoted as inventory controller. [4]

PERALTA, and
SAN MIGUEL FOODS, INC.,

ABAD,** JJ.

Respondent.

On June 26, 2000, respondent San Miguel Foods, Inc., through its President,
Mr. Arnaldo Africa, sent petitioner a letter informing him that his position as
sales office coordinator under its logistic department has been declared

Promulgated:
November 5, 2009

redundant.

Simultaneously,

respondent

terminated

the

services

of

petitioner effective July 31, 2000, and offered him an early retirement
package. Thereafter, petitioner was included in the list of retrenched

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

employees (for reason of redundancy) submitted by respondent to the

Department of Labor and Employment.[5]

DECISION
Petitioner was surprised upon receipt of the letter because he was
not a sales office coordinator, and yet he was being terminated as such.
PERALTA, J.:

Accordingly, petitioner refused to avail of the early retirement package. [6]

Prior to petitioners termination on July 31, 2000, he was an inventory

controller, performing at the same time the function of a warehouseman.

484

Furthermore, petitioner was an active union officer of respondents union

On October 14, 2002, the Labor Arbiter (LA) rendered a Decision, [12] where

but upon his termination, was only a member thereof.[7]

it ruled that petitioner was illegally dismissed. Accordingly, the LA ordered

respondent to pay petitioner backwages, separation pay in lieu of
reinstatement and attorneys fees. The dispositive portion of said Decision

With the support of his union,[8] petitioner filed a Complaint questioning his

reads:

termination primarily because he was not a sales office coordinator, but an

inventory controller, performing the functions of both an inventory
controller and a warehouseman.

[9]

In reply, respondent reiterated its declaration that petitioners position as

WHEREFORE, premises considered, judgment is hereby

rendered ordering the respondent SAN MIGUEL FOODS,
INC. to pay complainant REYNALDO CABIGTING the amount
ofP1,521,588.99, representing his separation pay under the
CBA, backwages and attorneys fees.
All other claims are dismissed for lack of merit.

sales office coordinator was redundant as a result of respondents effort to

streamline its operations.[10]

SO ORDERED.[13]

According to respondent, petitioner was supposed to be separated from

Respondent appealed the LAs Decision to the National Labor Relations

employment (effective July 1, 1997) due to the cessation of business of the

Commission (NLRC). Likewise, petitioner partly appealed the LAs Decision

B-Meg Plant. However, upon petitioners request for redeployment to

as to his non-reinstatement to his previous post and for not awarding him

another position, he was accommodated and was designated as sales

moral and exemplary damages.[14]

coordinator from December 1997 to November 1998, even without

rendering actual work as sales coordinator. Respondent claimed that the
same was done on the assumption that petitioner would replace Mr. Luis
del Rosario, Sales Coordinator of respondents Luzon Operations Center,
upon the latters impending retirement and for the sole purpose of
justifying his inclusion in the payroll. Respondent averred, however, that
the position of Mr. Luis del Rosario as sales coordinator was abolished due
to redundancy as a result of its streamlining efforts.[11]

On June 30, 2003, the NLRC rendered a Decision [15] affirming the LAs
finding that petitioner was illegally dismissed by respondent. More
importantly, the NLRC modified the LAs Decision by ordering the
reinstatement of petitioner to his previous post, without loss of seniority
rights. The dispositive portion of said Decision reads:

485

WHEREFORE, premises considered, the decision under

review
is
hereby
MODIFIED
by
decreeing
the
REINSTATEMENT of the complainant to his former position
without loss of seniority rights, in lieu of an earlier award of
separation pay.

dismissed by petitioner, is hereby AFFIRMED. However,

public respondent NLRCs judgment ordering the
reinstatement of private respondent Cabigting is hereby
REVERSED and SET ASIDE.

Accordingly, backwages shall be computed from the time

of the dismissal up to actual reinstatement.

The awards of backwages, separation pay and attorneys

fees by the Labor Arbiter in his Decision dated October 14,
2002 REMAIN.

All other claims are dismissed for lack of merit.

SO ORDERED.[18]

SO ORDERED.[16]
Respondent filed a Motion for Reconsideration [19] of the said Decision.
Likewise, petitioner filed a Partial Motion for Reconsideration [20] assailing
Respondent

appealed

the

NLRC

Decision

to

the

CA via a

Petition

the CA Decision insofar as it ruled against his reinstatement.

for Certiorari[17] under Rule 65 of the Rules of Court.

On April 5, 2005, the CA issued a Resolution [21] denying both motions.
On August 31, 2004, the CA rendered a Decision partially granting
respondents petition. In said Decision, the CA affirmed the judgment of the
LA and the NLRC finding that petitioner was illegally dismissed by
respondent. However, the CA, on the ground that there were strained

Hence, herein petition, with petitioner raising the lone assignment of error,
to wit:

relations between employee and employer, reversed the portion of the

NLRC Decision which decreed petitioners reinstatement. The dispositive
portion of the CA Decision reads:

WHEREFORE, premises considered, the judgment of public

respondent NLRC, affirming the judgment of the Labor
Arbiter that private respondent Cabigting was illegally

THE HONORABLE COURT OF APPEALS COMMITTED A

REVERSIBLE ERROR IN MODIFYING THE DECISION OF
THE NATIONAL LABOR RELATIONS COMMISSION,
SECOND DIVISION.[22]
The petition is meritorious.

486

After a painstaking review of the records, this Court finds no justification to

The crux of the controversy is whether or not strained relations bar

warrant the application of any exception to the general rule.

petitioners reinstatement.
At the outset, this Court shall address respondents plea to re-open
the issue of illegal dismissal. Respondent argues that it is axiomatic that an
appeal, once accepted by the Supreme Court, throws the entire case open
to review.[23] Accordingly, respondent posits that petitioner was not illegally
dismissed, but was separated due to a valid redundancy/retrenchment
program.

[24]

It bears to stress that the LA, the NLRC and the CA all ruled that petitioner
was illegally dismissed. Such being the case, factual findings of quasijudicial bodies like the NLRC, particularly when they coincide with those of
the Labor Arbiter and, if supported by substantial evidence, are accorded
respect and even finality by this Court.[26] Moreover, it is not the function of
this Court to assess and evaluate the evidence all over again, particularly
where the findings of the LA, the NLRC and the CA coincide. Thus, absent a
showing of an error of law committed by the court below, or of whimsical or

The well-entrenched rule in our jurisdiction is that only questions of law

capricious exercise of judgment, or a demonstrable lack of basis for its

may be entertained by this Court in a petition for review on certiorari. This

conclusions, this Court may not disturb its factual findings. [27]

rule, however, is not ironclad and admits certain exceptions, such as when
(1) the conclusion is grounded on speculations, surmises or conjectures; (2)
the inference is manifestly mistaken, absurd or impossible; (3) there is
grave abuse of discretion; (4) the judgment is based on a misapprehension

Having settled the foregoing, this Court shall now address the lone issue of
strained relations.

of facts; (5) the findings of fact are conflicting; (6) there is no citation of
specific evidence on which the factual findings are based;

(7) the

findings of absence of facts are contradicted by the presence of evidence

on record; (8) the findings of the Court of Appeals are contrary to those of
the trial court; (9) the Court of Appeals manifestly overlooked certain

Article 279 of the Labor Code of the Philippines provides the law on
reinstatement, viz.:

relevant and undisputed facts that, if properly considered, would justify a

different conclusion; (10) the findings of the Court of Appeals are beyond
the issues of the case; and (11) such findings are contrary to the
admissions of both parties.[25]

Article 279. Security of Tenure. -- In cases of regular

employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title. 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

487

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.[28]

In Globe-Mackay Cable and Radio Corporation v. National Labor

Relations Commission,[31] this Court discussed the limitations and
qualifications for the application of the strained relations principle, in this
wise:

Corollarily, Sections 2 and 3, Rule 1, Book VI of the Omnibus Rules

Implementing the Labor Code state, viz.:

Sec. 2. Security of Tenure. - In cases of regular

employment, the employer shall not terminate the services
of an employee, except for a just cause as provided in the
Labor Code or when authorized by existing laws.
Sec. 3. Reinstatement. - An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to
backwages.[29]

Under the law and prevailing jurisprudence, an illegally dismissed

employee is entitled to reinstatement as a matter of right. However, if
reinstatement would only exacerbate the tension and strained relations
between the parties, or where the relationship between the employer and
the employee has been unduly strained by reason of their irreconcilable
differences, particularly where the illegally dismissed employee held a
managerial or key position in the company, it would be more prudent to
order payment of separation pay instead of reinstatement.[30]

x x x If, in the wisdom of the Court, there may be a ground

or grounds for non-application of the above-cited provision,
this should be by way of exception, such as when the
reinstatement may be inadmissible due to ensuing strained
relations between the employer and the employee.
In such cases, it should be proved that the
employee concerned occupies a position where he
enjoys the trust and confidence of his employer; and
that it is likely that if reinstated, an atmosphere of
antipathy and antagonism may be generated as to
adversely affect the efficiency and productivity of
the employee concerned.
A few examples will suffice to illustrate the Court's
application of the above principle: where the employee is a
Vice-President for Marketing and, as such, enjoys the full
trust and confidence of top management; or is the OfficerIn-Charge of the extension office of the bank where he
works; or is an organizer of a union who was in a position
to sabotage the union's efforts to organize the workers in
commercial and industrial establishments; or is a
warehouseman of a non-profit organization whose primary
purpose is to facilitate and maximize voluntary gifts by
foreign individuals and organizations to the Philippines; or
is a manager of its Energy Equipment Sales.
Obviously, the principle of "strained relations"
cannot
be
applied
indiscriminately.
Otherwise,
reinstatement can never be possible simply because some
hostility is invariably engendered between the parties as a
result of litigation. That is human nature.
Besides, no strained relations should arise
from a valid and legal act of asserting one's right;
otherwise, an employee who shall assert his right

488

could be easily separated from the service, by

merely paying his separation pay on the pretext that
his relationship with his employer had already
become strained.[32]

proper subject of herein petition, this Court shall address said issue in light
of the conflicting findings of the LA and the NLRC.
The

LA

ruled

that

strained

relations

barred

petitioners

reinstatement, to wit:
Moreover, Chief Justice Reynato S. Puno, in his dissenting opinion
in MGG Marine Services, Inc. v. National Labor Relations Commission,
[33]

gives the following suggestion in the application of the doctrine of

strained relations:

x x x At the very least, I suggest that, henceforth, we

should require that the alleged strained relationship must
be pleaded and proved if either the employer or the
employee does not want the employment tie to remain. By
making strained relationship a triable issue of fact before
the Arbiter or the NLRC we will eliminate rulings on
strained relationship based on mere impression alone. [34]

Anent the aspect of reinstatement, this Office opines that

to reinstate complainant to his former position at this point
in time, is no longer practical and would not promote peace
considering the animosity and strained relations that exist
between the parties. x x x[35]

After a perusal of the LA Decision, this Court finds that the LA had
no hard facts upon which to base the application of the doctrine of strained
relations, as the same was not squarely discussed nor elaborated on. Also,
it is of notice that said issue was addressed by the LA in just one sentence
without indicating factual circumstances why strained relations exist.

Based on the foregoing, in order for the doctrine of strained

relations to apply, it should be proved that the employee concerned
occupies a position where he enjoys the trust and confidence of his
employer and that it is likely that if reinstated, an atmosphere of antipathy

The same is also true for the CA Decision which disposed of the
issue in just one sentence without any elaboration, to wit:

and antagonism may be generated as to adversely affect the efficiency

and productivity of the employee concerned.

Although the determination of the applicability of the doctrine of

strained relations is essentially a question of fact, which should not be the

On the matter of reinstatement, We believe that

under the circumstances in this case, there has been, and
there will be, animosity and strained relationships between
the parties, hence, private respondent Cabigting shall be
entitled to separation pay.[36]

489

Accordingly, this Court is of the opinion that both the LA and the CA based
their conclusions on impression alone. It bears to stress that reinstatement

5.6 As will be discussed below, the strained relationship

between the petitioner and the respondent, aside from the
fact that the former was not illegally dismissed, further
militates against the reinstatement of the petitioner.

is the rule and, for the exception of strained relations to apply, it should be
proved that it is likely that if reinstated, an atmosphere of antipathy and
antagonism would be generated as to adversely affect the efficiency and
productivity of the employee concerned. However, both the LA and the CA
failed to state the basis for their finding that a strained relationship exists.
Based on the foregoing, this Court upholds the ruling of the NLRC
finding the doctrine of strained relations inapplicable to the factual
circumstances of the case at bar, to wit:

Finally, it is noted that the position of warehouseman and

inventory controller is still existing up to date. The nature
of the controversy where the parties to this case were
engaged is not of such nature that would spawn a situation
where the relations are severely strained between them as
would bar the complainant to his continued employment.
Neither may it be said that his position entails a constant
communion with the respondent such that hostilities may
bar smooth interactions between them. Accordingly, We
find no basis for an award of separation pay in lieu of
reinstatement.[37]

In its pleadings, however, respondent repeatedly argued against

the reinstatement of petitioner, in the wise:
5.5 Strained relations may result, among others, from the
imputations made by the employer and the employee as
against each other or, by the filing of a complaint by the
employee against the employer.

5.7 The petitioner, in his pleadings submitted before the

Honorable Labor Arbiter below, resorted to imputations and
accusations which are totally uncalled for, hitting the
respondent below the belt, so to speak.

5.8 For instance, in his reply position paper, petitioner

declared as a blatant display of arrogance the alleged
refusal of respondent to observe certain provisions of the
collective bargaining agreement; that it was highly
ridiculous on the part of the respondent to assert that his
continued employment was due merely to an act of
accommodation on the part of the respondent.

5.9 In fact, in his comment with the Court of Appeals,

petitioner intimated that respondent fabricated evidence
when it presented a document which showed that
petitioner was a Sales Office Coordinator, claiming that he
was assigned by the respondent to a new and unknown
position
and
thereafter
declared
[the
position]
redundant. Throughout his allegations, petitioner imputes
malice and bad faith on the part of respondent.

5.10 These imputations effectively placed a strain on the

relationship between the respondent and the petitioner,
notwithstanding the fact that the former did everything
within its resources to accommodate the petitioner so as to
provide him employment even when there was no more
work for him to do.

490

xxxx

On this note, the NLRC was categorical that no such accommodation

existed, to wit:

5.18 The antagonism and antipathy shown by petitioner

towards the respondent is more real than imaginary. It
bears to note that after the respondent extended him
accommodation by instituting him in the payroll, the
petitioner turned the tables on the respondent by declaring
that his continued employment was not due to an
accommodation, even alleging that it was highly ridiculous
for the respondent to consider him as an accommodated
employee.[38]

On
the
argument
that
Cabigting
was
merely
accommodated by the respondent after the closure of the
Tacoma Warehouse, it, however, appears that no such
accommodation existed. x x x[42]

The doctrine of strained relations has been made applicable to

cases[43] where the employee decides not to be reinstated and demands for
separation pay. The same, however, does not apply to herein petition, as
The claim of respondent is not meritorious. This Court shares petitioners

petitioner is asking for his reinstatement despite his illegal dismissal.

view that the words allegedly imputing malice and bad faith towards the
respondent cannot be made a basis for denying his reinstatement.
Respondents perceived antipathy and antagonism is not of such degree as
would preclude reinstatement of petitioner to his former position. [39] In
addition, by themselves alone, the words used by petitioner in his
pleadings are insufficient to prove the presence of strained relations. Thus,

Lastly, this Court takes note of the findings of fact of the NLRC that the
position of inventory controller and warehouseman is still existing up to
date.[44] Petitioner has been an inventory controller for so many years, and
there should be no problem in ordering the reinstatement with facility of a
laborer, clerk, or other rank-and-file employee.[45]

this Court finds that one should not fault petitioner for his choice of words,
especially in light of overwhelming evidence showing he was illegally
In conclusion, it bears to stress that it is human nature that some

dismissed.

hostility will inevitably arise between parties as a result of litigation, but

the same does not always constitute strained relations in the absence of
Moreover, the filing of the complaint by petitioner cannot be used

proof or explanation that such indeed exists.

as a basis for strained relations. As a rule, no strained relations should

arise from a valid and legal act asserting ones right. [40] Likewise,
respondents claim that it was betrayed by petitioner, after several
accommodations it had extended to him,[41] deserves scant consideration.

WHEREFORE, premises considered, the petition is GRANTED. The August

31, 2004 Decision and April 5, 2005 Resolution of the Court of Appeals in
CA-G.R.

SP

No.

82810

are

hereby AFFIRMED with

491

the MODIFICATION that petitioner Reynaldo G. Cabigting is entitled

to REINSTATEMENT.

Respondent

is ORDERED toIMMEDIATELY

REINSTATE petitioner to his previous position without loss of seniority

rights. In case the former position of petitioner is no longer available,
respondent is directed to create an equivalent position and immediately
reinstate petitioner without loss of seniority rights. Accordingly, backwages
shall be computed from the time of dismissal up to the time of actual
reinstatement.
SO ORDERED.

492

BANK OF LUBAO, INC.,

Petitioner,

G.R. No. 188722

Present:
CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

- versus ROMMEL J. MANABAT and the

NATIONAL LABOR RELATIONS
COMMISSION,
Respondents.

encoder, the respondents primary duty is to encode the clients deposits on

the banks computer after the same are received by Lingad.

In November 2004, an initial audit on the Bank of Lubaos Sta. Cruz

Extension Office conducted by the petitioner revealed that there was a
misappropriation of funds in the amount of P3,000,000.00, more or less.

Promulgated:

Apparently, there were transactions entered and posted in the passbooks

February 1, 2012

of the clients but were not entered in the banks book of accounts. Further
audit showed that there were various deposits which were entered in the

x------------------------------------------------------------------------------------x

banks computer but were subsequently reversed and marked as error in

posting.

DECISION
On November 17, 2004, the respondent, through a memorandum
REYES, J.:

sent by the petitioner, was asked to explain in writing the discrepancies

that were discovered during the audit. On November 19, 2004, the
Nature of the Petition

respondent submitted to the petitioner his letter-explanation which, in

essence, asserted that there were times when Lingad used the banks

This is a petition for review on certiorari under Rule 45 of the Rules

of

Court

filed

the Decision

[1]

by

the

Bank

of

Lubao,

Inc.

dated April 24, 2009 and Resolution

(petitioner)
[2]

computer while he was out on errands.

assailing

dated July 7, 2009

issued by the Court of Appeals (CA) in CA-G.R. SP No. 106419.

On December 11, 2004, an administrative hearing was conducted

by the banks investigating committee where the respondent was further
made to explain his side. Subsequently, the investigating committee

The Antecedent Facts

concluded that the respondent conspired with Lingad in making fraudulent

entries disguised as error corrections in the banks computer.

Sometime in 2001, Rommel J. Manabat (respondent) was hired by

petitioner Bank of Lubao, a rural bank, as a Market Collector. Subsequently,

On August 9, 2005, the petitioner filed several criminal complaints

the respondent was assigned as an encoder at the Bank of Lubaos Sta.

for qualified theft against Lingad and the respondent with the Municipal

Cruz Extension Office, which he manned together with two other

Trial

employees, teller Susan P. Lingad (Lingad) and May O. Manasan. As an

Court

(MTC)

of

Lubao,

Pampanga.

Thereafter,

citing

serious

493

misconduct tantamount to willful breach of trust as ground, it terminated

Report that was adduced by the petitioner in evidence was disregarded by

the respondents employment effective September 1, 2005.

the LA since it was unsigned.

On September 26, 2005, the respondent filed a Complaint [3] for

The petitioner appealed the foregoing disposition to the NLRC,

illegal dismissal with the Regional Arbitration Branch of the National Labor

submitting a new audit report dated April 30, 2007. Pending appeal, the

Relations Commission (NLRC) in San Fernando City, Pampanga. In the said

petitioner sent the respondent a letter [5] dated April 30, 2007 requiring him

complaint, the respondent, to bolster his claim that there was no valid

to report for work on May 4, 2007 pursuant to the reinstatement order of

ground for his dismissal, averred that the charge against him for qualified

the LA. The said letter was served to the respondent on May 3, 2007 but he

theft was dismissed for lack of sufficient basis to conclude that he

refused to receive the same.

conspired with Lingad. The respondent sought an award for separation pay,
full backwages, 13th month pay for 2004 and moral and exemplary

The NLRCs Decision

damages.
On July 21, 2008, the NLRC rendered a Decision [6] affirming the
For its part, the petitioner insists that the dismissal of the

February 28, 2007 Decision of the LA. The NLRC held that it was sufficiently

respondent is justified, asserting the February 14, 2006 Audit Report which

established that only Lingad was the one responsible for the said

confirmed

alleged

misappropriations. Further, the NLRC asserted that the February 14, 2006

misappropriations. Likewise, the petitioner asserted that the dismissal of

and April 30, 2007 audit reports presented by the petitioner could not be

the qualified theft charge against the respondent is immaterial to the

given evidentiary weight as the same were executed after the respondent

validity of the ground for the latters dismissal.

had already been dismissed. The petitioner sought reconsideration of the

the

participation

of

the

respondent

in

the

said July 21, 2008 Decision but it was denied by the NLRC in its
The Labor Arbiters Decision

Resolution[7] dated September 22, 2009.

On February 28, 2007, the Labor Arbiter (LA) rendered a

Subsequently, the petitioner filed a Petition for Certiorari[8] with the

decision[4] sustaining the respondents claim of illegal dismissal thus

CA alleging that the NLRC and the LA gravely abused their discretion in

ordering the petitioner to reinstate the respondent to his former position

ruling that the respondent had been illegally dismissed.

and awarding the latter backwages in the amount of P111,960.00 and

13th month pay in the amount of P6,220.00. The LA opined that the
petitioner failed to adduce substantial evidence that there was a valid
ground for the respondents dismissal. Further, the February 14, 2006 Audit

494

termination up to the finality of this decision, without

qualification or deduction.[10] (citations omitted)
The CA Decision
Hence, the fallo of the CA Decision reads:
On

April

decision[9] denying

24,
the

2009,

the

petition

CA

rendered

for certiorari filed

the
by

herein
the

assailed
petitioner.

However, the CA held that the respondent is entitled to separation pay

equivalent to one-month salary for every year of service in lieu of
reinstatement and backwages to be computed from the time of his illegal
dismissal until the finality of the said decision.

WHEREFORE, the petition is DENIED. The

assailed
Decision
and
Resolution
of
the
NLRC
are AFFIRMED with
the MODIFICATION that
private
respondent is entitled to separation pay equivalent to one
month salary for every year of service in lieu of
reinstatement and backwages to be computed from the
time of his illegal dismissal until the finality of this
Decision.
SO ORDERED.[11]

The CA agreed with the LA and the NLRC that the petitioner failed
to establish by substantial evidence that there was indeed a valid ground
for the respondents dismissal. Nevertheless, the CA held that the petitioner

The petitioners Motion for Reconsideration [12] was denied by the CA

in its Resolution[13] dated July 7, 2009.

should pay the respondent separation pay since the latter did not pray for
reinstatement before the LA and that the same would be in the best
interest of the parties considering the animosity and antagonism that exist
between them. The CA stated the following:
With respect to monetary awards, a finding that an
employee has been illegally dismissed ordinarily entitles
him to reinstatement to his former position without loss of
seniority rights and to the payment of backwages. In this
case, however, private respondent did not pray for
reinstatement before the Labor Arbiter. This being the
case, the employer should pay him separation pay in lieu
[of] reinstatement. This is only just and practical because
reinstatement of private respondent will no longer be in the
best interest of both parties considering the animosity and
antagonism that exist between them brought about by the
filing of charges in the criminal as well as in the labor
proceedings. Consequently, private respondent is entitled
to separation pay equivalent to one month pay for every
year of service up to the finality of this judgment, as an
alternative to reinstatement. With respect to his
backwages, where reinstatement is no longer possible, it
shall be computed from the time of the employees illegal

Undaunted, the petitioner instituted the instant petition for review

on certiorari before this Court asserting the following arguments: (1) the
CA erred in awarding separation pay in favor of the respondent in lieu of
reinstatement considering that the appeal before it only involved the issue
of the legality or illegality of the respondents dismissal; (2) an award of
separation pay to the respondent is not proper in this case considering
that, in his complaint, he merely prayed for reinstatement and not
payment of separation pay; and (3) the CA erred in awarding backwages in
favor of the respondent since it acted in good faith when it terminated the
respondents employment.

In his Comment,[14] the respondent asserted that the CA did not err
in ordering the payment of separation pay in his favor in lieu of
reinstatement since there is already a strained relationship between him

495

and the petitioner. He intimated that the petitioner had previously filed

The well-entrenched rule in our jurisdiction is that only questions of

various criminal charges against him for qualified theft thus effectively

law may be entertained by this Court in a petition for review on certiorari.

rendering his reinstatement to his former position in the Bank of Lubao

This rule, however, is not ironclad and admits certain exceptions, such as

impracticable.

when, inter alia, the findings of fact are conflicting. [16]

Issues

Here, in view of the conflicting findings of the NLRC and the CA,
this Court is constrained to pass upon the propriety of the application of

In sum, the issues to be resolved by this Court in the instant case

are

the doctrine of strained relations to justify the award of separation pay to

the respondent in lieu of reinstatement.

the following: (1) whether the CA erred in ordering the petitioner to pay the
respondent separation pay in lieu of reinstatement; and (2) whether the
respondent is entitled to payment of backwages.

The law on reinstatement is provided for under Article 279 of the

Labor Code of the Philippines:

The Courts Ruling

This Court notes that the LA, the NLRC and the CA unanimously
ruled that the respondent was illegally dismissed. Factual findings of quasijudicial bodies like the NLRC, if supported by substantial evidence, are
accorded respect and even finality by this Court, more so when they

Article 279. Security of Tenure. - In cases of regular

employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title.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. (emphasis supplied)

coincide with those of the LA. Such factual findings are given more weight
when the same are affirmed by the CA. We find no reason to depart from
the foregoing rule.

Under the law and prevailing jurisprudence, an illegally dismissed

employee is entitled to reinstatement as a matter of right. However, if
reinstatement would only exacerbate the tension and strained relations

First Issue: Separation Pay in Lieu of Reinstatement

between the parties, or where the relationship between the employer and
the employee has been unduly strained by reason of their irreconcilable

At the outset, it should be stressed that a determination of the

differences, particularly where the illegally dismissed employee held a

applicability of the doctrine of strained relations is essentially a factual

managerial or key position in the company, it would be more prudent to

question and, thus, not a proper subject in the instant petition.

order payment of separation pay instead of reinstatement.[17]

[15]

496

Under the doctrine of strained relations, the payment of separation

pay is considered an acceptable alternative to reinstatement when the

to maintain the former in its employ since it may only inspire

vindictiveness on the part of the respondent.

latter option is no longer desirable or viable. On one hand, such payment

liberates the employee from what could be a highly oppressive work

Third, the refusal of the respondent to be re-admitted to work is in

environment. On the other hand, it releases the employer from the grossly

itself indicative of the existence of strained relations between him and the

unpalatable obligation of maintaining in its employ a worker it could no

petitioner. In the case ofLagniton, Sr. v. National Labor Relations

longer trust.[18]

Commission,[20] the Court held that the refusal of the dismissed employee
to be re-admitted is constitutive of strained relations:

In such cases, it should be proved that the employee concerned

occupies a position where he enjoys the trust and confidence of his
employer; and that it is likely that if reinstated, an atmosphere of antipathy
and antagonism may be generated as to adversely affect the efficiency
and productivity of the employee concerned.[19]

It appears that relations between the petitioner

and the complainants have been so strained that the
complainants are no longer willing to be reinstated. As
such reinstatement would only exacerbate the animosities
that have developed between the parties, the public
respondents were correct in ordering instead the grant of
separation pay to the dismissed employees in the interest
of industrial peace.[21]

Here, we agree with the CA that the relations between the parties
had been already strained thereby justifying the grant of separation pay in
lieu of reinstatement in favor of the respondent.

Time and again, this Court has recognized that strained relations
between the employer and employee is an exception to the rule requiring
actual reinstatement for illegally dismissed employees for the practical

First, it cannot be gainsaid that the petitioners reinstatement to his

reason that the already existing antagonism will only fester and

former position would only serve to intensify the atmosphere of antipathy

deteriorate, and will only worsen with possible adverse effects on the

and antagonism between the parties. Undoubtedly, the petitioners filing of

parties, if we shall compel reinstatement; thus, the use of a viable

various criminal complaints against the respondent for qualified theft and

substitute that protects the interests of both parties while ensuring that the

the subsequent filing by the latter of the complaint for illegal dismissal

law is respected.[22]

against the latter, taken together with the pendency of the instant case for
more than six years, had caused strained relations between the parties.

Second Issue: Backwages

Second, considering that the respondents former position as bank

Anent the second issue, the petitioner claimed that the respondent

encoder involves the handling of accounts of the depositors of the Bank of

is not entitled to the payment of backwages considering that there was no

Lubao, it would not be equitable on the part of the petitioner to be ordered

bad faith on its part when it terminated the latters employment. The

497

petitioner insists that it is within its prerogative to dismiss the respondent

on May 4, 2007. Notwithstanding the said letter, the respondent opted not

on the basis of loss of trust and confidence.

to report for work. Thus, it is but fair that the backwages that should be
awarded to the respondent be computed from the time that the

We do not agree.

respondent was illegally dismissed until the time when he was required to
report for work, i.e. from September 1, 2005 until May 4, 2007. It is only

The arguments raised by the petitioner with regard to the issue of

backwages, essentially, attacks the factual findings of the CA, the NLRC

during the said period that the respondent is deemed to be entitled to the
payment of backwages.

and the LA. As stated earlier, subject to well-defined exceptions, factual

questions may not be raised in a petition for review on certiorari under

The fact that the CA, in its April 4, 2009 decision, ordered the

Rule 45 as this Court is not a trier of facts. The petitioner failed to assert

payment of separation pay in lieu of the respondents reinstatement would

any circumstance which would impel this Court to disregard the findings of

not entitle the latter to backwages. It bears stressing that decisions of the

fact of the lower tribunals on the propriety of the award of backwages in

CA, unlike that of the LA, are not immediately executory. Accordingly, the

favor of the respondent.

petitioner should only pay the respondent backwages from September 1,

2005, the date when the respondent was illegally dismissed, until May 4,

However,

the

backwages

that

should

be

awarded

to

the

2007, the date when the petitioner required the former to report to work.

respondent should be modified. Employees who are illegally dismissed are

entitled to full backwages, inclusive of allowances and other benefits or
their

monetary

equivalent,

computed

from

the

time

their

WHEREFORE, in consideration of the foregoing disquisitions, the

actual

instant petition is PARTIALLY GRANTED. The Decision dated April 24,

compensation was withheld from them up to the time of their actual

2009 and Resolution dated July 7, 2009 of the Court of Appeals in CA-G.R.

reinstatement. But if reinstatement is no longer possible, the backwages

SP No. 106419 are hereby AFFIRMED with MODIFICATION. The petitioner

shall be computed from the time of their illegal termination up to the

is ordered to pay the respondent backwages from September 1, 2005 until

finality of the decision.

May 4, 2007. For this purpose, the case is hereby REMANDED to the Labor

[23]

Arbiter for the computation of the amounts due the respondent.

Thus, when there is an order of reinstatement, the computation of
backwages shall be reckoned from the time of illegal dismissal up to the
time that the employee is actually reinstated to his former position.

Pursuant to the order of reinstatement rendered by the LA, the

petitioner sent the respondent a letter requiring him to report back to work

SO ORDERED.

498

SYLLABUS
LABOR AND SOCIAL LEGISLATION; RECOVERY OF WAGES; COMPUTATION OF
BACKWAGES; BACKWAGES TO BE AWARDED TO AN ILLEGALLY
DISMISSED EMPLOYEE, SHOULD NOT, AS A GENERAL RULE, BE
DIMINISHED OR REDUCED BY THE EARNINGS DERIVED BY HIM
ELSEWHERE DURING THE PERIOD OF HIS ILLEGAL DISMISSAL;
RATIONALE THEREFOR. -- The Court deems it appropriate, to
reconsider such earlier ruling on the computation of backwages as
enunciated in said Pines City Educational Center case, by now holding
that comformably with the evident legislative intent as expressed in
Rep. Act No. 6715, above-quoted, backwages to be awarded to an
illegally dismissed employee, should not, as a general rule, be
diminished or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal. the underlying reason for this
ruling is that the employee, while litigating the legality (illegality) of
his dismissal, must still earn a living to support himself and family,
while full backwages have to be paid by the employer as part of the
price or penalty he has to pay for illegally dismissing his employee.
The clear legislative intent of the amendment in Rep. Act No. 6715 is
to give more benefits to workers than was previously given them
under the Mercury Drug rule or the "deduction of earnings elsewhere"
rule. Thus, a closer adherence to the legislative policy behind Rep. Act
No. 6715 points to "full backwages" as meaning exactly that, i.e.,
without deducting from backwages the earnings derived elsewhere by
the concerned employee during the period of his illegal dismissal. In
other words, the provision calling for "full backwages" to illegally
dismissed employees is clear, plain and free from ambiguity and,
therefore, must be applied without attempted or strained
interpretation. Index animi sermo est.
[G.R. No. 111651. November 28, 1996]
OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L.
BUSTAMANTE, MARIO D. SUMONOD, and SABU J.
LAMARAN, petitioners, vs.NATIONAL LABOR RELATIONS
COMMISSION, FIFTH DIVISION and EVERGREEN FARMS,
INC., respondents.

RESOLUTION
PADILLA, J.:

499

On 15 March 1996, the Court (First Division) promulgated a decision in

this case, the dispositive part of which states:

"WHEREFORE, the resolution of the National Labor Relations

Commission dated 3 May 1993 is modified in that its deletion of
the award for backwages in favor of petitioners, is SET ASIDE. The
decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with
the modification that backwages shall be paid to petitioners from
the time of their illegal dismissal on 25 June 1990 up to the date
of their reinstatement. If reinstatement s no longer feasible, a
one-month salary shall be paid the petitioners as ordered in the
labor arbiter's decision, in addition to the adjudged backwages.
Private respondent now moves to reconsider the decision on grounds
that (a) petitioners are not entitled to recover backwages because they
were not actually dismissed but their probationary employment was not
converted to permanent employment; and (b) assuming that petitioners
are entitled to backwages, computation thereof should not start from
cessation of work up to actual reinstatement, and that salary earned
elsewhere (during the period of illegal dismissal) should be deducted from
the award of such backwages.
There is no compelling reason to reconsider the decision of the Court
(First Division) dated 15 March 1996. However, we here clarify the
computation of backwages due an employee on account of his illegal
dismissal from employment.
This court has, over the years, applied different methods in the
computation of backwages. The first labor relations law governing the
award of backwages was Republic Act No. 875, the Industrial Peace Act,
approved on 17 June 1953. Sections 5 and 15 thereof provided thus:
"Sec. 5. Unfair Labor Practice Cases.(c) x x x. If, after investigation, the Court shall be of the opinion
that any person named in the complaint has engaged in or is
engaging in any unfair labor practice, then the Court shall state its
findings of fact and shall issue and cause to be served on such
person an order requiring such person to cease and desist from
such unfair labor practice and take such affirmative action as will
effectuate the policies of this Act, including (but not limited to)
reinstatement of employees with or without back-pay and
including rights of the employees prior to dismissal including
seniority. x x x (underscoring supplied)

500

Sec. 15. Violation of Duty to Bargain Collectively. - x x x. Any

employee whose work has stopped as a consequence of such
lockout shall be entitled to back-pay. (underscoring supplied)"
In accordance with these provisions, backpay (the same as
backwages) could be awarded where, in the opinion of the Court of
Industrial Relations (CIR) such was necessary to effectuate the policies of
the Industrial Peace Act.[1] Only in one case was backpay a matter of right,
and that was, when an employer had declared a lockout without having
first bargained collectively with his employees in accordance with the
provisions of the Act.
As the CIR was given wide discretion to grant or disallow payment of
backpay (backwages) to an employee, it also had the implied power of
mitigating (reducing) the backpay where backpay was allowed. [2] Thus, in
the exercise of its jurisdiction, the CIR increased or diminished the award of
backpay, depending on several circumstances, among them, the good faith
of the employer,[3] the employee's employment in other establishments
during the period of illegal dismissal, or the probability that the employee
could have realized net earnings from outside employment if he had
exercised due diligence to search for outside employment. [4] In labor cases
decided during the effectivity of R.A. No. 875, this Court acknowledged and
upheld the CIR's authority to deduct any amount from the employee's
backwages,[5] including the discretion to reduce such award of backwages
by whatever earnings were obtained by the employee elsewhere during
the period of his illegal dismissal.[6] In the case of Itogon-Suyoc Mines, Inc.
v. Sagilo-Itogon Workers' Union,[7] this Court restated the guidelines for
deternination of total backwages, thus:
"First. To be deducted from the backwages accruing to each of the
laborers to be reinstated is the total amount of earnings obtained
by him from other employment(s) from the date of dismissal to
the date of reinstatement. Should the laborer decide that it is
preferable not to return to work, the deduction should be made up
to the time judgment becomes final. And these, for the reason
that employees should not be permitted to enrich themselves at
the expense of their employer. Besides, there is the 'law's
abhorrence for the double competition'.

Second. Likewise, in mitigation of the damages that the dismissed

respondents are entitled to, account should be taken of whether in
the exercise of due diligence respondents might have obtained
income from suitable remunerative employment. We are
prompted to give out this last reminder because it is really unjust
that a discharged employee should, with folded arms, remain
inactive in the expectation that a windfall would come to him. A
countrary view would breed idleness; it is conductive to lack of
initiative on the part of a laborer. Both bear the stamp of
underdesirability."
From this ruling came the burden of disposing of an illegal dismissal
case on its merits of determining whether or not the computation of the
award of backwages is correct. In order not to unduly delay the disposition
of illegal dismissal cases, this Court found occasion in the case of Mercury
Drug Co., Inc., et al. v. CIR, et al.[8] to rule that a fixed amount of
backwages without further qualifications should be awarded to an illegally
dismissed employee (hereinafter the Mercury Drug rule). This ruling was
grounded upon considerations of expediency in the execution of
the decision. Former Justice Claudio Teehankee approved of this formula
expressing that such method of computation is a "realistic, reasonable and
mutually beneficial solution" and "thus obviates the twin evils of idleness
on the part of the employees and attrition and undue delay in satisfying
the award on the part of the employer".[9] However, Justice Teehankee
dissented from the majority view that the employee in said case should be
awarded backwages only for a period of 1 year, 11 months and 15 days
which represented the remainder of the prescriptive period after deducting
the period corresponding to the delay incurred by the employee in filing
the complaint for unfair labor practice and reinstatement. Justice
Teehankee opined that:
" an award of back wages equivalent to three years (where the
case is not terminated sooner) should serve as the base figure for
such awards without deduction, subject to deduction where there
are mitigating circumstances in favor of the employer but subject
to increase by way of exemplary damages where there are
aggravating circumstances (e.g. oppression or dilatory appeals)
on the employer's part."[10]

501

The proposal on the three-year backwages was subsequently adopted

in later cases, among them, Feati University Club (PAFLU) v. Feati
University (No. L-31503, 15 August 1974, 58 SCRA 395), Luzon Stevedoring
Corporation v. CIR (No. L-34300, 22 November 1974, 61 SCRA 154), Danao
Development Corporation v. NLRC (Nos. L-40706 and L-40707, 16 February
1978, 81 SCRA 487), Associated Anglo-American Tobacco Corporation v.
Lazaro (No. 63779, 27 October 1983, 125 SCRA (463), Philippine National
Oil Company - Energy Development Corporation v. Leogardo (G.R.
No. 58494, 5 July 1989, 175 SCRA 26).
Then came Presidential Decree No. 442 (the Labor Code of
the Philippines) which was signed into law on 1 May 1974 and which took
effect on 1 November 1974. Its posture on the award of backwages,
as amended, was expressed as follows:
"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 or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to his back
wages computed from the time his compensation was was
withheld from him up to the time of his
reinstatement. (underscoring supplied)."
Under the abovequoted provision, it became mandatory to award
backwages to illegally dismissed regular employees. The law specifically
declared that the award of backwages was to be computed from the time
compensation was withheld from the employee up to the time of his
reinstatement. This nothwithstanding, the rule generally applied by the
Court after the promulgation of the Mercury Drug case,[11] and during the
effectivity of P.D. No. 442 was still the Mercury Drug rule. A survey of cases
from 1974 until 1989, when the amendatory law to P.D. No. 442, namely,
R.A. No. 6715 took effect, supports this conclusion.
In the case of New Manila Candy Workers Union (Naconwa-Paflu) v.
CIR (1978),[12] or after the Labor Code (P.D. No. 442) had taken effect, the
Court still followed the Mercury Drug rule to avoid the necessity of a
hearing on earnings obtained elsewhere by the employee during the period
of illegal dismissal. In an even later case (1987) [13] the Court declared that
the general principle is that an employee is entitled to receive as
backwages all the amounts he may have received from the date of his
dismissal up to the time of his reinstatement. However, in compliance with
the jurisprudential policy of fixing the amount of backwages to a just and

reasonable level, the award of backwages equivalent to three (3) years,

without qualification or deduction, was nonetheless followed in said case.
In a more direct approach to the rule on the award of backwages, this
Court declared in the 1990 case of Medado v. Court of Appeals[14] that "any
decision or order granting backwages in excess of three (3) years is null
and void as to the excess".
In sum, during the effectivity of P.D. 442, the Court enforced
the Mercury Drug rule and, in effect, qualified the provision under P.D. No.
442 by limiting the award of backwages to three (3) years.
On 21 march 1989, Republic Act No. 6715 took effect, amending the
Labor Code. Article 279 thereof states in part:
"ART. 279. Security of Tenure.- . . . An employee who 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." (underscoring supplied)

502

In accordance with the above provision, an illegally dismissed

employee is entitled to his full backwages from the time his compensation
was withheld from him (which , as a rule, is from the time of his illegal
dismissal) up to the time of his actual reinstatement. It is true that this
Court had ruled in the case of Pines City Educational Center vs. NLRC (G.R.
No. 96779, 10 November 1993, 227 SCRA 655) that "in ascertaining the
total amount of backwages payable to them (employees), we go back to
the rule prior to the Mercury Drug rule that the total amount derived from
employment elsewhere by the employee from the date of dismissal up to
the date of reinstatement, if any, should be deducted therefrom." [15] The
rationale for such ruling was that, the eraning derived elsewhere by the
dismissed employee while litigating the legality of his dismissal, should be
deducted from the full amount of backwages which the law grants him
upon reinstatement, so as not to unduly or unjustly enrich the employee at
the expense of the employer.

The Court deems it appropriate, however, to reconsider such earlier

ruling on the computation of backwages as enunciated in said Pines City
Educational Center case, by now holding that conformably with the evident
legislative intent as expressed in Rep. Act No. 6715, above-quoted,
backwages to be awarded to an illegally dismissed employee, should not,
as a general rule, be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal. The underlying reason
for this ruling is that the employee, while litigating the legality (illegality) of
his dismissal, must still earn a living to support himself and family, while
full backwages have to be paid by the employer as part of the price or
penalty he has to pay for illegally dismissing his employee. The clear
legislative intent of the amendment in Rep. Act No. 6715 is to give more
benefits to workers than was previously given them under theMercury
Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal. [16] In other words, the provision
calling for "full backwages" to illegally dismissed employees is clear, plain
and free from ambiguity and, therefore, must be applied without attempted
or strained interpretation. Index animi sermo est.[17]
Therefore, in accordance with R.A No. 6715, petitioners are entitled to
their full backwages, inclusive of allowances and other benefits or their
monetary equivalent, from the time their actual compensation was with
held from them up to the time of their actual reinstatement.
As to reinstatement of petitioners, this Court has already ruled that
since reinstatement is no longer feasible, because the company would be
unjustly prejudiced by the continued employment of petitioners who at
present are overage, a separation pay equal to one-month salary granted
to them in the Labor Arbiter's decision was in order and, therefore,
affirmed in the Court's decision of 15 March 1996. Furthermore, since
reinstatement in this case is no longer feasible, the amount of backwages
shall be computed from the time of their illegal termination on 25 June
1990 up to the time of finality of this decision. [18]
ACCORDINGLY, private respondent's Motion for Reconsideration,
dated 10 April 1996, is DENIED.
SO ORDERED.

503

G.R. No. 201483, August 04, 2014

CONRADO A. LIM, Petitioner, v. HMR PHILIPPINES, INC., TERESA
SANTOS-CASTRO, HENRY BUNAG AND NELSON
CAMILLER, Respondents.

Both Lim and HMR filed their respective petitions for certiorari before the
CA, docketed as CA-G.R. SP No. 80379 and CA-G.R. SP No. 80630,
respectively, which were consolidated. Pending resolution of the petitions,
the CA issued the Temporary Restraining Order (TRO) enjoining the
execution of the NLRC decision.
On November 15, 2005, the CA affirmed the NLRC decision with
modification as follows:

DECISION
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the March 30, 2012 1 Decision of the Court of
Appeals (CA), in CA G.R. SP No. 112708, a case involving the computation
of the backwages of an illegally dismissed employee.
The Facts
On February 8, 2001, petitioner Conrado A. Lim (Lim) filed a case for illegal
dismissal and money claims against respondents, HMR Philippines,
Inc. (HMR) and its officers, Teresa G. Santos-Castro, Henry G. Bunag and
Nelson S. Camiller. The Labor Arbiter (LA) dismissed the complaint for lack
of merit. On April 11, 2003, the National Labor Relations
Commission (NLRC) in NLRC NCR No. 02-00926-01, reversed the LA and
declared Lim to have been illegally dismissed. The dispositive portion of
the NLRC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring
the appealed Decision REVERSED and SET ASIDE; that the dismissal of
herein complainant-appellant was illegal and the respondent-appellee
Company is hereby ordered to reinstate immediately the said employee to
his former position without loss of seniority rights and other privileges.
Furthermore, the respondent-appellee Company is hereby ordered to pay
the complainant-appellant his full backwages, reckoned from his
dismissal on February 3, 2001 up to the promulgation of this
Decision.
All other claims are hereby DISMISSED for lack of merit.
The Computation and Research Unit (CRU) of this Commission is hereby
directed tocompute the backwages and the 10% annual increase
from 1998 to 2000.
SO ORDERED.2]
[Emphases supplied]

WHEREFORE, the Decision of the National Labor Relations Commission is

AFFIRMED, with MODIFICATION by awarding moral damages and exemplary
damages to Conrado A. Lim in the amount of P50,000.00 and P20,000.00,
respectively, as well as attorneys fees equivalent to 10% of the total
amount due him.
SO ORDERED.3
On February 7, 2007, this Court, in G.R. No. 175950-51, dismissed the
petition for certiorari4 filed by HMR assailing the November 15, 2005 CA
decision. Entry of judgment was ordered on July 27, 2007. 5
On September 24, 2007, Lim moved for execution. 6 On November 28,
2007, the Computation and Research Unit (CRU) of the NLRC computed the
total award to amount to P2,020,053.46,7 which computed the backwages
from February 3, 2001, the date of the illegal dismissal, up to October 31,
2007, the date of actual reinstatement.
HMR opposed the computation arguing that the backwages should be
computed until April 11, 2003 only, the date of promulgation of the NLRC
decision, as stated in the dispositive portion of the NLRC decision, which
provided that backwages shall be reckoned from his dismissal on February
3, 2001up to the promulgation of this Decision. It also noted that the 10%
annual increase was computed from 1998 to 2007, instead of only from
1998 to 2000 as decreed.8
In his Comment, Lim argued that the body of the NLRC decision explictly
stated that he was entitled to full backwages from the time he was illegally
dismissed until his actual reinstatement, which was also in accord with
Article 279 of the Labor Code and all prevailing jurisprudence. 9
Ruling of the LA
On April 21, 2009, the LA issued the order 10 granting the motion for
execution filed by Lim. Holding that the backwages should be reckoned
until April 11, 2003 only in accordance with the NLRC decision, the LA
disposed:

504

Accordingly, in computing complainants backwages, the following

conditions must apply: 1) that the backwages cover the period February 3,
2001 up to April 11, 2003; 2) that the base rate applicable is his salary as
of February 3, 2001 inclusive of the ten percent adjustment due at the
time, or P12,500.00 plus ten percent (10%) or P13,750.00; 3) that the
computation should include his 13th month pay; and 4) 15 days vacation
pay in accordance with the personnel policy handbook, in lieu of 5 days
service incentive leave pay.
While complainant claims that he is entitled to 15 days sick leave pay, a
perusal of the personnel policy handbook on the grant of said benefit
shows that sick leave pay is availed of only upon notification of illness and
conversion thereof to cash is subject to the discretion of management.
Accordingly, complainants monetary award, which is the proper subject of
enforcement through a writ of execution, in accordance with the Decision
of the Commission as modified by the Court of Appeals, is computed as
follows:cralawlawlibrary

In its assailed March 30, 2012 Decision,14 the CA dismissed the petition. It
emphasized that the April 11, 2003 NLRC decision had long become final
and executory after it was affirmed by the Court and, as such, it may no
longer be amended or corrected. While noting that the body of the NLRC
decision stated that petitioner was entitled to backwages until his actual
reinstatement, the CA ruled that when there was a conflict between the
dispositive portion and the body of the decision, the former must prevail as
the dispositive portion was the final order, and that it was the dispositive
portion which was the subject of execution. It wrote that the fallo was clear
and unequivocal and could, therefore, be given effect without going to the
body of the decision or further interpretation or construction.
The CA found that although the NLRC had recognized that petitioner was
entitled to backwages until actual reinstatement, nonetheless, it expressly
limited the computation of backwages to the promulgation date of its
decision. It wrote that the issue of whether such limitation was lawful or
improper could no longer be ventilated due to the finality of the judgment.
Hence, the present petition.

A. Backwages:
2/3/01 to 4/11/03 = 26.26
P13,750.00 x 26.26
13th month pay (P366,575.00/12)
Vacation Leave (P687.50 x 15 x
26.26/12)
B. Moral Damages
C. Exemplary Damages
D. Attorneys Fees

ISSUES AND ARGUMENTS

=
=
=
=
=
=

P361,075.00
30,089.58
22,859.37

I
P414,023.95
50,000.00
20,000.00
P484,023.95
48,402.39
P532,426.34

WHEREFORE, complainants Motion for Issuance of Writ of Execution is

GRANTED. A Writ of Execution is hereby issued for the satisfaction of the
judgment award rendered in this case.
SO ORDERED.11
Ruling of the NLRC
Lim filed his Motion Ad Cautelam for Reconsideration or Recomputation
and Partial Execution of Monetary Award, insisting that his backwages
should be computed up to his actual reinstatement.12On August 28, 2009,
the NLRC treated the motion as an appeal and sustained the computation
of the LA, explaining that the dispositive portion was clear, and that it
could not alter or amend the amount based on the final decision of the
NLRC which was affirmed by both the CA and this Court. 13Aggrieved,
petitioner filed a petition for certiorari before the CA.
Ruling of the CA

Whether or not the Court of Appeals erred in peremptorily

applying the doctrine laid down in PH Credit Corporation v. Court
of Appeals and contrary to law as well as the established
jurisprudence mandating the payment of backwages until the
illegally dismissed employee is actually reinstated.
II
Whether or not the Court of Appeals erred in not affirming the
applicability ofEastern Shipping Lines v. Court of Appeals in the
computation of interest since the Decision on the illegal
termination case had become final and executory on June 6, 2007
inconsistent with existing jurisprudence by its failure to include
interest payments.15
Petitioner Lim argues that Article 279 of the Labor Code and the prevailing
jurisprudence provide that illegally dismissed workers are entitled to an
award of backwages from the time of the illegal dismissal until they are
actually reinstated. He states that the body of the NLRC decision was
explicit in its intent to award backwages until actual reinstatement,
especially when read with its fallo, which ordered his immediate
reinstatement. He further avers that it has been held that the dispositive
part of a decision must find support from the decisions ratio
decidendi, because, while the opinion of the court is not part of the
judgment, it may, in case of uncertainty or ambiguity, be referred to for the

505

purpose of construing the judgment, where the court may clarify by

amendment even after judgment has become final.
Lim also points out that the LA completely failed to include in the
computation the unpaid 10% annual increase in his salary from 1998 to
2000, as awarded in the fallo of the NLRC decision. He posits that the LA
also failed to include the payment of other benefits, such as a 10%
increase in salary per annum, 15 days vacation leave and 15 days sick
leave per annum, all as part of employee benefits found in HMRs
Personnel Policy.
Petitioner Lim also argues that in accordance with the rules laid down
in Eastern Shipping Lines v. Court of Appeals,16 the monetary awards
should be subject to interest. He prays that the respondents be made to
pay, jointly and severally, additional moral and exemplary damages on
account of their bad faith in delaying the payment and reinstatement of
the petitioner, which prompted him to file the present petition.
Respondents Comment

received by an authorized representative. As to HMRs offer of

reinstatement, the petitioner explains that the respondent company never
responded to his reply-letter asking for a meeting to discuss the matter of
his compensation upon reinstatement. Lim also argued that holiday pay
was not shown by HMR to be included in his salary, and that it is unjust to
leave the sick leave conversion to management discretion.
Specifically, the Court has to address the following
ISSUES:
Whether the petitioners motion for reconsideration and
motion ad cautelam/appeal were belatedly filed?
Whether the computation of backwages should be reckoned until
the promulgation of the NLRC Decision on April 11, 2003 or until
actual reinstatement?
Whether the petitioner is entitled to the unpaid 10% annual salary
increase from 1998-2000?

In their Comment,17 the respondents argue that the August 28, 2009 NLRC
Resolution had already become final and executory and could no longer be
modified as the petitioner belatedly filed his motion for reconsideration. In
the same vein, they argue that the April 21, 2009 LA Order had also
become final and executory considering that the petitioners motion ad
cautelam/appeal was not seasonably filed.

Whether the petitioner is entitled to the 10% annual salary

increase after the year 2000?

The respondents insist that the decretal portion of the NLRC decision,
dated April 11, 2003 limited the amount of petitioners backwages from
February 3, 2001 and up to promulgation of such Decision on April 11,
2003 only.18 Granting that the body of such decision controls, they aver
that the recoverable backwages cannot go beyond December 26, 2007,
the date HMR offered to reinstate Lim, who refused to be reinstated and
abandoned his job. They add that it was also clear from the dispositive
portion that the 10% annual salary increase awarded was only for the
years 1998 to 2000.

Whether the respondents should be held jointly and severally

liable for additional moral and exemplary damages?

They also point out that the P12,500.00 base pay of Lim was already
inclusive of holiday pay, and that the conversion of sick leave to cash was
subject to management discretion in accordance with company policy.

Preliminarily, the Court shall first dispose of the lone procedural issue. The
respondents argue that the August 28, 2009 NLRC Resolution was already
final and executory and could no longer be modified as the petitioner
belatedly filed his motion for reconsideration thereto. In the same vein,
they aver that the April 21, 2009 LA Order was also final and executory
considering that petitioners motion ad cautelam/appeal was not
seasonably filed. The petitioner counters that his pleadings were timely
filed because the aforementioned NLRC Resolution and LA Order were not
duly received by an authorized representative.

They further argue that the claims for legal interest and additional moral
and exemplary damages are without merit because these were not
awarded in the decision and they simply acted in good faith in pursuing the
legal remedies available to them.
Petitioners Reply
In his Reply,19 Lim counters that his pleadings before the NLRC and the LA
were timely filed as the notices of their respective orders had not been

Whether the petitioner is entitled to holiday pay?

Whether the petitioner is entitled to sick leave pay?

Whether the interest in accordance with Eastern Shipping should

be awarded?
Ruling of The Court
The petition is partly meritorious.

It appears that the respondents raised this issue before the NLRC and the
CA. The lower courts, nonetheless, ruled on the merits of the assailed
pleadings of the petitioner. The lower courts, thus, gave credence to the

506

petitioners argument that the notices were not received by an authorized

representative. The Court sees no reason to deviate from their findings. In
any case, this issue is a question of fact which is beyond the Courts ambit
of review under Rule 45 of the Rules of Court, considering that a resolution
of the issue would require a review of the evidence presented in
connection therewith.
The Court now moves on to the substantive issues.
Backwages
It is beyond question that Lim was illegally dismissed by HMR. All that
remains to be settled is the exact amount owing to petitioner as an illegally
dismissed employee.
Article 279 of the Labor Code is clear in providing that an illegally
dismissed employee is entitled to his full backwages computed from the
time his compensation was withheld up to the time of his actual
reinstatement, to wit:

decision limited the computation of the backwages up to its promulgation

on April 11, 2003, in this wise:
WHEREFORE, premises considered, judgment is hereby rendered declaring
the appealed Decision REVERSED and SET ASIDE; that the dismissal of
herein complainant-appellant was illegal and the respondent-appellee
Company is hereby ordered to reinstate immediately the said employee to
his former position without loss of seniority rights and other
privileges. Furthermore, the respondent-appellee Company is
hereby ordered to pay the complainant-appellant his full
backwages, reckoned from his dismissal on February 3, 2001 up to
the promulgation of this Decision.
All other claims are hereby DISMISSED for lack of merit.
The Computation and Research Unit (CRU) of this Commission is hereby
directed to compute the backwages and the 10% annual increase from
1998 to 2000.
SO ORDERED.21

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 or 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.
[Emphases and underscoring supplied]
In accordance with this provision, the body of the April 11, 2003 NLRC
decision expressly recognizes that Lim is entitled to his full backwages until
his actual reinstatement, as follows:
In fine, the act of complainant-appellant herein, do not constitute a serious
misconduct as to justify his dismissal. As such, he is, thus, entitled to
reinstatement to his former position as Assistant Technical Manager, unless
such position no longer exists, in which case, he shall be given a
substantially equivalent position without loss of seniority rights. He is,
likewise, entitled to his full backwages from the time he was
illegally dismissed until his actual reinstatement.20
[Emphasis and underscoring supplied]
Nowhere in the body of the NLRC decision was there a discussion
restricting the award of backwages. Nonetheless, the fallo of the said

[Emphasis and underscoring supplied]

Considering that the judgment decreeing the computation of backwages
up to the promulgation of the NLRC decision has long become final and
executory, the key question is whether a recomputation of backwages up
to the date of the actual reinstatement of Lim would violate the principle of
immutability of judgments.
The rule is that it is the dispositive portion that categorically states the
rights and obligations of the parties to the dispute as against each other.
Thus, it is the dispositive portion that must be enforced to ensure the
validity of the execution. That a judgment should be implemented
according to the terms of its dispositive portion is a long and wellestablished rule. A companion to this rule is the principle of immutability of
final judgments. Save for recognized exceptions, 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. 22
The cases of Session Delights Ice Cream and Fast Foods v. Court of
Appeals (Session Delights)23 andNacar v. Gallery Frames (Nacar)24 shed
much light on the apparent discrepancy in the case at hand. As in the
present case, both involve labor cases finding that the employees therein
were illegally dismissed. At the LA level, in awarding backwages, a precise
computation was provided from the time of illegal dismissal up to the
promulgation of the LA decision.25 Additionally, the dispositive portion of

507

the LA decision in Nacar also made a declaration that separation pay in

lieu of reinstatement be computed only up to promulgation of this
decision.26 The LA decisions in these cases were affirmed by the NLRC and
the CA and subsequently became final and executory. At the execution
stage, the computation of backwages came into issue.
Session Delights made clear that a case for illegal dismissal is one that
relates to status, where the decision or ruling is essentially declaratory of
the status and of the rights, obligations and monetary consequences that
flow from the declared status, such as, the payment of separation pay and
backwages. In execution, what is primarily implemented is the declaratory
finding on the status and the rights and obligations of the parties therein;
the arising monetary consequences from the declaration only follow as
component of the parties rights and obligations.27 The precise amount of
backwages should ideally be stated in the final decision; otherwise, the
matter is for handling and computation by the LA of origin as the labor
official charged with the implementation of decisions before the NLRC. 28
The Courts disquisition in Session Delights, also referenced with approval
in Nacar, is enlightening:
A source of misunderstanding in implementing the final decision in this
case proceeds from the way the original labor arbiter framed his decision.
The decision consists essentially of two parts.
The first is that part of the decision that cannot now be disputed because it
has been confirmed with finality. This is the finding of the illegality of the
dismissal and the awards of separation pay in lieu of reinstatement,
backwages, attorneys fees, and legal interests.
The second part is the computation of the awards made. On its face, the
computation the labor arbiter made shows that it was time-bound as can
be seen from the figures used in the computation. This part, being merely
a computation of what the first part of the decision established and
declared, can, by its nature, be re-computed. This is the part, too, that the
petitioner now posits should no longer be re-computed because the
computation is already in the labor arbiters decision that the CA had
affirmed. The public and private respondents, on the other hand, posit that
a re-computation is necessary because the relief in an illegal dismissal
decision goes all the way up to reinstatement if reinstatement is to be
made, or up to the finality of the decision, if separation pay is to be given
in lieu of reinstatement.
xxx
Clearly implied from this original computation is its currency up to the
finality of the labor arbiters decision. As we noted above, this implication
is apparent from the terms of the computation itself, and no question
would have arisen had the parties terminated the case and implemented

the decision at that point.

However, the petitioner disagreed with the labor arbiters findings on all
counts i.e., on the finding of illegality as well as on all the consequent
awards made. Hence, the petitioner appealed the case to the NLRC which,
in turn, affirmed the labor arbiters decision. By law, the NLRC decision is
final, reviewable only by the CA on jurisdictional grounds.
The petitioner appropriately sought to nullify the NLRC decision on
jurisdictional grounds through a timely filed Rule 65 petition for certiorari.
The CA decision, finding that NLRC exceeded its authority in affirming the
payment of 13th month pay and indemnity, lapsed to finality and was
subsequently returned to the labor arbiter of origin for execution.
It was at this point that the present case arose. Focusing on the core illegal
dismissal portion of the original labor arbiters decision, the implementing
labor arbiter ordered the award re-computed; he apparently read the
figures originally ordered to be paid to be the computation due had the
case been terminated and implemented at the labor arbiters level. Thus,
the labor arbiter re-computed the award to include the separation pay and
the backwages due up to the finality of the CA decision that fully
terminated the case on the merits. Unfortunately, the labor arbiters
approved computation went beyond the finality of the CA decision (July 29,
2003) and included as well the payment for awards the final CA decision
had deleted specifically, the proportionate 13th month pay and the
indemnity awards. Hence, the CA issued the decision now questioned in
the present petition.
We see no error in the CA decision confirming that a re-computation is
necessary as it essentially considered the labor arbiters original decision
in accordance with its basic component parts as we discussed above. To
reiterate, the first part contains the finding of illegality and its monetary
consequences; the second part is the computation of the awards or
monetary consequences of the illegal dismissal, computed as of the time of
the labor arbiters original decision.
To illustrate these points, had the case involved a pure money claim for a
specific sum (e.g. salary for a specific period) or a specific benefit (e.g.
13th month pay for a specific year) made by a former employee, the labor
arbiters computation would admittedly have continuing currency because
the sum is specific and any variation may only be on the interests that may
run from the finality of the decision ordering the payment of the specific
sum.
In contrast with a ruling on a specific pure money claim, is a claim that
relates to status (as in this case, where the claim is the legality of the
termination of the employment relationship). In this type of cases, the
decision or ruling is essentially declaratory of the status and of the rights,
obligations and monetary consequences that flow from the declared status
(in this case, the payment of separation pay and backwages and attorneys

508

fees when illegal dismissal is found). When this type of decision is

executed, what is primarily implemented is the declaratory finding on the
status and the rights and obligations of the parties therein; the arising
monetary consequences from the declaration only follow as component of
the parties rights and obligations.
In the present case, the CA confirmed that indeed an illegal dismissal had
taken place, so that separation pay in lieu of reinstatement and backwages
should be paid. How much that separation pay would be, would ideally be
stated in the final CA decision; if not, the matter is for handling and
computation by the labor arbiter of origin as the labor official charged with
the implementation of decisions before the NLRC.
xxx
Consistent with what we discussed above, we hold that under the terms of
the decision under execution, no essential change is made by a recomputation as this step is a necessary consequence that flows
from the nature of the illegality of dismissal declared in that
decision. A re-computation (or an original computation, if no
previous computation has been made) is a part of the law
specifically, Article 279 of the Labor Code and the established
jurisprudence on this provision that is read into the decision. By
the nature of an illegal dismissal case, the reliefs continue to add
on until full satisfaction, as expressed under Article 279 of the
Labor Code. The re-computation of the consequences of illegal
dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented.
The illegal dismissal ruling stands; only the computation of
monetary consequences of this dismissal is affected and this is not
a violation of the principle of immutability of final judgments.
xxx
That the amount the petitioner shall now pay has greatly increased
is a consequence that it cannot avoid as it is the risk that it ran
when it continued to seek recourses against the labor arbiters
decision. Article 279 provides for the consequences of illegal dismissal in
no uncertain terms, qualified only by jurisprudence in its interpretation of
when separation pay in lieu of reinstatement is allowed. When that
happens, the finality of the illegal dismissal decision becomes the
reckoning point instead of the reinstatement that the law decrees. In
allowing separation pay, the final decision effectively declares that the
employment relationship ended so that separation pay and backwages are
to be computed up to that point. x x x29
[Emphases and underscoring supplied]
Although the NLRC decision in the present case did not provide a precise

computation, the principles enunciated in Session Delights still equally

apply. In Session Delights, the computation of the LA was found to be timebound, which implied the currency of the computation up to the finality of
the LA decision. In the present case, the NLRC declared backwages to be
reckoned up to the promulgation of its decision, which was an express
declaration of the currency of the computation up to the finality of the
NLRC decision, especially considering that HMR was ordered to reinstate
immediately petitioner Lim. The decisions in both cases are premised on
their immediate execution, in that no question would have arisen had the
parties terminated the case and the decision implemented at that point. 30
As discussed above, no essential change is being made by a recomputation
because such is a necessary consequence which flows from the nature of
the illegality of the dismissal. To reiterate, a recomputation, or an
original computation, if no previous computation was made, as in
the present case, is a part of the law that is read into the decision,
namely, Article 279 of the Labor Code and established
jurisprudence.31 Article 279 provides for the consequences of
illegal dismissal, one of which is the payment of full backwages
until actual reinstatement,qualified only by jurisprudence when
separation pay in lieu of reinstatement is allowed, where the
finality of the illegal dismissal decision instead becomes the
reckoning point.32
The nature of an illegal dismissal case requires that backwages continue to
add on until full satisfaction. The computation required to reflect full
satisfaction does not constitute an alteration or amendment of the final
decision being implemented as the illegal dismissal ruling stands. Thus, in
the present case, a computation of backwages until actual
reinstatement is not a violation of the principle of immutability of
final judgments.33
The respondents aver that the recoverable backwages cannot go beyond
December 26, 2007, the date HMR offered to reinstate Lim, who allegedly
refused to be reinstated and abandoned his job.
HMR sent the petitioner a letter,34 dated December 22, 2007, directing him
to report for work on December 26, 2007, with an offer of separation pay in
the amount of P150,000.00 in lieu of reinstatement which he could avail of
not later than December 26, 2007. Lim replied in a letter, 35dated December
24, 2007, requesting for a meeting in January 2008, considering that his
counsel was out of the country; that the NLRC was still in the process of
computing the amount of the award which was necessary to consider the
offer of separation pay; and that a writ of execution had not yet been
issued. HMR never responded to the petitioners request, and up to the
present, the latter has yet to be reinstated.
From the above, it is apparent that the petitioner cannot be deemed to
have refused reinstatement or to have abandoned his job. HMRs offer of
reinstatement appeared superficial and insincere considering that it never

509

replied to the petitioners letter. It did not make any further attempt to
reinstate the petitioner either. The recoverable backwages, thus, continue
to run, and must be reckoned up until the petitioners actual
reinstatement.

1999
2000
Total

13,750.00
15,125.00

10%
10%

1,375.00
1,512.50

16,500.00
18,150.00
49,650.00

10% annual salary increase

Petitioner Lim argues that the LA completely failed to include in its
computation the unpaid 10% annual increase in his salary from 1998 to
2000, as stated in the fallo of the NLRC decision, and the 10% salary
increase per annum in backwages until actual reinstatement.
The pertinent portion of the fallo of the NLRC decision reads:
The Computation and Research Unit (CRU) of this Commission is hereby
directed to compute the backwages and the 10% annual increase from
1998 to 2000.36
In awarding the 10% annual salary increase from 1998 to 2000, the body
of the NLRC decision explained:
We see no reason, therefore, why complainant-appellant herein, being a
regular employee, should be deprived of what he is entitled to under
Company policy. As such,he should be paid his unpaid 10% annual
increase for the years 1998, 1999 and 2000.37
[Emphasis and underscoring supplied]

Second, based on the above, the applicable base rate for the computation
of the petitioners backwages from the time he was illegally dismissed on
February 3, 2001 should be P15,125.00.
Lim cannot, however, insist that the 10% annual salary increase be applied
to his backwages past the year 2000 up to his actual reinstatement.
In Equitable Banking Corporation v. Sadac, 41 the Court held that although
Article 279 of the Labor Code mandates that an employees full backwages
be inclusive of allowances and other benefits, salary increases cannot be
interpreted as either an allowance or a benefit, as allowances and benefits
are separate from salary, while a salary increase is added to salary as an
increment thereto.42 It was further held therein that the base figure to be
used in the computation of backwages was pegged at the wage rate at the
time of the employees dismissal, inclusive of regular allowances that the
employee had been receiving such as the emergency living allowances and
the 13th month pay mandated by law. The award of salary differentials was
not allowed, the rule being that upon reinstatement, illegally dismissed
employees were to be paid their backwages without deduction and
qualification as to any wage increases or other benefits that might have
been received by their co-workers who were not dismissed. 43

Lim is, thus, entitled to be paid his unpaid 10% annual salary increase for
the years 1998-2000.

It must be noted that the NLRC did not err in awarding the unpaid salary
increase for the years 1998-2000 as such did not constitute backwages as
a consequence of the petitioners illegal dismissal, but was earned and
owing to the petitioner before he was illegally terminated.

A reading of the assailed order of the LA would reveal that it made the
following adjustment in connection to the 10% annual salary increase:

Holiday pay

2) that the base rate applicable is his salary as of February 3, 2003

inclusive of the ten percent adjustment due at the time, or P12,500.00 plus
ten percent (10%) or P13,750.00;38

The respondents insist that the base pay of Lim is already inclusive of
holiday pay. The records, however, are insufficient to determine whether
holiday pay is indeed included in the petitioners base pay.

This is incorrect on two counts. First, the LA failed to include the actual
unpaid 10% annual increase from 1998-2000. The first computation of the
LA,39 as well as the suggested computation of respondent HMR
itself,40 gave the correct computation of the unpaid salary increase from
1998-2000, as follows:cralawlawlibrary

Under Article 94 of the Labor Code, every worker shall be paid his regular
daily wage during regular holidays. Thus, an employee must receive his
daily wage even if he does not work on a regular holiday. The purpose of
holiday pay is to prevent diminution of the monthly income of workers on
account of work interruptions declared by the State.44

Year

Rate (P)

Increase

1998

12,500.00

10%

Monthly
Increase
(P)
1,250.00

Annual
Increase (P)
15,000.00

Whether or not holiday pay is included in the monthly salary of an

employee, may be gleaned from the divisors used by the company in the
computation of overtime pay and employees absences. To illustrate, if all
nonworking days are paid, the divisor of the monthly salary to obtain daily
rate should be 365. If nonworking days are not paid, the divisor is 251,
which is a result of subtracting all Saturdays, Sundays, and the ten legal

510

holidays.45 Hence, if the petitioners base pay does not yet include holiday
pay, it must be added to his monetary award.
This matter is clearly for the LA to determine being the labor official
charged with the implementation of decision 46 and concomitant
computations.
Sick leave pay
The LA found that that the petitioner was not entitled to have his sick
leaves converted to cash because such was subject to the discretion of
management in accordance with company policy.
The pertinent provision on sick leave conversion in the Personnel Policy
handbook of HMR reads:
d) Accumulated days of unused sick leave may be converted into cash,
time-off or vacation allowance at the end of the calendar year, any of these
upon the discretion of the General Manager.47
It is clear from the above that the provision does not give HMR the
absolute discretion to decide whether or not to grant sick leave conversion.
The discretion of the general manager only pertains to what form the sick
leave conversion may take, and not to whether or not sick leave
conversion will be granted at all. An HMR employee is, therefore, entitled
to conversion of unused sick leave, subject only to the general managers
discretion as to the form it will take, namely cash, time-off, or vacation
allowance. Considering that the conversion options of time-off and
vacation allowance are no longer feasible because the petitioner was
illegally dismissed, he is now entitled to have his unused sick leaves
converted to cash.
Additional moral and exemplary damages
Petitioner Lim prays that the respondents be made to pay, jointly and
severally, additional moral and exemplary damages on account of their
bad faith in delaying the payment and his reinstatement.
There appears, however, no basis to award additional damages considering
that the respondents simply availed of the remedies available to them
under the law in good faith.
Legal interest
The petitioner argues that legal interest in accordance with the case
of Eastern Shipping must also be awarded, as follows:
1.

the unpaid 10% annual increase from 1998 to 2000 shall earn a 6%
interest annually starting 1998 until October 23, 2003 (Entry of

Judgment of the April 11, 2003 NLRC decision); and 12% legal
interest per annum thereafter until the same is fully paid;
andChanRoblesVirtualawlibrary
2.

the backwages, 13th month pay as well as unpaid vacation and sick
leaves shall earn a 6% per annum interest starting at the time of
petitioners illegal dismissal on February 3, 2001 until October 23,
2003; and 12% legal interest per annumthereafter until the same is
fully paid.48

The respondents counter that interest may no longer be added considering

that such was not included in the any of the courts decisions before the
judgment became final and executory.
In both Session Delights and Nacar, no interest was expressly awarded
before the judgments became final and executory, yet in both cases, the
Court, nonetheless, awarded legal interest. Session Delights explained that
the decision had become a judgment for money from which another
consequence flowed, namely, the payment of interest in case of delay in
accordance with Eastern Shipping Lines v. Court of Appeals. It was held
therein that when the judgment of the court awarding a sum of money
became final and executory, the rate of legal interest, should be 12% per
annumfrom finality until satisfaction.49
The rules on legal interest in Eastern Shipping have, however, been
recently modified by Nacar in accordance with Bangko Sentral ng Pilipinas
Monetary Board (BSP-MB) Circular No. 799, which became effective on July
1, 2013. Pertinently, it amended the rate of legal interest in judgments
from 12% to 6% per annum, with the qualification that the new rate be
applied prospectively. Thus, the 12% per annum legal interest in judgments
under Eastern Shipping shall apply only until June 30, 2013, and the new
rate of 6% per annum shall be applied from July 1, 2013 onwards.50
Petitioner also prays that he be awarded interest at a rate of 6% per
annum on the amounts awarded from the time they became legally due
him until entry of judgment, presumably under the second paragraph
in Eastern Shipping (which was not modified by Nacar), which states:
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is

511

made (at which time the quantification of damages may be deemed to

have been reasonably ascertained). The actual base for the computation of
legal interest shall, in any case, be on the amount finally adjudged. 51
[Emphasis supplied]
It is plain from the above that the interest of 6% per annum for obligations
not constituting a loan or forbearance of money is one that may be
imposed at the discretion of the court. This form of interest is not
mandatory but discretionary in nature and therefore, not necessarily owing
to the petitioner in the present case.
WHEREFORE, the petition is PARTLY GRANTED, the March 30, 2012
Decision of the Court of Appeals, in CA-G.R. SP No. 112708
is REVERSED and SET ASIDE. Respondent HMR Philippines, Inc.
is ORDERED to PAY petitioner Conrado A. Lim:
(1) backwages computed from the time the petitioner was illegally
dismissed on February 3, 2001 up to his actual reinstatement, with a
monthly base pay in the amount of P15,125.00;

(2) the unpaid 10% annual salary increase from 1998-2000 in the amount
of P49,650.00;
(3) 13th month pay;
(4) vacation pay in accordance with the personnel policy handbook;
(5) the cash value of his unused sick leaves;
(6) holiday pay, provided that the Labor Arbiter finds that such is not yet
included in the base pay;
(7) moral damages in the amount of P50,000.00;
(8) exemplary damages in the amount of P20,000.00;
(9) attorneys fees equivalent to 10% of the total amount due to the
petitioner; and
(10) legal interest of 12% per annum of the total monetary awards
computed from July 27, 2007 to June 30, 2013, and 6% per
annum from July 1, 2013 until their full satisfaction.
The Labor Arbiter is ORDERED to compute the total monetary benefits
awarded and due the petitioner in accordance with this decision.
SO ORDERED.