the complaint was duly received by private respondents Chief Accountant,
Nita Azarcon (Azarcon).[5]
THIRD DIVISION
FEDERICO M. LEDESMA, JR.,
Petitioner,
- versus -
NATIONAL LABOR RELATIONS COMMISSION (NLRC-SECOND
DIVISION) HONS. RAUL T. AQUINO, VICTORIANO R.
CALAYCAY and ANGELITA A. GACUTAN ARE THE
COMMISSIONERS, PHILIPPINE NAUTICAL TRAINING INC.,
ATTY. HERNANI FABIA, RICKY TY, PABLO MANOLO, C. DE
LEON and TREENA CUEVA,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
CHICO-NAZARIO, J.:
This a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court, filed by petitioner Federico Ledesma, Jr., seeking to reverse and
set aside the Decision,[1] dated 28 May 2005, and the Resolution, [2] dated 7
September 2006, of the Court of Appeals in CA-G.R. SP No. 79724. The
appellate court, in its assailed Decision and Resolution, affirmed the
Decision dated 15 April 2003, and Resolution dated 9 June 2003, of the
National Labor Relations Commission (NLRC), dismissing petitioners
complaint for illegal dismissal and ordering the private respondent
Philippine National Training Institute (PNTI) to reinstate petitioner to his
former position without loss of seniority rights.
The factual and procedural antecedents of the instant petition are
as follows:
On 4 December 1998, petitioner was employed as a bus/service
driver by the private respondent on probationary basis, as evidenced by
his appointment.[3] As such, he was required to report at private
respondents training site in Dasmarias, Cavite, under the direct
supervision of its site administrator, Pablo Manolo de Leon (de Leon).[4]
On 11 November 2000, petitioner filed a complaint against de Leon
for allegedly abusing his authority as site administrator by using the
private respondents vehicles and other facilities for personal ends. In the
same complaint, petitioner also accused de Leon of immoral conduct
allegedly carried out within the private respondents premises. A copy of
On 27 November 2000, de Leon filed a written report against the
petitioner addressed to private respondents Vice-President for
Administration, Ricky Ty (Ty), citing his suspected drug use.
G.R. No. 174585
Present:YNARES-SANTIAGO, J., In view of de Leons report, private respondents Human Resource
Manager, Trina Cueva (HR Manager Cueva), on 29 November 2000, served
Chairperson,
AUSTRIA-MARTINEZ, a copy of a Notice to petitioner requiring him to explain within 24 hours
CORONA,
CHICO-NAZARIO, and
why no disciplinary action should be imposed on him for allegedly violating
NACHURA, JJ. Section 14, Article IV of the private respondents Code of Conduct.[6]
Promulgated: On 3 December 2000, petitioner filed a complaint for illegal
dismissal against private respondent before the Labor Arbiter.
October 19, 2007
In his Position Paper,[7] petitioner averred that in view of the
complaint he filed against de Leon for his abusive conduct as site
administrator, the latter retaliated by falsely accusing petitioner as a drug
user. VP for Administration Ty, however, instead of verifying the veracity of
de Leons report, readily believed his allegations and together with HR
Manager Cueva, verbally dismissed petitioner from service on 29
November 2000.
Petitioner alleged that he was asked to report at private
respondents main office in Espaa, Manila, on 29 November 2000. There,
petitioner was served by HR Manager Cueva a copy of the Notice to
Explain together with the copy of de Leons report citing his suspected drug
use. After he was made to receive the copies of the said notice and report,
HR Manager Cueva went inside the office of VP for Administration Ty. After
a while, HR Manager Cueva came out of the office with VP for
Administration Ty. To petitioners surprise, HR Manager Cueva took back the
earlier Notice to Explain given to him and flatly declared that there was no
more need for the petitioner to explain since his drug test result revealed
that he was positive for drugs. When petitioner, however, asked for a copy
of the said drug test result, HR Manager Cueva told him that it was with
the companys president, but she would also later claim that the drug test
result was already with the proper authorities at Camp Crame.[8]
Petitioner was then asked by HR Manager Cueva to sign a
resignation letter and also remarked that whether or not petitioner would
resign willingly, he was no longer considered an employee of private
respondent. All these events transpired in the presence of VP for
Administration Ty, who even convinced petitioner to just voluntarily resign
with the assurance that he would still be given separation pay. Petitioner
did not yet sign the resignation letter replying that he needed time to think
over the offers. When petitioner went back to private respondents training
site in Dasmarias, Cavite, to get his bicycle, he was no longer allowed by
the guard to enter the premises.[9]
On the following day, petitioner immediately went to St. Dominic
Medical Center for a drug test and he was found negative for any drug
substance. With his drug result on hand, petitioner went back to private
respondents main office in Manila to talk to VP for Administration Ty and
HR Manager Cueva and to show to them his drug test result. Petitioner
then told VP for Administration Ty and HR Manager Cueva that since his
drug test proved that he was not guilty of the drug use charge against him,
he decided to continue to work for the private respondent.[10]
On 2 December 2000, petitioner reported for work but he was no
longer allowed to enter the training site for he was allegedly
banned therefrom according to the guard on duty.This incident prompted
the petitioner to file the complaint for illegal dismissal against the private
respondent before the Labor Arbiter.
For its part, private respondent countered that petitioner was never
dismissed from employment but merely served a Notice to Explain why no
disciplinary action should be filed against him in view of his superiors
report that he was suspected of using illegal drugs. Instead of filing an
answer to the said notice, however, petitioner prematurely lodged a
complaint for illegal dismissal against private respondent before the Labor
Arbiter.[11]
Private respondent likewise denied petitioners allegations that it
banned the latter from entering private respondents premises. Rather, it
was petitioner who failed or refused to report to work after he was made to
explain his alleged drug use. Indeed, on 3 December 2000, petitioner was
able to claim at the training site his salary for the period of 16-30
November 2000, as evidenced by a copy of the pay voucher bearing
petitioners signature. Petitioners accusation that he was no longer allowed
to enter the training site was further belied by the fact that he was able to
claim his 13th month pay thereat on 9 December 2000, supported by a
copy of the pay voucher signed by petitioner.[12]
On 26 July 2002, the Labor Arbiter rendered a Decision, [13] in favor
of the petitioner declaring illegal his separation from employment. The
Labor Arbiter, however, did not order petitioners reinstatement for the
same was no longer practical, and only directed private respondent to pay
petitioner backwages. The dispositive portion of the Labor Arbiters
Decision reads:
WHEREFORE, premises considered, the dismissal of
the [petitioner] is herein declared to be illegal. [Private
respondent] is directed to pay the complainant backwages
and separation pay in the total amount of One Hundred
Eighty Four Thousand Eight Hundred Sixty One Pesos and
Fifty Three Centavos (P184, 861.53).[14]
Both parties questioned the Labor Arbiters Decision before the
NLRC. Petitioner assailed the portion of the Labor Arbiters Decision denying
his prayer for reinstatement, and arguing that the doctrine of strained
relations is applied only to confidential employees and his position as a
driver was not covered by such prohibition.[15] On the other hand, private
respondent controverted the Labor Arbiters finding that petitioner was
illegally dismissed from employment, and insisted that petitioner was
never dismissed from his job but failed to report to work after he was
asked to explain regarding his suspected drug use.[16]
On 15 April 2003, the NLRC granted the appeal raised by both
parties and reversed the Labor Arbiters Decision.[17] The NLRC declared
that petitioner failed to establish the fact of dismissal for his claim that he
was banned from entering the training site was rendered impossible by the
fact that he was able to subsequently claim his salary and 13 th month
pay.Petitioners claim for reinstatement was, however, granted by the
NLRC. The decretal part of the NLRC Decision reads:
WHEREFORE, premises considered, the decision
under review is, hereby REVERSED and SET ASIDE, and
another entered, DISMISSING the complaint for lack of
merit.
[Petitioner] is however, ordered REINSTATED to his
former position without loss of seniority rights, but
WITHOUT BACKWAGES.[18]
The Motion for Reconsideration filed by petitioner was likewise
denied by the NLRC in its Resolution dated 29 August 2003.[19]
The Court of Appeals dismissed petitioners Petition
for Certiorari under Rule 65 of the Revised Rules of Court, and affirmed the
NLRC Decision giving more credence to private respondents stance that
petitioner was not dismissed from employment, as it is more in accord with
the evidence on record and the attendant circumstances of the instant
case.[20]Similarly ill-fated was petitioners Motion for Reconsideration, which
was denied by the Court of Appeals in its Resolution issued on 7
September 2006. [21]
 Hence, this instant Petition for Review on Certiorari[22] under Rule
45 of the Revised Rules of Court, filed by petitioner assailing the foregoing
Court of Appeals Decision and Resolution on the following grounds:
I.
WHETHER, THE HON. COURT OF APPEALS COMMITTED A
MISAPPREHENSION OF FACTS, AND THE ASSAILED DECISION
IS NOT SUPPORTED BY THE EVIDENCE ON
RECORD. PETITIONERS DISMISSAL WAS ESTABLISHED BY
THE UNCONTRADICTED EVIDENCES ON RECORD, WHICH
WERE MISAPPRECIATED BY PUBLIC RESPONDENT NLRC,
AND HAD THESE BEEN CONSIDERED THE INEVITABLE
CONCLUSION WOULD BE THE AFFIRMATION OF THE LABOR
ARBITERS DECISION FINDING ILLEGAL DISMISSAL
II.
WHETHER, THE HON. COURT OF APPEALS SUBVERTED DUE
PROCESS OF LAW WHEN IT DID NOT CONSIDER THE
EVIDENCE ON RECORD SHOWING THAT THERE WAS NO
JUST CAUSE FOR DISMISSAL AS PETITIONER IS NOT A DRUG
USER AND THERE IS NO EVIDENCE TO SUPPORT THIS
GROUND FOR DISMISSAL.
III.
WHETHER, THE HON. COURT OF APPEALS COMMITTED
REVERSIBLE ERROR OF LAW IN NOT FINDING THAT
RESPONDENTS SUBVERTED PETITIONERS RIGHT TO DUE
PROCESS OF THE LAW.[23]
Before we delve into the merits of this case, it is best to stress that
the issues raised by petitioner in this instant petition are factual in nature
which is not within the office of a Petition for Review.
[24]
The raison detre for this rule is that, this Court is not a trier of facts and
does not routinely undertake the re-examination of the evidence presented
by the contending parties for the factual findings of the labor officials who
have acquired expertise in their own fields are accorded not only respect
but even finality, and are binding upon this Court.[25]
However, when the findings of the Labor Arbiter contradict those of
the NLRC, departure from the general rule is warranted, and this Court
must of necessity make an infinitesimal scrunity and examine the records
all over again including the evidence presented by the opposing parties to
determine which findings should be preferred as more conformable with
evidentiary facts.[26]
The primordial issue in the petition at bar is whether the petitioner
was illegally dismissed from employment.
The Labor Arbiter found that the petitioner was illegally dismissed
from employment warranting the payment of his backwages. The NLRC
and the Court of Appeals found otherwise.
In reversing the Labor Arbiters Decision, the NLRC underscored the settled
evidentiary rule that before the burden of proof shifts to the employer to
prove the validity of the employees dismissal, the employee must first
sufficiently establish that he was indeed dismissed from employment. The
petitioner, in the present case, failed to establish the fact of his
dismissal.The NLRC did not give credence to petitioners allegation that he
was banned by the private respondent from entering the workplace,
opining that had it been true that petitioner was no longer allowed to enter
the training site when he reported for work thereat on 2 December 2000, it
is quite a wonder he was able to do so the very next day, on 3 December
2000, to claim his salary.[27]
The Court of Appeals validated the above conclusion reached by
the NLRC and further rationated that petitioners positive allegations that
he was dismissed from service was negated by substantial evidence to the
contrary. Petitioners averments of what transpired inside private
respondents main office on 29 November 2000, when he was allegedly
already dismissed from service, and his claim that he was effectively
banned from private respondents premises are belied by the fact that he
was able to claim his salary for the period of 16-30 November 2000 at
private respondents training site.
Petitioner, therefore, is now before this Court assailing the
Decisions handed down by the NLRC and the Court of Appeals, and
insisting that he was illegally dismissed from his employment. Petitioner
argues that his receipt of his earned salary for the period of 16-30
November 2000, and his 13th month pay, is neither inconsistent with nor a
negation of his allegation of illegal dismissal. Petitioner maintains that he
received his salary and benefit only from the guardhouse, for he was
already banned from the work premises.
We are not persuaded.
Well-entrenched is the principle that in order to establish a case
before judicial and quasi-administrative bodies, it is necessary that
allegations must be supported by substantial evidence.[28] Substantial
evidence is more than a mere scintilla. It means such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion.[29]
In the present case, there is hardly any evidence on record so as to
meet the quantum of evidence required, i.e., substantial
evidence. Petitioners claim of illegal dismissal is supported by no other
than his own bare, uncorroborated and, thus, self-serving allegations,
which are also incoherent, inconsistent and contradictory.
Petitioner himself narrated that when his presence was requested
on 29 November 2000 at the private respondents main office where he
was served with the Notice to Explain his superiors report on his suspected
drug use, VP for Administration Ty offered him separation pay if he will just
voluntarily resign from employment. While we do not condone such an
offer, neither can we construe that petitioner was dismissed at that
instance. Petitioner was only being given the option to either resign and
receive his separation pay or not to resign but face the possible
disciplinary charges against him. The final decision, therefore, whether to
voluntarily resign or to continue working still, ultimately rests with the
petitioner. In fact, by petitoners own admission, he requested from VP for
Administration Ty more time to think over the offer.
Moreover, the petitioner alleged that he was not allowed to enter
the training site by the guard on duty who told him that he was already
banned from the premises. Subsequently, however, petitioner admitted in
his Supplemental Affidavit that he was able to return to the said site on 3
December 2000, to claim his 16-30 November 2000 salary, and again on 9
December 2000, to receive his 13th month pay. The fact alone that he was
able to return to the training site to claim his salary and benefits raises
doubt as to his purported ban from the premises.
Finally, petitioners stance that he was dismissed by private
respondent was further weakened with the presentation of private
respondents payroll bearing petitioners name proving that petitioner
remained as private respondents employee up to December 2000. Again,
petitioners assertion that the payroll was merely fabricated for the purpose
of supporting private respondents case before the NLRC cannot be given
credence. Entries in the payroll, being entries in the course of business,
enjoy the presumption of regularity under Rule 130, Section 43 of the
Rules of Court. It is therefore incumbent upon the petitioner to adduce
clear and convincing evidence in support of his claim of fabrication and to
overcome such presumption of regularity.[30] Unfortunately, petitioner again
failed in such endeavor.
On these scores, there is a dearth of evidence to establish the fact
of petitioners dismissal. We have scrupulously examined the records and
we found no evidence presented by petitioner, other than his own
contentions that he was indeed dismissed by private respondent.
While this Court is not unmindful of the rule that in cases of illegal
dismissal, the employer bears the burden of proof to prove that the
termination was for a valid or authorized cause in the case at bar,
however, the facts and the evidence did not establish a prima facie case
that the petitioner was dismissed from employment.[31] Before the private
respondent must bear the burden of proving that the dismissal was legal,
petitioner must first establish by substantial evidence the fact of his
dismissal from service. Logically, if there is no dismissal, then there can be
no question as to the legality or illegality thereof.
In Machica v. Roosevelt Services Center, Inc.,[32] we had underscored
that the burden of proving the allegations rest upon the party alleging, to
wit:
The rule is that one who alleges a fact has the burden
of proving it; thus, petitioners were burdened to prove their
allegation that respondents dismissed them from their
employment. It must be stressed that the evidence to
prove this fact must be clear, positive and convincing. The
rule that the employer bears the burden of proof in illegal
dismissal cases finds no application here because the
respondents deny having dismissed the petitioners.[33]
In Rufina Patis Factory v. Alusitain,[34] this Court took the occasion to
emphasize:
It is a basic rule in evidence, however, that the burden of
proof is on the part of the party who makes the
allegations ei incumbit probatio, qui dicit, non qui negat. If he
claims a right granted by law, he must prove his claim by
competent evidence, relying on the strength of his own
evidence and not upon the weakness of that of his
opponent.[35]
It is true that the Constitution affords full protection to labor, and
that in light of this Constitutional mandate, we must be vigilant in striking
down any attempt of the management to exploit or oppress the working
class. However, it does not mean that we are bound to uphold the working
class in every labor dispute brought before this Court for our resolution.
The law in protecting the rights of the employees, authorizes
neither oppression nor self-destruction of the employer. It should be made
clear that when the law tilts the scales of justice in favor of labor, it is in
recognition of the inherent economic inequality between labor and
management. The intent is to balance the scales 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.[36]
WHEREFORE, premises considered, the instant Petition is DENIED. The
Court of Appeals Decision dated 28 May 2005 and its Resolution dated 7
September 2006 in CA-G.R. SP No. 79724 are hereby AFFIRMED. Costs
against the petitioner.
G.R. No. 187032 October 18, 2010
EDGARDO M. PANGANIBAN, Petitioner,
vs. TARA TRADING SHIPMANAGEMENT INC. AND SHINLINE SDN
BHD, Respondents.
MENDOZA, J.:
While it is true that labor contracts are impressed with public interest and
the provisions of the POEA Standard Employment Contract must be
construed logically and liberally in favor of Filipino seamen in the pursuit of
their employment on board ocean-going vessels, absent substantial
evidence from which reasonable basis for the grant of benefits prayed for
can be drawn, We are left with no choice but to deny the claims of the
employee, lest We cause injustice to the employer. We must always
remember that justice is in every case for the deserving, to be dispensed
with in the light of established facts, the applicable law, and existing
jurisprudence.1
This is a petition for review under Rule 45 of the Rules of Court challenging
the October 29, 2008 Decision2 of the Court of Appeals (CA), and its March
4, 2009 Resolution,3 in CA-G.R. SP No. 104343, reversing the March 25,
2008 Decision4 and April 30, 2008 Resolution5 of the National Labor
Relations Commission (NLRC) which affirmed the decision of the Labor
Arbiter (LA) favoring the petitioner.
THE FACTS:
In November 2005, petitioner was hired by respondent Tara Trading
Shipmanagement, Inc. (Tara), in behalf of its foreign principal, respondent
Shinline SDN BHD (Shinline) to work as an Oiler on board MV "Thailine
5"6 with a monthly salary of US$409.00.
Sometime in April 2006, petitioner began exhibiting signs of mental
instability. He was repatriated on May 24, 2006 for further medical
evaluation and management.7
Petitioner was referred by respondents to the Metropolitan Medical Center
where he was diagnosed to be suffering from "brief psychotic disorder."8
Despite his supposed total and permanent disability and despite repeated
demands for payment of disability compensation, respondents allegedly
failed and refused to comply with their contractual obligations.9
Hence, petitioner filed a Complaint against respondents praying for the
payment of US$60,000.00 as total and permanent disability benefits,
reimbursement of medical and hospital expenses, moral and exemplary
damages, and attorneys fees equivalent to 10% of total claims.10
Respondents, on the other hand, maintained that petitioner requested for
an early repatriation and arrived at the point of hire on May 24, 2006; that
while on board the vessel, he confided to a co-worker, Henry Santos, that
his eating and sleeping disorders were due to some family problems; that
Capt. Zhao, the master of the vessel, even asked him if he wanted to see a
doctor; that he initially declined; that on May 22, 2006, petitioner
approached Capt. Zhao and requested for a vacation and early
repatriation; that the said request was granted; that upon arrival,
petitioner was subjected to a thorough psychiatric evaluation; and that
after a series of check-ups, it was concluded that his illness did not appear
to be work-related. Respondents argued that petitioner was not entitled to
full and permanent disability benefits under the Philippine Overseas
Employment Administration Standard Employment Contract (POEA
SEC) because there was no declaration from the company-designated
physician that he was permanently and totally disabled and that the claim
for damages was without basis as no bad faith can be attributed to them.11
On September 17, 2007, the LA ruled in favor of the
petitioner.12 Specifically, the LA held that:
The claim for total and permanent disability benefits is resolved in favor of
complainant. Respondents have stated that the cause of complainants
illness, brief psychotic disorder, is largely unknown. This being the case, it
is not therefore right to bluntly claim that the same is not work-related
because it is also possible that the illness may be caused by or aggravated
by his employment. As alleged by respondents, there are certain factors
which may bring about brief psychotic disorder such as "biological or
psychological vulnerability toward the development of psychotic
symptoms." Complainant, and all seamen for that matter, are subjected to
stress because of the rigorous and strenuous demands of being at sea for
prolonged periods of time, causing sensory deprivation and continuous
isolation, to borrow the words of complainants attending psychiatrist. As
correctly argued by complainant, while all seamen may be subjected to the
same or greater degree of stress, their respective abilities to cope with
these factors are different. There is therefore the risk that seamen, not
only complainant, are prone to contract brief psychotic disorder since they
are most of the time at sea and away from their loved ones.
As early as 27 June 2006, respondents designated physicians have
declared that complainants condition does not appear to be work-related.
With this declaration, respondents are bound to deny complainants claim
for disability benefits. He cannot therefore be faulted for filing the instant
case in October 2006 without waiting for the evaluation of his disability
impediment by the company designated doctors. Moreover, the 120 days
period lapsed without the latter having declared the degree of
complainants disability, if any.
Complainant is thus considered to be totally and permanently disabled as
he is no longer capable of earning wages in the same kind of work, or work
of similar nature that he was trained for or accustomed to perform. He is
now incapacitated to work, hence, his earning capacity is impaired.
Jurisprudence has declared that disability should not be understood more
on its medical significance but on loss of earning capacity.
With the foregoing, complainant is awarded total and permanent disability
benefits in the amount of US$ 60,000.00 or its equivalent in Philippine
Currency at the time of payment.
Complainant cannot however be awarded his claim for medical and
hospitalization expenses. He did not anymore pursue this charge in his
pleadings, hence, the same remained unsubstantiated. The same holds
true with his claim for moral and exemplary damages. Complainant failed
to prove bad faith or malice on respondents part in denying his claims.
Complainant is entitled to attorneys fees as he sought the assistance of
his counsel in pursuing his claims against respondents for his total and
permanent disability benefits. He is thus awarded an equivalent of ten
percent (10%) of his total claims as and by way of attorneys fees.
WHEREFORE, in view of the foregoing, respondents Tara Trading
Shipmanagement, Inc. and/or Shinline SDN. BHD, are hereby ordered to
pay complainant Edgardo M. Panganiban his total and permanent disability
benefit in the amount of US$60,000.00 plus US$6,000.00 attorneys fees,
in Philippine Currency, at the prevailing rate of exchange at the time of
payment.
All other claims are denied. SO ORDERED.13
Respondents appealed to the NLRC. On March 25, 2008, the NLRC
affirmed the decision of the LA.14 The appeal of respondents was
dismissed for lack of merit.15 The NLRC reasoned out that "All material
averments on appeal are mere rehash or amplification of the substantive
allegations propounded in the proceedings below which were already
discerned and judiciously passed upon by the Labor Arbiter." 16
Respondents filed a motion for reconsideration but it was denied in a
resolution dated April 30, 2008.
Aggrieved, respondents filed a Petition for Certiorari with prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining
order17 with the CA. In their petition, respondents presented the following
grounds:
A. Public respondent gravely abused its discretion and
committed serious error in ruling that the petitioners are liable
to private respondent for the payment of disability
compensation in the amount of US$ 60,000.00 considering the
facts as borne out by the evidence on record and the
applicable laws.
1. Public respondent committed grave abuse of discretion in
arriving at the findings of fact which are not substantiated by
the evidence on record.
2. Public respondent committed grave abuse of discretion
when it failed to consider the evidence which proves the
 illness is not work related, thereby violating petitioners right
to procedural due process.
3. Public respondent erred in not finding in favor of the expert
opinion of the company-designated doctor on the nature of the
illness as against that of complainants doctor in utter
disregard of rules on evidence.
Without concrete proof that his assessment is biased and self-
serving, the medical opinion of the company-designate
physician should be accorded probative value and not
discarded merely on the basis of unfounded allegation.
4. Public respondent committed grave abuse of discretion
when it affirmed the award of attorneys fees.
B. Public respondent committed grave abuse of discretion
when it affirmed the award of attorneys fees.18
On October 29, 2008, the CA reversed the decision of the
NLRC.19 Pertinently, the CA held that:
We find that the NLRC (Sixth Division) committed grave abuse of discretion
in affirming the Decision of Labor Arbiter Cellan which awarded
US$60,000.00 total and permanent disability benefits and US$6,000.00
attorneys fees in favor of private respondent, as the findings of both the
Labor Arbiter and the NLRC (Sixth Division) are not anchored on substantial
evidence.
It is basic that a contract is the law between the parties. Obligations
arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. Unless the stipulations
in a contract are contrary to law, morals, good customs, public order or
public policy, the same are binding as between the parties.
A seafarer is a contractual, not a regular employee, and his employment is
contractually fixed for a certain period of time. His employment, including
claims for death or illness compensations, is governed by the contract he
signs every time he is hired, and is not rooted from the provisions of the
Labor Code.
The Contract of Employment entered into by petitioners and private
respondent, and approved by the POEA on 25 October 2005, provides:
"The herein terms and conditions in accordance with Department Order
No. 4 and Memorandum Circular No. 09, both Series of 2000, shall be
strictly and faithfully observed.
x x x Upon approval, the same shall be deemed an integral part of the:
Standard Terms and Conditions Governing the Employment of Filipino
Seafarers On Board Ocean-Going Vessels."
Section 20-B of the POEA Amended Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean Going
Vessels ("POEA-SEC" for brevity) provides that "COMPENSATION AND
BENEFITS FOR INJURY OR ILLNESS. The liabilities of the employer when the
seafarer suffers work-related injury or illness during the term of his
contract: x x x"
Under the Definition of Terms found in the Standard Contract, a work
related illness is defined as "any sickness resulting to disability or death as
a result of an occupational disease listed under Section 32-A of this
contract with the conditions set therein satisfied." In the instant case, the
illness "brief psychotic disorder" is not listed as an occupational disease.
In the instant case, it is an undisputed fact that private respondents
illness occurred during the term of his contract. The remaining issue to be
determined is whether or not private respondents illness of "brief
psychotic disorder" is work-related.
We find that private respondents brief psychotic disorder was not
contracted as a result of or caused by the seafarers work as an Oiler on
board the vessel M.V. Thailine 5.
A review of the evidence shows that the company-designated physician Dr.
Mylene Cruz-Balbon ("Dr. Balbon," for brevity) issued a certification dated
26 June 2006 certifying that private respondent has undergone medical
evaluation treatment at Robert D. Lim, M.D. Marine Medical Services,
Metropolitan Medical Center from 26 May 2006 up to the date of the
certification, due to "Brief Psychotic Disorder." x x x.x x x xxx
xxx
On the psychological test done on 30 May 2006 on private respondent, Dr.
Raymond L. Rosales ("Dr. Rosales," for brevity) Diplomate in Neurology and
Psychiatry and Associate Professor of the University of Santo Tomas
Hospital, who is the specialist to whom private respondent was referred by
the company-designated physician, commented that private respondent
suffered from hallucinations, persecutory delusions and paranoia; at
present, he does not exhibit these symptoms; no definite mood
disturbance; no suicidal intent; fair judgment and insight; the working
diagnosis is brief psychotic disorder; at this point, his condition does not
appear to be work-related since he claims to have no significant stressor at
work and his symptoms were most likely triggered by personal family
problems; and he needs to be followed up for atleast 3 months with
regular intake of medications.
As to the question of which findings should prevail, that of the company-
designated physician or the private respondents personal physician,
Section 20-B of the POEA-SEC provides:
2. x x x xxx
However, if after repatriation, the seafarer still requires medical attention
arising from said injury or illness, he shall be so provided at cost to the
employer until such time he is declared fit or the degree of his disability
has been established by the company-designated physician.
3. Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is
declared fit to work or the degree of permanent disability has been
assessed by the company-designated physician but in no case shall this
period exceed one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-employment
medical examination by a company-designated physician within three
working days upon his return except when he is physically incapacitated to
do so, in which case, a written notice to the agency within the same period
is deemed as compliance. Failure of the seafarer to comply with the
mandatory reporting requirement shall result in his forfeiture of the right to
claim the above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a
third doctor may be agreed jointly between the Employer and the seafarer.
The third doctors decision shall be final and binding on both parties.
(Emphasis supplied)
In order to claim disability benefits under the Standard Employment
Contract, it is the "company-designated" physician who must proclaim that
the seaman suffered a permanent disability, whether total or partial, due
to either injury or illness, during the term of the latters employment. It is a
cardinal rule in the interpretation of contracts that if the terms of a
contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall control. There is no
ambiguity in the wording of the Standard Employment Contract the only
qualification prescribed for the physician entrusted with the task of
assessing the seamans disability is that he be "company-designated."
xxx xxx xxx
[E]ven private respondents co-employee Oiler Henry Santos stated in his
letter to the Master of the vessel that private respondent could not eat and
sleep because of a family problem. X x x.
xxx xxx xxx
From the foregoing disquisitions, private respondent is neither entitled to a
total and permanent disability of US$60,000.00 nor to attorneys fees of
US$6,000.00. Petitioners did not act with gross or evident bad faith in
denying the claim of private respondent. Thus, We find that the NLRC
(Sixth Division) acted with grave abuse of discretion in dismissing
petitioners appeal, affirming the Decision of Labor Arbiter Cellan, and
denying petitioners Motion for Reconsideration.
While it is true that labor contracts are impressed with public interest and
the provisions of the POEA Standard Employment Contract must be
construed fairly, reasonably and liberally in favor of Filipino seamen in the
pursuit of their employment on board ocean-going vessels, we should
always be mindful that justice is in every case for the deserving, to be
dispensed with in the light of established facts, the applicable law, and
existing jurisprudence. x x x.
WHEREFORE, premises considered, the Petition is GRANTED. The Decision
dated 25 March 2008 and Resolution dated 30 April 2008 of the National
Labor Relations Commission (Sixth Division) in NLRC LAC NO. 11-000311-
07; NLRC NCR OFW (M) CASE NO. 06-10-03278-00 are REVERSED and SET
ASIDE and private respondents complaint is hereby DISMISSED.
However, solely for humanitarian considerations, petitioners are hereby
ORDERED to grant private respondent the amount of Php50,000.00 by way
of financial assistance, and to continue, at their expense, the medical
treatment of private respondent until the final evaluation or assessment
could be made, with regard to private respondents medical condition.SO
ORDERED.20
Petitioners Motion for Reconsideration was denied by the CA in its
Resolution dated March 4, 2009.21
Hence, this Petition anchored on the following grounds---
I
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN IGNORING
THE OVERWHELMING EVIDENCE THAT SUPPORTS PETITIONERS ENTITLEMENT
TO MAXIMUM DISABILITY BENEFITS IN THE AMOUNT OF USD60,000.00
II
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN DENYING THE COMPLAINANTS DISABILITY BENEFITS SOLELY
BECAUSE THE COMPANY-DESIGNATED PHYSICIAN HAS DECLARED PETITIONERS
ILLNESS AS NOT WORK-RELATED
III
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT CONSIDERING THAT COMPLAINANT COULD NO LONGER
RETURN TO ACTIVE SEA DUTIES, A JOB HE WAS TRAINED AND ACCUSTOMED TO
PERFORM WITHOUT ENDANGERING HIS HEALTH AND LIFE
IV
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISMISSING
PETITONERS SEPARATE CLAIMS FOR DAMAGES AND ATTORNEYS FEES. 22
The Court denies the petition.
Preliminarily, considering the grounds raised by petitioner, it appears that
he denominated this petition as one under Rule 45, but he filed it as both a
petition for review under Rule 45 and a petition for certiorari under Rule 65
of the Rules of Court. The applicable rule is Rule 45, which clearly provides
that decisions, final orders or resolutions of the CA in any case, regardless
of the nature of the action or proceeding involved, may be appealed to this
Court through a petition for review. This remedy is a continuation of the
appellate process over the original case. Recourse under Rule 65 cannot
be allowed either as an add-on or as a substitute for appeal.23
The procedural infirmity notwithstanding, the Court shall treat this petition
as one filed under Rule 45 only and shall consider the alleged grave abuse
of discretion on the part of the CA as an allegation of reversible error.
The pivotal issue to be resolved is whether or not the CA is correct in
denying petitioners entitlement to full and total disability benefits
amounting to US$60,000.00 and attorneys fees in the amount of
US$6,000.00.
The Court resolves the issue in the affirmative.
It need not be overemphasized that in the absence of substantial
evidence, working conditions cannot be accepted to have caused or at
least increased the risk of contracting the disease, in this case, brief
psychotic disorder. Substantial evidence is more than a mere scintilla The
evidence must be real and substantial, and not merely apparent; for the
duty to prove work-causation or work-aggravation imposed by law is real
and not merely apparent.24
Even in case of death of a seafarer, the grant of benefits in favor of the
heirs of the deceased is not automatic. As in the case of Rivera v. Wallem
Maritime Services, Inc.,25 without a post-medical examination or its
equivalent to show that the disease for which the seaman died was
contracted during his employment or that his working conditions increased
the risk of contracting the ailment, the employer/s cannot be made liable
for death compensation.
In fact, in Mabuhay Shipping Services, Inc. v. NLRC,26 the Court held that
the death of a seaman even during the term of employment does not
automatically give rise to compensation. Several factors must be taken
into account such as the circumstances which led to the death, the
provisions of the contract, and the right and obligation of the employer
and the seaman with due regard to the provisions of the Constitution on
the due process and equal protection clauses.
Petitioner points out that his illness is work-related simply because had it
been a land-based employment, petitioner would have easily gone home
and attended to the needs of his family.27
The Court cannot submit to this argument. This is not the "work-related"
instance contemplated by the provisions of the employment contract in
order to be entitled to the benefits. Otherwise, every seaman would
automatically be entitled to compensation because the nature of his work
is not land-based and the submission of the seaman to the company-
designated physician as to the nature of the illness suffered by him would
just be an exercise of futility.
The fact is that the petitioner failed to establish, by substantial evidence,
that his brief psychotic disorder was caused by the nature of his work as
oiler of the company-owned vessel. In fact, he failed to elaborate on the
nature of his job or to specify his functions as oiler of respondent company.
The Court, therefore, has difficulty in finding any link between his position
as oiler and his illness.
The Court cannot give less importance either to the fact that petitioner
was a seaman for 10 years serving 10 to 18-month contracts and never did
he have any problems with his earlier contracts.28 The Court can only
surmise that the brief psychotic disorder suffered by him was brought
about by a family problem. His daughter was sick and, as a seafarer, he
could not just decide to go home and be with his family. 29 Even the
psychiatric report30 prepared by the evaluating private psychiatrist of
petitioner shows that the hospitalization of petitioners youngest daughter
caused him poor sleep and appetite. Later, he started hearing voices and
developed fearfulness.
Although strict rules of evidence are not applicable in claims for
compensation and disability benefits, the Court cannot just disregard the
provisions of the POEA SEC. Significantly, a seaman is a contractual and
not a regular employee. His employment is contractually fixed for a certain
period of time. Petitioner and respondents entered into a contract of
employment. It was approved by the POEA on October 25, 2005 and, thus,
served as the law between the parties. Undisputedly, Section 20-B of the
POEA Amended Standard Terms and Conditions Governing the Employment
of Filipino Seafarers on Board Ocean-Going Vessels (POEA-SEC) provides
for compensation and benefits for injury or illness suffered by a seafarer. It
says that, in order to claim disability benefits under the Standard
Employment Contract, it is the company-designated physician who must
proclaim that the seaman suffered a permanent disability, whether total or
partial, due to either injury or illness, during the term of the latters
employment. In German Marine Agencies, Inc. v. NLRC,31 the Courts
discussion on the seafarers claim for disability benefits is enlightening.
Thus:
[In] order to claim disability benefits under the Standard Employment
Contract, it is the "company-designated" physician who must proclaim that
the seaman suffered a permanent disability, whether total or partial, due
to either injury or illness, during the term of the latters employment.
There is no provision requiring accreditation by the POEA of such
physician. In fact, aside from their own gratuitous allegations, petitioners
are unable to cite a single provision in the said contract in support of their
assertions or to offer any credible evidence to substantiate their claim. If
accreditation of the company-designated physician was contemplated by
the POEA, it would have expressly provided for such a qualification, by
specifically using the term "accreditation" in the Standard Employment
Contract, to denote its intention. For instance, under the Labor Code, it is
expressly provided that physicians and hospitals providing medical care to
an injured or sick employee covered by the Social Security System or the
Government Service Insurance System must be accredited by the
Employees Compensation Commission. It is a cardinal rule in the
interpretation of contracts that if the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall control. There is no ambiguity in the
wording of the Standard Employment Contract the only qualification
prescribed for the physician entrusted with the task of assessing the
seamans disability is that he be company-designated. When the
language of the contract is explicit, as in the case at bar, leaving no doubt
as to the intention of the drafters thereof, the courts may not read into it
any other intention that would contradict its plain import. [Emphasis
supplied]
In this case, the findings of respondents designated physician that
petitioner has been suffering from brief psychotic disorder and that it is not
work-related must be respected.
The Court commiserates with the petitioner, but absent substantial
evidence from which reasonable basis for the grant of benefits prayed for
can be drawn, the Court is left with no choice but to deny his petition, lest
an injustice be caused to the employer. Otherwise stated, while it is true
that labor contracts are impressed with public interest and the provisions
of the POEA SEC must be construed logically and liberally in favor of
Filipino seamen in the pursuit of their employment on board ocean-going
vessels, still the rule is that justice is in every case for the deserving, to be
dispensed with in the light of established facts, the applicable law, and
existing jurisprudence.32
Lastly, it appears premature at this time to consider petitioners disability
as permanent and total because the severity of his ailment has not been
established with finality to render him already incapable of performing the
work of a seafarer. In fact, the medical expert termed his condition
as brief psychotic disorder. The Court also takes note, as the CA correctly
did, that petitioner did not finish his treatment with the company-
designated physician, hence, there is no final evaluation yet on petitioner.
All told, no reversible error was committed by the CA in rendering the
assailed Decision and issuing the questioned Resolution.WHEREFORE, the
October 29, 2008 Decision of the Court of Appeals and its March 4, 2009
Resolution in CA-G.R. SP No. 104343, are AFFIRMED./p>
SO ORDERED.
G.R. No. 112877 February 26, 1996
SANDIGAN SAVINGS and LOAN BANK, INC., and SANDIGAN REALTY
DEVELOPMENT CORPORATION,petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION and ANITA M.
JAVIER, respondents.
HERMOSISIMA, JR., J.:
This Petition for Certiorari, with prayer for the issuance of a temporary
restraining order, seeks to review, modify and/or set aside the
Resolution1 dated 24 September 1993 and the Resolution 2 dated 19
November 1993 of public respondent National Labor Relations Commission
(NLRC) in NLRC CAS RAB-III-05-1560-90. The former affirmed, with
modification, the Decision3 of the Labor Arbiter of the NLRC Regional
Arbitration Branch No. III while the latter denied the motion to reconsider
the former.
Private respondent Anita M. Javier (hereinafter referred to as Javier) worked
as a realty sales agent of the petitioner Sandigan Realty Development
Corporation (hereinafter called the Sandigan Realty) from November 2,
1982 (or November 9, 1982) 4 to November 30, 1986. Their agreement was
that Javier would receive a 5% commission for every sale, or if no sale was
made, she would receive a monthly allowance of P500,00.
Subsequently, that is, on 1 December 1986, Javier was hired as a
marketing collector of petitioner Sandigan Savings and Loan Bank
(hereinafter called the Sandigan Bank) by Angel Andan, the President of
both the Sandigan Bank and Sandigan Realty. Javier's monthly salary and
allowance were initially in the amount of P788.00 and P585.00,
respectively. These were adjusted thereafter (the latest adjustment having
been made on 1 July 1989), to P1,840.00 per month as salary and to
P510.00 as monthly allowance, per "Notice of Salary Adjustment."5
Meanwhile, respondent Javier continued to be a realty sales agent of
Sandigan Realty oh the side, and while she still received the 5%
commission on her sales, she no longer enjoyed the P500,00 monthly
allowance.
On 20 April 1990, Javier was advised by Angel Andan not to report for work
anymore. This in effect was a notice of dismissal. The manner by which her
dismissal was effected has been correctly described by the Solicitor
General, thus:
On April 20, 1990, around 8:30 in the morning, while performing
her duties at the Bank, Javier saw and overhead petitioner Andan
summon the Bank's personnel officer, Mrs. Liberata G. Fajardo, and
instruct her to prepare her (Javier's) termination papers.
Immediately thereafter, Andan changed his mind and told Mrs.
Fajardo to prepare instead a resignation letter for Javier, saying,
"Ayaw ko na siyang makita sa susnod." Turning to private
respondent, he said, "Huwag na ninyong itanong kong anong
dahilan, basta't gusto ko, ito ang desisyon ko. Naawa lang ako sa
iyo noon kaya kita tinanggap. Ka Anita, huwag mong isipin na may
kinalaman ang mga pangyayari kay Ditas, wala, wala, hindi iyon,
basta't si Alice, iniskandalo na naman ako.
xxx xxx xxx
WHEREFORE, considering the foregoing consideration, and for
having unjustly dismissed Anita Javier from her employment,
respondents are hereby directed to reinstate her to her former
position as marketing collector of Sandigan Savings and Loan Bank
and sales agent of Sandigan Realty Development Corporation, pay
her full backwages from the time of her dismissal, plus 10%
attorney's fee and all her monetary award, until her actual
reinstatement, and P60,000.00 moral and exemplary damages to
compensate for her mental pain and anguish, her social humiliation
and besmirched reputation. Should reinstatement be rendered
impossible by virtue of the abolition of her position as marketing
collector, grant her, in addition to backwages and other benefits,
separation pay equivalent to one (1) month for every year of
service until after this decision shall have become final and
executory.7
On appeal, the NLRC affirmed the decision of the Labor Arbiter in its
Resolution, dated 24 September 1993, but, deleting the award of damages
and attorney's fees, provided the following monetary award of backwages
and separation pay:
"Backwages: Fr: April 20, 1990-April 20, 1993 - 36 months

In the afternoon, after she received P50,000.00 from one Mr. Ben
Santos as full payment for a lot sold in Sta. Rita Village, Guiguinto, Realty: P500.00 (allowance) x 36 P18,000.00
Bulacan, Andan ordered Reynaldo Bordado, her co-employee, to
withdraw her commission of P10,000.00 from the account of the
Realty, saying, "Ibigay mo sa ka Anita" yan para hindi na balikan
dito.6 Savings Bank: P2,400.00 x 36 P86,400.00

The advice of her termination notwithstanding, Javier reported for work at

the bank on the next working day or on 23 April 1990. Though she signed
TOTAL P104,400.0
the attendance sheet, she left when she could not find her table.

On 18 May 1990, Javier filed a complaint against petitioners and Angel

Andan with the NLRC Regional Arbitration Branch No. III at San Fernando, Separation Pay:
Pampanga, for illegal dismissal, seeking reinstatement and payment of
backwages and moral and exemplary damages.

On 6 October 1992, the labor arbiter rendered judgment in private Realty: Nov. 2, 1982-April 20, 1993 - 10 years
respondent's favor, the dispositive portion of which reads:

P500.00 (allowance) x 10
Savings Bank: Dec. 1, 1986-April 20, 1993
Consequently, the issues in this case are: (1) whether or not the
respondent NLRC abused its discretion in finding that private respondent
P5,000.00
was a regular employee of the petitioner Sandigan Realty, entitled to
backwages and separation pay because of her alleged illegal separation
therefrom; and (2) whether the computation of the monetary award owing
- 6 years to the private respondent, as contained in the assailed NLRC resolution,
was attended with serious errors as to its bases both in fact and in law.

In determining the existence of an employer-employee relationship, the

P2,400.00 x 6 P14,400.00following elements are generally considered: (1) the selection and
GRAND TOTAL
P123,800.00"
The petitioners' Motion for Reconsideration of the said Resolution, and that
of the private respondent, were denied by the NLRC in its Resolution, dated
19 November 1993, the dispositive portion of which reads:
It appearing that the issues raised by both parties in their Motions
for Reconsideration were thoroughly discussed and duly passed
upon in the questioned Resolution promulgated on September 24,
1993, the same are hereby denied for lack of merit with finality.
No further motion for reconsideration shall be entertained.
The petitioners, thus, instituted this petition for certiorari, contending that
the NLRC gravely and seriously abused its discretion in holding that:
1. Javier is a regular employee of both Sandigan Realty and
Sandigan Bank and entitled to backwages and separation pay from
both;
2. Javier was receiving P2,400.00 a month from the bank and that
she is entitled to separation pay for six years.8
The records disclose that petitioner Sandigan Bank no longer disputes the
finding that Javier was dismissed by it and that she did not abandon her
job thereat. In fact, it would have paid private respondent the monetary
award representing backwages and separation pay adjudged against it in
the assailed NLRC resolution, if only it found the same to be in the correct
amount.9
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer's power to control the employee with
respect to the means and methods by which the work is to be
accomplished. 10 This Court has generally relied on the so called "right of
control test" in making such a determination. Where the person for whom
the services are performed reserves a right to control not only the end to
be achieved but also the means by which such end is reached, 11 the
relationship is deemed to exist. Stated differently, it is the power of control
which is the most determinative factor. 12 It is deemed to be such an
important factor that the other requisites may even be
disregarded. 13 Thus, in the case of Cosmopolitan Funeral Homes,
Inc. v. Maalat, it was held that "to determine whether a person who
performs work for another is the latter's employee or is all independent
contractor, the prevailing test is 'the right of control test'." In the said case,
the petitioner therein failed to prove that the contract with private
respondent was that of a mere agency, an indication that subject person is
free to accomplish his work on his own terms and may engage in other
means of livelihood. 14
Viewed in the light of the foregoing criteria, the features of the relationship
between Javier and the Sandigan Realty, as may be gleaned from the facts
described herein below by the Office of the Solicitor General, readily
negate the existence of an employer-employee relationship between them,
the element of control being noticeably absent.
Javier was hired in 1982 to sell houses or lots owned by the Realty.
She was paid 5% commission for every lot or house sold. From
1982 up to 1986 when she was hired as a marketing collector of
petitioner bank, she received from the Realty P500.00 monthly
allowance if she was unable to make any sale. The P500.00
allowance ceased when she became a regular employee of the
petitioner bank.
Javier sold houses or lots according to the manner or means she
chose to. The petitioner realty firm, while interested in the result of
her work, had no control with respect to the details of how the sale
 of a house or lot was achieved. She was free to adopt her own
selling methods or free to sell at her own time. (cf. Insular Life
Assurance Co., Ltd. v. NLRC, 179 SCRA 459 [1989]). Her obligation
was merely to turn over the proceeds of each sale to the Realty
and, in turn, the Realty paid her by the job, i.e., her commission,
not by the hour.
Moreover, selling houses and lots was merely her sideline or extra
work for a sister company. 15
As it appears that Sandigan Realty had no control over the conduct of
Javier as a realty sales agent since its only concern or interest was in the
result of her work and not in how it was achieved, there cannot now be any
doubt that Javier was not an employee, much less a regular employee of
the Sandigan Realty. Hence, she cannot be entitled to the right to security
of tenure nor to backwages and separation pay as a consequence of her
separation therefrom.
Evidently, the legal relation of Javier to the Sandigan Realty can be that of
an independent contractor, where the control of the contracting party is
only with respect td the result of the work, as distinguished from an
employment relationship where the person rendering service is under the
control of the hirer with respect to the details and manner of
performance. 16
In the case of Sara v. Agarrado, private respondent who sold palay and rice
for the petitioners under an arrangement or agreement that the former
would be paid P2.00 commission per sack of milled rice sold as well as a
commission of 10% per kilo of palay purchased, 17 and that she would
spend her own money for the undertaking, and where she was shown to
have worked for petitioners at her own pleasure, that she was not subject
to definite hours or conditions of work, that she could even delegate the
task of buying and selling to others, if she so desired, or simultaneously
engaged in other means of livelihood while selling and purchasing rice or
palay, was held to be an independent contractor. 18
By the same token, the private respondent in another case, 19 who earns
on a per head/talent commission basis and who works as she pleases, on
her own schedule, terms and conditions was also held to be an
independent contractor.
Private respondent Anita Javier is clearly similarly placed as the private
respondents in the above-cited cases. Hence, she could not have been a
regular employee but an independent contractor in relation to the
petitioner Sandigan Realty.
As we hold that private respondent was not a regular employee of the
Sandigan Realty and that she could not, therefore, be entitled to
backwages and separation pay, we will necessarily have to limit our
treatment of the alleged errors committed by the NLRC in the computation
of the monetary award to that adjudged against the petitioner Sandigan
Bank. But, first, we have to settle the question as to whether
reinstatement or payment of separation pay in its stead is the proper relief
to be accorded the private respondent, it appearing that neither the labor
arbiter nor the NLRC made a definitive ruling on the matter. This has
become especially more significant since private respondent, in her
Comment20 and Memorandum, 21 presses for an order of reinstatement to
her former position, claiming that there is no sufficient basis for a grant of
separation pay in lieu thereof.
We agree with the private respondent in this respect.
Private respondent Anita Javier, by virtue of her employment status, is,
under the law entitled to security of tenure, which means that she has the
right to continue in employment until the same is terminated under
conditions required by law. Article 279 of the Labor Code, as amended,
clearly provides that:
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 the 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.
There being a finding of illegal dismissal of private respondent Anita Javier,
her reinstatement should follow as a matter of course, unless it be shown
that the same is no longer possible, in which case, payment of separation
pay will be ordered, in lieu thereof. 22 In this case, we do not find any such
showing or basis to preclude private respondent's reinstatement.
In effect, the petitioner bank is liable to private respondent only for
backwages, inclusive of allowances, and other benefits or their monetary
equivalent computed from the time her compensation was withheld from
her up to the time of her actual reinstatement, at the rate of her latest
monthly salary and allowance which was in the total amount of P2,350,00
as shown by Javier's latest "Notice of Salary Adjustment". However,
earnings derived elsewhere by Javier from the date of dismissal up to the
date of reinstatement, if there be any, should be deducted from said
backwages. 23 In this connection, it must be pointed out that the NLRC
applied the old rule, otherwise known as the "Mercury Drug Rule", and so,
as to the rate of P2,400.00, no-evidence was presented as basis. The rule
that should apply in this case is that provided in Article 279 of the Labor
Code, as amended by Section 34, Republic Act No. 6715, as aforequoted,
which took effect on March 21, 1989, considering that the private
respondent's dismissal occurred thereafter, or on April 20, 1990.
WHEREFORE, the petition is GRANTED. The assailed resolutions of the
National Labor Relations Commission, dated 24 September 1993 and 19
November 1993, are hereby modified to conform both to our finding that
private respondent was not a regular employee of Sandigan Realty
Development Corporation but of the Sandigan Savings and Loan Bank, Inc.
and to our determination respecting the monetary award to which the
private respondent is entitled. The petitioner Sandigan Savings and Loan
Bank, Inc. is hereby ordered to reinstate private respondent Anita Javier
and to pay her backwages from April 20, 1990 up to the date of her actual
reinstatement, less earnings derived elsewhere, if any.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.
Separate Opinions
PADILLA, J.: concurring and dissenting:
I concur in the ponencia of Mr. Justice Regino Hermosisima, Jr. including its
holding that because of the illegal dismissal, the backwages to be awarded
to the dismissed employee (Anita Javier) should be reckoned from the date
of illegal dismissal to date of actual reinstatement (thereby departing from
the "Mercury Drug Rule"). Article 279 of the Labor Code as amended by
Rep. Act No. 6715 provides for such a period as the basis in the
computation of backwages.
I do not however agree to the deduction from backwages of income or
salaries earned by the employee from elsewhere during the period of his
illegal dismissal. As I stated in my separate opinion in Pines City
Educational Center v. NLRC G.R. No. 96779, 10 November 1993, 227 SCRA
655:
xxx xxx xxx
The amendment to Art. 279 of the Labor Code introduced by Rep.
Act No. 6715 inserted the qualification " full" to the word
"backwages". The intent of the law seems to be clear. The plain
words of the statute provide that an employee who is unjustly
dismissed is entitled to FULL backwages from the time of his
dismissal to actual reinstatement. The law provides no qualification
nor does it state that income earned by the employee during the
period between his unjust dismissal and reinstatement should be
deducted from such backwages. When the law does not provide,
the Court should not improvise.
It is further my view that the principle of unjust enrichment (if no
deduction is allowed from backwages) does not apply in this case,
for the following reasons:
1. The applicable provision of law should be construed in
favor of labor.
2. The Labor Code is special law which should prevail over
the Civil Code provisions on unjust enrichment.
3 The language employed by the statute and, therefore, its
intent are clear. Where the unjust dismissal occurs after
Rep. Act No. 6715 took effect, backwages must be awarded
from the time the employee is unlawfully dismissed until
the time he is actually reinstated. There is no provision
authorizing deduction of any income earned by the
employee during that period. The statutory formula was
evidently crafted by the legislature not only for convenience
and expediency in executing the monetary judgments in
favor of the employees but also to prevent the employer
from reporting to delaying tactics when the judgment is
executed by pleading income earned by the employee
before reinstatement as proper deductions from
backwages. It is true that the dismissed employee may also
resort to the same delaying tactics but when we consider
the by and large inherent inequality of resources between
employer and employee, the legislative formula would
seem to be equitable. Besides and this we cannot over-
stress - given the language of the law, the Court appears to
have no alternative but to award such full backwages
without deduction or qualification. Any other interpretation
opens the Court to the charge of indulging in judicial
legislation.
I therefore vote to award private respondents Roland Picart and Lucia Chan Records show that on various dates starting in 1981, petitioner hotel and
full backwages from time of their unjust dismissal to their actual restaurant hired the following people, all respondents in this case, with the
reinstatement, without deduction or qualification in accordance with the following jobs:8
mandate of the law. (Rep. Act No. 6715)." 1. Wenefredo Loveres Accountant and Officer-in-charge
2. Paterno Llarena Front Desk Clerk
3. Gregorio Nicerio Supervisory Waiter
4. Amado Macandog Roomboy
5. Luis Guades Utility/Maintenance Worker
6. Santos Broola Roomboy
7. Teodoro Laurenaria Waiter
8. Eduardo Alamares Roomboy/Waiter
9. Lourdes Camigla Cashier
10. Chona Bumalay Cashier
11. Jose Atractivo Technician
12. Amado Alamares Dishwasher and Kitchen Helper
13. Roger Burce Cook
14. Rolando Adana Waiter
G.R. No. 157634 May 16, 2005 15. Miguel Torrefranca Cook
16. Edgardo Torrefranca Cook

MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO
LAM, petitioners,
vs. ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO
ALAMARES, AMADO ALAMARES, EDGARDO TORREFRANCA,
LOURDES CAMIGLA, TEODORO LAURENARIA, WENEFREDO
LOVERES, LUIS GUADES, AMADO MACANDOG, PATERNO LLARENA,
GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA, and
SANTOS BROOLA, respondents.
Due to the expiration and non-renewal of the lease contract for the rented
space occupied by the said hotel and restaurant at Rizal Street, the hotel
operations of the business were suspended on March 31, 1997. 9 The
operation of the restaurant was continued in its new location at Elizondo
Street, Legazpi City, while waiting for the construction of a new Mayon
Hotel & Restaurant at Pearanda Street, Legazpi City.10 Only nine (9) of the
sixteen (16) employees continued working in the Mayon Restaurant at its
new site.11

On various dates of April and May 1997, the 16 employees filed complaints
PUNO, J.:
for underpayment of wages and other money claims against petitioners, as
follows:12
This is a petition for certiorari to reverse and set aside the Decision issued
by the Court of Appeals (CA) 1 in CA-G.R. SP No. 68642, entitled "Rolando Wenefredo Loveres, Luis Guades, Amado Macandog and Jose
Adana, Wenefredo Loveres, et. al. vs. National Labor Relations Commission Atractivo for illegal dismissal, underpayment of wages,
(NLRC), Mayon Hotel & Restaurant/Pacita O. Po, et al.," and the nonpayment of holiday and rest day pay; service incentive leave
Resolution2 denying petitioners' motion for reconsideration. The assailed pay (SILP) and claims for separation pay plus damages;
CA decision reversed the NLRC Decision which had dismissed all of
respondents' complaints,3 and reinstated the Joint Decision of the Labor
Paterno Llarena and Gregorio Nicerio for illegal dismissal with
Arbiter4 which ruled that respondents were illegally dismissed and entitled
claims for underpayment of wages; nonpayment of cost of living
to their money claims.
allowance (COLA) and overtime pay; premium pay for holiday and
rest day; SILP; nightshift differential pay and separation pay plus
The facts, culled from the records, are as follows:5 damages;
Petitioner Mayon Hotel & Restaurant is a single proprietor business Miguel Torrefranca, Chona Bumalay and Lourdes Camigla for
registered in the name of petitioner Pacita O. Po,6 whose mother, petitioner underpayment of wages; nonpayment of holiday and rest day pay
Josefa Po Lam, manages the establishment.7 The hotel and restaurant and SILP;
employed about sixteen (16) employees.
 Rolando Adana, Roger Burce and Amado Alamares for
underpayment of wages; nonpayment of COLA, overtime, holiday,
rest day, SILP and nightshift differential pay;
Eduardo Alamares for underpayment of wages, nonpayment of
holiday, rest day and SILP and night shift differential pay;
Santos Broola for illegal dismissal, underpayment of wages,
overtime pay, rest day pay, holiday pay, SILP, and damages;13 and
Teodoro Laurenaria for underpayment of wages; nonpayment of
COLA and overtime pay; premium pay for holiday and rest day, and
SILP.
On July 14, 2000, Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a
Joint Decision in favor of the employees. The Labor Arbiter awarded
substantially all of respondents' money claims, and held that respondents
Loveres, Macandog and Llarena were entitled to separation pay, while
respondents Guades, Nicerio and Alamares were entitled to their
retirement pay. The Labor Arbiter also held that based on the evidence
presented, Josefa Po Lam is the owner/proprietor of Mayon Hotel &
Restaurant and the proper respondent in these cases.
On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and
all the complaints were dismissed.
Respondents filed a motion for reconsideration with the NLRC and when
this was denied, they filed a petition for certiorari with the CA which
rendered the now assailed decision.
After their motion for reconsideration was denied, petitioners now come to
this Court, seeking the reversal of the CA decision on the following
grounds:
I. The Honorable Court of Appeals erred in reversing the decision of the
National Labor Relations Commission (Second Division) by holding that the
findings of fact of the NLRC were not supported by substantial evidence
despite ample and sufficient evidence showing that the NLRC decision is
indeed supported by substantial evidence;
II. The Honorable Court of Appeals erred in upholding the joint decision of
the labor arbiter which ruled that private respondents were illegally
dismissed from their employment, despite the fact that the reason why
private respondents were out of work was not due to the fault of petitioners
but to causes beyond the control of petitioners.
III. The Honorable Court of Appeals erred in upholding the award of
monetary benefits by the labor arbiter in his joint decision in favor of the
private respondentS, including the award of damages to six (6) of the
private respondents, despite the fact that the private respondents have not
proven by substantial evidence their entitlement thereto and especially the
fact that they were not illegally dismissed by the petitioners.
IV. The Honorable Court of Appeals erred in holding that Pacita Ong Po is the
owner of the business establishment, petitioner Mayon Hotel and
Restaurant, thus disregarding the certificate of registration of the business
establishment ISSUED by the local government, which is a public document,
and the unqualified admissions of complainants-private respondents. 14
In essence, the petition calls for a review of the following issues:
1. Was it correct for petitioner Josefa Po Lam to be held liable as the
owner of petitioner Mayon Hotel & Restaurant, and the proper
respondent in this case?
2. Were respondents Loveres, Guades, Macandog, Atractivo,
Llarena and Nicerio illegally dismissed?
3. Are respondents entitled to their money claims due to
underpayment of wages, and nonpayment of holiday pay, rest day
premium, SILP, COLA, overtime pay, and night shift differential
pay?
It is petitioners' contention that the above issues have already been
threshed out sufficiently and definitively by the NLRC. They therefore assail
the CA's reversal of the NLRC decision, claiming that based on the ruling
in Castillo v. NLRC,15 it is non sequitur that the CA should re-examine the
factual findings of both the NLRC and the Labor Arbiter, especially as in
this case the NLRC's findings are allegedly supported by substantial
evidence.
We do not agree.
There is no denying that it is within the NLRC's competence, as an
appellate agency reviewing decisions of Labor Arbiters, to disagree with
and set aside the latter's findings. 16 But it stands to reason that the NLRC
should state an acceptable cause therefore, otherwise it would be a
whimsical, capricious, oppressive, illogical, unreasonable exercise of quasi-
judicial prerogative, subject to invalidation by the extraordinary writ
of certiorari.17 And when the factual findings of the Labor Arbiter and the
NLRC are diametrically opposed and this disparity of findings is called into
question, there is, necessarily, a re-examination of the factual findings to
ascertain which opinion should be sustained.18 As ruled in Asuncion v.
NLRC,19
Although, it is a legal tenet that factual findings of administrative
bodies are entitled to great weight and respect, we are constrained
to take a second look at the facts before us because of the
diversity in the opinions of the Labor Arbiter and the NLRC. A
disharmony between the factual findings of the Labor Arbiter and
those of the NLRC opens the door to a review thereof by this
Court.20
The CA, therefore, did not err in reviewing the records to determine which
opinion was supported by substantial evidence.
Moreover, it is explicit in Castillo v. NLRC21 that factual findings of
administrative bodies like the NLRC are affirmed only if they are
supported by substantial evidence that is manifest in the decision
and on the records. As stated in Castillo:
[A]buse of discretion does not necessarily follow from a reversal by the
NLRC of a decision of a Labor Arbiter. Mere variance in evidentiary
assessment between the NLRC and the Labor Arbiter does not
automatically call for a full review of the facts by this Court. The NLRC's
decision, so long as it is not bereft of substantial support from the
records, deserves respect from this Court. As a rule, the original and
exclusive jurisdiction to review a decision or resolution of respondent
NLRC in a petition for certiorari under Rule 65 of the Rules of Court
does not include a correction of its evaluation of the evidence but is
confined to issues of jurisdiction or grave abuse of discretion. Thus, the
NLRC's factual findings, if supported by substantial evidence, are
entitled to great respect and even finality, unless petitioner is able to
show that it simply and arbitrarily disregarded the evidence before it or
had misappreciated the evidence to such an extent as to compel a
contrary conclusion if such evidence had been properly appreciated.
(citations omitted)22
After careful review, we find that the reversal of the NLRC's decision was in
order precisely because it was not supported by substantial evidence.
1. Ownership by Josefa Po Lam
The Labor Arbiter ruled that as regards the claims of the employees,
petitioner Josefa Po Lam is, in fact, the owner of Mayon Hotel & Restaurant.
Although the NLRC reversed this decision, the CA, on review, agreed with
the Labor Arbiter that notwithstanding the certificate of registration in the
name of Pacita Po, it is Josefa Po Lam who is the owner/proprietor of Mayon
Hotel & Restaurant, and the proper respondent in the complaints filed by
the employees. The CA decision states in part:
[Despite] the existence of the Certificate of Registration in the name of
Pacita Po, we cannot fault the labor arbiter in ruling that Josefa Po Lam
is the owner of the subject hotel and restaurant. There were conflicting
documents submitted by Josefa herself. She was ordered to submit
additional documents to clearly establish ownership of the hotel and
restaurant, considering the testimonies given by the [respondents] and
the non-appearance and failure to submit her own position paper by
Pacita Po. But Josefa did not comply with the directive of the Labor
Arbiter. The ruling of the Supreme Court in Metropolitan Bank and Trust
Company v. Court of Appeals applies to Josefa Po Lam which is stated in
this wise:
When the evidence tends to prove a material fact which imposes
a liability on a party, and he has it in his power to produce
evidence which from its very nature must overthrow the case
made against him if it is not founded on fact, and he refuses to
produce such evidence, the presumption arises that the
evidence[,] if produced, would operate to his prejudice, and
support the case of his adversary.
Furthermore, in ruling that Josefa Po Lam is the real owner of the
hotel and restaurant, the labor arbiter relied also on the
testimonies of the witnesses, during the hearing of the instant
case. When the conclusions of the labor arbiter are sufficiently
corroborated by evidence on record, the same should be respected
by appellate tribunals, since he is in a better position to assess and
evaluate the credibility of the contending parties.23(citations
omitted)
Petitioners insist that it was error for the Labor Arbiter and the CA to have
ruled that petitioner Josefa Po Lam is the owner of Mayon Hotel &
Restaurant. They allege that the documents they submitted to the Labor
Arbiter sufficiently and clearly establish the fact of ownership by petitioner
Pacita Po, and not her mother, petitioner Josefa Po Lam. They contend that
petitioner Josefa Po Lam's participation was limited to merely (a) being the
overseer; (b) receiving the month-to-month and/or year-to-year financial
reports prepared and submitted by respondent Loveres; and (c) visitation
of the premises.24 They also put emphasis on the admission of the
respondents in their position paper submitted to the Labor Arbiter,
identifying petitioner Josefa Po Lam as the manager, and Pacita Po as the
owner.25 This, they claim, is a judicial admission and is binding on
respondents. They protest the reliance the Labor Arbiter and the CA placed
on their failure to submit additional documents to clearly establish
ownership of the hotel and restaurant, claiming that there was no need for
petitioner Josefa Po Lam to submit additional documents considering that
the Certificate of Registration is the best and primary evidence of
ownership.
We disagree with petitioners. We have scrutinized the records and find the
claim that petitioner Josefa Po Lam is merely the overseer is not borne out
by the evidence.
First. It is significant that only Josefa Po Lam appeared in the proceedings
with the Labor Arbiter. Despite receipt of the Labor Arbiter's notice and
summons, other notices and Orders, petitioner Pacita Po failed to appear in
any of the proceedings with the Labor Arbiter in these cases, nor file her
position paper.26 It was only on appeal with the NLRC that Pacita Po signed
the pleadings.27 The apathy shown by petitioner Pacita Po is contrary to
human experience as one would think that the owner of an establishment
would naturally be concerned when all her employees file complaints
against her.
Second. The records of the case belie petitioner Josefa Po Lam's claim that
she is merely an overseer. The findings of the Labor Arbiter on this
question were based on credible, competent and substantial evidence. We
again quote the Joint Decision on this matter:
Mayon Hotel and Restaurant is a [business name] of an enterprise.
While [petitioner] Josefa Po Lam claims that it is her daughter, Pacita Po,
who owns the hotel and restaurant when the latter purchased the same
from one Palanos in 1981, Josefa failed to submit the document of sale
from said Palanos to Pacita as allegedly the sale was only verbal
although the license to operate said hotel and restaurant is in the name
of Pacita which, despite our Order to Josefa to present the same, she
failed to comply (p. 38, tsn. August 13, 1998). While several
documentary evidences were submitted by Josefa wherein Pacita was
named therein as owner of the hotel and restaurant (pp. 64, 65, 67 to
69; vol. I, rollo)[,] there were documentary evidences also that were
submitted by Josefa showing her ownership of said enterprise (pp. 468
to 469; vol. II, rollo). While Josefa explained her participation and
interest in the business as merely to help and assist her daughter as the
hotel and restaurant was near the former's store, the testimonies of
[respondents] and Josefa as well as her demeanor during the trial in
these cases proves (sic) that Josefa Po Lam owns Mayon Hotel and
Restaurant. [Respondents] testified that it was Josefa who exercises all
the acts and manifestation of ownership of the hotel and restaurant like
transferring employees from the Greatwall Palace Restaurant which she
and her husband Roy Po Lam previously owned; it is Josefa to whom the
employees submits (sic) reports, draws money for payment of payables
and for marketing, attending (sic) to Labor Inspectors during ocular
inspections. Except for documents whereby Pacita Po appears as the
owner of Mayon Hotel and Restaurant, nothing in the record shows any
circumstance or manifestation that Pacita Po is the owner of Mayon
Hotel and Restaurant. The least that can be said is that it is absurd for a
person to purchase a hotel and restaurant in the very heart of the City
of Legazpi verbally. Assuming this to be true, when [petitioners],
particularly Josefa, was directed to submit evidence as to the ownership
of Pacita of the hotel and restaurant, considering the testimonies of
[respondents], the former should [have] submitted the lease contract
between the owner of the building where Mayon Hotel and Restaurant
was located at Rizal St., Legazpi City and Pacita Po to clearly establish
ownership by the latter of said enterprise. Josefa failed. We are not
surprised why some employers employ schemes to mislead Us in order
to evade liabilities. We therefore consider and hold Josefa Po Lam as the
owner/proprietor of Mayon Hotel and Restaurant and the proper
respondent in these cases.28
Petitioners' reliance on the rules of evidence, i.e., the certificate of
registration being the best proof of ownership, is misplaced.
Notwithstanding the certificate of registration, doubts were cast as to the
true nature of petitioner Josefa Po Lam's involvement in the enterprise, and
the Labor Arbiter had the authority to resolve this issue. It was therefore
within his jurisdiction to require the additional documents to ascertain who
was the real owner of petitioner Mayon Hotel & Restaurant.
Article 221 of the Labor Code is clear: technical rules are not binding, and
the application of technical rules of procedure may be relaxed in labor
cases to serve the demand of substantial justice. 29 The rule of evidence
prevailing in court of law or equity shall not be controlling in labor cases
and it is the spirit and intention of the Labor Code that the Labor Arbiter
shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process.30 Labor laws mandate the
speedy administration of justice, with least attention to technicalities but
without sacrificing the fundamental requisites of due process.31
Similarly, the fact that the respondents' complaints contained no allegation
that petitioner Josefa Po Lam is the owner is of no moment. To apply the
concept of judicial admissions to respondents who are but lowly
employees - would be to exact compliance with technicalities of law that is
contrary to the demands of substantial justice. Moreover, the issue of
ownership was an issue that arose only during the course of the
proceedings with the Labor Arbiter, as an incident of determining
respondents' claims, and was well within his jurisdiction.32
Petitioners were also not denied due process, as they were given sufficient
opportunity to be heard on the issue of ownership. 33 The essence of due
process in administrative proceedings is simply an opportunity to explain
one's side or an opportunity to seek reconsideration of the action or ruling
complained of.34 And there is nothing in the records which would suggest
that petitioners had absolute lack of opportunity to be heard. 35 Obviously,
the choice not to present evidence was made by petitioners themselves.36
But more significantly, we sustain the Labor Arbiter and the CA because
even when the case was on appeal with the NLRC, nothing was submitted
to negate the Labor Arbiter's finding that Pacita Po is not the real owner of
the subject hotel and restaurant. Indeed, no such evidence was submitted
in the proceedings with the CA nor with this Court. Considering that
petitioners vehemently deny ownership by petitioner Josefa Po Lam, it is
most telling that they continue to withhold evidence which would shed
more light on this issue. We therefore agree with the CA that the failure to
submit could only mean that if produced, it would have been adverse to
petitioners' case.37
Thus, we find that there is substantial evidence to rule that petitioner
Josefa Po Lam is the owner of petitioner Mayon Hotel & Restaurant.
2. Illegal Dismissal: claim for separation pay
Of the sixteen employees, only the following filed a case for illegal
dismissal: respondents Loveres, Llarena, Nicerio, Macandog, Guades,
Atractivo and Broola.38
The Labor Arbiter found that there was illegal dismissal, and granted
separation pay to respondents Loveres, Macandog and Llarena. As
respondents Guades, Nicerio and Alamares were already 79, 66 and 65
years old respectively at the time of the dismissal, the Labor Arbiter
granted retirement benefits pursuant to Article 287 of the Labor Code as
amended.39 The Labor Arbiter ruled that respondent Atractivo was not
entitled to separation pay because he had been transferred to work in the
restaurant operations in Elizondo Street, but awarded him damages.
Respondents Loveres, Llarena, Nicerio, Macandog and Guades were also
awarded damages.40
The NLRC reversed the Labor Arbiter, finding that "no clear act of
termination is attendant in the case at bar" and that respondents "did not
submit any evidence to that effect, but the finding and conclusion of the
Labor Arbiter [are] merely based on his own surmises and
conjectures."41 In turn, the NLRC was reversed by the CA.
It is petitioners contention that the CA should have sustained the NLRC
finding that none of the above-named respondents were illegally
dismissed, or entitled to separation or retirement pay. According to
petitioners, even the Labor Arbiter and the CA admit that when the illegal
dismissal case was filed by respondents on April 1997, they had as yet no
cause of action. Petitioners therefore conclude that the filing by
respondents of the illegal dismissal case was premature and should have
been dismissed outright by the Labor Arbiter.42 Petitioners also claim that
since the validity of respondents' dismissal is a factual question, it is not
for the reviewing court to weigh the conflicting evidence.43
We do not agree. Whether respondents are still working for
petitioners is a factual question. And the records are unequivocal that
since April 1997, when petitioner Mayon Hotel & Restaurant suspended its
hotel operations and transferred its restaurant operations in Elizondo
Street, respondents Loveres, Macandog, Llarena, Guades and Nicerio have
not been permitted to work for petitioners. Respondent Alamares, on the
other hand, was also laid-off when the Elizondo Street operations closed,
as were all the other respondents. Since then, respondents have not been
permitted to work nor recalled, even after the construction of the new
premises at Pearanda Street and the reopening of the hotel operations
with the restaurant in this new site. As stated by the Joint Decision of the
Labor Arbiter on July 2000, or more than three (3) years after the
complaint was filed:44
[F]rom the records, more than six months had lapsed without
[petitioner] having resumed operation of the hotel. After more than one
year from the temporary closure of Mayon Hotel and the temporary
transfer to another site of Mayon Restaurant, the building which
[petitioner] Josefa allege[d] w[h]ere the hotel and restaurant will be
transferred has been finally constructed and the same is operated as a
hotel with bar and restaurant nevertheless, none of [respondents]
herein who were employed at Mayon Hotel and Restaurant which was
also closed on April 30, 1998 was/were recalled by [petitioner] to
continue their services...
Parenthetically, the Labor Arbiter did not grant separation pay to the other
respondents as they had not filed an amended complaint to question the
cessation of their employment after the closure of Mayon Hotel &
Restaurant on March 31, 1997.45
The above factual finding of the Labor Arbiter was never refuted by
petitioners in their appeal with the NLRC. It confounds us, therefore, how
the NLRC could have so cavalierly treated this uncontroverted factual
finding by ruling that respondents have not introduced any evidence to
show that they were illegally dismissed, and that the Labor Arbiter's
finding was based on conjecture.46 It was a serious error that the NLRC did
not inquire as to the legality of the cessation of employment. Article 286
of the Labor Code is clear there is termination of employment when an
otherwise bona fide suspension of work exceeds six (6) months. 47 The
cessation of employment for more than six months was patent and the
employer has the burden of proving that the termination was for a just or
authorized cause.48
Moreover, we are not impressed by any of petitioners' attempts to
exculpate themselves from the charges. First, in the proceedings with the
Labor Arbiter, they claimed that it could not be illegal dismissal because
the lay-off was merely temporary (and due to the expiration of the lease
contract over the old premises of the hotel). They specifically invoked
Article 286 of the Labor Code to argue that the claim for separation pay
was premature and without legal and factual basis. 49 Then, because the
Labor Arbiter had ruled that there was already illegal dismissal when the
lay-off had exceeded the six-month period provided for in Article 286,
petitioners raise this novel argument, to wit:
It is the firm but respectful submission of petitioners that reliance on
Article 286 of the Labor Code is misplaced, considering that the reason
why private respondents were out of work was not due to the fault of
petitioners. The failure of petitioners to reinstate the private
respondents to their former positions should not likewise be attributable
to said petitioners as the private respondents did not submit any
evidence to prove their alleged illegal dismissal. The petitioners cannot
discern why they should be made liable to the private respondents for
their failure to be reinstated considering that the fact that they were out
of work was not due to the fault of petitioners but due to circumstances
beyond the control of petitioners, which are the termination and non-
renewal of the lease contract over the subject premises. Private
respondents, however, argue in their Comment that petitioners
themselves sought the application of Article 286 of the Labor Code in
their case in their Position Paper filed before the Labor Arbiter. In
refutation, petitioners humbly submit that even if they invoke Article
286 of the Labor Code, still the fact remains, and this bears stress and
emphasis, that the temporary suspension of the operations of the
establishment arising from the non-renewal of the lease contract did not
result in the termination of employment of private respondents and,
therefore, the petitioners cannot be faulted if said private respondents
were out of work, and consequently, they are not entitled to their
money claims against the petitioners.50
It is confounding how petitioners have fashioned their arguments. After
having admitted, in effect, that respondents have been laid-off since April
1997, they would have this Court excuse their refusal to reinstate
respondents or grant them separation pay because these same
respondents purportedly have not proven the illegality of their dismissal.
Petitioners' arguments reflect their lack of candor and the blatant attempt
to use technicalities to muddle the issues and defeat the lawful claims of
their employees. First, petitioners admit that since April 1997, when
hotel operations were suspended due to the termination of the lease of the
old premises, respondents Loveres, Macandog, Llarena, Nicerio and
Guades have not been permitted to work. Second, even after six
months of what should have been just a temporary lay-off, the same
respondents were still not recalled to work. As a matter of fact, the
Labor Arbiter even found that as of the time when he rendered his Joint
Decision on July 2000 or more than three (3) years after the supposed
"temporary lay-off," the employment of all of the respondents with
petitioners had ceased, notwithstanding that the new premises had
been completed and the same operated as a hotel with bar and restaurant.
This is clearly dismissal or the permanent severance or complete
separation of the worker from the service on the initiative of the employer
regardless of the reasons therefor.51
On this point, we note that the Labor Arbiter and the CA are in accord that
at the time of the filing of the complaint, respondents had no cause of
action to file the case for illegal dismissal. According to the CA and the
Labor Arbiter, the lay-off of the respondents was merely temporary,
pending construction of the new building at Pearanda Street.52
While the closure of the hotel operations in April of 1997 may have been
temporary, we hold that the evidence on record belie any claim of
petitioners that the lay-of of respondents on that same date was merely
temporary. On the contrary, we find substantial evidence that petitioners
intended the termination to be permanent. First, respondents Loveres,
Macandog, Llarena, Guades, Nicerio and Alamares filed the complaint for
illegal dismissal immediately after the closure of the hotel operations in
Rizal Street, notwithstanding the alleged temporary nature of the closure
of the hotel operations, and petitioners' allegations that the employees
assigned to the hotel operations knew about this beforehand. Second, in
their position paper submitted to the Labor Arbiter, petitioners invoked
Article 286 of the Labor Code to assert that the employer-employee
relationship was merely suspended, and therefore the claim for separation
pay was premature and without legal or factual basis.53 But they made
no mention of any intent to recall these respondents to work upon
completion of the new premises. Third, the various pleadings on
record show that petitioners held respondents, particularly Loveres, as
responsible for mismanagement of the establishment and for abuse of
trust and confidence. Petitioner Josefa Po Lam's affidavit on July 21, 1998,
for example, squarely blamed respondents, specifically Loveres, Bumalay
and Camigla, for abusing her leniency and causing petitioner Mayon Hotel
& Restaurant to sustain "continuous losses until it is closed." She then
asserts that respondents "are not entitled to separation pay for they were
not terminated and if ever the business ceased to operate it was because
of losses."54 Again, petitioners make the same allegation in their
memorandum on appeal with the NLRC, where they alleged that three (3)
years prior to the expiration of the lease in 1997, the operation of the
Hotel had been sustaining consistent losses, and these were solely
attributed to respondents, but most especially due to Loveres's
mismanagement and abuse of petitioners' trust and confidence. 55 Even the
petition filed in this court made reference to the separation of the
respondents due to "severe financial losses and reverses," again imputing
it to respondents' mismanagement.56 The vehemence of petitioners'
accusation of mismanagement against respondents, especially against
Loveres, is inconsistent with the desire to recall them to work. Fourth,
petitioners' memorandum on appeal also averred that the case was filed
"not because of the business being operated by them or that they were
supposedly not receiving benefits from the Labor Code which is true, but
because of the fact that the source of their livelihood, whether legal
or immoral, was stopped on March 31, 1997, when the owner of the
building terminated the Lease Contract."57 Fifth, petitioners had
inconsistencies in their pleadings (with the NLRC, CA and with this Court)
in referring to the closure,58 i.e., in the petition filed with this court, they
assert that there is no illegal dismissal because there was "only a
temporary cessation or suspension of operations of the hotel and
restaurant due to circumstances beyond the control of petitioners, and
that is, the non-renewal of the lease contract..." 59 And yet, in the same
petition, they also assert that: (a) the separation of respondents was due
to severe financial losses and reverses leading to the closure of the
business; and (b) petitioner Pacita Po had to close shop and was
bankrupt and has no liquidity to put up her own building to house Mayon
Hotel & Restaurant.60 Sixth, and finally, the uncontroverted finding of the
Labor Arbiter that petitioners terminated all the other respondents, by not
employing them when the Hotel and Restaurant transferred to its new site
on Pearanda Street.61 Indeed, in this same memorandum, petitioners
referred to all respondents as "former employees of Mayon Hotel &
Restaurant."62
These factors may be inconclusive individually, but when taken together,
they lead us to conclude that petitioners really intended to dismiss all
respondents and merely used the termination of the lease (on Rizal Street
premises) as a means by which they could terminate their employees.
Moreover, even assuming arguendo that the cessation of employment on
April 1997 was merely temporary, it became dismissal by operation of law
when petitioners failed to reinstate respondents after the lapse of six (6)
months, pursuant to Article 286 of the Labor Code.
We are not impressed by petitioners' claim that severe business losses
justified their failure to reinstate respondents. The evidence to prove this
fact is inconclusive. But more important, serious business losses do not
excuse the employer from complying with the clearance or report required
under Article 283 of the Labor Code and its implementing rules before
terminating the employment of its workers.63 In the absence of justifying
circumstances, the failure of petitioners to observe the procedural
requirements set out under Article 284, taints their actuations with bad
faith, especially since they claimed that they have been experiencing
losses in the three years before 1997. To say the least, if it were true that
the lay-off was temporary but then serious business losses prevented the
reinstatement of respondents, then petitioners should have complied with
the requirements of written notice. The requirement of law mandating the
giving of notices was intended not only to enable the employees to look for
another employment and therefore ease the impact of the loss of their jobs
and the corresponding income, but more importantly, to give the
Department of Labor and Employment (DOLE) the opportunity to ascertain
the verity of the alleged authorized cause of termination.64
And even assuming that the closure was due to a reason beyond the
control of the employer, it still has to accord its employees some relief in
the form of severance pay.65
While we recognize the right of the employer to terminate the services of
an employee for a just or authorized cause, the dismissal of employees
must be made within the parameters of law and pursuant to the tenets of
fair play.66 And in termination disputes, the burden of proof is always on
the employer to prove that the dismissal was for a just or authorized
cause.67 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.68
Under these circumstances, the award of damages was proper. As a rule,
moral damages are recoverable 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.69 We believe that the dismissal of the respondents was attended
with bad faith and meant to evade the lawful obligations imposed upon an
employer.
To rule otherwise would lead to the anomaly of respondents being
terminated from employment in 1997 as a matter of fact, but without legal
redress. This runs counter to notions of fair play, substantial justice and
the constitutional mandate that labor rights should be respected. If doubts
exist between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter the employer
must affirmatively show rationally adequate evidence that the dismissal
was for a justifiable cause.70 It is a time-honored rule that in controversies
between a laborer and his master, doubts reasonably arising from the
evidence, or in the interpretation of agreements and writing should be
resolved in the former's favor.71 The policy is to extend the doctrine to a
greater number of employees who can avail of the benefits under the law,
which is in consonance with the avowed policy of the State to give
maximum aid and protection of labor.72
We therefore reinstate the Labor Arbiter's decision with the following
modifications:
(a) Separation pay for the illegal dismissal of respondents Loveres,
Macandog and Llarena; (Santos Broola cannot be granted
separation pay as he made no such claim);
(b) Retirement pay for respondents Guades, Nicerio, and Alamares,
who at the time of dismissal were entitled to their retirement
benefits pursuant to Article 287 of the Labor Code as
amended;73 and
(c) Damages for respondents Loveres, Macandog, Llarena, Guades,
Nicerio, Atractivo, and Broola.
3. Money claims
The CA held that contrary to the NLRC's ruling, petitioners had not
discharged the burden of proving that the monetary claims of the
respondents have been paid.74 The CA thus reinstated the Labor Arbiter's
grant of respondents' monetary claims, including damages.
Petitioners assail this ruling by repeating their long and convoluted
argument that as there was no illegal dismissal, then respondents are not
entitled to their monetary claims or separation pay and damages.
Petitioners' arguments are not only tiring, repetitive and unconvincing, but
confusing and confused entitlement to labor standard benefits is a
separate and distinct concept from payment of separation pay arising from
illegal dismissal, and are governed by different provisions of the Labor
Code.
We agree with the CA and the Labor Arbiter. Respondents have set out
with particularity in their complaint, position paper, affidavits and other
documents the labor standard benefits they are entitled to, and which they
alleged that petitioners have failed to pay them. It was therefore
petitioners' burden to prove that they have paid these money claims. One
who pleads payment has the burden of proving it, and even where the
employees must allege nonpayment, the general rule is that the burden
rests on the defendant to prove nonpayment, rather than on the plaintiff to
prove non payment.75 This petitioners failed to do.
We also agree with the Labor Arbiter and the CA that the documents
petitioners submitted, i.e., affidavits executed by some of respondents
during an ocular inspection conducted by an inspector of the DOLE; notices
of inspection result and Facility Evaluation Orders issued by DOLE, are not
sufficient to prove payment.76 Despite repeated orders from the Labor
Arbiter,77 petitioners failed to submit the pertinent employee files, payrolls,
records, remittances and other similar documents which would show that
respondents rendered work entitling them to payment for overtime work,
night shift differential, premium pay for work on holidays and rest day, and
payment of these as well as the COLA and the SILP documents which are
not in respondents' possession but in the custody and absolute control of
petitioners.78 By choosing not to fully and completely disclose information
and present the necessary documents to prove payment of labor standard
benefits due to respondents, petitioners failed to discharge the burden of
proof.79 Indeed, petitioners' failure to submit the necessary documents
which as employers are in their possession, inspite of orders to do so,
gives rise to the presumption that their presentation is prejudicial to its
cause.80 As aptly quoted by the CA:
[W]hen the evidence tends to prove a material fact which imposes
a liability on a party, and he has it in his power to produce
evidence which from its very nature must overthrow the case made
against him if it is not founded on fact, and he refuses to produce
such evidence, the presumption arises that the evidence, if
produced, would operate to his prejudice, and support the case of
his adversary.81
Petitioners next claim that the cost of the food and snacks provided to
respondents as facilities should have been included in reckoning the
payment of respondents' wages. They state that although on the surface
respondents appeared to receive minimal wages, petitioners had granted
respondents other benefits which are considered part and parcel of their
wages and are allowed under existing laws.82 They claim that these
benefits make up for whatever inadequacies there may be in
compensation.83 Specifically, they invoked Sections 5 and 6, Rule VII-A,
which allow the deduction of facilities provided by the employer through
an appropriate Facility Evaluation Order issued by the Regional Director of
the DOLE.84 Petitioners also aver that they give five (5) percent of the gross
income each month as incentives. As proof of compliance of payment of
minimum wages, petitioners submitted the Notice of Inspection Results
issued in 1995 and 1997 by the DOLE Regional Office.85
The cost of meals and snacks purportedly provided to respondents cannot
be deducted as part of respondents' minimum wage. As stated in the
Labor Arbiter's decision:86
While [petitioners] submitted Facility Evaluation Orders (pp. 468,
469; vol. II, rollo) issued by the DOLE Regional Office whereby the
cost of meals given by [petitioners] to [respondents] were specified
 for purposes of considering the same as part of their wages, We
cannot consider the cost of meals in the Orders as applicable to
[respondents]. [Respondents] were not interviewed by the DOLE as
to the quality and quantity of food appearing in the applications of
[petitioners] for facility evaluation prior to its approval to determine
whether or not [respondents] were indeed given such kind and
quantity of food. Also, there was no evidence that the quality and
quantity of food in the Orders were voluntarily accepted by
[respondents]. On the contrary; while some [of the respondents]
admitted that they were given meals and merienda, the quality of
food serve[d] to them were not what were provided for in the
Orders and that it was only when they filed these cases that they
came to know about said Facility Evaluation Orders (pp. 100; 379[,]
vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa herself,
who applied for evaluation of the facility (food) given to
[respondents], testified that she did not inform [respondents]
concerning said Facility Evaluation Orders (p. 34, tsn[,] August 13,
1998).
Even granting that meals and snacks were provided and indeed
constituted facilities, such facilities could not be deducted without
compliance with certain legal requirements. As stated in Mabeza v.
NLRC,87 the employer simply cannot deduct the value from the
employee's wages without satisfying the following: (a) proof that such
facilities are customarily furnished by the trade; (b) the provision of
deductible facilities is voluntarily accepted in writing by the employee; and
(c) the facilities are charged at fair and reasonable value. The records are
clear that petitioners failed to comply with these requirements. There was
no proof of respondents' written authorization. Indeed, the Labor Arbiter
found that while the respondents admitted that they were given meals
and merienda, the quality of food served to them was not what was
provided for in the Facility Evaluation Orders and it was only when they
filed the cases that they came to know of this supposed Facility Evaluation
Orders.88 Petitioner Josefa Po Lam herself admitted that she did not inform
the respondents of the facilities she had applied for.89
Considering the failure to comply with the above-mentioned legal
requirements, the Labor Arbiter therefore erred when he ruled that the
cost of the meals actually provided to respondents should be deducted as
part of their salaries, on the ground that respondents have availed
themselves of the food given by petitioners. 90 The law is clear that mere
availment is not sufficient to allow deductions from employees' wages.
More important, we note the uncontroverted testimony of respondents on
record that they were required to eat in the hotel and restaurant so that
they will not go home and there is no interruption in the services of Mayon
Hotel & Restaurant. As ruled in Mabeza, food or snacks or other
convenience provided by the employers are deemed as supplements if
they are granted for the convenience of the employer. The criterion in
making a distinction between a supplement and a facility does not so
much lie in the kind (food, lodging) but the purpose. 91 Considering,
therefore, that hotel workers are required to work different shifts and are
expected to be available at various odd hours, their ready availability is a
necessary matter in the operations of a small hotel, such as petitioners'
business.92 The deduction of the cost of meals from respondents' wages,
therefore, should be removed.
We also do not agree with petitioners that the five (5) percent of the gross
income of the establishment can be considered as part of the respondents'
wages. We quote with approval the Labor Arbiter on this matter, to wit:
While complainants, who were employed in the hotel, receive[d]
various amounts as profit share, the same cannot be considered as
part of their wages in determining their claims for violation of labor
standard benefits. Although called profit share[,] such is in the
nature of share from service charges charged by the hotel. This is
more explained by [respondents] when they testified that what
they received are not fixed amounts and the same are paid not on
a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also,
[petitioners] failed to submit evidence that the amounts received
by [respondents] as profit share are to be considered part of their
wages and had been agreed by them prior to their employment.
Further, how can the amounts receive[d] by [respondents] be
considered as profit share when the same [are] based on the gross
receipt of the hotel[?] No profit can as yet be determined out of the
gross receipt of an enterprise. Profits are realized after expenses
are deducted from the gross income.
On the issue of the proper minimum wage applicable to respondents, we
sustain the Labor Arbiter. We note that petitioners themselves have
admitted that the establishment employs "more or less sixteen (16)
employees,"93therefore they are estopped from claiming that the
applicable minimum wage should be for service establishments employing
15 employees or less.
As for petitioners repeated invocation of serious business losses, suffice to
say that this is not a defense to payment of labor standard benefits. The
employer cannot exempt himself from liability to pay minimum wages
because of poor financial condition of the company. The payment of
minimum wages is not dependent on the employer's ability to pay.94
Thus, we reinstate the award of monetary claims granted by the Labor
Arbiter.
4. Conclusion
There is no denying that the actuations of petitioners in this case have
been reprehensible. They have terminated the respondents' employment
in an underhanded manner, and have used and abused the quasi-judicial
and judicial processes to resist payment of their employees' rightful
claims, thereby protracting this case and causing the unnecessary
clogging of dockets of the Court. They have also forced respondents to
unnecessary hardship and financial expense. Indeed, the circumstances of
this case would have called for exemplary damages, as the dismissal was
effected in a wanton, oppressive or malevolent manner, 95 and public policy
requires that these acts must be suppressed and discouraged.96
Nevertheless, we cannot agree with the Labor Arbiter in granting
exemplary damages of P10,000.00 each to all respondents. While it is true
that other forms of damages under the Civil Code may be awarded to
illegally dismissed employees,97 any award of moral damages by the Labor
Arbiter cannot be based on the Labor Code but should be grounded on the
Civil Code.98 And the law is clear that exemplary damages can only be
awarded if plaintiff shows proof that he is entitled to moral, temperate or
compensatory damages.99
(4) Awarding moral damages of P20,000.00 each for respondents
Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and
Broola;
(5) Deleting the award of exemplary damages of P10,000.00 from
all respondents except Loveres, Macandog, Llarena, Guades,
Nicerio, Atractivo, and Broola; and
(6) Granting attorney's fees of P10,000.00 each to all respondents.
The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the
total monetary benefits awarded and due to the employees concerned in
accordance with the decision. The Labor Arbiter is ORDERED to submit his
compliance thereon within thirty (30) days from notice of this decision,
with copies furnished to the parties.
SO ORDERED.
Austria-Martinez, Callejo Sr., Tinga, and Chico-Nazario, JJ., concur.

As only respondents Loveres, Guades, Macandog, Llarena, Nicerio,

Atractivo and Broola specifically claimed damages from petitioners, then
only they are entitled to exemplary damages.sjgs1

Finally, we rule that attorney's fees in the amount to P10,000.00 should be

granted to each respondent. It is settled that in actions for recovery of
wages or where an employee was forced to litigate and incur expenses to
protect his rights and interest, he is entitled to an award of attorney's
fees.100 This case undoubtedly falls within this rule.
G.R. No. 106341 September 2, 1994
IN VIEW WHEREOF, the petition is hereby DENIED. The Decision of
January 17, 2003 of the Court of Appeals in CA-G.R. SP No. 68642
DELFIN G. VILLARAMA, petitioner,
upholding the Joint Decision of July 14, 2000 of the Labor Arbiter in RAB V
Case Nos. 04-00079-97 and 04-00080-97 is AFFIRMED, with the following vs.
MODIFICATIONS: NATIONAL LABOR RELATIONS COMMISSION AND GOLDEN DONUTS,
INC., respondents.
(1) Granting separation pay of one-half (1/2) month for every year
of service to respondents Loveres, Macandog and Llarena; PUNO, J.:

(2) Granting retirement pay for respondents Guades, Nicerio, and

Alamares; Sexual harassment abounds in all sick societies. It is reprehensible enough
but more so when inflicted by those with moral ascendancy over their
(3) Removing the deductions for food facility from the amounts due victims. We rule that it is a valid cause for separation from service.
to all respondents;
First, the facts. On November 16, 1987, petitioner DELFIN VILLARAMA was
employed by private respondent GOLDEN DONUTS, INC., as its Materials
Manager. His starting salary was P6,500.00 per month, later increased to
P8,500.00.
On July 15, 1989, petitioner Villarama was charged with sexual harassment
by Divina Gonzaga, a clerk-typist assigned in his department. The
humiliating experience compelled her to resign from work. Her letter-
resignation, dated July 15, 1989, reads:
MR. LEOPOLDO H. PRIETO
President
Golden Donuts, Inc.
Dear Sir:
I would like to tender my resignation from my post as Clerk Typist of
Materials Department effective immediately.
It is really my regret to leave this company which has given me all the
opportunity I long desired. My five (5) months stay in the company have
been very gratifying professionally and financially and I would not
entertain the idea of resigning except for the most shocking experience
I have had in my whole life.
Last Friday, July 7, 1989, Mr. Delfin Villarama and Mr. Jess de Jesus
invited all the girls of Materials Department for a dinner when in (sic)
the last minute the other three (3) girls decided not to join the groupp
anymore. I do (sic) not have second thought(s) in accepting their
invitation for they are my colle(a)gues and I had nothing in mind that
would in any manner prompt me to refuse to what appeared to me as a
simple and cordial invitation. We went to a restaurant along Makati
Avenue where we ate our dinner. Mr. Villarama, Mr. Olaybar and Mr. Jess
de Jesus were drinking while we were eating and (they) even offered me
a few drinks and when we were finished, they decided to bring me
home. While on my way, I found out that Mr. Villarama was not driving
the way to my house. I was wondering why we were taking the wrong
way until I found out that we were entering a motel. I was really
shock(ed). I did not expect that a somewhat reputable person like
Mr. Villarama could do such a thing to any of his subordinates. I should
have left the company without any word but I feel that I would be unfair
to those who might be similarly situated. I hope that you would find
time to investigate the veracity of my allegations and make each (sic)
responsible for is own deed. (emphasis ours)
Thank you very much and more power. Very respectfully yours,DIVINA
GONZAGA
The letter prompted Mr. Leopoldo Prieto, President of Golden Donuts, Inc.,
to call petitioner to a meeting on August 4, 1989. Petitioner was then
required to explain the letter against him. It appears that petitioner agreed
to tender his resignation. Private respondent moved swiftly to separate
petitioner. Thus, private respondent approved petitioner's application for
leave of absence with pay from August 5-28, 1989. It also issued an inter-
office memorandum, dated August 4, 1989, advising "all concerned" that
petitioner was no longer connected with the company effective August 5,
1989. 1 Two (2) days later, or on August 7, 1989, Mr. Prieto sent a letter to
petitioner confirming their agreement that petitioner would be officially
separated from the private respondent. The letter reads:
Dear Mr. Villarama:
This is to officially confirm our discussion last Friday, August 4, 1989,
regarding your employment with us. As per our agreement, you will
be officially separated from the company effective August 23, 1989.
May I, therefore, request you to please submit or send us your
resignation letter on or before the close of business hours of August
22, 1989.
Please see the Personnel & Industrial Relations Office for your
clearance. Very truly yours,(SGD). LEOPOLDO H. PRIETO, JR.
President
In the interim, petitioner had a change of mind. In a letter dated August
16, 1989, petitioner sought reconsideration of the management's decision
to terminate him, viz.:
DEAR SIR:
 MAY I REQUEST FOR A RECONSIDERATION ON THE DECISION HANDED
DURING OUR MEETING OF AUGUST 4, 1989, TERMINATING MY SERVICES
WITH THE COMPANY EFFECTIVE AUGUST 5, 1989.
THE SIGNIFICANT CONTRIBUTION OF THE MATERIALS DEPARTMENT,
WHICH I HAD BEEN HEADING FOR THE PAST 21 MONTHS, TO THE
PERFORMANCE OF THE COMPANY FAR OUTWEIGHS THE ERROR THAT I
HAD COMMITTED. AN ERROR THAT MUST NOT BE A BASIS FOR SUCH A
DRASTIC DECISION.
AS I AM STILL OFFICIALLY ON LEAVE UNTIL THE 29th, OF THIS MONTH,
MAY I EXPECT THAT I WILL RESUME MY REGULAR DUTY ON THE 29th?
ANTICIPATING YOUR FAVORABLE REPLY.VERY TRULY YOURS,(SGD.) DELFIN
G. VILLARAMA
For his failure to tender his resignation, petitioner was dismissed by private
respondent on August 23, 1989. Feeling aggrieved, petitioner filed an
illegal dismissal case 2 against private respondent.
In a decision dated January 23, 1991, Labor Arbiter Salimar V. Nambi held
that due process was not observed in the dismissal of petitioner and there
was no valid cause for dismissal. Private respondent GOLDEN DONUTS,
INC. was ordered to: (1) reinstate petitiner DELFIN G. VILLARAMA to his
former position, without loss of seniority rights, and pay his backwages at
the rate of P8,500.00 per month from August 1989, until actual
reinstatement; (2) pay petitioner the amount of P24,866.66, representing
his unused vacation leave and proportionate 13th month pay; (3) pay
petitioner P100,000.00, as moral damages, and P20,000.00, as exemplary
damages; and (3) pay the attorney's fees equivalent to ten percent of the
entire monetary award.
Private respondent appealed to the National Labor Relations Commission.
On July 16, 1992, public respondent reversed the decision of the labor
arbiter. The dispositive portion of its Resolution reads:
WHEREFORE, premises considered, the decision appealed from is
hereby set aside and a new one entered declaring the cause of
dismissal of complainant as valid; however, for the procedural lapses,
respondent (Golden Donuts, Inc.) is hereby ordered to indemnify
complainant (petitioner) in the form of separation pay equivalent to
two month's (sic) pay (for his two years of service, as appears (sic) in
the records), or the amount of P17,000.00.
SO ORDERED.
Hence, this petition where the following arguments are raised:
THE ALLEGED IMMORALITY CHARGED AGAINST PETITIONER IS NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE ON RECORD.
THE MERE ADMISSION OF THE VIOLATION OF DUE PROCESS ENTITLES PETITIONER
TO REINSTATEMENT.
IN ANY EVENT, PETITIONER IS ENTITLED TO HIS SALARIES FROM RECEIPT BY
PRIVATE RESPONDENT OF THE DECISION OF THE LABOR ARBITER ON 4 FEBRUARY
1991 TO (sic) AT LEAST THE PROMULGATION OF THE ASSAILED RESOLUTION ON
(sic) 16 JULY 1992.
IN ANY EVENT, PETITIONER IS ALSO ENTITLED TO HIS UNUSED VACATION LEAVE
AND PROPORTIONATE 13TH MONTH PAY IN THE TOTAL AMOUNT OF P24,866.66,
ADJUDGED BY THE LABOR ARBITER.
THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES BY THE
LABOR ARBITER IS JUSTIFIED.
We affirm with modification the impugned Resolution.
At the outset, we note that the Petition was not accompanied by a certified
true copy of the assailed July 16, 1992 NLRC Resolution, 3 in violation
of Revised Circular No. 1-88. Neither was there any certification under oath
that "petitioner has not commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court of Appeals or
different Divisions thereof, or any other tribunal or agency, and that to the
best of his knowledge, no such action or proceeding is pending in the
Supreme Court, the Court of Appeals, or different Divisions thereof or any
other tribunal or agency," as required under Circular No. 28-91. It is settled
that non-compliance with the provisions of Revised Circular No. 1-88 and
Circular No. 28-91, would result in the outright dismissal of the petition. 4
In addition, under Rule 65 of the Revised Rules of Court, the special civil
action for certiorari is available in cases where the concerned "tribunal,
board or officer exercising judicial functions had acted without or in excess
of its jurisdiction, or with grave abuse of discretion and there is no appeal,
nor any plain, speedy, and adequate remedy in the ordinary course of law."
In Antonio v. National Labor Relations Commission, 5 we held that the plain
and adequate remedy expressly provided by law is a motion for
reconsideration of the assailed decision, and the resolution thereof, which
is not only expected to be but would actually have provided adequate and
more speedy remedy than a petition for certiorari. The rationale for this
requirement is to enable the court or agency concerned to pass upon and
correct its mistakes without the intervention of a higher court. 6 In this
case, the assailed July 16, 1992 Resolution of the National Labor Relations
Commission was received by petitioner's counsel on July 23,
1992. 7 Petitioner did not file a motion for reconsideration, instead, he
commenced this special civil action for certiorari. Be that as it may, we
allowed the petition to enable us to rule on the significant issues raised
before us, viz.: (1) whether or not petitioner's right to procedural due
process was violated, and (2) whether or not he was dismissed for a valid
or just cause.
The procedure for terminating an employee is found in Article 277 (b) of
the Labor Code, viz.:
(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 counsel 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)
This procedure protects not only rank-and-file employees but also
managerial employees. Both have the right to security of tenure as
provided for in Section 3, Article XIII of the 1987 Constitution. In the case
at bench, petitioner decided to seek reconsideration of the termination of
his service thru his August 16, 1989 letter. While admitting his error, he felt
that its gravity did not justify his dismissal. Considering this stance, and in
conformity with the aforequoted Article 277 (b) of the Labor Code,
petitioner should have been formally charged and given an opportunity to
refute the charges. Under the facts in field, we hold that petitioner was
denied procedural due process.
We now come to the more important issue of whether there was valid
cause to terminate petitioner.
Petitioner claims that his alleged immoral act was unsubstantiated, hence,
he could not be dismissed. We hold otherwise. The records show that
petitioner was confronted with the charge against him. Initially, he
voluntarily agreed to be separated from the company. He took a leave of
absence preparatory to this separation. This agreement was confirmed by
the letter to him by Mr. Prieto dated August 7, 1989. A few days after,
petitioner reneged on the agreement. He refused to be terminated on the
ground that the seriousness of his offense would not warrant his
separation from service. So he alleged in his letter to Mr. Prieto dated
August 16, 1989. But even in this letter, petitioner admitted his "error" vis-
a-vis Miss Gonzaga. As a manager, petitioner should know the evidentiary
value of his admissions. Needless to stress, he cannot complain there was
no valid cause for his separation.
Moreover, loss of trust and confidence is a good ground for dismissing a
managerial employee. It can be proved by substantial evidence which is
present in the case at bench. As further observed by the Solicitor General:
. . . assuming arguendo that De Jesus and Gonzaga were sweethearts
and that petitioner merely acceded to the request of the former to drop
them in the motel, petitioner acted in collusion with the immoral
designs of De Jesus and did not give due regard to Gonzaga's feeling
on the matter and acted in chauvinistic disdain of her honor, thereby
justifying public respondent's finding of sexual harassment. Thus,
petitioner not only failed to act accordingly as a good father of the
family because he was not able to maintain his moral ascendancy and
authority over the group in the matter of morality and discipline of his
subordinates, but he actively facilitated the commission of immoral
conduct of his subordinates by driving his car into the motel.
 (Comment, April 29, 1993, p. 9)
As a managerial employee, petitioner is bound by a more exacting
work ethics. He failed to live up to this higher standard of responsibility
when he succumbed to his moral perversity. And when such moral
perversity is perpetrated against his subordinate, he provides
justifiable ground for his dismissal for lack of trust and confidence. It is
the right, nay, the duty of every employer to protect its employees
from over sexed superiors.
To be sure, employers are given wider latitude of discretion in terminating
the employment of managerial employees on the ground of lack of trust
and confidence. 8
We next rule on the monetary awards due to petitioner. The public
respondent erred in awarding separation pay of P17,000.00 as indemnity
for his dismissal without due process of law. The award of separation pay is
proper in the cases enumerated under Articles 283 and 284 of the Labor
Code, 9 and in cases where there is illegal dismissal (for lack of valid
cause) and reinstatement is no longer feasible. But this is not to state that
an employer cannot be penalized for failure to give formal notice and
conduct the necessary investigation before dismissing an
employee. Thus,
10
in Wenphil vs. NLRC and Pacific
11
Mills,
Inc. vs. Alonzo, 12 this Court awarded P1,000.00 as penalty for non-
observance of due process.
Petitioner is not also entitled to moral and exemplary damages. There was
no bad faith or malice on the part of private respondent in terminating the
services of petitioner. 13
Petitioner is entitled, however, to his unused vacation/sick leave and
proportionate 13th month pay, as held by the labor arbiter. These are
monies already earned by petitioner and should be unaffected by his
separation from the service.
WHEREFORE, premises considered, the assailed resolution of public
respondent is hereby AFFIRMED WITH MODIFICATION that the award of
separation pay is DELETED. Private respondent is ordered to pay petitioner
the amount of P1,000.00 for non-observance of due process, and the
equivalent amount of his unused vacation/sick leave and proportionate
13th month pay. No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Mendoza, J.J., concur.
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.
PANGANIBAN, J.:p
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 Commission 3 (NLRC) in NLRC CA
No. M-00139593.
The Resolution dated July 29, 1993 affirmed in toto the decision of the
Labor Arbiter in RAB-11-08-00672-92 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 hold 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 company's 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 1/2 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 separated 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) post-
employment 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. Attorney's fees equivalent to ten percent (10%) thereof
were also granted. 6
On appeal, respondent NLRC affirmed the decision in toto. Petitioner North
Davao's motion for reconsideration was likewise denied. Hence, this
petition.
The Parties' Submissions and the Issues
In affirming the Labor Arbiter's 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 cited Abella vs. NLRC, 9 as authority for saying that Art. 283
of the Labor Code protects workers in case of 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-appellees' 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 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. (emphasis supplied)
The underscored portion of Art. 283 governs the grant of separation
benefits "in case of closures or cessation of operation" of business
establishments "NOT due to serious business losses or financial reverses . .
. ". 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 Davao's 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 Court's 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 (1/2) 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 month's 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. . . ."
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 was no 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 company's practice of giving one month's
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 ware 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 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:
Sec. 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
(Emphasis 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, . . . . Respondent is further ordered to pay its workers
salaries at the plantsite at Amacan, New Leyte, Maco, Davao del Norte
or 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 1/2
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 stand
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 ad 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.