CASE NO.

FIRST DIVISION

M+W ZANDER PHILIPPINES, INC. and ROLF WILTSCHEK,

Petitioners,

- versus -

TRINIDAD M. ENRIQUEZ,
Respondent.
G.R. No. 169173

Present:

PUNO, C.J., Chairperson,

CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.

Promulgated:

June 5, 2009

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

DECISION

PUNO, C.J.:

At bar is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking the reversal
of the decision,[1] dated May 31, 2005, of the Court of Appeals in CA G.R. SP No. 87597, entitled
Trinidad M. Enriquez v. National Labor Relations Commission, M+W Zander Philippines, Inc. and
Rolf Wiltschek. The decision of the Court of Appeals set aside the decision of the National Labor
Relations Commission (NLRC) and ruled the dismissal of respondent Trinidad M. Enriquez
(Enriquez) as illegal. The Court of Appeals also ordered petitioners M+W Zander Philippines, Inc.
and Rolf Wiltschek to reinstate respondent to her former position without loss of seniority rights and
privileges and awarded her moral damages and attorneys fees.

The facts are as follows.

On June 4, 2001, respondent Enriquez was hired on probationary basis as the Administration
Manager and Executive Assistant to the General Manager of petitioner M+W Zander Philippines, Inc.
(M+W Zander), a multi-national corporation engaged in construction and facilities management. She
was confirmed as a permanent employee on December 4, 2001. As Administration Manager,
respondents responsibilities include taking charge of the management of administrative personnel
assigned to the head office, as well as the security of the company staff and premises and the
implementation of company rules. As Executive Assistant to the General Manager, respondent was
in charge of scheduling, monitoring and tracking all the General Managers appointments and
personal finances and serving as the liaison among the General Manager, the Division Heads, the
Administrative Staff and external contacts.

In January 2002, M+W Zander relieved its General Manager, Mr. Eric Van Stiegeren, and in his
place appointed Mr. Rolf Wiltschek (Wiltschek). The appointment of Wiltschek as the Acting General
Manager was announced in a meeting held on January 31, 2002. On the same day, a Letter of
Appeal[2] was signed by 29 employees of M+W Zander, opposing the appointment of Wiltschek.
The letter states:

TO: MR. KLAUS GAERTNER

Managing Director

CC: MR. HELMUT KURZBOECK

CC: MISS KITY LEE
DATE: January 31, 2002
LETTER OF APPEAL

We are writing you this Letter of Appeal in the hope of expressing our concern and
sentiments on the appointment of Rolf Wiltschek as the new General Manager.

We are appealing for your kind attention and consideration on this matter as part of
the m+w Zander family worldwide. We know that above anything else, the well-being
of the company is the first priority of every employee from whom he derives his
livelihood and that of his family. However, we believe that Rolf Wiltschek as the
General Manager here in the Philippines will not in any way contribute to our goal of
making m+w Zander better equipped to fight all the financial deficiencies that the
company is facing today.

For how can we have a person represent the company when we cannot even respect
him as a person. His human behavior and relationship, his manners and etiquette
appear less than the accepted norms in a civilized society. His sarcasm and
arrogance and seeming feeling of superiority as expressed by his verbal abuses on
his contemporaries and subordinates is unacceptable even in a poor country like
the Philippines. Most of us in m+w Zander have worked with all sorts of people with
different nationalities, people with even higher positions in life but we have never
seen such an obnoxious and demeaning attitude towards the Filipino workers. It has
perhaps escaped Rolf Wiltschek, that we Filipinos take pride in our professions and
in our Country humble as it is.

We wish to relay to you our extreme disappointment on the replacement of Mr. Eric
Van Stijgeren with the sudden appointment of Rolf Wiltschek as the new General
Manager. We wish to convey to you our apprehension on the fate that awaits m+w
Zander here in the Philippines with Rolf Wiltschek as the General Manager. Lastly,
we assure you of our commitment to give our best performance in any task given us
for the welfare of our Company.
 Please help us save m+w Zander (Phils.) Inc.

Respectfully yours,

M+W Zander- Manila Head Office STAFF

All of the Undersigned:

1. ABEC TAYAG (sgd.)

2. CARLITO GARCIA (sgd.)
3. MARK JOSEPH AMADOR (sgd.)
4. CHRISTINE SAN AGUSTIN (sgd.)
5. EMMANUEL PIELAGO, JR. (sgd.)
6. STANLEY MOSENDE (sgd.)
7. JOANNE A. MEDIARITO (sgd.)
8. MICHAEL M. ILAGAN (sgd.)
9. DIANE F. COMINTAN (sgd.)
10. ERIC V. NAPOLITAN (sgd.)
11. RAYMOND C. JOSE (sgd.)
12. CHE BONBON (sgd.)
13. POCHOLO G. RATON (sgd.)
14. JON-JON IBARRA (sgd.)
15. MICHELLE DE MESA (sgd.)
16. TRINIDAD M. ENRIQUEZ (sgd.)
17. VIRGILIO G. NATIVIDAD (sgd.)
18. CELSA L. BAG-AO (sgd.)
19. ALLAN RIVERA (sgd.)
20. RANDY TECSON (sgd.)
21. JOY P. ESGUERRA (sgd.)
22. LARRY N. MARASIGAN (sgd.)
23. ELMER M. ARANA (sgd.)
24. ALDRIN EVANGELISTA (sgd.)
25. EDWARD A. BORJA (sgd.)
26. ERNESTO M. ANTIQUIA (sgd.)
27. JESS DELA CRUZ (sgd.)
28. P.R. SIMPLICIANO (sgd.)
29. R.L. CRUZ (sgd.)

The same appeal from the employees at the site to follow.[3]

A day after the Letter of Appeal was released, a number of employees did not report to work.
Petitioners allege that after the announcement of Wiltschek as the new General Manager,
respondent actively solicited signatures for a letter opposing the appointment of Wiltschek (Letter of
Appeal). The petitioners claim that Enriquez used her influence and moral ascendancy to coerce
several employees into signing the letter of appeal.[4] They referred to Affidavits of Mark Joseph M.
Amador (Amador),[5] Randy R. Tecson (Tecson)[6] and Patrocinio R. Simpliciano,[7] M+W Zanders
Accounting Assistant, Network Administrator and Contract Administrator, respectively, which state
that respondent sought their signature for the Letter of Appeal. Amador stated in his affidavit[8] that
on February 1, 2002 one Abelardo Tayag asked him not to go to work and Enriquez only called him
to confirm that he did not report for work. In Tecsons affidavit,[9] it was stated that on February 1,
2002, he received a call from Enriquez in his mobile phone telling him not to report to work since
other employees will not report to work and that he should just file for a sick leave since they were
doing the same. Tecson said he was already on his way to the office and refused to follow Enriquez.

Upon discovering respondent Enriquezs participation in drafting and in circulating the Letter of
Appeal, as well as in the alleged work stoppage that occurred a day after the release of the Letter,
M+W Zander sent a Notice[10] to respondent Enriquez, requiring her to explain within 48 hours from
receipt of the notice why no disciplinary action should be taken against her for willful breach of trust
and using her authority and/or influence as Administration Manager of M+W Zander over her
subordinates to stage a no work day on February 1, 2002. It was indicated that willful breach of trust
has a corresponding penalty of dismissal. Meanwhile, respondent Enriquez was placed under
preventive suspension for 15 working days.

Respondent Enriquez signed a statement,[11] dated February 5, 2002, denying that she used her
authority and/or influence as Administration Manager and Executive Assistant to the General
Manager to compel her co-employees to stage the illegal work stoppage. She also denied that she
performed any act to disrupt the vital operations of the company. She said that when she arrived at
work on February 2, 2002, she was given a notice of suspension for 15 days and was instructed to
leave the premises without being given an explanation. Her personal belongings were inspected and
she was escorted out of the premises like a criminal. Respondent stated in her affidavit that her
colleagues were given an order that if she is seen in the premises of the company, the
administration should be informed immediately and that in no case should respondent be allowed to
enter the premises of the company except if she is with an authorized escort of the petitioner
company.[12]
On February 14, 2002, an administrative investigation and an administrative hearing were conducted
by the petitioner. During the administrative hearing, the respondent submitted several signed
statements from her subordinates, such as Cecilia Benito,[13] the receptionist; Michelle De
Mesa,[14] the Engineering Administrative Assistant; Joy Esguerra,[15] an Administrative Assistant, and
Christine Roma San Agustin;[16] all saying that they were never advised or prevailed upon by the
respondent not to report to work.

Sales Engineer Allan Ordinario Rivera (Rivera) admitted before the investigating panel that he was
the one who instigated the no work day on February 1, 2002, but he was not charged by the
petitioners. We quote Riveras statement:
 14 FEBRUARY 2002

TO WHOM IT MAY CONCERN:

IN RELATION TO THE ALLEGATIONS MADE AGAINST MS. TRINIDAD

ENRIQUEZ, I ALLAN O. RIVERA REQUEST TO BE ACKNOWLEDGED &
RECOGNIZED THROUGH MY OWN INITIATIVE & NOT FORCED TO PRESENT
THIS WRITTEN STATEMENT TO CLARIFY WHAT REALLY TRANSPIRED ON
JANUARY 31, 2002.

IT WAS ME [sic] WHO GAVE INSTRUCTION TO THOSE PRESENT THAT

EVENING OF JANUARY 31, 2002 NOT TO REPORT FOR WORK THE
FOLLOWING DAY[,] FEBRUARY 01, 2002 (FRIDAY).

IT WAS ALSO I, WHO INVITED MS. TRINIDAD ENRIQUEZ TO JOIN US, WHO
WAS THEN LATER ACCUSED OF INSTIGATING THE SAID NO WORK DAY
SHOW, WHEREAS, IT WAS I WHO INSTIGATED THE INCIDENT.

FURTHER MS. TRINIDAD ENRIQUEZ, ASIDE FROM COMING LATE EVENING,

SHE ONLY STAYED FOR LESS THAN AN HOUR, THAT THE ACCUSATION BY
SOME OF THE INDIVIDUALS IS NOT TRUE, SINCE SOME HAD ALREADY LEFT
& MOST OF THE PARTICIPANTS DID NOT ARRIVED [sic] YET.

THIS IS TO ATTEST TO THE TRUTH OF THE ABOVE.

(Sgd.)
ALLAN ORDINARIO RIVERA
SALES ENGINEER[17]

Out of the eight subordinates who gave their statements during the administrative investigation, it
was only Stanley Mosende (Mosende) who stated that he was influenced by respondent Enriquez
not to report for work.[18] It appears, however, that Mosende was not absent from work based on the
signed attendance sheet, which showed that he reported to the office at 5:00 p.m. and signed out at
7:00 p.m.[19] The accounts of Mosende are incongruous with the statement of Tecson, the Network
Administrator. Tecson submitted a written statement declaring that around 8:00 a.m. of February 1,
2002, he received a text message from Mosende and from Wally Borja asking him not to go to the
office.[20] He did not mention the respondent. Later on, he contradicted his earlier statement when he
submitted another affidavit that was attached to the Petition for Review of petitioner M+W Zander,
this time stating that it was respondent Enriquez who called him up in his mobile phone to tell him
not to report to work.

On March 1, 2002, a Notice of Termination[21] was received by respondent informing her that her
services as Administration Manager and Executive Assistant to the General Manager of M+W
Zander are terminated effective the same day. The respondent was found liable for willful breach of
trust and confidence in using [her] authority and/or influence as Administrative Manager of M+W
Zander Philippines over [her] subordinate to stage a no work day last February 1, 2002, which in turn
disrupted vital operations in the Company.[22]

On the same day of her receipt of the Notice of Termination, respondent filed a Complaint for illegal
dismissal with the Arbitration Office of the NLRC. Respondent Enriquez alleges that petitioners
based her termination on mere speculation since there were a number of employees who reported to
work despite signing the letter of appeal, and despite the absence of some of the employees, the
company still continued its operations that day.

Labor Arbiter Edgar B. Bisana held that respondent Enriquez was illegally dismissed. [23] Both
petitioners, M+W Zander and Wiltschek, were ordered to reinstate respondent without loss of
seniority rights and privileges, and to pay respondent full backwages and benefits from the time
compensation was withheld from her up to her actual reinstatement. The petitioners were further
ordered to pay P100,000.00 as moral damages, P100,000.00 as exemplary damages, as well as
attorneys fees.

The NLRC reversed the decision of the Labor Arbiter and found that respondent was not illegally
dismissed because she committed serious misconduct which destroyed the trust and confidence of
the management in her.[24]
The Court of Appeals reversed and set aside the decision of the NLRC and reinstated the
decision of the Labor Arbiter, declaring that the dismissal of respondent was illegal.[25] The
petitioners were ordered to reinstate respondent to her former position without loss of seniority rights
and privileges. The Court of Appeals deleted the award of exemplary damages and reduced the
award of moral damages to P25,000.00. The award of attorneys fees was also affirmed.

At issue in this petition[26] is whether respondent was illegally dismissed by petitioners.

Consequently, it must also be determined whether moral damages and attorneys fees should be
awarded, if respondent was illegally dismissed, and whether Wiltschek should be personally liable
together with M+W Zander.
After a thorough review of the records, we affirm the decision of the Court of Appeals and find that
respondent was illegally dismissed by petitioner M+W Zander.
The sole ground for respondents termination by petitioners is willful breach of trust and
confidence in using [her] authority and/or influence as Administrative Manager of ZANDER over [her]
subordinate to stage a no work day last February 1, 2002.[27]

Article 282 (c) of the Labor Code allows an employer to terminate the services of an employee for
loss of trust and confidence. [28] Certain guidelines must be observed for the employer to terminate
an employee for loss of trust and confidence. We held in General Bank and Trust Company v.
Court of Appeals,[29] viz.:

[L]oss of confidence should not be simulated. It should not be used as a subterfuge

for causes which are improper, illegal, or unjustified. Loss of confidence may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be
genuine, not a mere afterthought to justify earlier action taken in bad faith.[30]
The first requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be one holding a position of trust and confidence.

There are two classes of positions of trust: managerial employees and fiduciary rank-and-file
employees.

Managerial employees are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions.[31] They refer to those whose primary
duty consists of the management of the establishment in which they are employed or of a
department or a subdivision thereof, and to other officers or members of the managerial
staff.[32] Officers and members of the managerial staff perform work directly related to management
policies of their employer and customarily and regularly exercise discretion and independent
judgment.[33]

The second class or fiduciary rank-and-file employees consist of cashiers, auditors, property
custodians, etc., or those who, in the normal exercise of their functions, regularly handle significant
amounts of money or property.[34] These employees, though rank-and-file, are routinely charged with
the care and custody of the employers money or property, and are thus classified as occupying
positions of trust and confidence.

In the case at bar, respondent was employed as the Administration Manager and the Executive
Assistant to the General Manager. The responsibilities of the Administration Manager include:

- To take charge of the management of Administrative personnel assigned to

the head office in so far as administrative functions are concerned
(Administrative Assistants assigned to the Division heads and other managerial
positions except HRD);
- To take charge of the over-all security for the company staff, premises, and
sensitive areas; to guard against unauthorized entry in sensitive areas (as
determined by the management committee);
- To take charge of the implementation of company rules on housekeeping,
cleanliness and security for all occupants of the Head Office in coordination with
the company Division Heads and HRD;
- To monitor attendance of all administrative personnel and enforce applicable
company rules pertaining thereto;
- To take charge of the maintenance, upkeep and inventory of all company
property within the head office;
- To take charge of the timely provision of supplies and equipment covered by the
proper requisition documents within the head office;
- To take charge of traffic, tracking, and distribution of all incoming and outgoing
correspondence, packages and facsimile messages;
- To take care of all official travel arrangements and documentation by company
personnel;
- To ensure the proper allocation of company cars assigned to the Head Office; and
- To coordinate schedule and documentation of regular staff meetings and one-on-
one meetings as required by EVS and the Division Heads.[35] (Emphasis supplied.)
The duties of the Executive Assistant to the General Manager are as follows:

- To take care of the scheduling, monitoring, and tracking of all the GMs
appointments;
- To serve as liaison between the GM, the Division Heads, the Administrative Staff
and external contacts;
- To take care of immigration concerns and corresponding documents for the GM
and the company expatriates;
- To effectively handle, monitor, and document calls for the GM;
- To handle personal financials (Banking/Bills) for the GM and
- To perform any other tasks relative to the above functions which may be assigned
from time to time by the GM.[36]

Though respondents position is designated as the Administration Manager of M+W Zander,

it does not automatically mean that she occupies a position of trust and confidence. It is not the job
title but the actual work that the employee performs that determines whether he or she occupies a
position of trust and confidence.[37]Respondents duties as the Administration Manager include
management of the administrative assistants who are assigned to the division heads, in so far as
their administrative functions are concerned. She also takes charge of the implementation of
company rules on housekeeping and cleanliness, oversees the security of the premises and the
sensitive areas of the company, monitors the inventory of company property, and ensures the timely
provision of supplies and equipment. The position of an Administration Manager may thus be
properly considered as a managerial position, being a head of administrative assistants of other
divisions, and because of the performance of work directly related to management policies and
company rules.

The second requisite of terminating an employee for loss of trust and confidence is that there must
be an act that would justify the loss of trust and confidence.[38] To be a valid cause for dismissal, the
loss of confidence must be based on a willful breach of trust and founded on clearly established
facts.[39]
We find that it was not established that respondent used her authority to influence her subordinates
to stage a no work day; and assuming that she performed this act as alleged by petitioners, it does
not satisfy the jurisprudential requirements for valid termination due to loss of trust and confidence.

Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or
fraudulent act. In the case at bar, respondent did not commit any act which was dishonest or
deceitful. She did not use her authority as the Administration Manager to misappropriate company
property nor did she abuse the trust reposed in her by petitioners with respect to her responsibility to
implement company rules. The most that can be attributed to respondent is that she influenced a
single subordinate, without exerting any force or making any threats, not to report to work. This does
not constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and
confidence.
We are convinced that respondent's dismissal cannot justifiably be sustained since the findings in
this case and whatever investigations may have been made by petitioners miserably fail to establish
culpability on respondents part. While dishonesty or disloyalty of an employee is not to be condoned,
neither should a condemnation on that ground be tolerated on the basis of suspicions spawned by
speculative inferences.[40]

Petitioners anchored the termination of respondent on the statement made by a single subordinate,
Mosende, which was made during the administrative investigation conducted by petitioners.
Mosende stated that respondent, as his superior, told him not to report to work on February 1,
2002.[41] It was only Mosende who said that respondent forced him not to report to work on February
1, 2002. During the administrative investigation, the rest of respondents subordinates did not identify
respondent as the one who influenced them not to go to work on February 1, 2002.

The act of influencing a single subordinate not to report to work is insufficient to merit the harsh and
grave penalty of dismissal. The records are bereft of any evidence to prove that respondent in fact
coerced a considerable number of employees to stage the no work day. Petitioners may not
arbitrarily assert loss of trust and confidence in respondent based on the lone affidavit of Mosende,
in the face of overwhelming evidence to the contrary, including affidavits from several subordinates
of respondent and the categorical statement of Rivera that he was the one who influenced other
employees to stage the no work day.

We note that while 29 other employees signed the Letter of Appeal, and several employees joined
the alleged work stoppage, it was only respondent who was singled out and dismissed. These
protest activities bear out the general sentiment of discontent within the company and petitioners
cannot pin the blame on respondent alone.Petitioners may not terminate respondents employment
on mere speculation and base her dismissal on unclear and nebulous reasons, especially where a
less punitive penalty would suffice. The penalty must be commensurate with the act, conduct or
omission imputed to the employee and must be imposed in connection with the disciplinary authority
of the employer.[42]

We thus find the dismissal to be illegal. Consequently, respondent is entitled to reinstatement

without loss of seniority rights and other privileges, and to full backwages, inclusive of allowances,
and other benefits or their monetary equivalent, computed from the time of the withholding of the
employee's compensation up to the time of actual reinstatement. If reinstatement is not possible due
to the strained relations between the employer and the employee, separation pay should instead be
paid the employee equivalent to one month salary for every year of service, computed from the time
of engagement up to the finality of this decision.

Petitioners also raised as an issue the propriety of the award of moral damages and attorneys fees,
arguing that there is no factual or legal basis to award such.Petitioners also pointed out that there
was also no discussion in the body of the decision of the Court of Appeals which states the reasons
for the award of damages.
We find that based on the facts of the case, there is sufficient basis to award moral damages and
attorneys fees to respondent. We have consistently ruled that in illegal dismissal cases, moral
damages are recoverable only where the dismissal of the employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy.[43] Such an award cannot be justified solely upon the premise that the
employer fired his employee without just cause or due process. Additional facts must be pleaded
and proven to warrant the grant of moral damages under the Civil Code, i.e., that the act of dismissal
was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy; and, of course, that social humiliation,
wounded feelings, grave anxiety, and similar injury resulted therefrom.[44]

In previous cases where moral damages and attorneys fees were awarded, the manner of
termination was done in a humiliating and insulting manner, such as in the case of Balayan
Colleges v. National Labor Relations Commission[45] where the employer posted copies of its
letters of termination to the teachers inside the school campus and it also furnished copies to the
town mayor and Parish Priest of their community for the purpose of maligning the teachers
reputation. So also in the case ofChiang Kai Shek School v. Court of Appeals,[46] this Court
awarded moral damages to a teacher who was flatly, and without warning or a formal notice, told
that she was dismissed.

In the case at bar, we see it fit to award moral damages to respondent because the manner in which
respondent was treated upon petitioners suspicion of her involvement in drafting and in circulating
the letter of appeal and the alleged staging of the no work day is contrary to good morals because it
caused unnecessary humiliation to respondent.
When respondent reported to work a day after the alleged no work day, she was given a notice of
preventive suspension, her personal belongings were inspected, and she was escorted outside of
the premises, without any explanation. Furthermore, an order was given by the administration to her
subordinates that in no case shall she be allowed inside the company premises without an
authorized escort. Such measures were unwarranted because the charges against respondent have
no connection to the breach of trust involving loss of money or company property, which could have
called for securing company property from respondent. The crux is precisely that the charges
against respondent are divorced from the essence of loss of trust and confidencewhich is the
commission of an act that is dishonest, deceitful or fraudulent.And despite this, based merely on
mere suspicion, respondent was treated unfairly when she was not given an explanation why her
personal belongings were inspected, why she was asked to leave the company building, why she
had to be escorted by guards, why she was banned from the premises, and, most importantly, why it
was necessary at all to issue an order to her subordinates that she is not allowed in the company
premises unless she is escorted by authorized personnel. These measures are uncalled for, unfair
and oppressive.

On the matter of attorney's fees, we have ruled that attorney's fees may be awarded only when the
employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect
his rights by reason of the unjustified acts of his employer.[47] In the case at bar, respondents
unjustified and unwarranted dismissal prompted her to engage the professional services of a
counsel and she is thus entitled to an award of attorneys fees.

Lastly, we come to the issue of whether Wiltschek, as the General Manager, should be
personally liable together with M+W Zander. We agree with petitioners that he should not be made
personally liable. The general manager of a corporation should not be made personally answerable
for the payment of an illegally dismissed employee's monetary claims arising from the
dismissal unless he had acted maliciously or in bad faith in terminating the services of the
employee.[48] The employer corporation has a separate and distinct personality from its officers who
merely act as its agents.

It is well settled that:

[A] corporation is invested by law with a personality separate and distinct from those
of the persons composing it as well as from that of any other entity to which it may be
related. Mere ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself sufficient ground for
disregarding the separate corporate personality. [49]

The exception noted is where the official "had acted maliciously or in bad faith," in which
event he may be made personally liable for his own act. That exception is not applicable in the case
at bar, because it has not been proven that Wiltschek was impleaded in his capacity as General
Manager of petitioner corporation and there appears to be no evidence on record that he acted
maliciously or in bad faith in terminating the services of respondent. His act, therefore, was within the
scope of his authority and was a corporate act for which he should not be held personally liable for.

IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the assailed
decision ordering Rolf Wiltschek liable with M+W Zander is DELETED. All other aspects of the
decision of the Court of Appeals are AFFIRMED.

SO ORDERED.
CASE NO.2

THIRD DIVISION

JACKQUI R. MORENO, G.R. No. 175283

Petitioner, Present:
- versus -
AUSTRIA-MARTINEZ, J.,
Acting Chairperson,
TINGA,*
SAN SEBASTIAN COLLEGE-
RECOLETOS, MANILA, CHICO-NAZARIO,

Respondent. NACHURA, and

REYES, JJ.

Promulgated:

March 28, 2008

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

DECISION

CHICO-NAZARIO, J.:

Assailed in this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court is the
Decision[2] of the Court of Appeals dated 7 November 2006 in CA-G.R. SP No. 90083. The appellate
courts Decision granted the Special Civil Action for Certiorari filed by respondent San Sebastian
College-Recoletos, Manila(SSC-R), and annulled the Decision[3] dated 23 November 2004 and the
Resolution[4] dated 31 March 2005 of the National Labor Relations Commission (NLRC) in NLRC-
NCR-CA No. 037175-03.

The undisputed facts of the case are as follows:

Respondent SSC-R is a domestic corporation and an educational institution duly registered under
the laws of the Philippines, located in C. M. Recto Avenue, Quiapo,Manila.
On 16 January 1999, SSC-R employed petitioner Jackqui R. Moreno (Moreno) as a teaching
fellow. On 23 October 2000, Moreno was appointed as a full-time college faculty member.[5] Then,
on 22 October 2001, Moreno became a member of the permanent college faculty.[6] She was also
offered the chairmanship[7] of the Business Finance and Accountancy Department of her college
on 13 September 2002.

Subsequently, reports and rumors of Morenos unauthorized external teaching engagements

allegedly circulated and reached SSC-R. The Human Resource Department of the school thereafter
conducted a formal investigation on the said activities. On 24 October 2002, the Department
submitted its report,[8] which stated that Moreno indeed had unauthorized teaching assignments at
the Centro Escolar University during the first semester of the School Year 2002-2003, and at the
College of the Holy Spirit, Manila, during the School Years 2000-2001, 2001-2002 and the first
semester of School Year 2002-2003.

On 27 October 2002, Moreno received a memorandum[9] from the Dean of her college, requiring her
to explain the reports regarding her unauthorized teaching engagements. The said activities
allegedly violated Section 2.2 of Article II of SSC-Rs Faculty Manual,[10] which reads:

Administrative permission is required for all full-time faculty members to teach part-
time elsewhere. If ever teaching permission is granted, the total teaching load
should not exceed the maximum allowed by CHED rules and regulations. Faculty
members are required to report all other teaching assignments elsewhere within two
(2) weeks from start of the classes every semester.

On 28 October 2002, Moreno sent a written explanation[11] in which she admitted her failure to
secure any written permission before she taught in other schools.Moreno explained that the said
teaching engagements were merely transitory in nature as the aforesaid schools urgently needed
lecturers and that she was no longer connected with them. Moreno further stated that it was never
her intention to jeopardize her work in SSC-R and that she merely wanted to improve her familys
poor financial conditions.

A Special Grievance Committee was then formed in order to investigate and make
recommendations regarding Morenos case. The said committee was composed of Dean Abraham
Espejo of the College of Law, as chairman, and Messrs. Dindo Bunag and Ramon Montierro, as
members.

In a letter[12] dated 11 November 2002, the grievance committee required Moreno to answer the
following series of questions concerning her case, to wit:

1. Did you teach in other schools without first obtaining the consent of your
superiors in SSC-R?

2. Did you ever go beyond the maximum limit for an outside load?

3. Did you ever truthfully disclose completely to your superiors at SSC-R any
outside Load?
 4. Do you deny teaching in CEU?

5. Do you deny teaching at Holy Spirit?

Moreno answered the above queries in a letter[13] dated 12 November 2002. Moreno admitted she
did not formally disclose her teaching loads at the College of the Holy Spirit and at the Centro
Escolar University for fear that the priest administrators may no longer grant her permission, as prior
similar requests had already been declined; that the Dean of her college was aware of her external
teaching loads; that she went beyond the maximum limit for an outside load in the School Years
2000 until 2002, because she needed to support her mother and sister, her masteral studies, and
her sisters canteen business, all of which coincided with the payment of the emergency loan from
the SSC-R administrators that paid for her mothers illness; that she did not deny teaching part-time
in the aforementioned schools; and that she did not wish to resign because she felt she deserved a
second chance.

On the same day that Moreno sent her letter, the grievance committee issued its resolution,[14] which
unanimously found that she violated the prohibition against a full-time faculty having an unauthorized
external teaching load. The majority of the grievance committee members recommended Morenos
dismissal from employment in accordance with the school manual, but Dean Espejo dissented and
called only for a suspension for one semester.

Thereafter, SSC-R sent a letter[15] to Moreno that was signed by the College President, informing her
that they had approved and adopted the findings and recommendations of the grievance committee
and, in accordance therewith, her employment was to be terminated effective 16 November 2002.

Moreno thus instituted with the NLRC a complaint for illegal termination against SSC-R, docketed as
NLRC-NCR Case No. 11-10077-02, seeking reinstatement, money claims, backwages, separation
pay if reinstatement is not viable, and attorneys fees.

In the Decision[16] dated 30 April 2003, Labor Arbiter Veneranda C. Guerrero dismissed Morenos
complaint for lack of merit, thus:

WHEREFORE, premises considered, judgment is hereby rendered dismissing the

complaint for illegal dismissal for lack of merit. Respondent San Sebastian College-
Recoletos is hereby ordered to pay complainant Jackqui R. Moreno the amount of
NINE THOUSAND ONE HUNDRED FORTY THREE AND 75/100 PESOS
(P9,143.75) representing her unpaid salaries.

All other claims are DISMISSED for lack of merit.

The Labor Arbiter ruled that Morenos due acceptance of the appointment as a member of the
Permanent Faculty meant that she was bound to the condition therein not to accept any outside
teaching assignments without permission. Morenos admission of her violation was likewise said to
have rendered her liable for the penalty of dismissal as provided for in the SSC-R Faculty
Manual. The Labor Arbiter held that SSC-R had adequately discharged the burden of proof imposed
by law in dismissing Moreno. Except for her unpaid salary for fifteen (15) days, which was not
controverted, the rest of Morenos money claims were denied for being unsubstantiated.

On appeal by Moreno, the NLRC reversed the rulings of the Labor Arbiter in a Decision dated 23
November 2004, the relevant portion of which reads:

The four (4) applications for leave of absence adduced in evidence by the
respondent [SSC-R] are all undated. If the absences indicated in the said
documents were the only absences incurred by the complainant [Moreno] in her
four-year tenure, it cannot be said that she had a poor attendance. In fact, the
contrary would be true. On the other hand, it is conceded that in the yearly
evaluation of the performance of teachers, she consistently landed among the five
best teachers. Thus, neither can it be said that her moonlighting activities adversely
affected her work performance. Likewise, the undisputed fact that she was asked to
be the chairman of Business Finance and Accountancy for SY 2002-2003 should be
considered. This last circumstance could only mean that she was very good at her
job.

There are other extenuating circumstances that should have been taken into
consideration in determining the propriety of the penalty of dismissal meted upon the
complainant. These circumstances are the fact that it was her first offense in four
years of unblemished employment, and the fact that she candidly admitted her fault.
xxx

Moreover, it is settled that the existence of some rules agreed upon between the
employer and employee on the subject of dismissal cannot preclude the State from
inquiring whether its rigid application would work too harshly on the employee.
(Gelmart Industries Phils. Inc. vs. NLRC, 176 SCRA 295 cited in Caltex Refinery
Employees Association vs. NLRC, 246 SCRA 271).

Thus, in the instant case, it must be concluded that the penalty of dismissal meted
upon the complainant [Moreno] was too harsh and unreasonable under the
circumstances. At most, a one-year suspension with a warning against the repetition
of the same offense would have been more in keeping with the generally accepted
principles of law.

WHEREFORE, the decision appealed from is hereby REVERSED. The respondent

[SSC-R] is hereby ordered to REINSTATE the complainant [Moreno] to her former
position, and to pay her full backwages counted from November 16, 2003 up to the
date of her actual reinstatement.[17]
SSC-R filed a Motion for Reconsideration[18] of the NLRC Decision, which was denied for lack of
merit in a Resolution[19] dated 31 March 2005.

Thus, SSC-R instituted with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules
of Court, with a prayer for the issuance of a temporary restraining order and/or a writ of preliminary
injunction,[20] docketed as CA-G.R. SP No. 90083, alleging grave abuse of discretion on the part of
the NLRC.

In a Decision[21] dated 7 November 2006, the appellate court granted the petition and annulled the
Decision dated 23 November 2004, and Resolution dated 31 March 2005 of the NLRC. In reinstating
the Decision of the Labor Arbiter dated 30 April 2003, the Court of Appeals ruled in this wise:

In the case at bar, there is clearly grave abuse of discretion on the part of the NLRC
when it reversed the Decision of the Labor Arbiter. Its conclusions are highly
prejudicial to the interests of herein petitioner [SSC-R], considering the glaring
infractions committed by private respondent [Moreno], which she even expressly
admitted.

xxxx

Willful disobedience of the employers lawful orders, as a just cause for dismissal of
an employee, envisages the concurrence of at least two (2) requisites: the
employees assailed conduct must have been willful or intentional, the willfulness
being characterized by a wrongful or perverse attitude; and the order violated must
have been reasonable, lawful, made known to the employee and must pertain to the
duties which he had been engaged to discharge.

The foregoing requisites are all present in this case. The prohibition against
unauthorized outside teaching engagements found in the Faculty Manual and in
private respondents [Moreno] appointment letter are deemed reasonable under the
circumstances. In fact, the petitioners [SSC-R] policy is actually permissive since it
allows other teaching engagements so long as its president approves of the same.

Concededly, this policy was made known to private respondent [Moreno] for as
mentioned earlier, it is found not only in the Faculty Manual, but more importantly, it
is explicitly stated in her appointment letter. By her own admission, it cannot be
clearer that, in spite of her knowledge thereof, private respondent [Moreno] willfully
disobeyed the said prohibition. When she accepted the teaching opportunities
offered to her by other schools and altogether concealed the same from the
petitioner [SSC-R], she risked being administratively held liable therefor. Thus, the
excuses she raised upon the petitioners [SSC-R] discovery of such concealment
deserve scant consideration.
 The policy is obviously in connection with the private respondents [Moreno] duties
as a faculty member. It is designed to ensure that the petitioners [SSC-R] teaching
staff is well fit to function accordingly, not only for its benefit, but chiefly, for the
students who are under their care and instruction. Private respondent [Moreno]
argues that notwithstanding her violations, her commitments with petitioner [SSC-R]
were never compromised. Be that as it may, this fact cannot absolve her. She may
be fit at the time when her infractions were revealed, but there is no assurance that
her health would not deteriorate in time if she persists in carrying on a heavy
workload.

xxxx

WHEREFORE, the instant petition is GRANTED. The 23 November 2004 Decision

and the 31 March 2005 Resolution of the National Labor Relations Commission
(Second Division) are hereby ANNULLED and SET ASIDE. The National Labor
Relations Commission is permanently enjoined from executing its 31 March
2005 Resolution. The Decision of the Labor Arbiter dated 30 April 2003 is
hereby REINSTATED and AFFIRMED.

Accordingly, Moreno now impugns before this Court the Court of Appeals Decision dated 07
November 2006 raising the following issues:

I.

WHETHER OR NOT THE DISMISSAL OF PETITIONER WAS PROPER AND

LAWFUL.

II.

WHETHER OR NOT PETITIONER IS ENTITLED TO THE RELIEF SHE SEEKS

AGAINST RESPONDENT.

Moreno insists that her right to security of tenure is a more significant consideration in this
case than the strict application of a school policy. She laments that her dismissal from employment
for failing to secure the necessary permission is too harsh and undeserved a penalty.

The most basic of tenets in employee termination cases is that no worker shall be dismissed
from employment without the observance of substantive and procedural due process. Substantive
due process means that the ground upon which the dismissal is based is one of the just or
authorized causes enumerated in the Labor Code. Procedural due process, on the other hand,
requires that an employee be apprised of the charge against him, given reasonable time to answer
the same, allowed ample opportunity to be heard and defend himself, and assisted by a
representative if the employee so desires.[22] The employee must be furnished two written notices:
the first notice apprises the employee of the particular acts or omissions for which his dismissal is
sought, and the second is a subsequent notice which informs the employee of the employer's
decision to dismiss him.[23]

Article 282 of the Labor Code provides for the just causes for the termination of employment,
to wit:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and

(e) Other causes analogous to the foregoing.

In termination cases, the burden of proof rests on the employer to show that the dismissal is
for just cause. When there is no showing of a clear, valid and legal cause for the termination of
employment, the law considers the matter a case of illegal dismissal and the burden is on the
employer to prove that the termination was for a valid or authorized cause.[24]

Respondent SSC-R contends that Morenos dismissal from employment was valid because
she knowingly violated the prohibition embodied in the aforementioned Section 2.2 of Art. II of the
SSC-R Faculty Manual, in accordance with Section 45[25] of the Manual of Regulations for Private
Schools, and which prohibition was likewise contained in Morenos employment contract.[26] In so
doing, Moreno allegedly committed serious misconduct and willful disobedience against the school,
and thereby submitted herself to the corresponding penalty provided for in both the Faculty
Manual and the employment contract, which is termination for cause.

On the basis of the evidence on record, the Court finds that Moreno has indeed committed
misconduct against respondent SSC-R. Her admitted failure to obtain the required permission from
the school before she engaged in external teaching engagements is a clear transgression of SSC-
Rs policy. However, said misconduct falls below the required level of gravity that would warrant
dismissal as a penalty.

Under Art. 282(a) of the Labor Code, willful disobedience of the employers lawful orders as a
just cause for termination of employment envisages the concurrence of at least two requisites: (1)
the employees assailed conduct must have been willful or intentional, the willfulness being
characterized by a "wrongful and perverse attitude"; and (2) the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he has been
engaged to discharge.[27]

Similarly, with respect to serious misconduct, the Court has already ruled in National Labor
Relations Commission v. Salgarino[28] that:

Misconduct is defined as improper or wrong conduct. It is the transgression

of some established and definite rule of action, a forbidden act, a dereliction of
duty, willful in character and implies wrongful intent and not mere error of
judgment. The misconduct to be serious within the meaning of the act must be of
such a grave and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious, must nevertheless be in connection with the work of
the employee to constitute just cause from his separation.

In order to constitute serious misconduct which will warrant the dismissal of

an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient
that the act or conduct complained of has violated some established rules or policies.
It is equally important and required that the act or conduct must have been
performed with wrongful intent.(Emphasis ours.)

After examining the records of the case, the Court finds that SSC-R miserably failed to prove
that Morenos misconduct was induced by a perverse and wrongful intent as required in Art. 282(a) of
the Labor Code. SSC-R merely anchored Morenos alleged bad faith on the fact that she had full
knowledge of the policy that was violated and that it was relatively easy for her to secure the
required permission before she taught in other schools. This posture is utterly lacking.
 It bears repeating that it is the employer that has the burden of proving the lawful cause
sustaining the dismissal of the employee. Even equipoise is not enough; the employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.[29]

In the present case, SSC-R failed to adduce any concrete evidence to prove
that Moreno indeed harbored perverse or corrupt motivations in violating the aforesaid school
policy. In her letter of explanation to the grievance committee dated 12 November
2002, Moreno explained in detail her role as the breadwinner and the grave financial conditions of
her family. As previous requests for permission had already been denied, Moreno was thus
prompted to engage in illicit teaching activities in other schools, as she desperately needed them to
augment her income. Instead of submitting controverting evidence, SSC-R simply dismissed the
above statements as nothing more than a lame excuse[30] and are clearly an
afterthought,[31] considering that no evidence was offered to support them and that Morenos salary
was allegedly one of the highest among the universities in the country.

In addition, even if dismissal for cause is the prescribed penalty for the misconduct herein
committed, in accordance with the SSC-R Faculty Manual andMorenos employment contract, the
Court finds the same to be disproportionate to the offense.

Time and again, we have ruled that while an employer enjoys a wide latitude of discretion in
the promulgation of policies, rules and regulations on work-related activities of the employees, those
directives, however, must always be fair and reasonable, and the corresponding penalties, when
prescribed, must be commensurate to the offense involved and to the degree of the infraction.[32]

Special circumstances were present in the case at bar which should have been properly
taken into account in the imposition of the appropriate penalty. Moreno, in this case, had readily
admitted her misconduct, which was undisputedly the first she has ever committed against the
school. Her teaching abilities and administrative skills remained apparently unaffected by her
external teaching engagements, as she was found by the grievance committee to be one of the
better professors in the Accounting Department[33] and she was even offered the Chairmanship of
her college.[34] Also, the fact that Moreno merely wanted to alleviate her familys poor financial
conditions is a justification that SSC-R failed to refute. SSC-R likewise failed to prove any resulting
material damage or prejudice on its part as a consequence of Morenos misconduct. The claim by
SSC-R that the imposition of a lesser penalty would set a bad precedent[35] for the other faculty
members who comply with the school policies is too speculative for this Court to even consider.

Finally, the Court notes that in Morenos contract of employment,[36] one of the provisions
therein categorically stated that should a violation of any of the terms and conditions thereof be
committed, the penalty that will be imposed would either be suspension or dismissal from
employment. Thus, contrary to its position from the beginning, SSC-R clearly had the discretion to
impose a lighter penalty of suspension and was not at all compelled to dismiss Moreno under the
circumstances, just because the Faculty Manual said so.

With regard to the observance of procedural due process, neither of the parties has put the same
into issue. Indeed, based on the evidence on record, Moreno was served with the required twin
notices and was afforded the opportunity to be heard. The first notice was embodied in the
memorandum[37] dated 27 October 2002 sent by her College Dean, which required her to explain her
unauthorized teaching assignments. The letter[38] by SSC-R that informed Moreno that her services
were being terminated effective 16 November 2002 constituted the second required
notice. Moreno was also given the opportunity to explain her side when the special grievance
committee asked her a series of questions pertaining to their investigation in a letter [39] dated 11
November 2002 and to which she replied likewise through a letter[40]dated 12 November 2002.

In light of the foregoing, the Court holds that the dismissal of petitioner Moreno failed to comply with
the substantive aspect of due process. Despite SSC-Rs observance of procedural due process, it
nonetheless failed to discharge its burden of proving the legality of Morenos termination from
employment. Thus, the imposed penalty of dismissal is hereby declared as invalid.

In so ruling, this Court does not depreciate the misconduct committed by Moreno. Indeed, SSC-R
has adequate reasons to impose sanctions on her. However, this should not be dismissal from
employment. Because of the serious implications of this penalty, our Labor Code decrees that an
employee cannot be dismissed, except for the most serious causes.[41]

Considering the presence of extenuating circumstances in the instant case, the Court deems it
appropriate to impose the penalty of suspension of one (1) year onMoreno, to be counted from 16
November 2002, the effective date of her illegal dismissal. However, given the period of time in
which Moreno was actually prevented from working in the respondent school, the said suspension
should already be deemed served.

Furthermore, the Court holds that Moreno should be reinstated to her former position, without loss of
seniority rights and other privileges, but without payment of backwages.

As a general rule, the normal consequences of a finding that an employee has been illegally
dismissed are, firstly, that the employee becomes entitled to reinstatement without loss of seniority
rights; and secondly, the payment of backwages corresponding to the period from his illegal
dismissal up to his actual reinstatement. The two forms of relief are, however, distinct and separate
from each other. Though the grant of reinstatement commonly carries with it an award of
backwages, the appropriateness or non-availability of one does not carry with it the
inappropriateness or non-availability of the other.[42]

In accordance with Durabuilt Recapping Plant & Co. v. National Labor Relations Commission, [43] the
Court may not only mitigate, but also absolve entirely, the liability of the employer to pay backwages
where good faith is evident. Likewise, backwages may be withheld from a dismissed employee
where exceptional circumstances are availing.[44]

In the present case, the good faith of SSC-R is apparent. The termination of Moreno from her
employment cannot be said to have been carried out in a malevolent, arbitrary or oppressive
manner. Indeed, the only mistake that the respondent school has committed was to strictly apply the
provisions of its Faculty Manual and its contract with Moreno without regard for the aforementioned
special circumstances that were attendant in this case. Even then, Morenos right to procedural due
process was fully respected, as she was given the required twin notices and an ample opportunity to
be heard. This fact was not even disputed by Moreno herself.
With respect to Morenos claim for moral and exemplary damages, the same were never
satisfactorily pleaded and substantiated.[45] Thus, they are hereby denied.Neither is Moreno entitled
to the award of the monetary claims[46] in her petition, as no basis and proof for the grant thereof
were ever adduced.

The Court cannot likewise award attorneys fees to Moreno in view of the above-mentioned finding of
good faith on the part of SSC-R[47]. It is a well-settled principle that even if a claimant is compelled to
litigate with third persons or to incur expenses to protect the claimants rights, attorneys fees may still
not be awarded where no sufficient showing of bad faith could be reflected in a partys persistence in
a case other than an erroneous conviction of the righteousness of his cause.[48]

WHEREFORE, the Petition for Review is GRANTED. The Decision of the Court of Appeals in CA-
G.R. SP No 90083 dated 7 November 2006 is herebyREVERSED. Respondent San Sebastian
College-Recoletos, Manila, is hereby ordered to reinstate Petitioner Jackqui R. Moreno without loss
of seniority rights and other privileges. No pronouncement as to cost.
SO ORDERED.
CASE NO.3

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 173489 February 25, 2013

ALILEM CREDIT COOPERATIVE, INC., now known as ALILEM MULTIPURPOSE

COOPERATIVE, INC.,Petitioner,
vs.
SALVADOR M. BANDIOLA, JR., Respondent.

DECISION

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Alilem
Credit Cooperative, Inc. against respondent Salvador M. Bandiola, Jr. assailing the Court of Appeals
(CA) Decision1dated January 16, 2006 and Resolution2 dated July 5, 2006 in CAG. R. SP No.
64554.

The case stemmed from the following facts:

Respondent was employed by petitioner as bookkeeper. Petitioner's Board of Directors (the Board)
received a letter from a certain Napoleon Gao-ay (Napoleon) reporting the alleged immoral coaduct
and unbecoming behavior of respondent by having an illicit relationship with Napoleon’s sister,
Thelma G. Palma (Thelma). This prompted the Board to conduct a preliminary investigation.3

During the preliminary investigation, the Board received the following evidence of respondent’s
alleged extramarital affair:

1. Melanie Gao-ay’s (Melanie) sworn statement declaring that sometime in December 1996,
respondent slept on the same bed with Thelma in a boarding house in San Fernando, La
Union where she (Melanie) and Thelma resided. She personally witnessed the intimacy of
respondent and Thelma when they engaged in lovemaking as they slept in one room and
openly displayed their affection for each other.4

2. Rosita Tegon’s (Rosita) sworn statement that on May 23, 1997, she saw Thelma talk to
respondent in petitioner’s office asking him to accompany her in San Fernando, La Union.5

3. Emma Gao-ay Lubrin’s (Emma, Thelma’s sister) interview wherein she admitted that she
and her family confronted Thelma about the alleged extramarital affair which Thelma
allegedly admitted.6

4. Napoleon’s interview with the Board wherein he claimed that their family tried to convince
Thelma to end her extramarital affair with respondent but instead of complying, she in fact
lived together with respondent.7
The Board decided to form an Ad Hoc Committee to investigate the charges against respondent
yielding the following additional evidence:

1. Agustina Boteras’ (Agustina) sworn statement that she witnessed a confrontation between
Thelma and her sister in the latter’s residence concerning the alleged extramarital affair. At
that time, respondent’s wife was allegedly present who in fact pleaded Thelma to end her
relationship with respondent but she supposedly said "No way!"8

2. Milagros Villacorte’s sworn statement that while she was at the Bethany Hospital in San
Fernando, La Union where her husband was confined, respondent approached her and
asked her to look for Thelma who was then having her class. When he finally found her,
respondent and Thelma met and talked in the hospital premises.9

3. Julienne Marie L. Dalangey’s certification that on August 9 to 10, 1996, respondent

attended a seminar on Internal Control and Systems Design I at the Northern Luzon
Federation of Cooperatives and Development Center (NORLU) Pension House in Baguio
City, together with a lady companion whom he introduced as his wife. Apparently, the lady
was not his wife because at that time, his wife reported for work in the Municipal Hall of
Alilem.10

Respondent, on the other hand, denied the accusation against him. He, instead, claimed that the
accusation was a result of the insecurity felt by some members of the cooperative and of the Board
because of his growing popularity owing to his exemplary record as an employee.11 Thelma
executed an affidavit likewise denying the allegations of extra-marital affair.12

Meanwhile, on June 7, 1997, the Board received a petition from about fifty members of the
cooperative asking the relief of respondent due to his illicit affair with Thelma.13

In its Summary Investigation Report, the Ad Hoc Committee concluded that respondent was involved
in an extra-marital affair with Thelma. On July 10, 1997, the Chairman of the Board sent a letter14 to
respondent informing him of the existence of a prima facie case against him for "illicit marital affair,
an act that brings discredit to the cooperative organization and a cause for termination per AMPC
(Alilem Multi-Purpose Cooperative) Personnel Policy. Respondent was directed to appear and be
present at the AMPC office for a hearing. He was likewise advised of his right to be assisted by
counsel.

On the day of the hearing, respondent requested15 for postponement on the ground that his lawyer
was not available. The request was, however, denied and the hearing proceeded as scheduled.

In a Memorandum16 dated July 16, 1997, respondent was informed of Board Resolution No. 05,
series of 199717embodying the Board’s decision to terminate his services as bookkeeper of
petitioner, effective July 31, 1997, without any compensation or benefit except the unpaid balance of
his regular salary for services actually rendered.18

Aggrieved, respondent filed a Complaint for Illegal Dismissal against petitioner before the Regional
Arbitration Branch of the National Labor Relations Commission (NLRC).19

On April 30, 1998, the Labor Arbiter (LA) dismissed20 respondent’s complaint for lack of merit. The
LA concluded that respondent had been or might still be carrying on an affair with a married woman.
The LA found it unforgiving in the case of a married employee who sleeps with or has illicit relations
with another married person for in such case, the employee sullies not only the reputation of his
spouse and his family but the reputation as well of the spouse of his paramour and the latter’s
family.21 As opposed to respondent’s claim that the accusation is a mere fabrication of some of the
directors or cooperative members who were allegedly envious of his growing popularity, the LA gave
more credence to the testimonies of petitioner’s witnesses who were relatives of Thelma and who
had no motive to falsely testify because their family reputation was likewise at a risk of being
tarnished.22 The LA, thus, found respondent to have been validly dismissed from employment for
violation of the cooperative’s Personnel Policy, specifically "the commission of acts that bring
discredit to the cooperative organization, especially, but not limited to conviction of any crime, illicit
marital affairs, scandalous acts inimical to established and accepted social mores." The LA also
found no violation of respondent’s right to due process as he was given ample opportunity to defend
himself from the accusation against him.23

On appeal, the NLRC set aside24 the LA decision and rendered a judgment disposed in this wise:

WHEREFORE, the appealed Decision of the Executive Labor Arbiter is SET ASIDE. Judgment is
hereby rendered:

1. declaring respondent Alilem Credit Cooperative, Inc. (ACCI) also known as Alilem Multi-
Purpose Cooperative (AMPC) guilty of illegal dismissal for the reasons above-discussed;

2. directing the said respondent to pay complainant Salvador Bandiola, Jr. full backwages
computed from the time of (sic) his wages were withheld until finality of this judgment;

3. directing, on account of strained relationship between the parties, the above-named

respondent to pay complainant, in lieu of reinstatement, separation pay computed at one (1)
month pay for every year of service, a fraction of six (6) months to be computed as one (1)
whole year; [and]

4. directing respondent to pay complainant ten (10%) percent attorney’s fees based on the
total monetary award.

SO ORDERED.25

The NLRC found petitioner’s Personnel Policy to be of questionable existence and validity because it
was unnumbered.26 It held that even assuming that respondent had an extra-marital affair with a
married woman, the latter is not his fellow worker in petitioner’s business establishment.27 It, thus,
concluded that respondent’s dismissal was not founded on any of the just causes for termination of
employment under Article 282 of the Labor Code, as amended.28 It, likewise, declared that
respondent was not afforded his right to his counsel of choice as his request for postponement was
not allowed.29 Therefore, the NLRC declared respondent’s dismissal from employment illegal,
entitling him to the payment of backwages, separation pay, and attorney’s fees.30

Petitioner elevated the matter to the CA, but it failed to obtain a favorable decision. The CA found
respondent’s dismissal being founded on the serious misconduct he allegedly committed by carrying
an illicit relationship with a married woman.31 While considering said act a serious misconduct, it
refused to consider it sufficient to justify respondent’s dismissal, because it was not done in the
performance of his duties as would make him unfit to continue working for petitioner.32 Petitioner’s
motion for reconsideration was likewise denied in the assailed July 5, 2006 resolution.

Unsatisfied, petitioner now comes before the Court in this petition for review on certiorari insisting on
the validity of respondent’s dismissal from employment.
We find merit in the petition.

It is undisputed that respondent was dismissed from employment for engaging in extramarital affairs,
a ground for termination of employment stated in petitioner’s Personnel Policy. This basis of
termination was made known to respondent as early as the first communication made by petitioner.
In its June 20, 1997 letter, petitioner directed respondent to explain in writing or personal
confrontation why he should not be terminated for violation of Section 4.1.4 of the Personnel
Policy.33 Respondent merely denied the accusation against him34 and did not question the basis of
such termination. When the LA was called upon to decide the illegal dismissal case, it ruled in favor
of petitioner and upheld the basis of such dismissal which is the cited Personnel Policy.1âwphi1 The
NLRC, however, refused to recognize the existence and validity of petitioner’s Personnel Policy on
which the ground for termination was embodied.35

The existence of the Personnel Policy containing provisions on the grounds for termination of
employees was not questioned by respondent. In his position paper, respondent only assailed the
effectivity of the policy, as for him as it was amended on the same date as the letter-complaints
against him. In other words, he claimed that the policy was amended in order to include therein the
ground for his termination to make sure that he is removed from his position.36

We do not subscribe to such an argument.

A comparison of petitioner’s old and new Personnel Policies attached by respondent himself to his
Position Paper shows that under the old policy, one of the grounds for termination of an employee
is "commission of acts or commission (sic) of duties that bring discredit to the
organization,37" while under the new policy, one of the grounds is the "commission of acts that
brings (sic) discredit to the cooperative organization, especially, but not limited to, conviction
of any crime, illicit marital affairs, scandalous acts inimical to established and accepted
social mores."38 Contrary to respondent’s claim, with the amendment of the Personnel Policy,
petitioner did not create a new ground for the termination of employment to make sure that
respondent is removed from his position. The quoted ground under the old policy is similar to that
provided for in the new policy. The enumeration containing the specific act of "illicit marital affairs" is
not an additional ground, but an example of an act that brings discredit to the cooperative. It is
merely an interpretation of what petitioner considers as such. It is, thus, clear from the foregoing that
engaging in extra-marital affairs is a ground for termination of employment not only under the new
but even under the old Personnel Policy of petitioner. The effectivity of the policy as to respondent
cannot, therefore, be questioned.

To be sure, an employer is free to regulate all aspects of employment.39 It may make reasonable
rules and regulations for the government of its employees which become part of the contract of
employment provided they are made known to the employee.40 In the event of a violation, an
employee may be validly terminated from employment on the ground that an employer cannot
rationally be expected to retain the employment of a person whose lack of morals, respect and
loyalty to his employer, regard for his employer’s rules and application of the dignity and
responsibility, has so plainly and completely been bared.41

Applying now the above-discussed ground for termination, we now determine whether respondent
was properly dismissed from employment. In other words, did petitioner adequately prove that
respondent indeed engaged in extra-marital affairs, an act which petitioner considers as would bring
discredit to the cooperative?

We answer in the affirmative.

The employer’s evidence consists of sworn statements of either relatives or friends of Thelma and
respondent. They either had direct personal knowledge of the illicit relationship or revealed
circumstances indicating the existence of such relationship. As aptly observed by the LA:

x x x Moreover, the credibility of the persons who bore witness against him can hardly be questioned
because some of these persons are relatives or friends of either [respondent] or his lover. In
particular, it is hard to see how Napoleon Gao-ay, the brother of his lover, Thelma, could have
resorted to a lie just to destroy him when the same scandal could also result in tarnishing the
reputation of his own family. The motive of Napoleon in bringing the matter to the attention of the
Board of Directors, after all, was based on ethical grounds – he wanted a stop to the affair because it
was a disgrace to the community.

There is also no reason to doubt the statement of Melanie Gao-ay, the wife of Napoleon, who
witnessed the embarrassing "encounter", to borrow the term she used, between [respondent] and
Thelma in her own boarding house.42

While respondent’s act of engaging in extra--marital affairs may be considered personal to him and
does not directly affect the performance of his assigned task as bookkeeper, aside from the fact that
the act was specifically provided for by petitioner’s Personnel Policy as one of the grounds for
termination of employment, said act raised concerns to petitioner as the Board received numerous
complaints and petitions from the cooperative members themselves asking for the removal of
respondent because of his immoral conduct.43

The next question is whether procedural due process was observed in the termination of
respondent’s services. "Before the services of an employee can be validly terminated, the employer
must furnish him two written notices: (a) a written notice served on the employee specifying the
ground or grounds for termination, and giving the employee reasonable opportunity to explain his
side; and (b) a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination."44 The employer must inform the employee of the charges against him and to hear his
defenses. A full adversarial proceeding is not necessary as the parties may be heard through
pleadings, written explanations, position papers, memorandum or oral argument.45

In this case, respondent was adequately afforded the opportunity to defend himself and explain the
accusation against him. Upon receipt of the complaint, petitioner conducted a preliminary
investigation and even created an Ad Hoc Committee to investigate the matter. Respondent was
directed to explain either in writing or by a personal confrontation with the Board why he should not
be terminated for engaging in illicit affair.46 Not only did petitioner give him the opportunity but
respondent in fact informed petitioner that he opted to present his side orally47 and did so as
promised when he specifically denied such allegations before the AdHoc Committee.48 Moreover,
respondent was also allowed to peruse the investigation report prepared by the Ad Hoc Committee
and was advised that he was entitled to assistance of counsel.49 Afterwhich, hearing was conducted.
It was only after thorough investigation and proper notice and hearing to respondent that petitioner
decided whether to dismiss the former or not. The decision to terminate respondent from
employment was embodied in Board Resolution No. 05, series of 1997 a copy of which was
furnished respondent.50 With this resolution, respondent was adequately notified of petitioner’s
decision to remove him from his position. Respondent cannot now claim that his right to due process
was infringed upon.

WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of Appeals
Decision dated January 16, 2006 and Resolution dated July 5, 2006 in CA-G.R. SP No. 64554,
are SET ASIDE. The Labor Arbiter's Decision dated April 30, 1998 in NLRC Case No. RAB-1-08-
1144-97 (IS) dismissing respondent Salvador M. Bandiola, Jr.'s complaint against petitioner Alilem
Credit Cooperative, Inc., Is REINSTATED.

SO ORDERED.
CASE NO.4

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 153510 February 13, 2008

R.B. MICHAEL PRESS and ANNALENE REYES ESCOBIA, petitioners,

vs.
NICASIO C. GALIT, respondent.

DECISION

VELASCO, JR., J.:

The Case

Year in, year out, a copious number of illegal dismissal cases reach the Court of Appeals (CA) and
eventually end up with this Court. This petition for review under Rule 45 registered by petitioners
R.B. Michael Press and Annalene Reyes Escobia against their former machine operator, respondent
Nicasio C. Galit, is among them. It assails the November 14, 2001 Decision of the CA in CA-G.R. SP
No. 62959, finding the dismissal of respondent illegal. Likewise challenged is the May 7, 2002
Resolution denying reconsideration.

The Facts

On May 1, 1997, respondent was employed by petitioner R.B. Michael Press as an offset machine
operator, whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays to Saturdays, and he was
paid PhP 230 a day. During his employment, Galit was tardy for a total of 190 times, totaling to 6,117
minutes, and was absent without leave for a total of nine and a half days.

On February 22, 1999, respondent was ordered to render overtime service in order to comply with a
job order deadline, but he refused to do so. The following day, February 23, 1999, respondent
reported for work but petitioner Escobia told him not to work, and to return later in the afternoon for a
hearing. When he returned, a copy of an Office Memorandum was served on him, as follows:

To : Mr. Nicasio Galit

From : ANNALENE REYES-ESCOBIA
Re : WARNING FOR DISMISSAL; NOTICE OF HEARING

This warning for dismissal is being issued for the following offenses:

(1) habitual and excessive tardiness

(2) committing acts of discourtesy, disrespect in addressing superiors

(3) failure to work overtime after having been instructed to do so

 (4) Insubordination - willfully disobeying, defying or disregarding company authority

The offenses you’ve committed are just causes for termination of employment as provided by
the Labor Code. You were given verbal warnings before, but there had been no improvement
on your conduct.

Further investigation of this matter is required, therefore, you are summoned to a hearing at
4:00 p.m. today. The hearing wills determine your employment status with this company.

(SGD) ANNALENE REYES-ESCOBIA

Manager1

On February 24, 1999, respondent was terminated from employment. The employer, through
petitioner Escobia, gave him his two-day salary and a termination letter, which reads:

February 24, 1999

Dear Mr. Nicasio Galit,

I am sorry to inform you that your employment with this company has been terminated
effective today, February 24, 1999. This decision was not made without a thorough and
complete investigation.

You were given an office memo dated February 23, 1999 warning you of a possible
dismissal. You were given a chance to defend yourself on a hearing that was held in the
afternoon of the said date.

During the hearing, Mrs. Rebecca Velasquez and Mr. Dennis Reyes, were present in their
capacity as Production Manager and Supervisor, respectively.

Your admission to your offenses against the company and the testimonies from Mrs.
Velasquez and Mr. Reyes justified your dismissal from this company,

Please contact Ms. Marly Buita to discuss 13th-Month Pay disbursements.

Cordially,

(SGD) Mrs. Annalene Reyes-Escobia2

Respondent subsequently filed a complaint for illegal dismissal and money claims before the
National Labor Relations Commission (NLRC) Regional Arbitration Branch No. IV, which was
docketed as NLRC Case No. RAB IV-2-10806-99-C. On October 29, 1999, the labor arbiter
rendered a Decision,

WHEREFORE, premises considered, there being a finding that complainant was illegally
dismissed, respondent RB MICHAEL PRESS/Annalene Reyes-Escobia is hereby ordered to
reinstate complainant to his former position without loss of seniority rights and other benefits,
and be paid his full backwages computed from the time he was illegally dismissed up to the
time of his actual reimbursement.

All other claims are DISMISSED for lack of evidence.

 SO ORDERED.3

On January 3, 2000, petitioners elevated the case to the NLRC and their appeal was docketed as
NLRC NCR CA No. 022433-00. In the April 28, 2000 Decision, the NLRC dismissed the appeal for
lack of merit.

Not satisfied with the ruling of the NLRC, petitioners filed a Petition for Certiorari with the CA. On
November 14, 2001, the CA rendered its judgment affirming with modification the NLRC’s Decision,
thus:

WHEREFORE, the petition is DISMISSED for lack of merit. The Decision of public
respondent is accordingly modified in that the basis of the computation of the backwages,
13th month pay and incentive pay should be respondent’s daily wage of P230.00; however,
backwages should be computed from February 22, 1999 up to the finality of this decision,
plus the 13th month and service incentive leave pay.4

The CA found that it was not the tardiness and absences committed by respondent, but his refusal to
render overtime work on February 22, 1999 which caused the termination of his employment. It ruled
that the time frame in which respondent was afforded procedural due process is dubitable; he could
not have been afforded ample opportunity to explain his side and to adduce evidence on his behalf.
It further ruled that the basis for computing his backwages should be his daily salary at the time of
his dismissal which was PhP 230, and that his backwages should be computed from the time of his
dismissal up to the finality of the CA’s decision.

On December 3, 2001, petitioners asked for reconsideration5 but was denied in the CA’s May 7,
2002 Resolution.

Persistent, petitioners instituted the instant petition raising numerous issues which can be
summarized, as follows: first, whether there was just cause to terminate the employment of
respondent, and whether due process was observed in the dismissal process; and second, whether
respondent is entitled to backwages and other benefits despite his refusal to be reinstated.

The Court’s Ruling

It is well settled that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only
respect but even finality if the findings are supported by substantial evidence. This is especially so
when such findings of the labor arbiter were affirmed by the CA.6 However, this is not an iron-clad
rule. Though the findings of fact by the labor arbiter may have been affirmed and adopted by the
NLRC and the CA as in this case, it cannot divest the Court of its authority to review the findings of
fact of the lower courts or quasi-judicial agencies when it sees that justice has not been served,
more so when the lower courts or quasi-judicial agencies’ findings are contrary to the evidence on
record or fail to appreciate relevant and substantial evidence presented before it.7

Petitioners aver that Galit was dismissed due to the following offenses: (1) habitual and excessive
tardiness; (2) commission of discourteous acts and disrespectful conduct when addressing
superiors; (3) failure to render overtime work despite instruction to do so; and (4) insubordination,
that is, willful disobedience of, defiance to, or disregard of company authority.8 The foregoing
charges may be condensed into: (1) tardiness constituting neglect of duty; (2) serious misconduct;
and (3) insubordination or willful disobedience.

Respondent’s tardiness cannot be considered condoned by petitioners

Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to
work on time everyday exhibit the employee’s deportment towards work. Habitual and excessive
tardiness is inimical to the general productivity and business of the employer. This is especially true
when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive
period of time.

In resolving the issue on tardiness, the labor arbiter ruled that petitioners cannot use respondent’s
habitual tardiness and unauthorized absences to justify his dismissal since they had already
deducted the corresponding amounts from his salary. Furthermore, the labor arbiter explained that
since respondent was not subjected to any admonition or penalty for tardiness, petitioners then had
condoned the offense or that the infraction is not serious enough to merit any penalty. The CA then
supported the labor arbiter’s ruling by ratiocinating that petitioners cannot draw on respondent’s
habitual tardiness in order to dismiss him since there is no evidence which shows that he had been
warned or reprimanded for his excessive and habitual tardiness.

We find the ruling incorrect.

The mere fact that the numerous infractions of respondent have not been immediately subjected to
sanctions cannot be interpreted as condonation of the offenses or waiver of the company to enforce
company rules. A waiver is a voluntary and intentional relinquishment or abandonment of a known
legal right or privilege.9 It has been ruled that "a waiver to be valid and effective must be couched in
clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or
benefit which legally pertains to him."10 Hence, the management prerogative to discipline employees
and impose punishment is a legal right which cannot, as a general rule, be impliedly waived.

In Cando v. NLRC,11 the employee did not report for work for almost five months when he was
charged for absenteeism. The employee claimed that such absences due to his handling of union
matters were condoned. The Court held that the employee did not adduce proof to show
condonation coupled with the fact that the company eventually instituted the administrative complaint
relating to his company violations.

Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation
or waiver on the part of management to forego the exercise of its right to impose sanctions for
breach of company rules.

In the case at bar, respondent did not adduce any evidence to show waiver or condonation on the
part of petitioners. Thus the finding of the CA that petitioners cannot use the previous absences and
tardiness because respondent was not subjected to any penalty is bereft of legal basis. In the case
of Filipio v. The Honorable Minister Blas F. Ople,12 the Court, quoting then Labor Minister Ople, ruled
that past infractions for which the employee has suffered the corresponding penalty for each
violation cannot be used as a justification for the employee’s dismissal for that would penalize him
twice for the same offense. At most, it was explained, "these collective infractions could be used as
supporting justification to a subsequent similar offense." In contrast, the petitioners in the case at bar
did not impose any punishment for the numerous absences and tardiness of respondent. Thus, said
infractions can be used collectively by petitioners as a ground for dismissal.

The CA however reasoned out that for respondent’s absences, deductions from his salary were
made and hence to allow petitioners to use said absences as ground for dismissal would amount to
"double jeopardy."

This postulation is incorrect.

Respondent is admittedly a daily wage earner and hence is paid based on such arrangement. For
said daily paid workers, the principle of "a day’s pay for a day’s work" is squarely applicable. Hence it
cannot be construed in any wise that such nonpayment of the daily wage on the days he was absent
constitutes a penalty.

Insubordination or willful disobedience

While the CA is correct that the charge of serious misconduct was not substantiated, the charge of
insubordination however is meritorious.

For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the
employee’s assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties which he had been engaged to discharge.13

In the present case, there is no question that petitioners’ order for respondent to render overtime
service to meet a production deadline complies with the second requisite. Art. 89 of the Labor Code
empowers the employer to legally compel his employees to perform overtime work against their will
to prevent serious loss or damage:

Art. 89. EMERGENCY OVERTIME WORK

Any employee may be required by the employer to perform overtime work in any of the
following cases:

xxxx

(c) When there is urgent work to be performed on machines, installations, or equipment, in

order to avoid serious loss or damage to the employer or some other cause of similar nature;

xxxx

In the present case, petitioners’ business is a printing press whose production schedule is
sometimes flexible and varying. It is only reasonable that workers are sometimes asked to render
overtime work in order to meet production deadlines.

Dennis Reyes, in his Affidavit dated May 3, 1999, stated that in the morning of February 22, 1999,
he approached and asked respondent to render overtime work so as to meet a production deadline
on a printing job order, but respondent refused to do so for no apparent reason. Respondent, on the
other hand, claims that the reason why he refused to render overtime work was because he was not
feeling well that day.

The issue now is, whether respondent’s refusal or failure to render overtime work was willful; that is,
whether such refusal or failure was characterized by a wrongful and perverse attitude. In Lakpue
Drug Inc. v. Belga, willfulness was described as "characterized by a wrongful and perverse mental
attitude rendering the employee’s act inconsistent with proper subordination."14 The fact that
respondent refused to provide overtime work despite his knowledge that there is a production
deadline that needs to be met, and that without him, the offset machine operator, no further printing
can be had, shows his wrongful and perverse mental attitude; thus, there is willfulness.
Respondent’s excuse that he was not feeling well that day is unbelievable and obviously an
afterthought. He failed to present any evidence other than his own assertion that he was sick. Also, if
it was true that he was then not feeling well, he would have taken the day off, or had gone home
earlier, on the contrary, he stayed and continued to work all day, and even tried to go to work the
next day, thus belying his excuse, which is, at most, a self-serving statement.

After a re-examination of the facts, we rule that respondent unjustifiably refused to render overtime
work despite a valid order to do so. The totality of his offenses against petitioner R.B. Michael Press
shows that he was a difficult employee. His refusal to render overtime work was the final straw that
broke the camel’s back, and, with his gross and habitual tardiness and absences, would merit
dismissal from service.

Due process: twin notice and hearing requirement

On the issue of due process, petitioners claim that they had afforded respondent due process.
Petitioners maintain that they had observed due process when they gave respondent two notices
and that they had even scheduled a hearing where he could have had explained his side and
defended himself.

We are not persuaded.

We held in Agabon v. NLRC:

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer
must give the employee two written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment: a notice specifying the
grounds for which dismissal is sought a hearing or an opportunity to be heard and after
hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal
is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the
effectivity of his separation.15

Under the twin notice requirement, the employees must be given two (2) notices before his
employment could be terminated: (1) a first notice to apprise the employees of their fault, and (2) a
second notice to communicate to the employees that their employment is being terminated. Not to
be taken lightly of course is the hearing or opportunity for the employee to defend himself personally
or by counsel of his choice.

In King of Kings Transport v. Mamac,16 we had the occasion to further elucidate on the procedure
relating to the twin notice and hearing requirement, thus:

(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are given
the opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently prepare
their explanation and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A general
 description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct
a hearing or conferencewherein the employees will be given the opportunity to: (1) explain
and clarify their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity to come to an amicable
settlement.

(3) After determining that termination of employment is justified, the employers shall serve
the employees awritten notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.

In addition, if the continued employment poses a serious and imminent threat to the life or property
of the employers or of other employees like theft or physical injuries, and there is a need for
preventive suspension,17the employers can immediately suspend the erring employees for a period
of not more than 30 days. Notwithstanding the suspension, the employers are tasked to comply with
the twin notice requirement under the law. The preventive suspension cannot replace the required
notices.18 Thus, there is still a need to comply with the twin notice requirement and the requisite
hearing or conference to ensure that the employees are afforded due process even though they may
have been caught in flagrante or when the evidence of the commission of the offense is strong.

On the surface, it would seem that petitioners observed due process (twin notice and hearing
requirement): On February 23, 1999 petitioner notified respondent of the hearing to be conducted
later that day. On the same day before the hearing, respondent was furnished a copy of an office
memorandum which contained a list of his offenses, and a notice of a scheduled hearing in the
afternoon of the same day. The next day, February 24, 1999, he was notified that his employment
with petitioner R.B. Michael Press had been terminated.

A scrutiny of the disciplinary process undertaken by petitioners leads us to conclude that they only
paid lip service to the due process requirements.

The undue haste in effecting respondent’s termination shows that the termination process was a
mere simulation—the required notices were given, a hearing was even scheduled and held, but
respondent was not really given a real opportunity to defend himself; and it seems that petitioners
had already decided to dismiss respondent from service, even before the first notice had been given.

Anent the written notice of charges and hearing, it is plain to see that there was merely a general
description of the claimed offenses of respondent. The hearing was immediately set in the afternoon
of February 23, 1999—the day respondent received the first notice. Therefore, he was not given any
opportunity at all to consult a union official or lawyer, and, worse, to prepare for his defense.

Regarding the February 23, 1999 afternoon hearing, it can be inferred that respondent, without any
lawyer or friend to counsel him, was not given any chance at all to adduce evidence in his defense.
At most, he was asked if he did not agree to render overtime work on February 22, 1999 and if he
was late for work for 197 days. He was never given any real opportunity to justify his inability to
perform work on those days. This is the only explanation why petitioners assert that
respondent admitted all the charges.

In the February 24, 1999 notice of dismissal, petitioners simply justified respondent’s dismissal by
citing his admission of the offenses charged. It did not specify the details surrounding the offenses
and the specific company rule or Labor Code provision upon which the dismissal was grounded.

In view of the infirmities in the proceedings, we conclude that termination of respondent was
railroaded in serious breach of his right to due process. And as a consequence of the violation of his
statutory right to due process and following Agabon, petitioners are liable jointly and solidarily to pay
nominal damages to the respondent in the amount of PhP 30,000.19

WHEREFORE, premises considered, the November 14, 2001 CA Decision in CA-G.R. SP No.
62959, the April 28, 2000 Decision of the NLRC in NLRC NCR CA No. 022433-00, and the October
29, 1999 Decision of the Labor Arbiter in NLRC Case No. RAB IV-2-10806-99-C are
hereby REVERSED and SET ASIDE. The Court declares respondent’s dismissal from
employment VALID and LEGAL. Petitioners are, however, ordered jointly and solidarily to pay
respondent nominal damages in the amount of PhP 30,000 for violation of respondent’s right to due
process.

No costs.

SO ORDERED.
CASE NO.5

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 157202 March 28, 2007

PHILIPPINE LONG DISTANCE and TELEPHONE COMPANY, INC., Petitioner,

vs.
AMPARO BALBASTRO and NATIONAL LABOR RELATIONS COMMISSION, Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari filed by Philippine Long Distance and Telephone
Company, Inc. (petitioner) seeking to annul the Decision1 dated July 31, 2002 and the
Resolution2 dated February 7, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 51060.

Amparo Balbastro (private respondent) was employed by petitioner in 1978 as its telephone operator
until her questioned dismissal from employment on October 5, 1989. She was dismissed by
petitioner for her absences without authorized leave due to unconfirmed sick leave on June 28 to
July 14, 1989, which constituted her third offense3 punishable by dismissal under petitioner’s rules
and regulations.4

On October 28, 1991, private respondent filed a Complaint5 with the Labor Arbiter against petitioner
and its President, Antonio Cojuangco, for illegal dismissal, non-payment of salary wage, premium
pay for rest day, 13th month pay, and damages. In her position paper, she alleged that she was
dismissed on the ground of unconfirmed sick leave despite her presentation of medical certificates
from her attending physicians which were not considered by petitioner’s medical doctors; and that
she has four minor children and it was not her intention to habitually absent herself without reason
considering that her loss of job which was based only on opinions of petitioner’s doctors had caused
her great deprivation and moral suffering. She prayed for reinstatement, backwages, and damages.

Petitioner filed its position paper with Motion to Dismiss6 alleging that private respondent’s habitual
and unjustified absences was a just and valid cause for her termination under its rules and
regulations; and that her record of unauthorized absences for 1989 showed the following:

First unauthorized absences, from March 19 to 29, 1989. Private respondent absented herself from
work for nine days excluding rest days on March 23 to 24, 1989 without notice to petitioner. She
gave marital problem as the reason for her absence. She was penalized with 18 days suspension for
violating petitioner’s rules and regulations regarding absences.

Second unauthorized absences, from June 11 to 13, 1989. Private respondent called in sick from
Tanauan, Batangas on June 5 that she was suffering from gastroenteritis. She absented herself from
June 5 to 13, 1989. On June 14, 1989, she presented herself to petitioner’s doctor, Dr. Melissa
Musngi and submitted a medical certificate where it was stated that she was under treatment from
June 5 to 8, 1989 of gastroenteritis. Dr. Musngi confirmed private respondent’s sick leave from June
5 to 10, 1989 but did not confirm her absences from June 11 to 13, 1989 because her medical
certificate covered only the period from June 5 to 8, 1989. Furthermore, petitioner reasons out that if
she really had such illness, certain normal logical medical procedures should have been taken, such
as stool examinations and hospitalization; and she bore no post-illness manifestations of
gastroenteritis. Private respondent’s unconfirmed leave of absence was considered by petitioner
unauthorized due to her patent abuse of sick leave privileges and treated it as her second offense
and was penalized with 15 days suspension.

Third unauthorized absences, from June 28 to July 14, 1989. On June 25, 1989, private respondent
made a sick call that she had sore eyes and absented herself from June 25 to July 14, 1989. On July
3, 1989, she was outvisited at her given address in Makati but was not found home. On July 15,
1989, she reported for work and presented herself to the clinic for confirmation. She had her medical
certificate issued by her attending physician showing that she had been under his professional
treatment from June 25 to July 12, 1989 for systemic viral infection. Petitioner’s doctor, Dr. Benito
Dungo, confirmed her sick leave from June 25 to 27, 1989 but did not confirm as to the rest of the
dates when she was absent from work. When asked to explain, private respondent said that she had
a viral infection during the said period; and that she was in Tanauan, Batangas during the said dates
so she was not found in Makati when outvisited. Petitioner’s doctor did not confirm her leave of
absence from June 28 to July 14, 1989 on the ground that such illness did not warrant a very long
time of rest; certain laboratory examinations should have been conducted by her attending
physician; and there was patent abuse of her sick leave privileges.

While private respondent’s third leave of absence was being deliberated upon, she absented herself
from August 6 to 12, 1989. She called in sick on August 6, 1989 informing her supervisor that she
had a fever. The medical certificate issued by her attending physician showed that she was under
treatment from August 7 to 10, 1989 for influenza. Petitioner’s doctor, Dr. Eduardo Co, confirmed
private respondent’s leave of absence from August 6 to 8, 1989 but did not confirm the rest because
her absences from August 9 to 12, 1989 were not covered by a medical certificate; her illness did not
warrant prolonged absence; and it was medically impossible for her to contract the same illness
which she contracted the previous month since it is a medical fact that there is no such thing as an
immediately recurrent viral infection.

In view of her repeated absences without authorized leave for the third time, petitioner terminated
private respondent’s service effective October 5, 1989.

The Labor Arbiter conducted a hearing where private respondent testified on her behalf, while
petitioner presented the three medical doctors who did not confirm portions of private respondent’s
leave of absence, and its Employee Relations and Service Department Manager.

On May 30, 1994, the Labor Arbiter issued its Decision,7 the dispositive portion of which reads:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering
the respondent Philippine Long Distance [and] Telephone Co. to reinstate the complainant to her
former position as telephone operator with all the rights, privileges and benefits appertaining thereto,
including seniority, plus backwages equivalent to one (1) year salary in the sum of ₱78,000.00
(₱6,500.00/mo. x 12 mos.).

SO ORDRED.8

The Labor Arbiter held that private respondent’s first incident of absence from March 19 to 29, 1989
were unauthorized but not as to the other succeeding absences. It found that private respondent, on
her first day of absence, called in sick and when she reported for work, she went to petitioner’s clinic
for check-up and submitted her medical certificates, thus she complied with the standard
requirements on matters of sick leave; that petitioner’s doctors did not confirm some portions of
private respondent’s leave of absence based merely on their medical opinions; that such justification
was not warranted under Department Order No. ADM-79-02 wherein absences due to illness were
considered unauthorized and without pay when the attending doctor’s signature is forged, there is
alteration as to the date and contents of the medical certificate, the certificate is false as to the facts
alleged therein, the doctor issuing the medical certificate is not qualified to attend to the illness, there
are falsities and misrepresentations, and when there is patent abuse of sick leave privileges; and
that these circumstances were not proven in this case.

The Labor Arbiter gave more credence to the doctor who actually attended to private respondent
rather than to the medical opinion of petitioner’s doctors. It concluded that petitioner’s doctors should
have coordinated with private respondent’s attending physicians to settle any doubts as to the
medical certificates.

Petitioner filed its appeal with the National Labor Relations Commission (NLRC).9 On January 19,
1996, the NLRC issued a

Resolution10 affirming the decision of the Labor Arbiter.

The NLRC found that company practice allows leave of absence due to sickness if supported by a
medical certificate issued by the attending physician; that a difference in opinion by the Medical
Director from that of the attending physician should not prejudice private respondent since the
Medical Director can consider absences unauthorized only in cases of forgery and patent abuse of
sick leave privileges which were not proven in this case; that if the Medical Director entertained
doubts as to the medical certificate, he should have asked the attending physician to submit himself
for cross-examination and then present an independent physician for an expert opinion on the
matter.

Petitioner’s Motion for Reconsideration was denied in a Resolution11 dated March 14, 1996.

Undaunted, petitioner filed with us a Petition for Certiorari with prayer for the issuance of a
Temporary Restraining Order (TRO). A TRO was issued to enjoin the enforcement of the NLRC
Resolution until further orders.12

In a Resolution dated December 7, 1998,13 we referred the petition to

the CA in accordance with the St. Martin Funeral Home v. National Labor Relations
Commission14 ruling.

On July 31, 2002, the CA issued its assailed Decision which dismissed the petition and affirmed the
NLRC Decision. The CA held that as long as the medical certificate presented did not fall under any
of the infirmities set forth in petitioner’s rules and regulations, the unconfirmed leave should be
treated merely as absence without leave and was not subject to disciplinary action; that petitioner
may not rely on the previous absences of respondents in 1978 and 1982 to show abuse of sick leave
privileges because petitioner had acknowledged that respondent had already been penalized with
suspension, and those absences were committed beyond the three-year period mentioned in their
rules and regulations; that in its desire to clothe private respondent’s dismissal with a semblance of
legality, petitioner points to private respondent’s fourth unauthorized leave of absence committed in
August 1989 while the third unauthorized leave of absence was being deliberated upon; and that the
notice of dismissal referred only to her third unauthorized leave, thus she could not be faulted for an
infraction for which she was not charged.

Petitioner’s Motion for Reconsideration was denied in a Resolution dated February 7, 2003.

Hence, petitioner filed the instant Petition for Review on Certiorari alleging the following grounds:

WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO CONSIDER THAT THE
PETITION HEREIN DOES NOT MERELY INQUIRE UPON THE RELATIVE WEIGHT OF THE
EVIDENCE PRESENTED BY THE PARTIES, BUT IS ANCHORED ON MANIFESTLY
ERRONEOUS CONCLUSIONS ON THE PART OF THE NLRC ARISING FROM GROSS
MISAPPREHENSION OF THE FACTS OBTAINING IN THE CASE. AMONG OTHERS, IT WAS
GRAVE ERROR TO CONCLUDE THAT THERE WAS NO PATENT ABUSE OF THE SICK LEAVE
PRIVILEGE ON THE PART OF THE PRIVATE RESPONDENT BECAUSE THE MEDICAL
CERTIFICATES SHE PRESENTED WERE NOT FALSE, FORGED, OR ALTERED TOTALLY
DISREGARDING THE FACT THAT "ABUSE OF SICK LEAVE PRIVILEGE" IS A CAUSE
SEPARATELY ENUMERATED UNDER THE RULES AS A GROUND FOR DISCIPLINARY
ACTION.

II

WITH ALL DUE RESPECT, THE HONORABLE COURT FAILED TO CONSIDER THAT THE
CONCLUSIONS OF THE NLRC ARE BEREFT OF ANY LEGAL OR FACTUAL BASES AS THERE
WERE LEGALLY NO MEDICAL CERTIFICATES TO SPEAK OF, AND THE EXISTENCE
THEREOF ARE PURE AND SIMPLE HEARSAY, HENCE COULD NOT BE VALIDLY RELIED
UPON OR INVOKED BY THE PRIVATE RESPONDENT TO SUPPORT HER DEFENSE EVEN
SUPPOSING TECHNICAL RULES ON EVIDENCE COULD BE RELAXED IN LABOR
PROCEEDINGS. 15

Petitioner argues that the NLRC’s conclusions that private respondent had not committed a patent
abuse of sick leave privileges and that her dismissal was illegal are utterly without any factual or
legal basis; that the NLRC’s conclusion that the dismissal was illegal was merely based: (1) on the
evidence of private respondent; (2) on medical certificates which are clearly hearsay and of no
probative value whatsoever; and (3) on medical certificates which, even supposing could be
considered, simply failed to cover the period of the leave requested and set forth implausible
diagnoses.

Petitioner claims that the CA as well as the NLRC failed to resolve the issue of whether or not the
medical certificate should be given any credence at all; that it had presented four witnesses which
included their three medical doctors who were subjected to cross-examinations, and yet credence
was given to private respondent’s hearsay evidence consisting merely of a medical certificate by the
latter’s attending physician who was not even presented to testify; that since the content of the
medical certificate had been rebutted and refuted by petitioner’s witnesses, the burden of evidence
is shifted to private respondent to show that the medical certificate she submitted was competent,
proper, and sound which she failed to do.

Petitioner further claims that the CA erred in not finding that private respondent committed a patent
abuse of sick leave privileges which does not arise solely from forgery or alteration of the medical
certificate, but on the fact that an employee had frequently and incorrigibly absented herself and
then applied for sick leave with absolute impunity armed with medical certificates which not only
failed to cover the entire length of the leave but also with implausible diagnoses; that excluding
private respondent’s unauthorized absences in 1989, she had accumulated 93 days of sick leave
from January to July 1989 and 115 days of sick leave in 1988, thus, how can the conclusion be
drawn that there was no patent abuse of sick leave privileges; and that her unauthorized absence for
which she was terminated all occurred in 1989, thus, the CA erred in saying that petitioner may not
rely on the previous absences of respondent in 1978 and 1982 to justify private respondent’s
dismissal.

We find the petition meritorious. Private respondent was validly dismissed by petitioner. It must be
borne in mind that the basic principle in termination cases is that the burden of proof rests upon the
employer to show that the dismissal is for just and valid cause and failure to do so would necessarily
mean that the dismissal was not justified and, therefore, was illegal.16 For dismissal to be valid, the
evidence must be substantial and not arbitrary and must be founded on clearly established
facts.17 We find that petitioner had discharged this burden.

Under petitioner’s Department Order No. ADM-79-02, for the absence due to an alleged illness to be
considered unauthorized, without pay, and subject to disciplinary action, it must be shown that the
medical certificate is forged, altered as to the date and contents, false as to the facts stated therein,
issued by a doctor not qualified to attend to the patient’s illness, and there is patent abuse of sick
leave privileges. The penalty for three offenses of unauthorized absences committed within the
three-year period is dismissal.

Private respondent’s unconfirmed absences from June 28 to July 14, 1989 is the crucial period in
this particular case.

The Labor Arbiter and the NLRC found that private respondent was illegally dismissed by petitioner.
Such finding was affirmed by the CA. They all concluded that the medical certificate which private
respondent presented did not fall under the circumstances enumerated in Department Order No.
ADM-79-02, and there was no patent abuse of sick leave privileges, thus, there was no basis for
petitioner’s doctors not to confirm her sick leave and consider the same unauthorized.

The jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only errors of
law, not of fact, unless the factual findings being assailed are not supported by evidence on record
or the impugned judgment is based on a misapprehension of facts.18 We find that those exceptions
are present in the instant case.

We find that petitioner had sufficiently established that private respondent committed a patent abuse
of her sick leave privileges which is one of the grounds listed in Department Order No. ADM-79-02
for disciplinary action.

Private respondent was absent on June 25, 1989 and the reason given was sore eyes. She was
then absent from June 25 to July 14, 1989. When she reported for work on July 15, 1989, she went
to petitioner’s doctor, Dr. Benito Dungo, for confirmation of her leave of absence and presented a
medical certificate19 from her attending physician, Dr. Manuel C. Damian of Tanauan Batangas, who
certified that she had been under his professional care from June 25 to July 12, 1989 for systemic
viral disease.

Dr. Dungo confirmed private respondent’s leave of absence from June 25 to 27, 1989 only and did
not confirm her leave from June 28 to July 14, 1989 for the following reasons: (a) systemic viral
disease indicated in the medical certificate does not warrant such a very long time of rest and
recuperation; (b) if she really had an infection, the logical recourse is for the attending physician to
conduct a chest x-ray and blood examination to determine the cause of the prolonged fever, but
such was not made; (c) if she was really ill for such a long time, she would have already been
confined in a hospital for treatment as petitioner has standing agreements with various hospitals to
provide immediate medical assistance free of charge; (d) she displayed no residue of symptoms of
flu, thus casting doubt on the veracity of her claim; (e) she called in sick on June 25, 1989 that she
was suffering from sore eyes but her medical certificate made no mention of such condition; and (f)
her medical records reveal a pattern of abuse of sick leave privileges.20

Private respondent’s reason for her absence on June 25, 1989 was sore eyes, however the medical
certificate that she presented for her prolonged absence from June 25 to July 14, 1989 was systemic
viral disease and as correctly observed by Dr. Dungo, sore eyes was never mentioned therein.

Moreover, in the medical progress note21 of Dr. Damian dated October 10, 1989 attached to private
respondent’s position paper submitted before the Labor Arbiter, it was shown that private respondent
was seen by Dr. Damian on June 25, 1989 at 9:00 a.m. and her temperature was 40 degrees and
she was complaining of severe headache and body pain. It would appear that there was a
discrepancy between the reason given when she called in sick on June 25, 1989 and her complaints
when she consulted Dr. Damian on the same day. In fact, when private respondent was asked on
cross-examination why sore eyes was never mentioned in her medical certificate, all that she could
say was "the diagnosis was systemic viral disease, sama-sama na lahat".22

The medical certificate issued by Dr. Damian showed that private respondent was under his
professional care from June 25 to July 12, 1989. However, the medical progress note dated October
10, 1989 of the same doctor showed that private respondent consulted him only on June 25, 27, and
29, 1989. It was never mentioned that Dr. Damian had seen private respondent after June 29, 1989.
Thus, there was even a discrepancy between the medical certificate dated July 13, 1989 and the
medical progress note as to the time frame that private respondent was seen by Dr. Damian. The
medical certificate did not cover private respondent’s absences from July 13 to 14, 1989 and she
only reported for work on July 15, 1989.

It bears stressing that from the time private respondent called in sick on June 25, 1989 due to sore
eyes, she never called up petitioner again until she reported for work on July 15, 1989. She never
went to petitioner’s doctors for them to verify her sickness.

Private respondent had committed the first two offenses of unauthorized absences in the same year.
First, she did not report for work from March 19 to 29, 1989 without notice to petitioner, thus her
absence was treated as unauthorized and considered her first offense for which she was penalized
with suspension. Second, she again did not report for work from June 5 to 13, 1989 and when she
reported for work and presented her medical certificate, it covered the period from June 5 to 8, 1989
only but she did not report for work until June 14, 1989. Petitioner’s doctor did not confirm her
absences from June 11 to 13, 1989, thus, the same was considered unauthorized and her second
offense for which she was penalized again with suspension. These two unauthorized absences
together with her third unauthorized absences committed from June 28 to July 14, 1989 are
sufficient bases for petitioner’s finding that private respondent patently abused her sick leave
privileges.

Previous infractions may be used as justification for an employee’s dismissal from work in
connection with a subsequent similar offense.23 Moreover, it is in petitioner’s rules and regulations
that the same offense committed within the three-year period merits the penalty of dismissal. The
CA’s finding that petitioner may not rely on the previous absences of private respondent in 1978 and
1982 to show abuse of sick leave privileges has no basis since private respondent was dismissed for
committing her three unauthorized absences all in 1989.
It had also been established by Dr. Dungo’s testimony that private respondent’s medical record
showed that she did not go to the clinic for consultation as she would only present a medical
certificate and get a clearance for her sick leave;24 that the same medical record showed her
absences in 1989 as follows: (1) From April 27 to May 4 due to urinary tract infection and she
submitted a medical certificate;25 (2) From May 5 to 14 due to back pain;26(3) From May 20 to 21 due
to migraine;27 (4) June 5 to 13 due to gastroenteritis (penalized as her second offense); (5) June 15
to 24 due to conjunctivitis and submitted a medical certificate;28 and (6) June 25 to July 14, 1989 due
to systemic viral disease with medical certificate (her third offense penalized with dismissal). Private
respondent had incurred a total absence of 85 days from January to October 1989;29 and 115 days
in 1988.30 It had also been established that petitioner’s doctors confirmed most of her sick leave out
of compassion31 and that her medical records showed that there were several warnings given her
regarding her unconfirmed sick leave.32

As petitioner stated in its pleadings, it is a telecommunication service company which provides the
country with various telecommunication services and facilities. Its operations are a vital part to many
transactions all over the country and abroad, and private respondent was one of its telephone
operators who used to connect all these calls. Thus, her patent abuse of her sick leave privileges is
detrimental to petitioner’s business.

While it is true that compassion and human consideration should guide the disposition of cases
involving termination of employment since it affects one's source or means of livelihood, it should not
be overlooked that the benefits accorded to labor do not include compelling an employer to retain
the services of an employee who has been shown to be a gross liability to the employer. The law in
protecting the rights of the employees authorizes neither oppression nor self-destruction of the
employer.33 It should be made clear that when the law tilts the scale of justice in favor of labor, it is
but a recognition of the inherent economic inequality between labor and management. The intent is
to balance the scale of justice; to put the two parties on relatively equal positions. There may be
cases where the circumstances warrant favoring labor over the interests of management but never
should the scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda
est (Justice is to be denied to none).34

WHEREFORE, the instant petition is GRANTED. The Decision dated July 31, 2002 and the
Resolution dated February 7, 2003 of the Court of Appeals in CA-G.R. SP No. 51060 are
hereby REVERSED and SET ASIDE. The complaint of Amparo Balbastro is DISMISSED.

No costs.

SO ORDERED.
CASE N0.6

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 178125 March 18, 2013

THE ORCHARD GOLF AND COUNTRY CLUB, Petitioner,

vs.
AMELIA R. FRANCISCO, Respondent.

DECISION

DEL CASTILLO, J.:

Constructive dismissal occurs not when the employee ceases to report for work, but when the
unwarranted acts of the employer are committed to the end that the employee's continued
employment shall become so intolerable. In these difficult times, an employee may he left with no
choice but to continue with his employment pespite abuses committed against him by the employer,
and even during the pendency of a labor dispute between them. This should not be taken against
the employee. Instead, we must share the burden of his plight, ever aware of the precept that
necessitous men are not free men.

Assailed in this Petition for Review1 is the January 25, 2007 Decision2 of the Court of Appeals (CA)
which dismissed the Petition in CA-G.R. SP No. 80968 and affirmed the November 19, 2002
Resolution3 of the National Labor Relations Commission (NLRC). Likewise assailed is the May 23,
2007 CA Resolution4 denying petitioner's Motion for Reconsideration.

Factual Antecedents

Petitioner, The Orchard Golf and Country Club (the Club), operates and maintains two golf courses
in Dasmariñas, Cavite for Club members and their guests. The Club likewise has a swimming pool,
bowling alley, cinema, fitness center, courts for tennis, badminton and basketball, restaurants, and
function rooms.

On March 17, 1997, respondent Amelia R. Francisco (Francisco) was employed as Club Accountant,
to head the Club’s General Accounting Division and the four divisions under it, namely: 1) Revenue
and Audit Division, 2) Billing/ Accounts Receivable Division, 3) Accounts Payable Division, and 4)
Fixed Assets Division. Each of these four divisions has its own Supervisor and Assistant Supervisor.
As General Accounting Division head, respondent reports directly to the Club’s Financial
Comptroller, Jose Ernilo P. Famy (Famy).

On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co. (SGV), the Club’s external
auditor, inquiring about the accounting treatment that should be accorded property that will be sold
or donated to the Club. Francisco failed to prepare the letter, even after Famy’s repeated verbal and
written reminders, the last of which was made on June 22, 2000.
On June 27, 2000, Famy issued a memorandum5 requiring Francisco’s written explanation, under
pain of an insubordination charge, relative to her failure to prepare the letter. Instead of complying
with the memorandum, Francisco went to the Club’s General Manager, Tomas B. Clemente III
(Clemente), and personally explained to the latter that due to the alleged heavy volume of work that
needed her attention, she was unable to draft the letter. Clemente assured her that he would discuss
the matter with Famy personally. On this assurance, Francisco did not submit the required written
explanation. For this reason, Famy issued a June 29, 2000 memorandum6suspending Francisco
without pay for a period of 15 days. The memorandum reads, as follows:

Considering the fact that you did [sic] explain in writing within 24 hours from the date and time of my
memorandum to you dated June 27, 2000 the reason why you should not be charged with
"Insubordination" as specified in Rule 5 Section 2a of our handbook, it has been found that:

Findings: You willfully refused to carry out a legitimate and reasonable instruction of your
Department Head.

Act/Offense: Insubordination

Under the circumstances and pursuant to the rules and regulations of the Club, you are hereby
suspended for 15 working days without pay. Effective dates of which shall be determined by the
undersigned depending on the exigency of your work.

(Signed)

Nilo P. Famy7

On July 1, 2000, Famy issued another memorandum8 informing Francisco that her suspension shall
be effective from July 3 to 19, 2000. On July 3, 2000 Francisco wrote to the Club’s General and
Administrative Manager, Ma. Irma Corazon A. Nuevo (Nuevo), questioning Famy’s act of charging,
investigating, and suspending her without coursing the same through the Club’s Personnel
Department. Pertinent portions of her memorandum to Nuevo read:

This has reference to the memoranda of the Financial Controller, Mr. Ernilo Famy of June 27, June
29 & July 1, 2000 x x x. I would like to know under what authority x x x a department head could
issue a memorandum and make decisions without the intervention of the Personnel Department.

I believe that if ever a department head or superior has complaints against his subordinate then he
has to course them through the Personnel Department which will be the one to initiate and conduct
an inquiry and investigation. A mere furnishing of the memorandum to the Personnel Department
does not substitute [sic] the actual authority and functions of the Personnel Department because
there will be no due process x x x. Nilo Famy decided on his own complaint without merit (sic) x x x.
Also I believe x x x Nilo Famy abuse [sic] his authority as superior with full disregard of the
Personnel Department because he acted as the complainant, the investigator and the judge, all by
himself. For this I would like to file this complaint against him for abuse of authority x x x.

x x x During our departmental meetings listed in his letter, I always made him aware of the lined-up
priorities that need to be given attention first and pending works which during the year-end audit by
the auditors were put on hold and were not x x x finished by the assigned staff. In fact, he
commented that I should do something about the pending work. Also, if he really feels [sic] the
importance of that letter and [sic] cognizant of my present work load, then why did he went [sic] on
leave from June 23 until June 26. (his leave was cut because of the board meeting. His leave [sic]
supposed to be until June 30) x x x.
Also, I would like to formally inform you that whenever we have some disagreement or he has
dissatisfaction [sic] he is creating [sic] a feeling of job insecurity; it is very easy for Mr. Nilo Famy to
directly tell me and the staff to resign. The last time we had a talk prior to this issue, he made it clear
that he can transfer me to lower positions like the position of the cashier, cost controller and the like.
He is confident he can do it because he had done it to the former Club Accountant. What do you
think is the kind of authority you expect from him if you always hear these wordings [sic].9

That very same day, Nuevo replied,10 exonerating Famy and justifying the latter’s actions as falling
within his power and authority as department head. Nuevo said that Francisco was accorded due
process when she was given the opportunity to explain her side; that she deliberately ignored her
superior’s directive when she did not submit a written explanation, which act constitutes
insubordination; that Famy acted prudently though he did not course his actions through the
Personnel Department, for ultimately, he would decide the case; and that she was consulted by
Famy and that she gave her assent to Famy’s proposed actions, which he later carried out. Nuevo
likewise brushed aside Francisco’s accusation of abuse of authority against Famy, and instead
blamed Francisco for her predicament.

On July 5, 2000, Francisco wrote a letter11 to Clemente requesting an investigation into Famy’s
possible involvement in the commission in 1997 of alleged fraudulent and negligent acts relative to
the questionable approval and release of Club checks in payment of Bureau of Internal Revenue
(BIR) taxes, in which her counter-signature though required was not obtained. Famy belied
Francisco’s claims in a reply memorandum, saying the charges were baseless and intended to
malign him.

On July 20, 2000, or a day after Francisco’s period of suspension expired, Famy issued separate
memoranda12 to Francisco and Clemente informing them of Francisco’s transfer, without diminution
in salary and benefits, to the Club’s Cost Accounting Section while the investigation on Famy’s
alleged illegal activities is pending. Relevant portions of these memoranda state:

MEMORANDUM TO CLEMENTE

In view of the recent developments, i.e. the suspension of Ms. Amelia Francisco and her letter of
July 5, 2000 x x x, I would like to formally inform you that effective today, July 20, 2000, Ms.
Francisco shall be temporarily given a new assignment in my department pending the result of the
investigation she lodged against the undersigned.

x x x. She shall remain directly reporting to the Financial Comptroller (Famy).13

MEMORANDUM TO FRANCISCO

This is to inform you that effective today, July 20, 2000, Management has approved your temporary
transfer of assignment pending the completion of the investigation you lodged against the
undersigned.

You shall be handling the Cost Accounting Section together with six (6) Accounting Staffs and shall
remain reporting directly to the undersigned.14

Yet again, in another memorandum15 dated August 1, 2000 addressed to Nuevo, Famy sought an
investigation into Francisco’s alleged insubordination, this time for her alleged unauthorized change
of day-off from July 30 to August 4, 2000, and for being absent on said date (August 4, 2000)
despite disapproval of her leave/offset application therefor. In an August 2, 2000
memorandum,16 Francisco was required to explain these charges. In another memorandum17 dated
August 5, 2000, Francisco was asked to submit her explanation on the foregoing charges of
insubordination, negligence, inefficiency and violation of work standards relative to the unauthorized
change of day-off and disapproved offset/ leave. To these, Francisco replied on August 8, 2000
claiming that her presence on July 30, 2000 which was a Sunday and supposedly her day-off, was
nonetheless necessary because it was the Club’s scheduled month-end inventory, and she was
assigned as one of the officers-in-charge thereof. She added that her actions were in accord with
past experience, where she would take a leave during the first week of each month to make
payments to Pag-Ibig, and Famy very well knew about this. She accused Famy of waging a personal
vendetta against her for her seeking an inquiry into claimed anomalies embodied in her July 5, 2000
letter. She also took exception to her transfer to Cost Accounting Section, claiming that the same
was humiliating and demeaning and that it constituted constructive dismissal, and threatened to take
legal action or seek assistance from Club members to insure that Famy’s impropriety is
investigated.18

On August 11, 2000, Francisco filed a Complaint for illegal dismissal against the Club, impleading
Famy, Clemente and Nuevo as additional respondents. The case was docketed as NLRC Case No.
RAB-IV-812780-00-C. She prayed, among others, for damages and attorney’s fees.

On August 16, 2000, Francisco received another memorandum requiring her to explain why she
should not be charged with betrayal of company trust, allegedly for the act of one Ernie Yu, a Club
member, who was seen distributing copies of Francisco’s letter to the Club’s Chairman of the Board
of Directors.19 On August 18, 2000, Francisco submitted her written explanation to the charges.20 On
August 19, 2000, with the Club finding no merit in her explanation, Clemente handed her a Notice of
Disciplinary Action21 dated August 16, 2000 relative to her July 30, 2000 unauthorized change of
day-off and her August 4, 2000 unauthorized leave/absence. She was suspended for another fifteen
days, or from August 21 to September 6, 2000.22

Francisco amended her illegal dismissal Complaint to one for illegal suspension. Meanwhile, she
continued to report for work.

On September 7, 2000, or a day after serving her suspension, Francisco again received a
September 6, 2000 memorandum from Nuevo, duly noted and approved by Clemente, this time
placing her on forced leave with pay for 30 days, or from September 7, 2000 up to October 11, 2000,
for the alleged reason that the case filed against her has strained her relationship with her
superiors.23 On even date, Francisco wrote a letter to Nuevo seeking clarification as to what case
was filed against her, to which Nuevo immediately sent a reply memorandum stating that the case
referred to her alleged "betrayal of company trust".24

After the expiration of her forced leave, or on October 12, 2000, Francisco reported back to work.
This time she was handed an October 11, 2000 memorandum25 from Clemente informing her that,
due to strained relations between her and Famy and the pending evaluation of her betrayal of
company trust charge, she has been permanently transferred, without diminution of benefits, to the
Club’s Cost Accounting Section effective October 12, 2000. Notably, even as Clemente claimed in
the memorandum that Francisco’s transfer was necessary on account of the strained relations
between her and Famy, Francisco’s position at the Cost Accounting Section was to remain under
Famy’s direct supervision. The pertinent portion of the memorandum in this regard reads:

Because of the strained relationship between you and your department head, Mr. Ernilo Famy, we
deem it necessary to transfer you permanently to Cost Accounting effective October 12, 2000. You
shall however continue to receive the same benefits and shall remain under the supervision of Mr.
Famy. x x x26
In an October 13, 2000 memorandum27 to Clemente, Francisco protested her permanent transfer,
claiming that it was made in bad faith. She also bewailed Clemente’s inaction on her July 5, 2000
letter charging Famy with irregularities relative to BIR tax payments. Likewise, on account of her
transfer, Francisco once more amended her Complaint to include illegal/constructive dismissal. And
in her prayer, she sought to be reinstated to her former position as Club Accountant.

On October 17, 2000, Clemente issued a memorandum28 addressed to Francisco denying that her
transfer was done in bad faith, and affirming instead that it was made in the proper exercise of
management prerogative. In addition, Clemente clarified the matter of Famy’s alleged wrongdoing,
thus:

Secondly, I would also like to correct your assumptions that the case of Mr. Famy has not yet been
acted upon. For your information, the Committee composed of Club members and myself tasked by
the Board of Directors to investigate the case and make the necessary recommendations has
already concluded its investigation and has made its recommendations to the Board. The Board,
likewise, has acted on the Committee’s recommendation x x x the results of which have been given
to Mr. Famy. Whatever that decision was, it is a matter between the Board and Mr. Famy.29

Ruling of the Labor Arbiter

After considering the parties’ respective Position Papers and evidence, Labor Arbiter Enrico Angelo
C. Portillo issued a Decision30 dated August 23, 2001 dismissing Francisco’s Complaint for lack of
merit. The Labor Arbiter noted the "belligerence and animosity" between Francisco and Famy,
making short shrift of Francisco’s accusations against her superior and dismissing them as nothing
more than attempts to get back at Famy for his reproach at her failure to draft the SGV letter. The
Labor Arbiter further admonished Francisco, reminding her that –

x x x A workplace is not a "bed of roses". While employers are expected to show respect and
courtesy to its employees, words and actions expectedly tend to get somewhat disrespectful, if not
outright insulting, when work remains undone. Common experience tells us that the scolding and
trash talk bites harder as one climbs higher in the organization ladder commensurate to the
additional responsibility attached to the position. It is at these times, when the fact [sic] and
professionalism of an employee, particularly a managerial employee, is put to test. x x x31

The Labor Arbiter further upheld Francisco’s two suspensions as valid exercises of the Club’s
management prerogative, justifying the measures taken as reasonable and necessary penalties for
Francisco’s failure to draft the SGV letter and her taking a leave with full awareness yet in disregard
of her superior Famy’s disapproval of her leave application. He added that in the conduct of
proceedings leading to the decision to suspend Francisco, the proper procedure was taken, and
Francisco was afforded ample opportunity to defend herself.

The Labor Arbiter likewise found Francisco’s claim of constructive dismissal to be baseless. On the
contrary, he found Francisco’s transfer as necessary and in furtherance of the Club’s interests. He
also noted that the transfer was lateral, or to a position of the same rank and pay scale based on the
Club’s Organizational Chart.32 Both Club Accountant and Cost Controller positions belonged to the
same pay scale "9" and are rated as "Supervisor V".

Finally, the Labor Arbiter held that the fact that Francisco continued to report for work belies her
claim of constructive dismissal.

Ruling of the National Labor Relations Commission

On September 17, 2001, Francisco appealed the Labor Arbiter’s Decision to the NLRC, which took a
contrary view. Thus, in its November 19, 2002 Resolution,33 the NLRC held that while Francisco’s
suspensions were valid, her subsequent permanent transfer on the ground of strained relations to
the Club’s Cost Accounting Section as Cost Controller on October 12, 2000 was without just cause.
It resulted in Francisco’s demotion, since the position of Cost Controller was merely of a supervisory
character, while the position of Club Accountant was of managerial rank. Besides, by admission of
herein petitioner, Francisco held the rank of "Manager 3" with her position as Club Accountant, while
the Cost Controller is only a Supervisor position and is precisely under the direct supervision and
control of the Club Accountant.34 This unwarranted demotion, according to the NLRC, is equivalent
to constructive dismissal.

The NLRC added that strained relationship is not a valid ground for termination of employment under
the Labor Code. It ordered Francisco’s reinstatement to her former position as Club Accountant and
awarded her attorney’s fees in the amount of ₱50,000.00. However, the NLRC absolved Famy,
Nuevo and Clemente of wrongdoing. It also held that Francisco was not entitled to moral and
exemplary damages because she failed to show proof that her constructive dismissal was attended
by bad faith. Thus, the NLRC held:

WHEREFORE, premises considered, Complainant’s appeal is partly GRANTED. The Labor Arbiter’s
decision in the above-entitled case is hereby MODIFIED. It is hereby declared that Complainant’s
transfer resulted in a demotion in level/rank, which is considered as illegal constructive dismissal.
Respondent the Orchard Golf & Country Club, Inc. is hereby ordered to immediately reinstate
Complainant to her former position as Club Accountant without loss of seniority rights and other
privileges and to pay her attorney’s fees in the amount of ₱50,000.00

SO ORDERED.35

Petitioner moved for reconsideration, to no avail. Francisco moved for partial reconsideration of the
NLRC’s Resolution with respect to its ruling declaring her suspensions as valid and the denial of her
claim for damages. Her motion was denied as well.

Ruling of the Court of Appeals

Petitioner went up to the CA via Petition for Certiorari,36 while respondent Francisco no longer took
issue with the denial of her motion.

In its January 25, 2007 Decision, the CA sustained the NLRC ruling. It held that while petitioner had
the right or prerogative to transfer the respondent from one office to another within the Club, there
should be no demotion in rank, salary, benefits and other privileges. The CA added that the right
may not be used arbitrarily to rid the employer of an undesirable worker. Proper notification and an
opportunity to be heard or contest the transfer must be given to the employee whose transfer is
sought, conditions which were not observed in Francisco’s case. She was notified only of the Club’s
decision to permanently transfer her, without giving her the opportunity to contest the same. The CA
characterized Francisco’s permanent transfer as a demotion in the guise of a lateral transfer.

The CA sustained as well the award of attorney’s fees, saying that Francisco was forced to litigate
and hire the services of counsel to protect her rights.

Thus, the Petition for Certiorari was dismissed. Petitioner filed a Motion for Reconsideration,37 which
was subsequently denied.
 Issues

Hence, this Petition raising the following issues:

WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND

DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW
AND WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT HELD
THAT THE TRANSFER OF RESPONDENT FROM THE POSITION OF CLUB
ACCOUNTANT TO COST ACCOUNTANT WAS TANTAMOUNT TO A DEMOTION.

II

WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND

DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW
AND WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
AWARDED ATTORNEY’S FEES TO RESPONDENT IN THE AMOUNT OF FIFTY
THOUSAND PESOS (₱50,000.00).38

Petitioner’s Arguments

In seeking the annulment and setting aside of the CA Decision, petitioner insists that respondent
Francisco’s transfer did not amount to a demotion, and that she suffered no diminution in rank,
salary, benefits, and position because the position of Club Accountant and Cost
Controller/Accountant are of equal rank. Both positions belong to pay grade "9" and rated as
"Supervisor V"; a transfer from one of the positions to the other is merely a lateral transfer and within
the prerogative of Club management. Petitioner directs the Court’s attention to its

Organizational Chart39 which should bolster its claim in this regard.

Petitioner adds that Francisco’s transfer to the Cost Accounting Section was done in good faith,
noting that the deteriorating relationship between Famy and Francisco placed the Club’s business at
risk. It had no choice but to address this problem in order not to further jeopardize the Club’s day-to-
day operations. Petitioner claims further that Francisco’s transfer did not prejudice her. She
continues to report to Famy and receive the same benefits and privileges as the Club Accountant. It
is of no consequence that as Cost Controller, she has a lesser number of employees/staff (six)
under her or that she is relegated to a very small office space, as opposed to the position of Club
Accountant, which has 32 employees under it and holds office at the bigger offices reserved for use
by the Club’s executives.

On the issue of constructive dismissal, petitioner claims that it did not commit any act which forced
Francisco to quit; she continues to be employed by the Club, and in fact continues to report for work.

Finally, petitioner argues that Francisco is not entitled to attorney’s fees, in the absence of an award
of exemplary damages and in the wake of the NLRC’s finding that she is not entitled to such
damages. It believes that if no exemplary damages are adjudged, then no attorney’s fees may be
awarded as well. It adds that Francisco could only blame herself for the fate she suffered, knowing
very well that she is not entitled to her claims; she should bear her own litigation expenses.

Respondent’s Arguments
Francisco insists that the issues raised in the Petition have been sufficiently addressed by the NLRC
and the CA, and their findings should bind the Court. Francisco stresses that petitioner’s own actions
betrayed the fact that the position of Cost Controller/Accountant is a mere Supervisor position and
the same is directly under the supervision of the Club Accountant. A reassignment from Club
Accountant to Cost Controller is clearly an unwarranted demotion in rank. She adds that per the
Club’s latest actions, she has suffered not only a demotion in rank, but also a diminution in salary
and benefits. Petitioner illegally withheld her accrued salary differential, merit increases and
productivity bonuses since 2001.

Our Ruling

The Petition lacks merit.

At the outset, it must be emphasized that Francisco’s two suspensions, i.e., for her failure to draft the
SGV letter and for being absent without prior leave, is no longer at issue before this Court. Records
show that after the NLRC declared the same as valid in its November 19, 2002 Resolution,
Francisco moved for reconsideration but to no avail. After the denial of her motion, Francisco no
longer brought the issue or appealed the same to the CA. Hence, the only issues for our resolution
are the propriety of Francisco’s transfer to the position of Cost Controller and the award of attorney’s
fees.

There was constructive dismissal when Francisco was transferred to the Cost Accounting Section.

We agree with the NLRC and the CA that Francisco’s transfer to the position of Cost Controller was
without valid basis and that it amounted to a demotion in rank. Hence, there was constructive
dismissal.

Records show that when Francisco returned to work on July 20, 2000 fresh from her first
suspension, she was unceremoniously transferred by Famy, via his July 20, 2000 memorandum, to
the Club’s Cost Accounting Section. Famy stated the reason for her transfer:

This is to inform you that effective today, July 20, 2000, Management has approved your temporary
transfer of assignment pending the completion of the investigation you lodged against the
undersigned.

x x x x40

His memorandum of even date to his superior Clemente reveals the same cause:

In view of the recent developments, i.e. the suspension of Ms. Amelia Francisco and her letter of
July 5, 2000 x x x, I would like to formally inform you that effective today, July 20, 2000, Ms.
Francisco shall be temporarily given a new assignment in my department pending the result of the
investigation she lodged against the undersigned.

x x x x41

In other words, the cause of Francisco’s temporary transfer on July 20, 2000 was her pending
complaint against Famy.

And then again, on September 6, 2000, Nuevo issued another memorandum duly noted and
approved by Clemente, and personally delivered at Francisco’s residence on September 7, 2000
informing her this time that she has been placed on forced leave with pay for 30 days, or from
September 7, 2000 up to October 11, 2000, for the reason that the case filed against her has
strained her relationship with her superiors.

And just when her forced leave expired on October 11, or on October 12, 2000, Francisco was once
more handed an October 11, 2000 memorandum from Clemente informing her that, due to strained
relations between her and Famy and pending evaluation of her betrayal of company trust charge,
she has been permanently transferred, without diminution of benefits, to the Club’s Cost Accounting
Section effective October 12, 2000.

The Court shares the CA’s observation that when Francisco was placed on forced leave and
transferred to the Cost Accounting Section, not once was Francisco given the opportunity to contest
these company actions taken against her. It has also not escaped our attention that just when one
penalty has been served by Francisco, another would instantaneously take its place. And all these
happened even while the supposed case against her, the alleged charge of "betrayal of company
trust", was still pending and remained unresolved. In fact, one of the memoranda was served even at
Francisco’s residence.

Not even the claim that her relations with her superiors have been strained could justify Francisco’s
transfer to Cost Accounting Section. Indeed, it appears that her charge was never resolved. And if
Famy, Nuevo and Clemente truly believed that their relations with Francisco have been strained,
then it puzzles the Court why, despite her transfer, she continues to remain under Famy’s direct
supervision. Such is the tenor of the memoranda relative to her temporary and subsequently,
permanent, transfer to the Cost Accounting Section:

JULY 20, 2000 MEMORANDUM OF FAMY TO CLEMENTE

In view of the recent developments, i.e. the suspension of Ms. Amelia Francisco and her letter of
July 5, 2000 x x x, I would like to formally inform you that effective today, July 20, 2000, Ms.
Francisco shall be temporarily given a new assignment in my department pending the result of the
investigation she lodged against the undersigned.

x x x. She shall remain directly reporting to the Financial Comptroller (Famy).42

JULY 20, 2000 MEMORANDUM OF FAMY TO FRANCISCO

This is to inform you that effective today, July 20, 2000, Management has approved your temporary
transfer of assignment pending the completion of the investigation you lodged against the
undersigned.

You shall be handling the Cost Accounting Section together with six (6) Accounting Staffs and shall
remain reporting directly to the undersigned.43

OCTOBER 11, 2000 MEMORANDUM OF CLEMENTE TO FRANCISCO

Because of the strained relationship between you and your department head, Mr. Ernilo Famy, we
deem it necessary to transfer you permanently to Cost Accounting effective October 12, 2000. You
shall however continue to receive the same benefits and shall remain under the supervision of Mr.
Famy.44
Interestingly, Francisco’s transfer was occasioned not by a past infraction or a present one which
has just been committed, but by her act of filing a complaint for impropriety against Famy.

For this reason, Francisco’s July 20, 2000 temporary transfer and her October 12, 2000 permanent
transfer to Cost Accounting Section must be invalidated. For one, there was no valid reason to
temporarily transfer Francisco to Cost Accounting Section on July 20, 2000. She had already served
her penalty for her failure to draft the SGV letter, through the 15-day suspension period which she
just completed on July 20, 2000. Secondly, the transfer was not even rooted in any new infraction
she is accused of committing. There was thus an absolute lack of basis for her July 20, 2000
temporary transfer.

As for her October 12, 2000 permanent transfer, the same is null and void for lack of just cause.
Also, the transfer is a penalty imposed on a charge that has not yet been resolved. Definitely, to
punish one for an offense that has not been proved is truly unfair; this is deprivation without due
process. Finally, the Court sees no necessity for Francisco’s transfer; on the contrary, such transfer
is outweighed by the need to secure her office and documents from Famy’s possible intervention on
account of the complaint she filed against him.

We also agree with the findings of the NLRC, as affirmed by the CA, that Francisco’s transfer
constituted a demotion, viz:

x x x We however, hold that Complainant’s transfer resulted to a demotion in her level/rank. The
level of Club Accountant is not "Supervisor V" but "Managerial-3" as indicated in the Notice of
Personnel Action issued to Complainant on July 20, 2000, signed by her immediate superior Jose
Ernilo P. Famy, Department Head of Respondent company on July 10, 2000, and approved by
Tomas B. Clemente III, Acting GM & COOO on July 11, 2000 x x x. Obviously, the alleged August
15, 1998 Company’s Organizational Chart showing the Club Accountant and the Cost Controller
occupying the same job grade level, which was attached to Respondent’s February 21, 2001 Reply x
x x was never implemented, otherwise, the Department Head and the Acting GM & COO would not
have specifically indicated "Managerial-3" for Complainant’s position of Club Accountant in the
Notice of Personnel Action issued to Complainant on July 10, 2000 or two (2) years after the date of
the alleged Organizational Chart. Clearly, Complainant was a manager when she occupied the
position of Club Accountant. However, when management transferred her to the position of Cost
Controller/Accountant, she was demoted to a mere supervisor.

Moreover, in Complainant’s December 3, 1997 Job Description as Club Accountant prepared by

Jose Ernilo P. Famy and approved by Ian Paul Gardner and Atty. Stellamar C. Flores of HR, it is
specifically indicated therein that as Club Accountant, Complainant directly supervises the Cost
Controller x x x. Notably, Complainant was never issued any amendment to her December 3, 1997
Job Description, which would have removed from her supervision the Cost Controller. In fact,
Respondents do not refute Complainant’s allegation that as Club Accountant, she was responsible
for the rating of the Cost Controller’s performance for the years 1998 to 2000. It becomes clearer
now that the alleged August 15, 1998 Company’s Organizational Chart showing the Club Accountant
and the Cost Controller occupying the same job grade level, which was attached to Respondent’s
February 22, 2001 Reply x x x was, indeed, never implemented, otherwise, management would
have issued Complainannt an amendment to her December 3, 1997 Job Description effectively
removing from her supervision the position of Cost Controller/Accountant and management would
not have let Complainant rate the performance of the Cost Controller/Accountant for the years 1998
to 2000. It is obvious, therefore, that Complainant’s position of Club Accountant is higher in
level/rank than that of Cost Controller/Accountant. Patently, Complainant’s transfer from the position
of Club Accountant to the position of Cost Accountant resulted to her demotion in level/rank.
Complainant’s transfer resulting to her demotion is, therefore, tantamount to constructive dismissal.
x x x45

The fact that Francisco continued to report for work does not necessarily suggest that constructive
dismissal has not occurred, nor does it operate as a waiver. Constructive dismissal occurs not when
the employee ceases to report for work, but when the unwarranted acts of the employer are
committed to the end that the employee’s continued employment shall become so intolerable. In
these difficult times, an employee may be left with no choice but to continue with his employment
despite abuses committed against him by the employer, and even during the pendency of a labor
dispute between them. This should not be taken against the employee. Instead, we must share the
burden of his plight, ever aware of the precept that necessitous men are not free men.

"An employer is free to manage and regulate, according to his own discretion and judgment, all
phases of employment, which includes hiring, work assignments, working methods, time, place and
manner of work, supervision of workers, working regulations, transfer of employees, lay-off of
workers, and the discipline, dismissal and recall of work. While the law recognizes and safeguards
this right of an employer to exercise what are clearly management prerogatives, such right should
not be abused and used as a tool of oppression against labor. The company’s prerogatives must be
exercised in good faith and with due regard to the rights of labor. A priori, they are not absolute
prerogatives but are subject to legal limits, collective bargaining agreements and the general
principles of fair play and justice. The power to dismiss an employee is a recognized prerogative that
is inherent in the employer’s right to freely manage and regulate his business. x x x. Such right,
however, is subject to regulation by the State, basically in the exercise of its paramount police
power. Thus, the dismissal of employees must be made within the parameters of the law and
pursuant to the basic tenets of equity, justice and fair play. It must not be done arbitrarily and without
just cause."46

The award of attorney’s fees is proper.

With respect to the award of attorney’s fees, we find the same to be due and owing to respondent
given the circumstances prevailing in this case as well as the fact that this case has spanned the
whole judicial process from the Labor Arbiter to the NLRC, the CA and all the way up to this Court.
Under Article 2208 of the Civil Code, attorney’s fees and expenses of litigation other than judicial
costs may be recovered if the claimant is compelled to litigate with third persons or to incur
expenses to protect his interest by reason of an unjustified act or omission of the party from whom it
is sought,47 and where the courts deem it just and equitable that attorney’s fees and expenses of
litigation should be recovered.

As for petitioner’s argument that in the absence of an award of exemplary damages, attorney’s fees
may not be granted, the Court finds this unavailing. An award of attorney’s fees is not predicated on
a grant of exemplary damages. Given the circumstances of this case, it is regretful that the Labor
Arbiter and the NLRC failed to award moral and exemplary damages prayed for by the respondent.
But because respondent did not appeal the denial, the Court may no longer modify the ruling in this
regard.

Respondent is entitled to receive her accrued salary differential, merit increases and productivity
bonuses since 2001.

Respondent raises the side issue pertaining to petitioner’s alleged withholding of her accrued salary
differential, merit increases and productivity bonuses since 2001.48 She claims that during the
pendency of this case, petitioner effected salary adjustments, merit increases and productivity
bonuses to other employees. As proof, she submitted the Notice of Personnel Action-Salary
Adjustment49 of Arsenio Rodrigo Neyra, the former Cost Accountant which position she now
occupies, and pertinent portions of the Collective Bargaining Agreement.50She now seeks payment
of these amounts.

Notably, petitioner does not refute its grant of salary increases, merit increases and productivity
bonuses to other employees. In its attempt to rebuff Francisco’s claim, petitioner merely argues that
the same should no longer be entertained because it was never raised before the proceedings
below.51

Interestingly, it never categorically denied that such salary increases, merit increases and
productivity bonuses have indeed been given to the other employees.

At this juncture, it must be stressed that "technical rules of procedure are not binding in labor cases.
The application of technical rules of procedure may be relaxed to serve the demands of substantial
justice."52 "It is more in keeping with the objective of rendering substantial justice if we brush aside
technical rules rather than strictly apply its literal reading. There [being] no objective reason to further
delay this case by insisting on a technicality when the controversy could now be
resolved."53 Moreover, "there is no need to remand this case to the Labor Arbiter for further
proceedings, as the facts are clear and complete on the basis of which a decision can be
made."54 Based on the foregoing, we find no reason to deprive herein respondent of the accrued
salary differential, merit increases and productivity bonuses due her since 2001.

WHEREFORE, the Petition is DENIED for lack of merit. The January 25, 2007 Decision and May
1âw phi 1

23, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 80968 are AFFIRMED. Petitioner,
The Orchard Golf and Country Club, is ORDERED:

1. To immediately reinstate respondent Amelia R. Francisco to her former position as Club

Accountant without loss of seniority rights and other privileges;

2. Within 15 days from receipt of this Decision, to return and/or pay to the respondent, all her
accrued salary differential, merit increases and productivity bonuses due her, with 12o/o per
annum interest55 on outstanding balance from finality of this Decision until full payment; and

3. Within the same period, to pay the respondent attorney's fees in the amount of
₱50,000.00.

SO ORDERED.
CASE NO. 7

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 176377 November 16, 2011

FUNCTIONAL, INC. Petitioner,

vs.
SAMUEL C. GRANFIL, Respondent.

DECISION

PEREZ, J.:

Assailed in this petition for review1 filed under Rule 45 of the 1997 Rules of Civil Procedure is the
Decision dated 22 November 2006 rendered by the then Tenth Division of the Court of Appeals (CA)
in CA-G.R. SP No. 94851,2the dispositive portion of which states:

WHEREFORE, premises considered, the petition is GRANTED. The Resolution dated April 20, 2005
and the order dated January 26, 2006 of public respondent NLRC, First Division in NLRC NCR Case
No. 09-07126-02 NLRC NCR CA No. 035887-03 sustaining the findings of the Labor Arbiter are
hereby REVERSED and SET ASIDE. Private respondent Functional, Inc. is hereby ORDERED to
reinstate petitioner Granfil without loss of seniority rights and other privileges, and to pay the latter
his full backwages, inclusive of allowances and other benefits, from July 31, 2002 up to the time of
his actual reinstatement.

SO ORDERED.3

The Facts

Sometime in 1992, respondent Samuel C. Granfil was hired as key operator by petitioner Functional,
Inc. (FI), a domestic corporation engaged in the business of sale and rental of various business
equipments, including photocopying machines. As Key Operator, Granfil was tasked to operate the
photocopying machine rented by the National Bookstore (NBS) at its SM Megamall Branch. There is
no dispute regarding the fact that, in the evening of 30 July 2002, Granfil attended to a customer by
the name of Cosme Cavaldeja (Cavaldeja) who, together with his wife, asked to have their flyers
photocopied. It appears that Bonnel Dechavez, the security guard assigned at said establishment,
saw Cavaldeja handing money to Granfil after the transaction was finished.4 After investigating the
matter, Dechavez submitted the following incident report to NBS Branch Manager Lucy Genegaban
(Genegaban), to wit:

At around 1940 on July 30, 2002 at NBS SM Megamall Dona Julia Vargas Ave., Mandaluyong City, I
checked one customer and asked if he already paid for his xerox[ed] item’s (sic) and he said "yes."
Upon asking for a receipt, he pointed to Sammy the Xerox operator [to] whom he g[a]ve payment,
instead of paying to the cashier. Sammy came and it was only then that he brought the customer to
the counter 09 for payment [of] the amount of [the] xerox[ed] item’s (sic) is ₱250.5
On 3 September 2002, Granfil filed a complaint against FI, its President, Romeo Bautista (Bautista),
its Marketing Manager, Freddie Tenorio (Tenorio), its Office Supervisor, Julius Ballesteros
(Ballesteros), and its Area Supervisor, Joel Dizon (Dizon), for illegal dismissal, unpaid 13th month
pay, moral and exemplary damages and attorney’s fees. In support of his complaint which was
docketed as NLRC NCR Case No. 09-07126-2002 before the arbitral level of the National Labor
Relations Commission (NLRC),6 Granfil alleged, among other matters, that the money which
Dechavez saw him receive from Cavaldeja was a ₱200 tip said customer gave him in appreciation of
his assistance in xeroxing and organizing the batches of voluminous materials he asked to be
photocopied; that payment for the materials was, however, already paid per batch by Cavaldeja’s
wife who, by that time, had already left the premises; and, that rather than listening to his
explanation and simply verifying the meter of the photocopy machine as well as the paper allotted to
it, Dechavez submitted his incident report which, in turn, caused Tenorio to tell him, "Mr. Granfil,
magpahinga ka muna. Mabuti pa, pumirma ka nalang ng resignation letter para may makuha ka
pa."7

Granfil further asseverated that, with said incident report having been telefaxed to FI’s head office,
he was asked to report thereat in the morning of 31 July 2002; that instead of allowing him to
explain, however, Ballesteros peremptorily ordered his termination from employment; that wishing to
explain his side, he sought out Dizon who merely ignored and tersely advised him, "Magpahinga ka
na lang"; that refused entry when he tried to report for work on 1 August 2002, he subsequently
sought out Cavaldeja whose corroboration of his version of the incident also fell on deaf ears; that
having been terminated without just cause and observance of due process, he was constrained to
file the 3 September 2002 complaint from which the instant suit originated; that aside from the
reinstatement to which he is clearly entitled as an illegally dismissed employee, he should be paid
full backwages and 13th month pay for the year 2002; and, that in view of the malice and bad faith
which characterized his dismissal from employment, Bautista, Tenorio, Ballesteros and Dizon should
be held jointly and severally liable with FI for the payment of said indemnities as well as his claims
for moral and exemplary damages and attorney’s fees.8

In their position paper, FI and its corporate officers, in turn, averred that having been apprised of the
incident, Genegaban requested for Granfil’s relief as Key Operator of the photocopying machine
installed at the NBS SM Megamall Branch; that for the good of all concerned, FI informed Granfil
that he was going to be transferred to a different assignment, without demotion in rank or diminution
of his salaries, benefits and other privileges; that required to report to FI’s main office to act as
emergency reliever to other Key Operators while waiting for his new assignment, Granfil
misconstrued his transfer as a punishment for his guilt and refused to heed said directive which was
within the management’s prerogative to issue; that an employee’s right to security of tenure does not
give him such vested right to his position as would deprive his employer of its prerogative to change
his assignment or transfer him where he will be most useful; and, that aside from being guilty of
insubordination, Granfil clearly abandoned his employment rather than illegally dismissed therefrom.9

On 29 April 2003, Labor Arbiter Eduardo Carpio rendered a decision discounting Granfil’s illegal
dismissal from employment in view of his failure to prove with substantial evidence overt acts of
termination on the part of FI and its officers. Simply awarded the sum of ₱3,966.65 as proportionate
13th month pay for services rendered from January to July 2002,10 Granfil perfected the appeal
which was docketed before the First Division of the NLRC as NLRC NCR CA No. 035887-03. With
the affirmance of the Labor Arbiter’s decision in the 20 April 2005 Resolution issued by the
NLRC11 and the subsequent denial of his motion seeking the reconsideration of said
decision,12Granfil elevated the case through the Rule 65 petition for certiorari docketed before the
CA as CA-G.R. SP No. 94851. On 22 November 2006, the CA rendered the herein assailed 22
November 2006 Decision, reversing the NLRC’s 20 April 2005 Resolution on the ground that FI
failed to satisfactorily prove Granfil’s supposed abandonment of his employment which, by itself, was
negated by his filing of a case for illegal employment. Ordering FI to reinstate Granfil and to pay his
full backwages, allowances and other benefits from 31 July 2002 until his actual reinstatement, the
CA denied said employee’s claims for moral and exemplary damages as well as attorney’s fees for
lack of factual basis.13

FI’s motion for reconsideration of the CA’s 22 November 2006 decision was denied for lack of merit
in said court’s 22 January 2007 resolution,14 hence, this petition.

The Issues

FI prays for the reversal and setting aside of the assailed decision on the following grounds, to wit:

A.

The Honorable Court erred in holding that [Granfil] was illegally dismissed by FI.

B.

The Honorable Court erred in not giving credence to the factual findings of both the NLRC
and Labor Arbiter before wh[om] the case was tried.15

The Court’s Ruling

We find the petition bereft of merit.

The rule is long and well settled that, in illegal dismissal cases like the one at bench, the burden of
proof is upon the employer to show that the employee’s termination from service is for a just and
valid cause.16 The employer’s case succeeds or fails on the strength of its evidence and not the
weakness of that adduced by the employee,17in keeping with the principle that the scales of justice
should be tilted in favor of the latter in case of doubt in the evidence presented by them.18 Often
described as more than a mere scintilla,19 the quantum of proof is substantial evidence which is
understood as such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other equally reasonable minds might conceivably opine otherwise.20Failure of
the employer to discharge the foregoing onus would mean that the dismissal is not justified and
therefore illegal.21

Denying the charge of illegal dismissal, FI insists that Granfil abandoned his employment after he
was transferred from his assignment at the NBS Megamall Branch as a consequence of the latter’s
request for his relief.22 In the same manner that it cannot be said to have discharged the above-
discussed burden by merely alleging that it did not dismiss the employee, it has been ruled that an
employer cannot expediently escape liability for illegal dismissal by claiming that the former
abandoned his work.23 This applies to FI which adduced no evidence to prove Granfil’s supposed
abandonment beyond submitting copies of NBS’ 31 July 2002 request for said employee’s
transfer24 and its 1 August 2002 written acquiescence thereto.25 While these documents may have
buttressed the claim that Granfil was indeed recalled from his assignment, however, we find that the
CA correctly discounted their probative value insofar as FI’s theory of abandonment is concerned.

Being a matter of intention, moreover, abandonment cannot be inferred or presumed from equivocal
acts.26 As a just and valid ground for dismissal, it requires the deliberate, unjustified refusal of the
employee to resume his employment,27 without any intention of returning.28 Two elements must
concur: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship, with the second element as the more
determinative factor and being manifested by some overt acts.29 The burden of proving
abandonment is once again upon the employer30 who, whether pleading the same as a ground for
dismissing an employee or as a mere defense, additionally has the legal duty to observe due
process.31 Settled is the rule that mere absence or failure to report to work is not tantamount to
abandonment of work.32

Viewed in the light of the foregoing principles, we find that the CA correctly ruled out FI’s position
that Granfil had abandoned his employment. Aside from the fact that Bautista, Tenorio, Ballesteros
and Dizon did not even execute sworn statements to refute the overt acts of dismissal imputed
against them, the record is wholly bereft of any showing that FI required Granfil to report to its main
office or, for that matter, to explain his supposed unauthorized absences. Absence must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to
work anymore.33 Even then, FI’s theory of abandonment was likewise negated by Granfil’s filing the
complaint for illegal dismissal34 which evinced his desire to return to work. In vigorously pursuing his
action against FI before the Labor Arbiter, the NLRC and the CA, Granfil clearly manifested that he
has no intention of relinquishing his employment. In any case, the fact that Granfil prayed for his
reinstatement speaks against any intent to sever the employer-employee relationship35 with FI.

FI next faults the CA for not giving credence to the factual findings of Labor Arbiter Eduardo Carpio
which was affirmed in the NLRC’s 20 April 2005 resolution.36 As may be gleaned from the above
disquisition, however, both the Labor Arbiter and the NLRC clearly erred in directing the dismissal of
the complaint by unduly shifting the burden of proving the illegality of his dismissal to Granfil. While
administrative findings of fact are, concededly, accorded great respect, and even finality when
supported by substantial evidence, nevertheless, when it can be shown that administrative bodies
grossly misappreciated evidence of such nature as to compel a contrary conclusion, this court had
not hesitated to reverse their factual findings.37 Indeed, said rule does not apply when, as here, it is
clear that a palpable mistake was committed by the quasi-judicial tribunal which needs
rectification.38
1âwphi 1

WHEREFORE, premises considered, the petition is DENIED for lack of merit and the assailed
Decision dated 22 November 2006 is, accordingly, AFFIRMED in toto.

SO ORDERED.
CASE NO. 8

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

COSMOS BOTTLING CORP., G.R. No. 193676

Petitioner,

- versus -

WILSON FERMIN,

Respondent.

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

WILSON B. FERMIN,
G.R. No. 194303
Petitioner,

- versus -
Present:

COSMOS BOTTLING CORPORATION and CECILIA

BAUTISTA, CARPIO, J., Chairperson,

Respondents. BRION,

PEREZ,

SERENO, and

REYES, JJ.

Promulgated:

June 20, 2012

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
 DECISION

SERENO, J.:

Before this Court are two consolidated cases, namely: (1) Petition for Review dated 26
October 2010 (G.R. No. 193676) and (2) Petition for Review on Certiorari under Rule 45 dated 14
October 2010 (G.R. No. 194303).[1] Both Petitions assail the Decision dated 20 May 2009[2] and
Resolution dated 8 September 2010[3] issued by the Court of Appeals (CA). The dispositive portion
of the Decision reads:

WHEREFORE, the August 31, 2005 Decision and October 21,

2005 Resolution of the National Labor Relations Commission in NLRC NCR CA No.
043301-05 are hereby SET ASIDE. Respondent Cosmos Bottling Corporation is, in
light of the foregoing discussions, hereby ORDERED to pay Petitioner his full
retirement benefits.

There being no data from which this Court can properly assess Petitioners full
retirement benefits, the case is, thus, remanded to the Labor Arbiter only for that
purpose.

SO ORDERED.

Wilson B. Fermin (Fermin) was a forklift operator at Cosmos Bottling Corporation

(COSMOS), where he started his employment on 27 August 1976.[4] On 16 December 2002, he was
accused of stealing the cellphone of his fellow employee, Luis Braga (Braga).[5] Fermin was then
given a Show Cause Memorandum, requiring him to explain why the cellphone was found inside his
locker.[6] In compliance therewith, he submitted an affidavit the following day, explaining that he only
hid the phone as a practical joke and had every intention of returning it to Braga.[7]

On 21 December 2002, Braga executed a handwritten narration of events stating the

following:[8]

(a) At around 6:00 a.m. on 16 December 2002, he was changing his clothes inside
the locker room, with Fermin as the only other person present.
 (b) Braga went out of the locker room and inadvertently left his cellphone by the
chair. Fermin was left inside the room.

(c) After 10 minutes, Braga went back to the locker room to retrieve his cellphone,
but it was already gone.

(d) Braga asked if Fermin saw the cellphone, but the latter denied noticing it.

(e) Braga reported the incident to the security guard, who thereafter conducted an
inspection of all the lockers.

(f) The security guard found the cellphone inside Fermins locker.

(g) Later that afternoon, Fermin talked to Braga to ask for forgiveness. The latter
pardoned the former and asked him not to do the same to their colleagues.

After conducting an investigation, COSMOS found Fermin guilty of stealing Bragas phone in
violation of company rules and regulations.[9] Consequently, on 2 October 2003,[10] the company
terminated Fermin from employment after 27 years of service,[11] effective on 6 October 2003.[12]

Following the dismissal of Fermin from employment, Braga executed an affidavit, which
stated the belief that the former had merely pulled a prank without any intention of stealing the
cellphone, and withdrew from COSMOS his complaint against Fermin.[13]

Meanwhile, Fermin filed a Complaint for Illegal Dismissal,[14] which the Labor Arbiter (LA)
dismissed for lack of merit on the ground that the act of taking a fellow employees cellphone
amounted to gross misconduct.[15] Further, the LA likewise took into consideration Fermins other
infractions, namely: (a) committing acts of disrespect to a superior officer, and (b) sleeping on duty
and abandonment of duty.[16]

Fermin filed an appeal with the National Labor Relations Commission (NLRC), which
affirmed the ruling of the LA[17] and denied Fermins subsequent Motion for Reconsideration.[18]

Thereafter, Fermin filed a Petition for Certiorari with the Court of Appeals (CA), [19] which
reversed the rulings of the LA and the NLRC and awarded him his full retirement
benefits.[20] Although the CA accorded with finality the factual findings of the lower tribunals as
regards Fermins commission of theft, it nevertheless held that the penalty of dismissal from service
was improper on the ground that the said violation did not amount to serious misconduct or wilful
disobedience, to wit:
 [COSMOS], on which the onus of proving lawful cause in sustaining the
dismissal of [Fermin] lies, failed to prove that the latters misconduct was induced by
a perverse and wrongful intent, especially in the light of Bragas Sinumpaang
Salaysay which corroborated [Fermins] claim that [Fermin] was merely playing a
prank when he hid Bragas cellular phone. Parenthetically, the labor courts dismissed
Bragas affidavit of desistance as a mere afterthought because the same was
executed only after [Fermin] had been terminated.

It must be pointed out, however, that in labor cases, in which technical rules of
procedure are not to be strictly applied if the result would be detrimental to the
workingman, an affidavit of desistance gains added importance in the absence of any
evidence on record explicitly showing that the dismissed employee committed the act
which caused the dismissal. While We cannot completely exculpate [Fermin] from his
violation at this point, We cannot, however, turn a blind eye and disregard Bragas
recantation altogether. Bragas recantation all the more bolsters Our conclusion that
[Fermins] violation does not amount to or borders on serious or willful misconduct or
willful disobedience to call for his dismissal.

Morever, [COSMOS] failed to prove any resultant material damage or prejudice on

their part as a consequence of [Fermins] questioned act. To begin with, the cellular
phone subject of the stealth belonged, not to [COSMOS], but to Braga. Secondly, the
said phone was returned to Braga in due time. Under the circumstances, a penalty
such as suspension without pay would have sufficed to teach [Fermin] a lesson and
for him to realize his wrongdoing.

xxxxxxxxx

On another note, [COSMOS], in upholding the legality of [Fermins]

termination from service, considered the latters past infractions with
[COSMOS], i.e. threatening, provoking, challenging, insulting and committing acts of
disrespect to a superior officer/defiance to an instruction and a lawful order of a
superior officer; and, sleeping while on duty and abandonment of duty or leaving
assigned post with permission from immediate supervisor, as aggravating
circumstances to his present violation [stealth (sic) of a co-employees property].
We disagree with Public Respondent on this matter.

The correct rule is that previous infractions may be used as justification for an
employees dismissal from work in connection with a subsequent similar offense,
which is obviously notthe case here. x x x. [21] (Emphases in the original.)

COSMOS and Fermin moved for reconsideration, but the CA likewise denied their
motions.[22] Thus, both parties filed the present Petitions for Review.

COSMOS argues, among other things, that: (a) Fermin committed a clear act of bad faith
and dishonesty in taking the cellphone of Braga and denying knowledge thereof; (b) the latters
recantation was a mere afterthought; (c) the lack of material damage or prejudice on the part of
COSMOS does not preclude it from imposing the penalty of termination; and (d) the previous
infractions committed by Fermin strengthen the decision of COSMOS to dismiss him from service.[23]

On the other hand, Fermin contends that since the CA found that the penalty of dismissal
was not proportionate to his offense, it should have ruled in favor of his entitlement to backwages.[24]

It must be noted that in the case at bar, all the lower tribunals were in agreement that
Fermins act of taking Bragas cellphone amounted to theft. Factual findings made by
administrative agencies, if established by substantial evidence as borne out by the records, are final
and binding on this Court, whose jurisdiction is limited to reviewing questions of law.[25] The only
disputed issue left for resolution is whether the imposition of the penalty of dismissal was
appropriate. We rule in the affirmative.

Theft committed against a co-employee is considered as a case analogous to serious

misconduct, for which the penalty of dismissal from service may be meted out to the erring
employee,[26] viz:

Article 282 of the Labor Code provides:

Article 282. Termination by Employer. - An employer may

terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobendience by the
employee of the lawful orders of his employer or his
representatives in connection with his work;
xxx xxx xxx
(e) Other causes analogous to the foregoing.

Misconduct involves the transgression of some established and definite rule

of action, forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment. For misconduct to be serious and therefore a
valid ground for dismissal, it must be:

1. of grave and aggravated character and not merely trivial or

unimportant and
2. connected with the work of the employee.

In this case, petitioner dismissed respondent based on the NBI's finding that
the latter stole and used Yusecos credit cards. But since the theft was not
committed against petitioner itself but against one of its
employees, respondent's misconduct was not work-related and therefore, she
could not be dismissed for serious misconduct.

Nonetheless, Article 282(e) of the Labor Code talks of other analogous

causes or those which are susceptible of comparison to another in general or in
specific detail. For an employee to be validly dismissed for a cause analogous to
 those enumerated in Article 282, the cause must involve a voluntary and/or willful act
or omission of the employee.

A cause analogous to serious misconduct is a voluntary and/or willful act or

omission attesting to an employees moral depravity. Theft committed by an
employee against a person other than his employer, if proven by substantial
evidence, is a cause analogous to serious misconduct.[27] (Emphasis supplied.)

In this case, the LA has already made a factual finding, which was affirmed by both the
NLRC and the CA, that Fermin had committed theft when he took Bragas cellphone. Thus, this act is
deemed analogous to serious misconduct, rendering Fermins dismissal from service just and valid.

Further, the CA was correct in ruling that previous infractions may be cited as justification for
dismissing an employee only if they are related to the subsequent offense.[28] However, it must be
noted that such a discussion was unnecessary since the theft, taken in isolation from Fermins other
violations, was in itself a valid cause for the termination of his employment.

Finally, it must be emphasized that the award of financial compensation or assistance to an

employee validly dismissed from service has no basis in law. Therefore, considering that Fermins
act of taking the cellphone of his co-employee is a case analogous to serious misconduct, this Court
is constrained to reverse the CAs ruling as regards the payment of his full retirement benefits. In the
same breath, neither can this Court grant his prayer for backwages.

WHEREFORE, the Petition in G.R. No. 194303 is DENIED, while that in G.R. No. 193676
is GRANTED. The Decision dated 20 May 2009 and Resolution dated 8 September 2010 of the
Court of Appeals are hereby REVERSED and SET ASIDE. The Decision dated 20 August 2004 of
the Labor Arbiter isREINSTATED.

SO ORDERED.
CASE NO. 9

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 168081 October 17, 2008

ARMANDO G. YRASUEGUI, petitioners,

vs.
PHILIPPINE AIRLINES, INC., respondents.

DECISION

REYES, R.T., J.:

THIS case portrays the peculiar story of an international flight steward who was dismissed because
of his failure to adhere to the weight standards of the airline company.

He is now before this Court via a petition for review on certiorari claiming that he was illegally
dismissed. To buttress his stance, he argues that (1) his dismissal does not fall under 282(e) of the
Labor Code; (2) continuing adherence to the weight standards of the company is not a bona fide
occupational qualification; and (3) he was discriminated against because other overweight
employees were promoted instead of being disciplined.

After a meticulous consideration of all arguments pro and con, We uphold the legality of dismissal.
Separation pay, however, should be awarded in favor of the employee as an act of social justice or
based on equity. This is so because his dismissal is not for serious misconduct. Neither is it
reflective of his moral character.

The Facts

Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc.
(PAL). He stands five feet and eight inches (5’8") with a large body frame. The proper weight for a
man of his height and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds,
as mandated by the Cabin and Crew Administration Manual1 of PAL.

The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an
extended vacation leave from December 29, 1984 to March 4, 1985 to address his weight concerns.
Apparently, petitioner failed to meet the company’s weight standards, prompting another leave
without pay from March 5, 1985 to November 1985.

After meeting the required weight, petitioner was allowed to return to work. But petitioner’s weight
problem recurred. He again went on leave without pay from October 17, 1988 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with
company policy, he was removed from flight duty effective May 6, 1989 to July 3, 1989. He was
formally requested to trim down to his ideal weight and report for weight checks on several dates. He
was also told that he may avail of the services of the company physician should he wish to do so. He
was advised that his case will be evaluated on July 3, 1989.2

On February 25, 1989, petitioner underwent weight check. It was discovered that he gained, instead
of losing, weight. He was overweight at 215 pounds, which is 49 pounds beyond the limit.
Consequently, his off-duty status was retained.

On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his
residence to check on the progress of his effort to lose weight. Petitioner weighed 217 pounds,
gaining 2 pounds from his previous weight. After the visit, petitioner made a commitment3 to reduce
weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. The letter, in full, reads:

Dear Sir:

I would like to guaranty my commitment towards a weight loss from 217 pounds to 200 pounds from
today until 31 Dec. 1989.

From thereon, I promise to continue reducing at a reasonable percentage until such time that my
ideal weight is achieved.

Likewise, I promise to personally report to your office at the designated time schedule you will set for
my weight check.

Respectfully Yours,

F/S Armando Yrasuegui4

Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained
overweight. On January 3, 1990, he was informed of the PAL decision for him to remain grounded
until such time that he satisfactorily complies with the weight standards. Again, he was directed to
report every two weeks for weight checks.

Petitioner failed to report for weight checks. Despite that, he was given one more month to comply
with the weight requirement. As usual, he was asked to report for weight check on different dates.
He was reminded that his grounding would continue pending satisfactory compliance with the weight
standards.5

Again, petitioner failed to report for weight checks, although he was seen submitting his passport for
processing at the PAL Staff Service Division.

On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check
would be dealt with accordingly. He was given another set of weight check dates.6 Again, petitioner
ignored the directive and did not report for weight checks. On June 26, 1990, petitioner was required
to explain his refusal to undergo weight checks.7

When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still
way over his ideal weight of 166 pounds.

From then on, nothing was heard from petitioner until he followed up his case requesting for leniency
on the latter part of 1992. He weighed at 219 pounds on August 20, 1992 and 205 pounds on
November 5, 1992.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation
of company standards on weight requirements. He was given ten (10) days from receipt of the
charge within which to file his answer and submit controverting evidence.8

On December 7, 1992, petitioner submitted his Answer.9 Notably, he did not deny being overweight.
What he claimed, instead, is that his violation, if any, had already been condoned by PAL since "no
action has been taken by the company" regarding his case "since 1988." He also claimed that PAL
discriminated against him because "the company has not been fair in treating the cabin crew
members who are similarly situated."

On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was
undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain his
ideal weight.10

On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal
weight, "and considering the utmost leniency" extended to him "which spanned a period covering a
total of almost five (5) years," his services were considered terminated "effective immediately."11

His motion for reconsideration having been denied,12 petitioner filed a complaint for illegal dismissal
against PAL.

Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled13 that petitioner was illegally
dismissed. The dispositive part of the Arbiter ruling runs as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainant’s
dismissal illegal, and ordering the respondent to reinstate him to his former position or substantially
equivalent one, and to pay him:

a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993 until reinstated,
which for purposes of appeal is hereby set from June 15, 1993 up to August 15, 1998 at
₱651,000.00;

b. Attorney’s fees of five percent (5%) of the total award.

SO ORDERED.14

The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the
job of petitioner.15 However, the weight standards need not be complied with under pain of dismissal
since his weight did not hamper the performance of his duties.16 Assuming that it did, petitioner could
be transferred to other positions where his weight would not be a negative factor.17 Notably, other
overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being
disciplined.18

Both parties appealed to the National Labor Relations Commission (NLRC).19

On October 8, 1999, the Labor Arbiter issued a writ of execution directing the reinstatement of
petitioner without loss of seniority rights and other benefits.20

On February 1, 2000, the Labor Arbiter denied21 the Motion to Quash Writ of Execution22 of PAL.
On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC.23

On June 23, 2000, the NLRC rendered judgment24 in the following tenor:

WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November 1998 as
modified by our findings herein, is hereby AFFIRMED and that part of the dispositive portion of said
decision concerning complainant’s entitlement to backwages shall be deemed to refer to
complainant’s entitlement to his full backwages, inclusive of allowances and to his other benefits or
their monetary equivalent instead of simply backwages, from date of dismissal until his actual
reinstatement or finality hereof. Respondent is enjoined to manifests (sic) its choice of the form of
the reinstatement of complainant, whether physical or through payroll within ten (10) days from
notice failing which, the same shall be deemed as complainant’s reinstatement through payroll and
execution in case of non-payment shall accordingly be issued by the Arbiter. Both appeals of
respondent thus, are DISMISSEDfor utter lack of merit.25

According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless of the
amount of food intake, is a disease in itself."26 As a consequence, there can be no intentional
defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight.27

Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However, it
found as unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of
his duties as flight steward despite being overweight. According to the NLRC, the Labor Arbiter
should have limited himself to the issue of whether the failure of petitioner to attain his ideal weight
constituted willful defiance of the weight standards of PAL.28

PAL moved for reconsideration to no avail.29 Thus, PAL elevated the matter to the Court of Appeals
(CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.30

By Decision dated August 31, 2004, the CA reversed31 the NLRC:

WHEREFORE, premises considered, we hereby GRANT the petition. The assailed NLRC decision
is declared NULL and VOID and is hereby SET ASIDE. The private respondent’s complaint is
hereby DISMISSED. No costs.

SO ORDERED.32

The CA opined that there was grave abuse of discretion on the part of the NLRC because it "looked
at wrong and irrelevant considerations"33 in evaluating the evidence of the parties. Contrary to the
NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an
employee’s position.34 The failure to adhere to the weight standards is an analogous cause for the
dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not
willful disobedience as the NLRC seemed to suggest.35 Said the CA, "the element of willfulness that
the NLRC decision cites is an irrelevant consideration in arriving at a conclusion on whether the
dismissal is legally proper."36 In other words, "the relevant question to ask is not one of willfulness
but one of reasonableness of the standard and whether or not the employee qualifies or continues to
qualify under this standard."37

Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are
reasonable.38 Thus, petitioner was legally dismissed because he repeatedly failed to meet the
prescribed weight standards.39 It is obvious that the issue of discrimination was only invoked by
petitioner for purposes of escaping the result of his dismissal for being overweight.40
On May 10, 2005, the CA denied petitioner’s motion for reconsideration.41 Elaborating on its earlier
ruling, the CA held that the weight standards of PAL are a bona fide occupational qualification which,
in case of violation, "justifies an employee’s separation from the service."42

Issues

In this Rule 45 petition for review, the following issues are posed for resolution:

I.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING

THAT PETITIONER’S OBESITY CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e)
OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES;

II.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING

THAT PETITIONER’S DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE "BONA FIDE
OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE";

III.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING

THAT PETITIONER WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED
WHILE OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR
PROMOTED;

IV.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE
PETITIONER’S CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT
AND ACADEMIC.43 (Underscoring supplied)

Our Ruling

I. The obesity of petitioner is a ground for dismissal under Article 282(e) 44 of the Labor Code.

A reading of the weight standards of PAL would lead to no other conclusion than that they constitute
a continuing qualification of an employee in order to keep the job. Tersely put, an employee may be
dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight
standards. The dismissal of the employee would thus fall under Article 282(e) of the Labor Code. As
explained by the CA:

x x x [T]he standards violated in this case were not mere "orders" of the employer; they were the
"prescribed weights" that a cabin crew must maintain in order to qualify for and keep his or her
position in the company. In other words, they were standards that establish continuing
qualifications for an employee’s position. In this sense, the failure to maintain these standards does
not fall under Article 282(a) whose express terms require the element of willfulness in order to be a
ground for dismissal. The failure to meet the employer’s qualifying standards is in fact a ground
that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e)
– the "other causes analogous to the foregoing."
By its nature, these "qualifying standards" are norms that apply prior to and after an employee is
hired. They apply prior to employment because these are the standards a job applicant must
initially meet in order to be hired. They apply after hiring because an employee must continue to
meet these standards while on the job in order to keep his job. Under this perspective, a violation is
not one of the faults for which an employee can be dismissed pursuant to pars. (a) to (d) of Article
282; the employee can be dismissed simply because he no longer "qualifies" for his job irrespective
of whether or not the failure to qualify was willful or intentional. x x x45

Petitioner, though, advances a very interesting argument. He claims that obesity is a "physical
abnormality and/or illness."46 Relying on Nadura v. Benguet Consolidated, Inc.,47 he says his
dismissal is illegal:

Conscious of the fact that Nadura’s case cannot be made to fall squarely within the specific causes
enumerated in subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and
says that Nadura’s illness – occasional attacks of asthma – is a cause analogous to them.

Even a cursory reading of the legal provision under consideration is sufficient to convince anyone
that, as the trial court said, "illness cannot be included as an analogous cause by any stretch of
imagination."

It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly
enumerated in the law are due to the voluntary and/or willful act of the employee. How Nadura’s
illness could be considered as "analogous" to any of them is beyond our understanding, there being
no claim or pretense that the same was contracted through his own voluntary act.48

The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the
case at bar.First, Nadura was not decided under the Labor Code. The law applied in that case was
Republic Act (RA) No. 1787. Second, the issue of flight safety is absent in Nadura, thus, the
rationale there cannot apply here. Third, inNadura, the employee who was a miner, was laid off from
work because of illness, i.e., asthma. Here, petitioner was dismissed for his failure to meet the
weight standards of PAL. He was not dismissed due to illness. Fourth, the issue in Nadura is
whether or not the dismissed employee is entitled to separation pay and damages. Here, the issue
centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of
PAL. Fifth, inNadura, the employee was not accorded due process. Here, petitioner was accorded
utmost leniency. He was given more than four (4) years to comply with the weight standards of PAL.

In the case at bar, the evidence on record militates against petitioner’s claims that obesity is a
disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible
for him to lose weight given the proper attitude, determination, and self-discipline. Indeed, during the
clarificatory hearing on December 8, 1992, petitioner himself claimed that "[t]he issue is could I bring
my weight down to ideal weight which is 172, then the answer is yes. I can do it now."49

True, petitioner claims that reducing weight is costing him "a lot of expenses."50 However, petitioner
has only himself to blame. He could have easily availed the assistance of the company physician,
per the advice of PAL.51He chose to ignore the suggestion. In fact, he repeatedly failed to report
when required to undergo weight checks, without offering a valid explanation. Thus, his fluctuating
weight indicates absence of willpower rather than an illness.

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and
Hospitals,52decided by the United States Court of Appeals (First Circuit). In that case, Cook worked
from 1978 to 1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at
the Ladd Center that was being operated by respondent. She twice resigned voluntarily with an
unblemished record. Even respondent admitted that her performance met the Center’s legitimate
expectations. In 1988, Cook re-applied for a similar position. At that time, "she stood 5’2" tall and
weighed over 320 pounds." Respondent claimed that the morbid obesity of plaintiff compromised her
ability to evacuate patients in case of emergency and it also put her at greater risk of serious
diseases.

Cook contended that the action of respondent amounted to discrimination on the basis of a
handicap. This was in direct violation of Section 504(a) of the Rehabilitation Act of 1973,53 which
incorporates the remedies contained in Title VI of the Civil Rights Act of 1964. Respondent claimed,
however, that morbid obesity could never constitute a handicap within the purview of the
Rehabilitation Act. Among others, obesity is a mutable condition, thus plaintiff could simply lose
weight and rid herself of concomitant disability.

The appellate Court disagreed and held that morbid obesity is a disability under the Rehabilitation
Act and that respondent discriminated against Cook based on "perceived" disability. The evidence
included expert testimony that morbid obesity is a physiological disorder. It involves a dysfunction of
both the metabolic system and the neurological appetite – suppressing signal system, which is
capable of causing adverse effects within the musculoskeletal, respiratory, and cardiovascular
systems. Notably, the Court stated that "mutability is relevant only in determining the substantiality of
the limitation flowing from a given impairment," thus "mutability only precludes those conditions that
an individual can easily and quickly reverse by behavioral alteration."

Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the
District of Rhode Island, Cook was sometime before 1978 "at least one hundred pounds more than
what is considered appropriate of her height." According to the Circuit Judge, Cook weighed "over
320 pounds" in 1988. Clearly, that is not the case here. At his heaviest, petitioner was only less than
50 pounds over his ideal weight.

In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight
attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his
dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the
CA correctly puts it, "[v]oluntariness basically means that the just cause is solely attributable to the
employee without any external force influencing or controlling his actions. This element runs through
all just causes under Article 282, whether they be in the nature of a wrongful action or omission.
Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the
element of intent found in Article 282(a), (c), and (d)."54

II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national
origin unless the employer can show that sex, religion, or national origin is an actual qualification for
performing the job. The qualification is called a bona fide occupational qualification (BFOQ).55 In the
United States, there are a few federal and many state job discrimination laws that contain an
exception allowing an employer to engage in an otherwise unlawful form of prohibited discrimination
when the action is based on a BFOQ necessary to the normal operation of a business or
enterprise.56

Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute providing
for it.57Further, there is no existing BFOQ statute that could justify his dismissal.58

Both arguments must fail.

First, the Constitution,59 the Labor Code,60 and RA No. 727761 or the Magna Carta for Disabled
Persons62contain provisions similar to BFOQ.

Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British
Columbia Government and Service Employee’s Union (BCGSEU),63 the Supreme Court of Canada
adopted the so-called "Meiorin Test" in determining whether an employment policy is justified. Under
this test, (1) the employer must show that it adopted the standard for a purpose rationally connected
to the performance of the job;64 (2) the employer must establish that the standard is reasonably
necessary65 to the accomplishment of that work-related purpose; and (3) the employer must
establish that the standard is reasonably necessary in order to accomplish the legitimate work-
related purpose. Similarly, in Star Paper Corporation v. Simbol,66 this Court held that in order to
justify a BFOQ, the employer must prove that (1) the employment qualification is reasonably related
to the essential operation of the job involved; and (2) that there is factual basis for believing that all
or substantially all persons meeting the qualification would be unable to properly perform the duties
of the job.67

In short, the test of reasonableness of the company policy is used because it is parallel to
BFOQ.68 BFOQ is valid "provided it reflects an inherent quality reasonably necessary for satisfactory
job performance."69

In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome Philippines, Inc.,70 the Court did
not hesitate to pass upon the validity of a company policy which prohibits its employees from
marrying employees of a rival company. It was held that the company policy is reasonable
considering that its purpose is the protection of the interests of the company against possible
competitor infiltration on its trade secrets and procedures.

Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute.
Too, the Labor Arbiter,71 NLRC,72 and CA73 are one in holding that the weight standards of PAL are
reasonable. A common carrier, from the nature of its business and for reasons of public policy, is
bound to observe extraordinary diligence for the safety of the passengers it transports.74 It is bound
to carry its passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with due regard for all the circumstances.75

The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only
logical to hold that the weight standards of PAL show its effort to comply with the exacting
obligations imposed upon it by law by virtue of being a common carrier.

The business of PAL is air transportation. As such, it has committed itself to safely transport its
passengers. In order to achieve this, it must necessarily rely on its employees, most particularly the
cabin flight deck crew who are on board the aircraft. The weight standards of PAL should be viewed
as imposing strict norms of discipline upon its employees.

In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew
is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order
to inspire passenger confidence on their ability to care for the passengers when something goes
wrong. It is not farfetched to say that airline companies, just like all common carriers, thrive due to
public confidence on their safety records. People, especially the riding public, expect no less than
that airline companies transport their passengers to their respective destinations safely and soundly.
A lesser performance is unacceptable.

The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims
and caprices of the passengers. The most important activity of the cabin crew is to care for the
safety of passengers and the evacuation of the aircraft when an emergency occurs. Passenger
safety goes to the core of the job of a cabin attendant. Truly, airlines need cabin attendants who
have the necessary strength to open emergency doors, the agility to attend to passengers in
cramped working conditions, and the stamina to withstand grueling flight schedules.

On board an aircraft, the body weight and size of a cabin attendant are important factors to consider
in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors.
Thus, the arguments of respondent that "[w]hether the airline’s flight attendants are overweight or
not has no direct relation to its mission of transporting passengers to their destination"; and that the
weight standards "has nothing to do with airworthiness of respondent’s airlines," must fail.

The rationale in Western Air Lines v. Criswell76 relied upon by petitioner cannot apply to his case.
What was involved there were two (2) airline pilots who were denied reassignment as flight
engineers upon reaching the age of 60, and a flight engineer who was forced to retire at age 60.
They sued the airline company, alleging that the age-60 retirement for flight engineers violated the
Age Discrimination in Employment Act of 1967. Age-based BFOQ and being overweight are not the
same. The case of overweight cabin attendants is another matter. Given the cramped cabin space
and narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would
certainly have difficulty navigating the cramped cabin area.

In short, there is no need to individually evaluate their ability to perform their task. That an obese
cabin attendant occupies more space than a slim one is an unquestionable fact which courts can
judicially recognize without introduction of evidence.77 It would also be absurd to require airline
companies to reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate
overweight cabin attendants like petitioner.

The biggest problem with an overweight cabin attendant is the possibility of impeding passengers
from evacuating the aircraft, should the occasion call for it. The job of a cabin attendant during
emergencies is to speedily get the passengers out of the aircraft safely. Being overweight
necessarily impedes mobility. Indeed, in an emergency situation, seconds are what cabin attendants
are dealing with, not minutes. Three lost seconds can translate into three lost lives. Evacuation might
slow down just because a wide-bodied cabin attendant is blocking the narrow aisles. These
possibilities are not remote.

Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made
known to him prior to his employment. He is presumed to know the weight limit that he must
maintain at all times.78 In fact, never did he question the authority of PAL when he was repeatedly
asked to trim down his weight. Bona fides exigit ut quod convenit fiat. Good faith demands that what
is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin ang napagkasunduan.

Too, the weight standards of PAL provide for separate weight limitations based on height and body
frame for both male and female cabin attendants. A progressive discipline is imposed to allow non-
compliant cabin attendants sufficient opportunity to meet the weight standards. Thus, the clear-cut
rules obviate any possibility for the commission of abuse or arbitrary action on the part of PAL.

III. Petitioner failed to substantiate his claim that he was discriminated against by PAL.

Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate
against him.79 We are constrained, however, to hold otherwise. We agree with the CA that "[t]he
element of discrimination came into play in this case as a secondary position for the private
respondent in order to escape the consequence of dismissal that being overweight entailed. It is a
confession-and-avoidance position that impliedly admitted the cause of dismissal, including the
reasonableness of the applicable standard and the private respondent’s failure to comply."80 It is a
basic rule in evidence that each party must prove his affirmative allegation.81

Since the burden of evidence lies with the party who asserts an affirmative allegation, petitioner has
to prove his allegation with particularity. There is nothing on the records which could support the
finding of discriminatory treatment. Petitioner cannot establish discrimination by simply naming the
supposed cabin attendants who are allegedly similarly situated with him. Substantial proof must be
shown as to how and why they are similarly situated and the differential treatment petitioner got from
PAL despite the similarity of his situation with other employees.

Indeed, except for pointing out the names of the supposed overweight cabin attendants, petitioner
miserably failed to indicate their respective ideal weights; weights over their ideal weights; the
periods they were allowed to fly despite their being overweight; the particular flights assigned to
them; the discriminating treatment they got from PAL; and other relevant data that could have
adequately established a case of discriminatory treatment by PAL. In the words of the CA, "PAL
really had no substantial case of discrimination to meet."82

We are not unmindful that findings of facts of administrative agencies, like the Labor Arbiter and the
NLRC, are accorded respect, even finality.83 The reason is simple: administrative agencies are
experts in matters within their specific and specialized jurisdiction.84 But the principle is not a hard
and fast rule. It only applies if the findings of facts are duly supported by substantial evidence. If it
can be shown that administrative bodies grossly misappreciated evidence of such nature so as to
compel a conclusion to the contrary, their findings of facts must necessarily be reversed. Factual
findings of administrative agencies do not have infallibility and must be set aside when they fail the
test of arbitrariness.85

Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus annul their
findings.

To make his claim more believable, petitioner invokes the equal protection clause guaranty86 of the
Constitution. However, in the absence of governmental interference, the liberties guaranteed by the
Constitution cannot be invoked.87 Put differently, the Bill of Rights is not meant to be invoked against
acts of private individuals.88 Indeed, the United States Supreme Court, in interpreting the Fourteenth
Amendment,89 which is the source of our equal protection guarantee, is consistent in saying that the
equal protection erects no shield against private conduct, however discriminatory or
wrongful.90 Private actions, no matter how egregious, cannot violate the equal protection
guarantee.91

IV. The claims of petitioner for reinstatement and wages are moot.

As his last contention, petitioner avers that his claims for reinstatement and wages have not been
mooted. He is entitled to reinstatement and his full backwages, "from the time he was illegally
dismissed" up to the time that the NLRC was reversed by the CA.92

At this point, Article 223 of the Labor Code finds relevance:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in
the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement
provided herein.
The law is very clear. Although an award or order of reinstatement is self-executory and does not
require a writ of execution,93 the option to exercise actual reinstatement or payroll reinstatement
belongs to the employer. It does not belong to the employee, to the labor tribunals, or even to the
courts.

Contrary to the allegation of petitioner that PAL "did everything under the sun" to frustrate his
"immediate return to his previous position,"94 there is evidence that PAL opted to physically reinstate
him to a substantially equivalent position in accordance with the order of the Labor Arbiter.95 In fact,
petitioner duly received the return to work notice on February 23, 2001, as shown by his signature.96

Petitioner cannot take refuge in the pronouncements of the Court in a case97 that "[t]he unjustified
refusal of the employer to reinstate the dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite the issuance of a writ of
execution"98 and ""even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the employee during the
period of appeal until reversal by the higher court."99 He failed to prove that he complied with the
return to work order of PAL. Neither does it appear on record that he actually rendered services for
PAL from the moment he was dismissed, in order to insist on the payment of his full backwages.

In insisting that he be reinstated to his actual position despite being overweight, petitioner in effect
wants to render the issues in the present case moot. He asks PAL to comply with the impossible.
Time and again, the Court ruled that the law does not exact compliance with the impossible.100

V. Petitioner is entitled to separation pay.

Be that as it may, all is not lost for petitioner.

Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from
the language of Article 279 of the Labor Code that "[a]n 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." Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed employee as an act "social

justice,"101 or based on "equity."102 In both instances, it is required that the dismissal (1) was not for
serious misconduct; and (2) does not reflect on the moral character of the employee.103

Here, We grant petitioner separation pay equivalent to one-half (1/2) month’s pay for every year of
service.104 It should include regular allowances which he might have been receiving.105 We are not
blind to the fact that he was not dismissed for any serious misconduct or to any act which would
reflect on his moral character. We also recognize that his employment with PAL lasted for more or
less a decade.

WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that
petitioner Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to one-half
(1/2) month’s pay for every year of service, which should include his regular allowances.

SO ORDERED.
CASE NO. 10

SECOND DIVISION

[G.R. No. 152057. September 29, 2003]

PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION, petitioner, vs. COURT OF

APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PT&T PROGRESSIVE
WORKERS UNION-NAFLU-KMU, CRISTINA RODIEL, JESUS PARACALE, ROMEO TEE,
BENJAMIN LAKANDULA, AVELINO ACHA, IGNACIO DELA CERNA and GUILLLERMO
DOMEGILLO, respondents.

DECISION
CALLEJO, SR., J.:

This is a petition for review filed by petitioner Philippine Telegraph and Telephone Corporation
(PT&T) of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 54346 promulgated on June 15,
2001 affirming the resolution of the National Labor Relations Commission (NLRC) promulgated on
May 31, 1999 reversing the decision of the Labor Arbiter, and its Resolution dated February 6, 2002
denying the petitioners motion for reconsideration.
The petitioner is a domestic corporation engaged in the business of providing telegraph and
communication services thru its branches all over the country. It employed various employees,
among whom were the following:
1. Cristina Rodiel, initially as a Probationary Junior Counter- Clerk on July 1, 1995 at the
Cabanatuan Branch, regularized on November 28, 1995;
2. Jesus Paracale as a Probationary Junior CW Operator in Padada, Davao del Sur on
November 16, 1988, regularized on April 15, 1990, transferred to Malita, Davao Branch
on November 16, 1990, to Makar, South Cotabato Branch on September 1, 1994 and to
Kiamba, South Cotabato Branch on April 1, 1995;
3. Romeo Tee as Counter-Clerk at the Zamboanga Branch on January 16, 1982, as a TTY
Operator on November 16, 1986, promoted as TTY Operator General on November 1,
1989 and designated as TRITY Operator Regions on July 1, 1997;
4. Benjamin Lakandula as a Counter-Clerk at the Iligan City Branch on January 16, 1982;
5. Avelino Acha as Probationary Junior Counter at the Naga City Branch, regularized on
June 10, 1983, transferred to Legaspi City Branch on November 16, 1989;
6. Ignacio Dela Cerna as a Probationary Junior CW-Operator in at the Pagadian City
Branch regularized on March 15, 1986 and designated as TR/TTY Operator Regions on
July 1, 1993 at the Pagadian City Branch, and
7. Guillermo Demigillo as Clerk.[2]
Sometime in 1997, after conducting a series of studies regarding the profitability of its retail
operations, its existing branches and the number of employees, the petitioner came up with
a Relocation and Restructuring Program designed to (a) sustain its (PT&Ts) retail operations; (b)
decongest surplus workforce in some branches, to promote efficiency and productivity; (c) lower
expenses incidental to hiring and training new personnel; and (d) avoid retrenchment of employees
occupying redundant positions.[3]
On August 11, 1997, private respondents Cristina Rodiel, Jesus Paracale, Romeo Tee,
Benjamin Lakandula, Avelino Acha, Ignacio Dela Cerna and Guillermo Demigillo received separate
letters from the petitioner, giving them the option to choose the branch to which they could be
transferred. Thereafter through HRAG Bulletin No. 97-06-16, the private respondents and other
petitioners employees were directed to relocate to their new PT&T Branches. The affected
employees were directed to report to their respective relocation assignments in a Letter dated
September 16, 1997.
The petitioner offered benefits/allowances to those employees who would agree to be
transferred under its new program, thus:
EXISTING SPECIAL FLAT MOVING
RELOCATION RELOCATION RELOCATION EXPENSES
ALLOWANCE ALLOWANCE ALLOWANCE (FREIGHT)
1. Temporary 2.1 Married employee
relocation per bringing along his
diem of family P17,500.00 P15,000
P260.00/day

2. Permanent 2.2 Married employee

relocation a flat not bringing along
monthly his family P10,000.00 N/A
allowance of
P5,100.00

2.3 Single employee

bringing along his
qualified
dependent/s
P10,000.00 P15,000
2.4 Single employee
not bringing along
his dependent/s P7,000.00 N/A[4]

Moreover, the employees who would agree to the transfers would be considered promoted,
thus:
FROM TO
NAME
POSITION/JG* WORK POSITION WORK
LOCATION LOCATION

1. ACHA, Jr. Counter- Legaspi (Br) Courier JG3 Romblon/

AVELINO JG2 Odiongan
(SL)

2. RODIEL, Jr. Counter Cabanatuan Clerk-JG4 Baguio

CRISTINA Clerk-JG2 (CL) (NWL)

3. DELA Jr. CW Cotabato City Clerk-JG4 Kidapawan

 CERNA, Operator-JG2 (CM) (CM)
IGNACIO

4. DEMIGILLO Jr. CW Midsayap Courier-JG3 Lebak (CM)

GUILLERMO Operator-JG2 North

5. LAKANDULA, Counter-JG3 Iligan (NM) Clerk JG4 Butuan

BENJAMIN (EM)

6. PARACALE, Jr. CW Makar, Gen. Clerk JG4 Butuan

JESUS Operator-JG2 Santos (SM) (EM)

7. TEE, ROMEO TTY Operator- Zamboanga Clerk JG4 Jolo (WM)[5]

Gen. JG4 City (WM)

The private respondents rejected the petitioners offer. On October 2, 1997, the petitioner sent
letters to the private respondents requiring them to explain in writing why no disciplinary action
should be taken against them for their refusal to be transferred/relocated.[6]
In their respective replies to the petitioners letters, the private respondents explained that:

The transfers imposed by the management would cause enormous difficulties on the individual
complainants. For one, their new assignment involve distant places which would require their
separation from their respective families. For instance, in the case of Avelino Acha who would be
coming from Bicol Region, he would have to take a boat in going to his new assignment in
Odiongan, Romblon. The voyage would take a considerable period of time and it would be
imperative for him to relocate to Romblon to be able to attend to his new assignment.

The same holds true with the other complainants. Romeo Tee for instance, will have to take an
overnight boat trip from his previous assignment in Zamboanga to his new assignment in Jolo,
Sulu. He would have to part with his family and resettle to Jolo in connection with his
transfer. Cristina Rodiel on the other hand, would be transferred to Baguio City which is quite distant
from her previous workbase and residence at Cabanatuan. Jesus Paracale finds himself in the same
difficult situation as he would be transferred from General Santos City at the Southern tip of
Mindanao to Butuan City, almost a days travel by bus and located at the northernmost tip of the
island. Benjamin Lakandula and Guillermo Demigillo, are also in the same situation as their new
assignments are quite distant from their previous places of work.[7]

Dissatisfied with this explanation, the petitioner considered the private respondents refusal as
insubordination and willful disobedience to a lawful order; hence, the private respondents were
dismissed from work.[8] They forthwith filed their respective complaints against the petitioner before
the appropriate sub-regional branches of the NLRC.[9]
Subsequently, the private respondents bargaining agent, PT&T Workers Union-NAFLU-KMU,
filed a complaint against the petitioner for illegal dismissal and unfair labor practice for and in behalf
of the private respondents, including Ignacio Dela Cerna, before the arbitration branch of the
NLRC.[10]
In their position paper, the complainants (herein private respondents) declared that their refusal
to transfer could not possibly give rise to a valid dismissal on the ground of willful disobedience, as
their transfer was prejudicial and inconvenient; thus unreasonable. The complainants further
asserted that since they were active union members, the petitioner was clearly guilty of unfair labor
practice[11] especially considering their new work stations:
 1. Jesus Paracale, from General Santos Branch to Butuan City Branch;
2. Romeo Tee, from Zamboanga Branch to Jolo Branch;
3. Benjamin Lakandula, from Iligan City to Butuan City;
4. Avelino Acha, from Legaspi City Branch to Odiongan Branch;
5. Ignacio Dela Cerna, from Pagadian City Branch to Butuan Branch; and
6. Guillermo Demigillo, from Midsayap to Lebak Cotabato Branch.[12]
For its part, the petitioner (respondent therein) alleged that the private respondents transfers
were made in the lawful exercise of its management prerogative and were done in good faith. The
transfers were aimed at decongesting surplus employees and detailing them to a more demanding
branch.
In their reply to the petitioners position paper, the private respondents opined that since their
respective transfers resulted in their promotion, they had the right to refuse or decline the positions
being offered to them. Resultantly, the refusal to accept the transfer could not have amounted to
insubordination or willful disobedience to the lawful orders of the employer.
After the parties filed their respective pleadings, the Honorable Labor Arbiter Celenito N. Daing
rendered a Decision on September 25, 1998 dismissing the complaint for lack of merit.[13]
The labor arbiter ratiocinated that an employer, in the exercise of his management prerogative,
may cause the transfer of his employees provided that the same is not attended by bad faith nor
would result in the demotion of the transferred employees. The labor arbiter ruled in favor of the
petitioner, finding that the aforesaid transfers indeed resulted in the private respondents promotion,
and that the complaint for unfair labor practice was not fully substantiated and supported by
evidence.
Aggrieved, the private respondents appealed that aforesaid decision to the NLRC.
On May 31, 1999, the NLRC issued a Resolution which reversed and set aside the decision of
the labor arbiter. The NLRC ruled that the petitioner illegally dismissed the private respondents, thus:

WHEREFORE, premises considered, the Appeal is hereby GRANTED. Accordingly, the Decision
appealed from is REVERSED and SET ASIDE and a new one entered declaring respondent-
appellee guilty of illegal dismissal and ordering Philippine Telegraph and Telephone Corporation to
reinstate individual complainants-appellants to their former positions without loss of seniority rights
and other privileges and to pay them full backwages from the date of their dismissal up to the date of
their actual reinstatement, computed as follows [14]

The NLRC interpreted the said transfers of the respondents as a promotion; that the movement
was not merely lateral but of scalar ascent, considering the movement of the job grades, and the
corresponding increase in salaries. As such, the respondents had the right to accept or refuse the
said promotions. The NLRC concluded that in the exercise of their right to refuse the promotion
given them, they could not be dismissed.
Without filing a motion for reconsideration, the petitioner filed a petition for certiorari under Rule
65 of the 1997 Rules of Civil Procedure before the Court of Appeals, assailing the May 31, 1999
Resolution of the NLRC. The petitioner raised the following errors:
4.1
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT RULED AGAINST PRIVATE RESPONDENTS
 DISMISSAL ON THE GROUND OF INSUBORDINATION FOR REFUSING TO HEED TO
THE TRANSFER ORDER OR THE PETITIONER.
4.2
PUBLIC RESPONDENT COMMITTEE GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT SUSTAINED PRIVATE RESPONDENTS
CONTENTION THAT THEY WERE IN FAC BEING PROMOTED AND NOT
TRANSFERRED, THUS RENDERING THE LATTERS DISOBEDIENCE JUSTIFIED.
PUBLIC RESPONDENTS (SIC) COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION WHEN IT RULED THAT PRIVATE
RESPONDENTS ARE ENTITLED TO REINSTATEMENT WITHOUT LOSS OF SENIORITY
RIGHTS AND OTHER PRIVILEGES, AS WELL AS PAYMENT OF FULL BACKWAGES
FROM DATE OF DISMISSAL UP TO DATE OF ACTUAL REINSTATEMENT.[15]
On June 15, 2001, the Court of Appeals rendered a Decision affirming the resolution of the
NLRC, the dispositive portion of which reads:

WHEREFORE, finding no grave abuse of discretion on the part of the respondent commission, the
petition is hereby DISMISSED for lack of merit. The assailed May 31, 1999 Resolution of the
National Labor Relations Commission, Third Division is hereby AFFIRMED IN TOTO.[16]

The petitioner filed a motion for reconsideration. On February 6, 2002, the CA issued a
Resolution denying the motion.[17]
Dissatisfied, the petitioner filed its petition for review assailing the decision and resolution of the
CA, insisting that:
I

PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT ISSUED THE ORDERS
DATED JUNE 15, 2001 AND FEBRUAR 6, 2002 AFFIRMING THE ORDER DATED MAY 31,
1999 OF THE THIRD DIVISION OF THE NATIONAL LABOR RELATIONS COMMISSION,
CONSIDERING THAT:

a. THE ORDER DATED MAY 31, 1999 OF THE NATIONAL LABOR RELATIONS
COMMISSION IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE;

b. THE PETITIONER DID NOT ADMIT IN ITS POSITION PAPER FILED BEFORE THE
LABOR ARBITER THAT THE PRIVATE RESPONDENTS WERE BEING PROMOTED. ON
THE CONTRARY, IT HAS ALWAYS BEEN THE CONTENTION OF THE PETITIONER THAT
THE PRIVATE RESPONDENTS WERE SIMPLY ORDERED TRANSFERRED TO OTHER
WORK STATIONS WITHOUT DEMOTION IN RANK AND DIMINUTION IN SALARY;

c. THE PRIVATE RESPONDENTS WERE LEGALLY TERMINATED FOR JUST AND

AUTHORIZED CAUSE FOR WILFULL DISOBEDIENCE TO THE LAWFUL ORDERS OF THE
PETITIONER (TRANSFER ORDER PURSUANT TO ITS RELOCATION AND
RESTRUCTURING PROGRAM), AFTER AFFORDING THEM DUE PROCESS OF LAW AND
THUS NOT ENTITLED TO REINSTATEMENT; AND

d. PETITIONER ACTED IN GOOD FAITH IN IMPLEMENTING ITS RELOCATION AND

RESTRUCTUTING PROGRAM WHICH RESULTED IN THE TERMINATION OF THE
 PRIVATE RESPONDENTS. AND AS SUCH, THE PRIVATE RESPONDENTS ARE NOT
ENTITLED TO THE PAYMENT OF ANY BACKWAGES.[18]

In their Comment, the private respondents argue that the petition should be dismissed for the
following reasons: (a) that a petition for review under Ruler 45 is limited to questions of law; (b) the
private respondents were promoted and not only transferred as established by the evidence on
record; and (b) private respondents could not be penalized with dismissal for declining their
promotions.
The petition is denied due course.
As has been enunciated in numerous cases, the issues that can be delved into a petition for
review under Rule 45 are limited to questions of law. Thus, the Court is not tasked to calibrate and
assess the probative weight of evidence adduced by the parties during trial all over again.[19] The
test of whether the question is one of law or of fact is whether the appellate court can determine the
issue raised without reviewing or evaluating the evidence, in which case, it is a question of law;
otherwise, it is a question of fact.[20]
In the case at bar, the petitioner would want this Court to ascertain whether or not the findings
of NLRC, as affirmed by the CA, are substantiated by the evidence on record; hence, requiring a
review involving questions of facts. For this reason alone, this case should be dismissed.
Even if the Court were to review the instant case on its merits, the dismissal of the petition is
inevitable.
Section 3, Rule V of the NLRC provides that:

Section 3. Submission of Position Papers/Memorandum Should the parties fail to agree upon an
amicable settlement, either in whole or in part, during the conferences, the Labor Arbiter shall issue
an order stating therein the matters taken up and agree upon during the conferences and directing
the parties to simultaneously file their respective verified position papers.

These verified position papers shall cover only those claims and causes of action raised in the
complaint excluding those that may have been amicably settled, and shall be accompanied by all
supporting documents including the affidavits of their respective witnesses which shall take the place
of the latters direct testimony. The parties shall thereafter not be allowed to allege facts, or present
evidence to prove facts, not referred to and any cause or causes of action not included in the
complaint or position papers. Without prejudice to the provisions of Section 2 of this Rule, the Labor
Arbiter shall direct both parties to submit simultaneously their position papers with supporting
documents and affidavits within an inextendible period of ten (10) days from notice of termination of
the mandatory conciliation. mediation conference.

In its position with the labor arbiter, the petitioner adverted that when the private respondents
were transferred, they were also promoted, thus:

Clearly, the transfer of the complainants is not unreasonable nor does it involve demotion in
rank. They are being moved to branches where the complainants will function with maximum benefit
to the company and they were in fact promoted not demoted from a lower job-grade to a higher job-
grade and receive even higher salaries than before. Thus, transfer of the complainants would not
also result in diminution in pay benefit and privilege since the salaries of the complainant would be
receiving a bigger salary if not the same salary plus additional special relocation package. Although
the increase in the pay is not significant this however would be translated into an increase rather
than decrease in their salary because the complainants who were transferred from the city to the
province would greatly benefit because it is of judicial notice that the cost of living in the province is
much lower than in the city. This would mean a higher purchasing power of the same salary
previously being received by the complainants.[21]

Indeed, the increase in the respondents responsibility can be ascertained from the scalar ascent
of their job grades. With or without a corresponding increase in salary, the respective transfer of the
private respondents were in fact promotions, following the ruling enunciated in Homeowners Savings
and Loan Association, Inc. v. NLRC:[22]

[P]romotion, as we defined in Millares v, Subido, is the advancement from one position to another
with an increase in duties and responsibilities as authorized by law, and usually accompanied by an
increase in salary. Apparently, the indispensable element for there to be a promotion is that there
must be an advancement from one position to another or an upward vertical movement of the
employees rank or position. Any increase in salary should only be considered incidental but never
determinative of whether or not a promotion is bestowed upon an employee. This can be likened to
the upgrading of salaries of government employees without conferring upon the, the concomitant
elevation to the higher positions.[23]

The admissions of the petitioner are conclusive on it. An employee cannot be promoted, even if
merely as a result of a transfer, without his consent. A transfer that results in promotion or demotion,
advancement or reduction or a transfer that aims to lure the employee away from his permanent
position cannot be done without the employees consent.[24]
There is no law that compels an employee to accept a promotion for the reason that a
promotion is in the nature of a gift or reward, which a person has a right to refuse.[25] Hence, the
exercise by the private respondents of their right cannot be considered in law as insubordination, or
willful disobedience of a lawful order of the employer. As such, there was no valid cause for the
private respondents dismissal.
As the questioned dismissal is not based on any of the just or valid grounds under Article 282 of
the Labor Code, the NLRC correctly ordered the private respondents reinstatement without loss of
seniority rights and the payment of backwages from the time of their dismissal up to their actual
reinstatement.
IN LIGHT OF THE ALL THE FOREGOING, the Decision of the Court of Appeals dated June
15, 2001 is hereby AFFIRMED.
SO ORDERED.
CASE NO. 11

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 72977 December 21, 1988

BIENVENIDO R. BATONGBACAL, petitioner,

vs.
ASSOCIATED BANK and NATIONAL LABOR RELATIONS COMMISSION, respondents.

F.B. Santiago, Calabio & Associates for private respondent.

The Solicitor General for public respondent.

FERNAN, C.J.:

The issue in this petition for certiorari is whether or not an employer bank may legally dismiss its assistant vice-president for refusal to tender
his courtesy resignation which the bank required in line with its reorganization plan.

Petitioner Bienvenido R. Batongbacal, a lawyer who was admitted to the Bar in 1952, began his
banking career in 1961 as manager of the Second Rizal Development Bank. On November 2, 1966,
he transferred to the Citizens Bank and Trust Company. He was appointed assistant vice-president
therein "to assist the Senior Vice-President as directly in charge of the Loans and Discounts
Department" and, concurrently, as acting manager of the personnel and administration department
in "lieu of the Vice-President and Treasurer." 1 Said appointment was without a definite period.

On October 14, 1975, Citizens Bank and Trust Company merged with the Associated Banking
Corporation. The merged corporate entity later became known as Associated Bank. In the new bank,
petitioner resumed his position as assistant vice-president.

More than six years later or in March, 1982, petitioner learned that the salary and allowances he was
receiving were very much below the standard remuneration of the bank's other assistant vice
presidents as in fact they were even less than those paid for employees holding positions lower than
the rank of assistant vice-president.

Consequently, he wrote the bank's board of directors requesting that he be paid "the accrued salary
and allowance arbitrarily withheld from him." 2 He later wrote the board of directors a follow-up letter
on November 12, 1982.3 Since his letters were unanswered, on February 4, 1983, petitioner wrote
the newly appointed vice-president for administration about the glaring inequality in the salaries and
allowances of the bank's assistant vice-presidents. Thus, he stated therein that while he was the
most senior of them all, he was receiving an annual salary of P27,000 while the four other assistant
vice-presidents were each receiving P42,000, P54,000, P60,000 and P72,000 annual
salaries. 4 Apparently, said letter fell on deaf ears.
Meanwhile, on March 15,1983, the bank's board of directors met and approved the following
resolution:

BE IT RESOLVED that the new management be given the necessary flexibility in

streamlining the operations of the Bank and for the purpose it is hereby resolved that
the Bank officers at the Head Office and the Branches with corporate rank of
Manager and higher be required, as they hereby are required to submit
IMMEDIATELY to the President their courtesy resignations.

IT IS FURTHER RESOLVED to authorize the President as he is hereby authorized to

implement this resolution. 5

Petitioner did not submit his courtesy resignation. On May 3, 1983, he received the following letter:

26 April 1983

Atty. Bienvenido Batongbacal

Acquired Assets Unit
Administrative Division
Present

Dear Atty. Batongbacal:

We have been given the task of advising you that the Board of Directors of our Bank
has accepted your resignation effective immediately.

Therefore, please arrange with the Personnel Administration Unit for the settlement
of any accountabilities and turn over all pending official matters to your respective
division/department head as soon as possible.

We wish you all the best in your future endeavors.

Very truly yours,

For the
Steerin
g
Commi
ttee:
(Sgd.)

RAMON F. CHANYUNGCO Exec. Vice-President 6

Shocked by this turn of events, petitioner on the same day wrote the bank's executive vice-president
requesting a reconsideration of the board of director's decision accepting his resignation. He stated
therein that he thought the call for the submission of courtesy resignations was only for erring
"loathsome" officers and not those like him who had served the bank honestly and sincerely for
sixteen years; that although he was a stockholder with the smallest investment in the bank, he had
called the attention of higher officers on matters that are of vital importance to the bank's financial
stability; and that should there be evidence of any act of dishonesty on his part, the bank should so
inform him so that he could accordingly submit his voluntary resignation. 7
Starting May 4, 1983, petitioner was not paid his usual salary and allowance. Nevertheless, he made
repeated requests for the reconsideration of the bank's decision to terminate his employment. His
requests were ignored. Hence, he filed a complaint for illegal dismissal and damages in the
arbitration branch of the National Labor Relations Commission (NLRC).

On January 31, 1984, the labor arbiter upheld the petitioner's arguments and claims in an Order the
dispositive portion of which states:

IN VIEW OF THE FOREGOING, judgment is rendered in the following tenor:

1. Respondent is hereby ordered to reinstate complainant to his former post with full
backwages and other fringe benefits until actually reinstated;

2. Respondent should make good the salary differential of complainant computed

from his last rate up to P42,000.00 per annum, the next rate of Asst. Vice President
effective on the date said P42,000.00 was given to the next higher salary rate Asst.
Vice President up to the present;

3. Respondent is further ordered to pay the complainant the amount of P500,000.00

moral damages and P200,000.00 exemplary damages.

4. Respondent is finally ordered to post this decision in at least two conspicous (sic)
places in the bank for all concerned to see, read and be informed for at least two
months from receipt.

SO ORDERED.8

The bank filed a motion for reconsideration of said order. Its motion having been denied, the bank
appealed to the National Labor Relations Commission (NLRC) which, in its decision of July 12,
1985, ruled in favor of the legality of petitioner's dismissal from employment. The dispositive portion
of said decision states:

WHEREFORE, premises considered, the appealed Decision is as it is hereby SET

ASIDE and another one issued considering the dismissal valid but ordering
respondent-appellant to pay complaint-appellee his accumulative leave credits and
separation pay equivalent to one (1) month for every year of service, a period of at
least six (6) months considered as one (1) year, as well as other benefits he is
entitled to under existing policies of respondent-appellant granted to any of its retiring
personnel.

The Corporate Auditing Examiner of this Commission is directed to proceed to the

premises of respondent-appellant to compute the amount of accumulative leave
credits and termination pay and such other benefits he is entitled as above-
mentioned.

SO ORDERED. 9

Petitioner's motion for reconsideration of said decision was denied. Hence, the instant petition for
certiorari.
We are aware of the circumstances surrounding the dismissal of the petitioner. Private respondent
was, since 1981, in the throes of financial reverses due to the Dewey Dee scandal. It was through
the infusion of capital supplied by the Development Bank of the Philippines and the emergency loan
provided by the Central Bank that private respondent was able to redeem itself. Accordingly, to
"streamline" its operation, the new management of the bank called upon all its employees to submit
their courtesy resignations and considered all executive positions vacant. Private respondent claims
that those who submitted letters of resignation were allowed to re-apply for positions where their
qualifications were best suited while those who did not submit such letters were terminated from
employment for their alleged deliberate refusal to cooperate in its rehabilitation. 10

While it may be said that the private respondent's call for courtesy resignations was prompted by its
determination to survive, we cannot lend legality to the manner by which it pursued its goal. By
directing its employees to submit letters of courtesy resignation, the bank in effect forced upon its
employees an act which they themselves should voluntarily do. It should be emphasized that
resignation per se means voluntary relinquishment of a position or office. 11 Adding the word
"courtesy" did not change the essence of resignation. That courtesy resignations were utilized in
government reorganization did not give private respondent the right to use it as well in its own
reorganization and rehabilitation plan. There is no guarantee that all employers will not use it to rid
themselves arbitrarily of employees they do not like, in the guise of "streamlining" its organization.
On the other hand, employees would be unduly exposed to outright termination of employment
which is anathema to the constitutional mandate of security of tenure.

Petitioner's dismissal was effected through a letter "accepting" his resignation. Private respondent
rationalizes that this was done, even if petitioner did not actually submit such letter, so as not to
jeopardize his chances of future employment. 12 But it is also clear from its pleadings that private
respondent terminated petitioner's employment for insubordination in view of his failure to comply
with the order to submit his letter of courtesy resignation. We hold, however, that insubordination
may not be imputed to one who refused to follow an unlawful order.

Private respondent asserts that petitioner's refusal to submit his letter of courtesy resignation was
"sufficient reason to distrust him." 13 Loss of confidence as a ground for dismissal must be supported
by satisfactory evidence. Even with respect to managerial employees who, under Policy Instructions
No. 8, may be dismissed for lack of confidence, loss of trust must be substantiated and clearly
proven. 14

The record fails to show any valid reasons for terminating the employment of petitioner. There are no
proofs of malfeasance or misfeasance committed by petitioner which jeopardized private
respondent's interest. The latter's allegations that petitioner was "purged" because he sabotaged the
bank 15 and that he "contributed, directly or indirectly" to its downfall 16 are mere subjective
conclusions unsubstantiated by hard facts. To clothe with legality petitioner's dismissal for his failure
to submit his letter of courtesy resignation is to add a ground for termination of employment to the
provisions of the Labor Code.

However, we agree with the Solicitor General and the NLRC that petitioner is not entitled to an
award of the difference between his actual salary and that received by the assistant vice-president
who had been given the salary next higher to his. There is a semblance of discrimination in this
aspect of the bank's organizational set-up but we are not prepared to preempt the employer's
prerogative to grant salary increases to its employees. In this connection, we may point out that
private respondent's claim that it needed to trim down its employees as a self-preservation measure
is belied by the amount of salaries it was giving its other assistant vice-presidents.
Notwithstanding the foregoing discussion, the Court cannot rule outright in favor of the petitioner.
There are factual issues which must be dealt with below.

A pivotal point to consider is whether petitioner is a managerial or a rank-and-file employee.

Petitioner claims that inspite of his pompous title of assistant vice-president, he is actually a rank-
and-file employee. On the other hand, private respondent asserts that petitioner is a managerial
employee because he is "not only a department/unit head but an assistant vice-president" who is
ranked higher than a manager "by any standard" and therefore, to consider him a rank-and-file
employee is "to stretch one's imagination too far." 17

Article 212(k) of the Labor Code defines a managerial employee as "one who is vested with powers
or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-
off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial
actions." The same article provides that all employees not falling within said definition are considered
rank-and-file employees. Under Policy Instructions No. 8 which was issued by the then Secretary of
Labor and which took effect on April 23, 1976, managerial employees are those (1) who have the
power to lay down management policies; (2) who have the power to hire, fire, demote. promote, etc.;
and (3) who have the power to recommend effectively (1) and (2).

With these definitions, a determination of whether petitioner is a managerial employee would have
been easy had the matter been properly threshed out below. The onus of proof on the matter fell on
the private respondent but, as correctly observed by the Solicitor General, it did not present
substantial proof that petitioner is vested with any of the powers and prerogatives of a managerial
employee. 18 It merely relied upon provisions of the bank's amended by-laws specifically Article V,
Section 2 and Article VI, Section 5 thereof. 19

The only other evidence on record from which the functions of an assistant vice-president may be
gleaned is the copy of petitioner's original appointment as such. It is stated therein that petitioner
would "assist" the vice-president in the performance of his job. Said function implies that he was not
actually a policy-determining employee but one who had to wait for assignments from his superior.
Notwithstanding that, both the labor arbiter and the NLRC proceeded from the presumption that
petitioner was a managerial employee.

A determination of the nature of the functions of an assistant vice-president gains importance in the
face of the variance of causes for the termination of employment ' of rank-and-file managerial
employees. Much more so in the instant petition wherein the parties present contradictory views on
the status of petitioner. Of primordial consideration also is the fact that it is the nature of the
employee's functions and not the nomenclature or title given to his job which determines whether the
employee has rank-and-file or managerial status. 20

We are aware that to remand this case below would mean further delay in its disposition, particularly
as the petitioner is now around sixty-three years old. However, justice and equity demand that not
only the factual issue of whether or not an assistant vice-president is a managerial employee but
also whether or not petitioner is entitled to an award of moral and exemplary damages, should be
considered. Indeed, the proceedings had below leave much to be desired.

We note with dismay the impracticality of the position paper method of disposing labor cases. As
exemplified by this case, there are instances wherein claims of parties are not properly ventilated
because they agree to dispense with the hearing not knowing that more often than not both of them
suffer adverse consequences. In this case, had the parties agreed to a hearing and the concomitant
presentation of evidence, private respondent could have proven that petitioner was a managerial
employee when he was dismissed and petitioner could have proven the extent of damages he
sustained thereby.

WHEREFORE, this case is hereby remanded to the National Labor Relations Commission for
determination of the factual issues of whether petitioner, as assistant vice-president of the
respondent bank, is a managerial employee and whether he is entitled to an award of moral and
exemplary damages.

The respondent Commission is ordered to conduct with dispatch a hearing thereon and thereafter, to
render a decision in accordance with the guidelines set herein. This decision is immediately
executory. No costs.

SO ORDERED.
CASE NO. 12

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 165565 July 14, 2008

SCHOOL OF THE HOLY SPIRIT OF QUEZON CITY and/or SR. CRISPINA A. TOLENTINO,
S.Sp.S., Petitioners,
vs.
CORAZON P. TAGUIAM, Respondent.

DECISION

QUISUMBING, J.:

This petition assails the Decision1 dated June 7, 2004 of the Court of Appeals in CA-G.R. SP No.
81480, which reversed the Resolution2 dated September 20, 2002 of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 031627-02. The NLRC had affirmed the Decision3 dated
March 26, 2002 of the Labor Arbiter dismissing respondent’s complaint for illegal dismissal. This
petition likewise assails the Resolution4 dated September 30, 2004 of the Court of Appeals denying
petitioners’ motion for reconsideration.

The antecedent facts are as follows:

Respondent Corazon P. Taguiam was the Class Adviser of Grade 5-Esmeralda of the petitioner,
School of the Holy Spirit of Quezon City. On March 10, 2000, the class president, wrote a letter5 to
the grade school principal requesting permission to hold a year-end celebration at the school
grounds. The principal authorized the activity and allowed the pupils to use the swimming pool. In
this connection, respondent distributed the parent’s/guardian’s permit forms to the pupils.

Respondent admitted that Chiara Mae Federico’s permit form6 was unsigned. Nevertheless, she
concluded that Chiara Mae was allowed by her mother to join the activity since her mother
personally brought her to the school with her packed lunch and swimsuit.

Before the activity started, respondent warned the pupils who did not know how to swim to avoid the
deeper area. However, while the pupils were swimming, two of them sneaked out. Respondent went
after them to verify where they were going.

Unfortunately, while respondent was away, Chiara Mae drowned. When respondent returned, the
maintenance man was already administering cardiopulmonary resuscitation on Chiara Mae. She
was still alive when respondent rushed her to the General Malvar Hospital where she was
pronounced dead on arrival.

On May 23, 2000, petitioners issued a Notice of Administrative Charge7 to respondent for alleged
gross negligence and required her to submit her written explanation. Thereafter, petitioners
conducted a clarificatory hearing which respondent attended. Respondent also submitted her
Affidavit of Explanation.8
On July 31, 2000, petitioners dismissed respondent on the ground of gross negligence resulting to
loss of trust and confidence.9 Meanwhile, Chiara Mae’s parents filed a ₱7 Million damage suit against
petitioners and respondent, among others. They also filed against respondent a criminal complaint
for reckless imprudence resulting in homicide.

On July 25, 2001, respondent in turn filed a complaint10 against the school and/or Sr. Crispina
Tolentino for illegal dismissal, with a prayer for reinstatement with full backwages and other money
claims, damages and attorney’s fees.

In dismissing the complaint, the Labor Arbiter declared that respondent was validly terminated for
gross neglect of duty. He opined that Chiara Mae drowned because respondent had left the pupils
without any adult supervision. He also noted that the absence of adequate facilities should have
alerted respondent before allowing the pupils to use the swimming pool. The Labor Arbiter further
concluded that although respondent’s negligence was not habitual, the same warranted her
dismissal since death resulted therefrom.

Respondent appealed to the NLRC which, however, affirmed the dismissal of the complaint.

Aggrieved, respondent instituted a petition for certiorari before the Court of Appeals, which ruled in
her favor. The appellate court observed that there was insufficient proof that respondent’s
negligence was both gross and habitual. The Court of Appeals disposed, thus:

WHEREFORE, … the Court hereby GRANTS the petition. The assailed September 20, 2002
Resolution of the National Labor Relations Commission entitled Corazon Taguiam vs. School of
the Holy Spirit and/or Sister Crispina Tolentino[,] NLRC NCR Case No. 00-07-03877-01[,]
NLRC NCR CA No. 031627-02 is hereby REVERSED and SET ASIDE, and a new one is
hereby ENTERED directing the private respondent the School of the Holy Spirit to:

(1) Pay the petitioner full backwages, plus all other benefits, bonuses and general increases
to which she would have been normally entitled, had she not been dismissed and had she
not been forced to stop working computed up to the finality of this decision;

(2) Pay the petitioner separation pay equivalent to one (1) month for every year of service in
addition to full backwages;

(3) Pay the petitioner an amount equivalent to 10% of the judgment award as attorney’s fees;

(4) Pay the cost of this suit.

SO ORDERED.11

In this petition, petitioners contend that the Court of Appeals erred in:

… REVERSING AND SETTING ASIDE THE DECISION AND RESOLUTION OF THE NATIONAL
LABOR RELATIONS COMMISSION AFFIRMING THE DECISION OF THE LABOR ARBITER
DISMISSING THE COMPLAINT FOR LACK OF MERIT.12

Simply stated, the sole issue presented for our resolution is whether respondent’s dismissal on the
ground of gross negligence resulting to loss of trust and confidence was valid.
The issue of whether a party is negligent is a question of fact. As a rule, the Supreme Court is not a
trier of facts and this applies with greater force in labor cases.13 However, where the issue is
shrouded by a conflict of factual perception, we are constrained to review the factual findings of the
Court of Appeals. In this case, the findings of facts of the appellate court contradict those of the
Labor Arbiter and the NLRC.14

Under Article 28215 of the Labor Code, gross and habitual neglect of duties is a valid ground for an
employer to terminate an employee. Gross negligence implies a want or absence of or a failure to
exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.16 Habitual neglect implies repeated failure to
perform one’s duties for a period of time, depending upon the circumstances.17

Our perusal of the records leads us to conclude that respondent had been grossly negligent. First, it
is undisputed that Chiara Mae’s permit form was unsigned. Yet, respondent allowed her to join the
activity because she assumed that Chiara Mae’s mother has allowed her to join it by personally
bringing her to the school with her packed lunch and swimsuit.

The purpose of a permit form is precisely to ensure that the parents have allowed their child to join
the school activity involved. Respondent cannot simply ignore this by resorting to assumptions.
Respondent admitted that she was around when Chiara Mae and her mother arrived. She could
have requested the mother to sign the permit form before she left the school or at least called her up
to obtain her conformity.

Second, it was respondent’s responsibility as Class Adviser to supervise her class in all activities
sanctioned by the school.18 Thus, she should have coordinated with the school to ensure that proper
safeguards, such as adequate first aid and sufficient adult personnel, were present during their
activity. She should have been mindful of the fact that with the number of pupils involved, it would be
impossible for her by herself alone to keep an eye on each one of them.

As it turned out, since respondent was the only adult present, majority of the pupils were left
unsupervised when she followed the two pupils who sneaked out. In the light of the odds involved,
respondent should have considered that those who sneaked out could not have left the school
premises since there were guards manning the gates. The guards would not have allowed them to
go out in their swimsuits and without any adult accompanying them. But those who stayed at the
pool were put at greater risk, when she left them unattended by an adult. 1avv phi 1

Notably, respondent’s negligence, although gross, was not habitual. In view of the considerable
resultant damage, however, we are in agreement that the cause is sufficient to dismiss respondent.
This is not the first time that we have departed from the requirements laid down by the law that
neglect of duties must be both gross and habitual. In Philippine Airlines, Inc. v. NLRC,19 we ruled that
Philippine Airlines (PAL) cannot be legally compelled to continue with the employment of a person
admittedly guilty of gross negligence in the performance of his duties although it was his first
offense. In that case, we noted that a mere delay on PAL’s flight schedule due to aircraft damage
entails problems like hotel accommodations for its passengers, re-booking, the possibility of law
suits, and payment of special landing fees not to mention the soaring costs of replacing aircraft
parts.20 In another case,Fuentes v. National Labor Relations Commission,21 we held that it would be
unfair to compel Philippine Banking Corporation to continue employing its bank teller. In that case,
we observed that although the teller’s infraction was not habitual, a substantial amount of money
was lost. The deposit slip had already been validated prior to its loss and the amount reflected
thereon is already considered as current liabilities in the bank’s balance sheet.22Indeed, the
sufficiency of the evidence as well as the resultant damage to the employer should be considered in
the dismissal of the employee. In this case, the damage went as far as claiming the life of a child.
As a result of gross negligence in the present case, petitioners lost its trust and confidence in
respondent. Loss of trust and confidence to be a valid ground for dismissal must be based on a
willful breach of trust and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.23 Otherwise stated, it must rest on substantial
grounds and not on the employer’s arbitrariness, whims, caprices or suspicion; otherwise, the
employee would eternally remain at the mercy of the employer. It should be genuine and not
simulated; nor should it appear as a mere afterthought to justify earlier action taken in bad faith or a
subterfuge for causes which are improper, illegal or unjustified. It has never been intended to afford
an occasion for abuse because of its subjective nature. There must, therefore, be an actual breach
of duty committed by the employee which must be established by substantial evidence.24

As a teacher who stands in loco parentis to her pupils, respondent should have made sure that the
children were protected from all harm while in her company.25 Respondent should have known that
leaving the pupils in the swimming pool area all by themselves may result in an accident. A simple
reminder "not to go to the deepest part of the pool"26 was insufficient to cast away all the serious
dangers that the situation presented to the children, especially when respondent knew that Chiara
Mae cannot swim.27 Dismally, respondent created an unsafe situation which exposed the lives of all
the pupils concerned to real danger. This is a clear violation not only of the trust and confidence
reposed on her by the parents of the pupils but of the school itself.

Finally, we note that based on the criminal complaint filed by Chiara Mae’s parents, the Assistant
City Prosecutor found probable cause to indict respondent for the crime of reckless imprudence
resulting in homicide. The Assistant City Prosecutor held that respondent "should have foreseen the
danger lurking in the waters." By leaving her pupils in the swimming pool, respondent displayed an
"inexcusable lack of foresight and precaution."28 While this finding is not controlling for purposes of
the instant case, this only supports our conclusion that respondent has indeed been grossly
negligent.

All told, there being a clear showing that respondent was culpable for gross negligence resulting to
loss of trust and confidence, her dismissal was valid and legal. It was error for the Court of Appeals
to reverse and set aside the resolution of the NLRC.

WHEREFORE, the petition is GRANTED. The assailed Decision dated June 7, 2004 of the Court of
Appeals in CA-G.R. SP No. 81480 is SET ASIDE. The Resolution dated September 20, 2002 of the
National Labor Relations Commission in NLRC NCR CA No. 031627-02 is REINSTATED. No
pronouncement as to costs.

SO ORDERED.
CASE NO. 13

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 171189 March 9, 2011

LORES REALTY ENTERPRISES, INC., LORENZO Y. SUMULONG III, Petitioners,

vs.
VIRGINIA E. PACIA, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioners Lores
Realty Enterprises, Inc. (LREI) and Lorenzo Y. Sumulong III (Sumulong) seeking to reverse and set
aside the November 25, 2005 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 59975,
which affirmed the Decision2 of the National Labor Relations Commission (NLRC), in NLRC NCR CA
No. 019221-99 (RAB-IV-10-10492-98-RI).

The Facts

In 1982, respondent Virginia E. Pacia (Pacia) was hired by LREI. At the time of her dismissal, she
was the assistant manager and officer-in-charge of LREI’s Accounting Department under the
Finance Administrative Division.

On October 28, 1998, LREI’s acting general manager, petitioner Sumulong, through Ms. Julie Ontal,
directed Pacia to prepare Check Voucher No. 16477 worth ₱150,000.00 as partial payment for
LREI’s outstanding obligation to the Bank of the Philippine Islands-Family Bank (BPI-FB). Pacia did
not immediately comply with the instruction. After two repeated directives, Pacia eventually prepared
Check No. 0000737526 in the amount of ₱150,000.00. Later, Sumulong again directed Pacia to
prepare Check Voucher No. 16478 in the amount of ₱175,000.00 to settle the balance of LREI’s
outstanding indebtedness with BPI-FB. Pacia once again was slow in obeying the order. Due to the
insistence of Sumulong, however, Pacia eventually prepared Check No. 0000737527 in the amount
of ₱175,000.00.

To explain her refusal to immediately follow the directive, Pacia reasoned out that the funds in
LREI’s account were not sufficient to cover the amounts to be indicated in the checks.

The next day, October 29, 1998, Sumulong issued a memorandum3 ordering Pacia to explain in
writing why she refused to follow a clear and lawful directive.

On the same day, Pacia replied in writing and explained that her initial refusal to prepare the checks
was due to the unavailability of funds to cover the amounts and that she only wanted to protect LREI
from liability under the Bouncing Checks Law.4
On November 6, 1998, Pacia received a notice of termination5 stating, among others, that she was
being dismissed because of her willful disobedience and their loss of trust and confidence in her.

Pacia then filed a Complaint for Unfair Labor Practice due to Harassment, Constructive Dismissal,
Moral and Exemplary Damages6 against LREI and Sumulong. Subsequently, Pacia filed an
Amended Complaint7 to include the charges of illegal dismissal and non-payment of salaries.

On March 11, 1999, the Labor Arbiter (LA) rendered a decision8 finding that the dismissal of Pacia
was for a just and valid cause but ordering payment of what was due her. The dispositive portion of
the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered, as follows:

1. Ordering respondent corporation to pay complainant her:

a. unpaid salary ₱12,550.00

b. proportionate 13th month pay 20,916.66

Total ₱33,466.66

2. Dismissing the complaint for constructive/illegal dismissal, unfair labor practice, and claim
for payment of damages and attorney’s fees for lack of merit.

SO ORDERED.

On appeal, the NLRC in its March 31, 2000 Decision9 reversed the LA’s Decision and found LREI
and Sumulongguilty of illegal dismissal. Pertinent portions of the NLRC decision including the
decretal portion read:

A careful perusal of the records reveal[s] that complainant’s actuation herein cannot in any manner
be construed as an act of insubordination. Neither can we classify it as an example of wilful
disobedience by the employee of the lawful order of her employer in connection with her work.

Records show that Check No. 0000737527 in the amount of ₱175,000.000 bounced as shown by the
Return Checks Advice issued by the BPI family Bank on 3 November 1998.

xxx xxx xxx

The above evidence clearly reveal[s] that there were no sufficient funds to cover the check which the
acting Manager directed complainant to prepare. However, complainant nevertheless prepared
Check Nos. 737527 and 737526 on 28 October 1998 and also corrected Check Vouchers Nos.
16477 and 16478 on 28 October 1998.

We take note and give due merit to complainant’s explanation in her reluctance to issue checks
against insufficient funds which was to protect the company and its signatories from liabilities
resulting from issuance of bounced checks. Complainant’s initial refusal was good intentioned.
Respondents also insist that complainant refused to follow a lawful directive of her superior officer to
make some corrections on the vouchers. However, we cannot see how an order to prepare a check
at the time when there was no sufficient fund to cover the same can be classified as a lawful
directive of the acting Manager.

xxx xxx xxx

Considering that complainant was illegally dismissed, the law provides that her reinstatement with
payment of full backwages would be in order. However, mindful of the animosity and strained
relations between parties emanating from this litigation we declare that in lieu of reinstatement,
separation pay may be given to complainant, at the rate of one (1) month pay for every year of
service.

WHEREFORE, the Decision dated 11 March 1999 is MODIFIED. Respondent Lores Realty Ent., Inc.
is held liable for illegally dismissing complainant and is directed to pay her, in addition to her unpaid
salary and proportionate 13th month pay for the year 1998, the following:

1. Backwages
(6 November 1998 to 15 March 2000)
Basic Pay ₱25,100.00 x 16.3 mos. = ₱409,130.00

13th Month Pay ₱409,130.00 / 12 = 34,094.17

₱443,224.17
2. Separation Pay (one month for every year of service)

(18 years)
₱25,100 x 18 = ₱451,800.00

₱895,024.17
vvvvvvvvvvvvv

The other findings are AFFIRMED.

SO ORDERED.10

Dissatisfied, LREI and Sumulong elevated the case to the CA by way of a petition for certiorari under
Rule 65 of the Rules of Court asserting grave abuse of discretion on the part of the NLRC in
reversing the LA’s finding that Pacia was guilty of wilful disobedience of a lawful order of her
employer in connection with her work.

On November 25, 2005, the CA found no merit in the petition and dismissed it.11 Thus:

WHEREFORE, the petition is DISMISSED. Public respondent’s Decision dated 31 March 2000 and
the Resolution dated 15 May 2000 in NLRC-RAB IV-10-10492-98-RI, CA NO. 019221-99,
are AFFIRMED.

SO ORDERED.

The CA held that LREI and Sumulong failed to establish with substantial evidence that the dismissal
of Pacia was for a just cause. It found that Pacia’s initial reluctance to obey the orders of her
superiors was for a good reason - to shield the company from liability in the event that the checks
would be dishonored for insufficiency of funds.
Hence, the petition.

THE ISSUES

1. WHETHER OR NOT THE INSTANT PETITION FOR REVIEW RAISES

QUESTIONS OF LAW.

2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE

RULING OF THE NLRC THAT THE ESTABLISHED FACTS JUSTIFY
RESPONDENT’S TERMINATION FROM EMPLOYMENT.

3. WHETHER OR NOT THE AWARD OF BACKWAGES MUST BE COMPUTED

FROM THE TIME OF DISMISSAL UNTIL FINALITY OF THE DECISION
ESTABLISHING HER ILLEGAL DISMISSAL.12

In essence, the main issue to be resolved is whether Pacia’s dismissal was justified under the
circumstances.

The Court finds no merit in the petition.

At the outset, it must be emphasized that the issues raised in this petition are questions of fact which
are not proper subjects of an appeal by certiorari. Well-settled is the rule that under Rule 45 of the
Rules of Court, only questions of law may be raised before this Court.13 A disharmony between the
factual findings of the LA and the NLRC, however, opens the door to a review by this Court. Factual
findings of administrative agencies are not infallible and will be set aside when they fail the test of
arbitrariness. Moreover, when the findings of the NLRC contradict those of the LA, this Court, in the
exercise of its equity jurisdiction, may look into the records of the case and re-examine the
questioned findings.14

LREI and Sumulong argue that Pacia’s refusal to obey the directives of Sumulong was a "manifest
intent not to perform the function she was engaged to discharge."15 They are of the position that
Pacia’s claim of "good intentions" in refusing to prepare the checks was a mere afterthought. They
stress that the instruction to prepare a check despite the absence of sufficient funds to cover the
same was, nevertheless, a lawful order.

On the other hand, Pacia counters that her initial reluctance to prepare the checks, which she knew
were not sufficiently funded, cannot "be characterized as ‘wrongful or perverse attitude.’"16 In her
view, the directive to prepare the checks at the time it was not sufficiently funded was not a lawful
order contemplated in Article 282 of the Labor Code. It was an unlawful directive because it asked
for the preparation of a check despite the fact that the account had no sufficient funds to cover the
same. She further explained that she did not comply with the directive in order to protect Sumulong
and LREI from any liability in the event that the checks would be dishonored upon presentment for
payment for insufficiency of funds.

Article 282 of the Labor Code enumerates the just causes for which an employer may terminate
the services of an employee, to wit:

ARTICLE 282. Termination by employer. – An employer may terminate an employment for any of
the following causes:
 (a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing. [Emphasis supplied]

The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employee’s
assailed conduct must have been willful, that is characterized by a wrongful and perverse attitude;
and (2) the order violated must have been reasonable, lawful, made known to the employee and
must pertain to the duties which he had been engaged to discharge.17

Let it be noted at this point that the Court finds nothing unlawful in the directive of Sumulong to
prepare checks in payment of LREI’s obligations. The availability or unavailability of sufficient funds
to cover the check is immaterial in the physical preparation of the checks. 1avv phi1

Pacia’s initial reluctance to prepare the checks, however, which was seemingly an act of disrespect
and defiance, was for honest and well intentioned reasons. Protecting LREI and Sumulong from
liability under the Bouncing Checks Law18 was foremost in her mind. It was not wrongful or willful.
Neither can it be considered an obstinate defiance of company authority. The Court takes into
consideration that Pacia, despite her initial reluctance, eventually did prepare the checks on the
same day she was tasked to do it.

The Court also finds it difficult to subscribe to LREI and Sumulongs’s contention that the reason for
Pacia’s initial reluctance to prepare the checks was a mere afterthought considering that "check no.
0000737527 under one of the check vouchers she reluctantly prepared, bounced when it was
deposited."19 Pacia’s apprehension was justified when the check was dishonored. This clearly affirms
her assertion that she was just being cautious and circumspect for the company’s sake. Thus, her
actuation should not be construed as improper conduct.

In finding for Pacia, the Court is guided by the time-honored principle that if doubt exists between the
evidence presented by the employer and the employee, the scales of justice must be tilted in favor of
the latter. The rule in controversies between a laborer and his master distinctly states that doubts
reasonably arising from the evidence, or in the interpretation of agreements and writing, should be
resolved in the former's favor.20

WHEREFORE, the petition is DENIED.

SO ORDERED.
CASE NO. 14

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 164939 June 6, 2011

SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN), Petitioner,

vs.
HON. VOLUNTARY ARBITRATOR BUENAVENTURA C. MAGSALIN and HOTEL ENTERPRISES
OF THE PHILIPPINES, INC., Respondents.

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

G.R. No. 172303

SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN), Petitioner,

vs.
HOTEL ENTERPRISES OF THE PHILIPPINES, INC., Respondent.

DECISION

VILLARAMA, JR., J.:

Before this Court are two consolidated petitions filed by petitioner Samahan ng mga Manggagawa
sa Hyatt-NUWHRAIN-APL under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The
first petition, docketed as G.R. No. 164939, assails the Resolutions dated October 3, 20031 and
August 13, 20042 of the Court of Appeals (CA) in CA-G.R. SP No. 78364, which dismissed
petitioner’s petition for review at the CA for being the wrong remedy. The second petition, docketed
as G.R. No. 172303, assails the Decision3 dated December 16, 2005 and Resolution4 dated April 12,
2006 of the CA in CA-G.R. SP No. 77478, modifying the judgment of the Voluntary Arbitrator in
NCMB-NCR-CRN-07-008-01.

The antecedent facts are as follows:

Petitioner Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL is a duly registered union and

the certified bargaining representative of the rank-and-file employees of Hyatt Regency Manila, a
five-star hotel owned and operated by respondent Hotel Enterprises of the Philippines, Inc. On
January 31, 2001, Hyatt’s General Manager, David C. Pacey, issued a Memorandum5 informing all
hotel employees that hotel security have been instructed to conduct a thorough bag inspection and
body frisking in every entrance and exit of the hotel. He enjoined employees to comply therewith.
Copies of the Memorandum were furnished petitioner.

On February 3, 2001, Angelito Caragdag, a waiter at the hotel’s Cafe Al Fresco restaurant and a
director of the union, refused to be frisked by the security personnel. The incident was reported to
the hotel’s Human Resources Department (HRD), which issued a Memorandum6 to Caragdag on
February 5, 2001, requiring him to explain in writing within forty-eight (48) hours from notice why no
disciplinary action should be taken against him. The following day, on February 6, 2001, Caragdag
again refused to be frisked by the security personnel. Thus, on February 8, 2001, the HRD issued
another Memorandum7 requiring him to explain.

On February 14, 2001, the HRD imposed on Caragdag the penalty of reprimand for the February 3,
2001 incident, which was considered a first offense, and suspended him for three days for the
February 6, 2001 incident, which was considered as a second offense.8 Both penalties were in
accordance with the hotel’s Code of Discipline.

Subsequently, on February 22, 2001, when Mike Moral, the manager of Hyatt’s Cafe Al Fresco and
Caragdag’s immediate superior, was about to counsel two staff members, Larry Lacambacal and
Allan Alvaro, at the training room, Caragdag suddenly opened the door and yelled at the two with an
enraged look. In a disturbing voice he said, "Ang titigas talaga ng ulo n’yo. Sinabi ko na sa inyo na
huwag kayong makikipagusap sa management habang ongoing pa ang kaso!" (You are very
stubborn. I told you not to speak to management while the case is ongoing!) Moral asked Caragdag
what the problem was and informed him that he was simply talking to his staff. Moral also told
Caragdag that he did not have the right to interrupt and intimidate him during his counseling session
with his staff.

On February 23, 2001, Moral issued a Memorandum9 requiring Caragdag to explain his actions in
the training room. Caragdag submitted his written explanation on February 25, 200110 narrating that
he was informed by someone that Lacambacal and Alvaro were requesting for his assistance
because Moral had invited them to the training room. Believing that he should advise the two that
they should be accompanied by a union officer to any inquisition, he went to the training room.
However, before he could enter the door, Moral blocked him. Thus, he told Lacambacal and Alvaro
that they should be assisted by a union representative before giving any statement to management.
Caragdag also prayed that Moral be investigated for harassing union officers and union members.

On February 28, 2001, Moral found the explanations unsatisfactory. In a Memorandum11 issued on
the same date, Moral held Caragdag liable for Offenses Subject to Disciplinary Action (OSDA) 3.01
of the hotel’s Code of Discipline, i.e., "threatening, intimidating, coercing, and provoking to a fight
your superior for reasons directly connected with his discharge of official duty." Thus, Caragdag was
imposed the penalty of seven days suspension in accordance with the hotel’s Code of Discipline.

Still later, on March 2, 2001, Caragdag committed another infraction. At 9:35 a.m. on the said date,
Caragdag left his work assignment during official hours without prior permission from his Department
Head. He was required to submit an explanation, but the explanation12 he submitted was found
unsatisfactory. On March 17, 2001, Moral found Caragdag liable for violating OSDA 3.07, i.e.,
"leaving work assignment during official working hours without prior permission from the department
head or immediate superior," and suspended him for three days.13

Because of the succession of infractions he committed, the HRD also required Caragdag to explain
on May 11, 2001 why the hotel’s OSDA 4.32 (Committing offenses which are penalized with three [3]
suspensions during a 12-month period) should not be enforced against him.14 An investigation board
was formed after receipt of Caragdag’s written explanation, and the matter was set for hearing on
May 19, 2001. However, despite notice of the scheduled hearing, both Caragdag and the Union
President failed to attend. Thereafter, the investigating board resolved on the said date to dismiss
Caragdag for violation of OSDA 4.32.15 Caragdag appealed but the investigating board affirmed its
resolution after hearing on May 24, 2001.

On June 1, 2001, the hotel, through Atty. Juancho A. Baltazar, sent Caragdag a Notice of
Dismissal,16 the pertinent portion of which reads:
Based on the findings of the Investigation Board dated May 19, 2001 which was approved by the
General Manager Mr. David Pacey on the same day and which did not merit any reversal or
modification after the hearing on your appeal on May 24, 2001, the penalty of DISMISSAL is
therefore affirmed to take effect on June 1, 2001.

Caragdag’s dismissal was questioned by petitioner, and the dispute was referred to voluntary
arbitration upon agreement of the parties. On May 6, 2002, the Voluntary Arbitrator rendered a
decision,17 the dispositive portion of which reads:

WHEREFORE, premises considered, this Arbiter rules that the three separate suspensions of Mr.
Caragdag are valid, his dismissal is legal and OSDA 4.32 of Hyatt’s Code of Discipline is
reasonable.

However, for humanitarian considerations, Hyatt is hereby ordered to grant financial assistance to
Mr. Caragdag in the amount of One Hundred Thousand Pesos (PhP100,000.00).

In finding the three separate suspensions of Caragdag valid, the Voluntary Arbitrator reasoned that
the union officers and members had no right to breach company rules and regulations on security
and employee discipline on the basis of certain suspicions against management and an ongoing
CBA negotiation standoff. The Voluntary Arbitrator also found that when Caragdag advised
Lacambacal and Alvaro not to give any statement, he threatened and intimidated his superior while
the latter was performing his duties. Moreover, there is no reason why he did not arrange his time-off
with the Department Head concerned. Thus, Caragdag was validly dismissed pursuant to OSDA
4.32 of Hyatt’s Code of Discipline, which states that an employee who commits three different acts of
misconduct within a twelve (12)-month period commits serious misconduct.

Petitioner sought reconsideration of the decision while respondent filed a motion for partial
reconsideration. However, the Voluntary Arbitrator denied both motions on May 26, 2003.18

On August 1, 2003, petitioner assailed the decision of the Voluntary Arbitrator before the CA in a
petition for certiorari which was docketed as CA-G.R. SP No. 78364.19 As mentioned at the outset,
the CA dismissed the petition outright for being the wrong remedy. The CA explained:

Rule 43, Section 5 of the 1997 Rules of Civil Procedure explicitly provides that the proper mode of
appeal from judgments, final orders or resolution of voluntary arbitrators is through a Petition for
Review which should be filed within fifteen (15) days from the receipt of notice of judgment, order or
resolution of the voluntary arbitrator.

Considering that petitioner intends this petition to be a Petition for Certiorari, the Court hereby
resolves to dismiss the petition outright for being an improper mode of appeal.

Even if this Court treats the instant petition as a Petition for Review, still the Court has no alternative
but to dismiss the same for having been filed out of time. As admitted by the petitioner it received the
Order dated 26 May 2003 denying their motion for reconsideration on 02 June 2003. The fifteen (15)
day period within which to appeal through a Petition for Review is until June 17, 2003. The petitioner
filed the present petition on August 1, 2003, way beyond the reglementary period provided for by the
Rules.20

Petitioner duly filed a motion for reconsideration of the dismissal, but the motion was denied by the
CA. Thus, petitioner filed before this Court a petition for review on certiorari which was docketed as
G.R. No. 164939.
In the meantime, on June 30, 2003, respondent also filed a petition for review21 with the CA on the
ground that the Voluntary Arbitrator committed a grievous error in awarding financial assistance to
Caragdag despite his finding that the dismissal due to serious misconduct was valid. On December
16, 2005, the CA promulgated a decision in CA-G.R. SP. No. 77478 as follows:

WHEREFORE, the Decision dated May 6, 2002 of Voluntary Arbitrator Buenaventura C. Magsalin is
AFFIRMED with MODIFICATION by DELETING the award of financial assistance in the amount of
P100,000.00 to Angelito Caragdag.

SO ORDERED.22

In deleting the award of financial assistance to Caragdag, the CA cited the case of Philippine
Commercial International Bank v. Abad,23 which held that the grant of separation pay or other
financial assistance to an employee dismissed for just cause is based on equity and is a measure of
social justice, awarded to an employee who has been validly dismissed if the dismissal was not due
to serious misconduct or causes that reflected adversely on the moral character of the employee. In
this case, the CA agreed with the findings of the Voluntary Arbitrator that Caragdag was validly
dismissed due to serious misconduct. Accordingly, financial assistance should not have been
awarded to Caragdag. The CA also noted that it is the employer’s prerogative to prescribe
reasonable rules and regulations necessary or proper for the conduct of its business or concern, to
provide certain disciplinary measures to implement said rules and to ensure compliance therewith.

Petitioner sought reconsideration of the decision, but the CA denied the motion for lack of merit.
Hence, petitioner filed before us a petition for review on certiorari docketed as G.R. No. 172303.

Considering that G.R. Nos. 164939 and 172303 have the same origin, involve the same parties, and
raise interrelated issues, the petitions were consolidated.

Petitioner raises the following issues:

In G.R. No. 164939

THE COURT OF APPEALS ERRED IN DISMISSING OUTRIGHT THE PETITION FOR

CERTIORARI ON THE GROUND THAT THE SAME IS AN IMPROPER MODE OF APPEAL.24

In G.R. No. 172303

THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF FINANCIAL ASSISTANCE IN

THE AMOUNT OF ₱100,000.00 TO ANGELITO CARAGDAG.25

The issues for our resolution are thus two-fold: first, whether the CA erred in dismissing outright the
petition for certiorari filed before it on the ground that the same is an improper mode of appeal; and
second, whether the CA erred in deleting the award of financial assistance in the amount of
₱100,000.00 to Caragdag.

On the first issue, petitioner argues that because decisions rendered by voluntary arbitrators are
issued under Title VII-A of the Labor Code, they are not covered by Rule 43 of the 1997 Rules of
Civil Procedure, as amended, by express provision of Section 2 thereof. Section 2, petitioner points
out, expressly provides that Rule 43 "shall not apply to judgments or final orders issued under the
Labor Code of the Philippines." Hence, a petition for certiorari under Rule 65 is the proper remedy
for questioning the decision of the Voluntary Arbitrator, and petitioner having availed of such remedy,
the CA erred in declaring that the petition was filed out of time since the petition was filed within the
sixty (60)-day reglementary period.

On the other hand, respondent maintains that the CA acted correctly in dismissing the petition for
certiorari for being the wrong mode of appeal. It stresses that Section 1 of Rule 43 clearly states that
it is the governing rule with regard to appeals from awards, judgments, final orders or resolutions of
voluntary arbitrators. Respondent contends that the voluntary arbitrators authorized by law include
the voluntary arbitrators appointed and accredited under the Labor Code, as they are considered as
included in the term "quasi-judicial instrumentalities."

Petitioner’s arguments fail to persuade.

In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,26 we

repeated the well-settled rule that a decision or award of a voluntary arbitrator is appealable to the
CA via petition for review underRule 43. We held that:

The question on the proper recourse to assail a decision of a voluntary arbitrator has already been
settled in Luzon Development Bank v. Association of Luzon Development Bank Employees, where
the Court held that the decision or award of the voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95 (now embodied in Rule 43 of the 1997 Rules of Civil Procedure),
just like those of the quasi-judicial agencies, boards and commissions enumerated therein, and
consistent with the original purpose to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia v.
Court of Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the Court held that
notwithstanding Section 2 of Rule 43, the ruling in Luzon Development Bank still stands. The Court
explained, thus:

"The provisions may be new to the Rules of Court but it is far from being a new law. Section 2, Rules
42 of the 1997 Rules of Civil Procedure, as presently worded, is nothing more but a reiteration of the
exception to the exclusive appellate jurisdiction of the Court of Appeals, as provided for in Section 9,
Batas Pambansa Blg. 129, as amended by Republic Act No. 7902:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards
of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
including the Securities and Exchange Commission, the Employees’ Compensation Commission
and the Civil Service Commission, except those falling within the appellate jurisdiction of the
Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of
1948.

"The Court took into account this exception in Luzon Development Bank but, nevertheless, held that
the decisions of voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit
x x x"

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended,
provide:
SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of
Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-
judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the x x x,
and voluntary arbitrators authorized by law.

xxxx

SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals within
the period and in the manner therein provided, whether the appeal involves questions of fact, of law,
or mixed questions of fact and law.

SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the
award, judgment, final order or resolution, or from the date of its last publication, if publication is
required by law for its effectivity, or of the denial of petitioner’s motion for new trial or reconsideration
duly filed in accordance with the governing law of the court or agency a quo. x x x. (Emphasis
supplied.)

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrator’s Resolution denying petitioner’s
motion for reconsideration, petitioner should have filed with the CA, within the fifteen (15)-day
reglementary period, a petition for review, not a petition for certiorari.

Petitioner insists on a liberal interpretation of the rules but we find no cogent reason in this case to
deviate from the general rule. Verily, rules of procedure exist for a noble purpose, and to disregard
such rules in the guise of liberal construction would be to defeat such purpose. Procedural rules are
not to be disdained as mere technicalities. They may not be ignored to suit the convenience of a
party. Adjective law ensures the effective enforcement of substantive rights through the orderly and
speedy administration of justice. Rules are not intended to hamper litigants or complicate litigation.
But they help provide for a vital system of justice where suitors may be heard following judicial
procedure and in the correct forum. Public order and our system of justice are well served by a
conscientious observance by the parties of the procedural rules.27

On the second issue, petitioner argues that Caragdag is entitled to financial assistance in the
amount of ₱100,000 on humanitarian considerations. Petitioner stresses that Caragdag’s infractions
were due to his being a union officer and his acts did not show moral depravity. Petitioner also adds
that, while it is true that the award of financial assistance is given only for dismissals due to causes
specified under Articles 283 and 284 of the Labor Code, as amended, this Court has, by way of
exception, allowed the grant of financial assistance to an employee dismissed for just causes based
on equity.

Respondent on the other hand, asserts that the CA correctly deleted the award of financial
assistance erroneously granted to Caragdag considering that he was found guilty of serious
misconduct and other acts adversely reflecting on his moral character. Respondent stresses that
Caragdag’s willful defiance of the hotel’s security policy, disrespect and intimidation of a superior,
and unjustifiable desertion of his work assignment during working hours without permission, patently
show his serious and gross misconduct as well as amoral character.28

Again, petitioner’s arguments lack merit.

The grant of separation pay or some other financial assistance to an employee dismissed for just
causes is based on equity.29 In Phil. Long Distance Telephone Co. v. NLRC,30 we ruled that
severance compensation, or whatever name it is called, on the ground of social justice shall be
allowed only when the cause of the dismissal is other than serious misconduct or for causes which
reflect adversely on the employee’s moral character. The Court succinctly discussed the propriety of
the grant of separation pay in this wise:

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

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

The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone
the offense. Compassion for the poor is an imperative of every humane society but only when the
recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be
refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty.
Those who invoke social justice may do so only if their hands are clean and their motives blameless
and not simply because they happen to be poor. This great policy of our Constitution is not meant for
the protection of those who have proved they are not worthy of it, like the workers who have tainted
the cause of labor with the blemishes of their own character.31

Here, Caragdag’s dismissal was due to several instances of willful disobedience to the reasonable
rules and regulations prescribed by his employer. The Voluntary Arbitrator pointed out that according
to the hotel’s Code of Discipline, an employee who commits three different acts of misconduct within
a twelve (12)-month period commits serious misconduct. He stressed that Caragdag’s infractions
were not even spread in a period of twelve (12) months, but rather in a period of a little over a
month. Records show the various violations of the hotel’s rules and regulations were committed by
Caragdag. He was suspended for violating the hotel policy on bag inspection and body frisking. He
was likewise suspended for threatening and intimidating a superior while the latter was counseling
his staff. He was again suspended for leaving his work assignment without permission. Evidently,
Caragdag’s acts constitute serious misconduct. 1âwphi1

In Piedad v. Lanao del Norte Electric Cooperative, Inc.,32 we ruled that a series of irregularities when
put together may constitute serious misconduct, which under Article 282 of the Labor Code, as
amended, is a just cause for dismissal.

Caragdag’s dismissal being due to serious misconduct, it follows that he should not be entitled to
financial assistance. To rule otherwise would be to reward him for the grave misconduct he
committed. We must emphasize that social justice is extended only to those who deserve its
compassion.33

WHEREFORE, the petitions for review on certiorari are DENIED. The October 3, 2003 and August
13, 2004 Court of Appeals Resolutions in CA-G.R. SP No. 78364, as well as the Court of Appeals
December 16, 2005 Decision and April 12, 2006 Resolution in CA-G.R. SP No. 77478, are
AFFIRMED and UPHELD.

With costs against the petitioner.

SO ORDERED.
CASE NO. 15

Republic of the Philippines

SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 191008 April 11, 2011

QUIRICO LOPEZ, Petitioner,

vs.
ALTURAS GROUP OF COMPANIES and/or MARLITO UY, Respondents.

DECISION

CARPIO MORALES, J.:

Quirico Lopez (petitioner) was hired by respondent Alturas Group of Companies in 1997 as truck
driver. Ten years later or sometime in November 2007, he was dismissed after he was allegedly
caught by respondent’s security guard in the act of attempting to smuggle out of the company
premises 60 kilos of scrap iron worth ₱840 aboard respondents’ Isuzu Cargo Aluminum Van with
Plate Number PHP 271 that was then assigned to him. When questioned, petitioner allegedly
admitted to the security guard that he was taking out the scrap iron consisting of lift springs out of
which he would make axes.

Petitioner, in compliance with the Show Cause Notice1 dated December 5, 2007 issued by
respondent company’s Human Resource Department Manager, denied the allegations by a
handwritten explanation written in the Visayan dialect.

Finding petitioner’s explanation unsatisfactory, respondent company terminated his employment by

Notice of Termination2 effective December 14, 2007 on the grounds of loss of trust and confidence,
and of violation of company rules and regulations. In issuing the Notice, respondent company also
took into account the result of an investigation showing that petitioner had been smuggling out its
cartons which he had sold, in conspiracy with one Maritess Alaba, for his own benefit to thus prompt
it to file a criminal case for Qualified Theft3 against him before the Regional Trial Court (RTC) of
Bohol. It had in fact earlier filed another criminal case for Qualified Theft4against petitioner arising
from the theft of the scrap iron.

Petitioner thereupon filed a complaint against respondent company for illegal dismissal and
underpayment of wages. He claimed that the smuggling charge against him was fabricated to justify
his illegal dismissal; that the filing of the charge came about after he reported the loss of the original
copy of his pay slip, which report, he went on to claim, respondent company took to mean that he
could use the pay slip as evidence for filing a complaint for violation of labor laws; and that on
account of the immediately stated concern of respondent, it forced him into executing an affidavit
that if the pay slip is eventually found, it could not be used in any proceedings between them.

By Decision5 of June 30, 2008, the Labor Arbiter, holding that the pendency of the criminal case
involving the scrap iron did not warrant the suspension of the proceedings before him, held that
petitioner’s dismissal was justified, for he, a truck driver, held a position of trust and confidence, and
his act of stealing company property was a violation of the trust reposed upon him.
Respecting the charge of underpayment of wages, the Labor Arbiter noted that on the basis of the
records, petitioner had been paid the correct wages and benefits mandated by law.

The Labor Arbiter accordingly dismissed petitioner’s complaint.

On appeal, the National Labor Relations Commission’s (NLRC) Fourth Division (Cebu City) set aside
the Labor Arbiter’s Decision by Decision6 dated December 22, 2008, finding that respondent’s
evidence did not suffice to warrant the termination of petitioner’s services; and that petitioner’s
alleged admission of taking the scrap iron was belied by his vehement denial, as even the security
guard, one Gerardo Luega, who allegedly witnessed the asportation and before whom the alleged
admission was made, did not even execute an affidavit in support thereof.

Citing Salaw v. NLRC,7 the NLRC went on to hold that petitioner should have been afforded, or at
least advised of the right to counsel. It thus held that "any evaluation which was based only on the
explanation to the show-cause letter and any so-called investigation but without confrontation of the
vital witnesses, do[es] not suffice."

Respondent company’s motion for reconsideration was denied by Resolution8 of April 30, 2009,
hence, it appealed to the Court of Appeals.

By Report9 of December 18, 2009, the appellate court reversed the NLRC ruling. It held that
respondent company was justified in terminating petitioner’s employment on the ground of loss of
trust and confidence, his alleged act of smuggling out the scrap iron having been sufficiently
established through the affidavits of Patrocinio Borja and Zalde Tare, supervisor and junior
supervisor, respectively, of its Supermarket Motorpool.

The appellate court further held that "the evidence supporting the criminal charge, found after
preliminary investigation are [sic] sufficient to show prima facie guilt, which constitutes just cause for
[petitioner’s dismissal] based on loss of trust and confidence"; and that petitioner’s subsequent
acquittal in the criminal case "did not automatically preclude a determination that he is guilty of acts
inimical to the employer’s interest resulting in loss of trust and confidence."

Albeit the appellate court found that petitioner’s dismissal was for a just cause, it held that due
process was not observed when respondent company failed to give him a chance to defend his side
in a proper hearing. Following Agabon v. NLRC,10 the appellate court thus ordered respondent to pay
nominal damages of ₱30,000.

Thus the appellate court disposed:

WHEREFORE, in view of the foregoing, the Decision of the NLRC dated December 22, 2008 is
hereby MODIFIED. Private respondent’s dismissal from employment is upheld on the ground of loss
of trust and confidence, a just cause for termination. However, for failure to comply fully with the
procedural due process, petitioner is ORDERED to pay private respondent the amount of
₱30,000.00 as nominal damages.11 (underscoring supplied)

Hence, the present petition for review on certiorari.

Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due
process, and the legality of the manner of dismissal which constitutes procedural due process.12
As to substantive due process, the Court finds that respondent company’s loss of trust and
confidence arising from petitioner’s smuggling out of the scrap iron, conpounded by his past acts of
unauthorized selling cartons belonging to respondent company, constituted just cause for
terminating his services.

Loss of trust and confidence as a ground for dismissal of employees covers employees occupying a
position of trust who are proven to have breached the trust and confidence reposed on them.
Apropos is Cruz v. Court of Appeals13 which explains the basis and quantum of evidence of loss of
trust and confidence, viz:

In addition, the language of Article 282(c) of the Labor Code states that the loss of trust and
confidence must be based on willful breach of the trust reposed in the employee by his employer.
Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it
must be based on substantial evidence and not on the employer’s whims or caprices or suspicions
otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence
must not be indiscriminately used as a shield by the employer against a claim that the dismissal of
an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained
of must be work-related and shows that the employee concerned is unfit to continue working for the
employer. In addition, loss of confidence as a just cause for termination of employment is premised
on the fact that the employee concerned holds a position of responsibility, trust and confidence or
that the employee concerned is entrusted with confidence with respect to delicate matters, such as
the handling or care and protection of the property and assets of the employer. The betrayal of this
trust is the essence of the offense for which an employee is penalized. (emphasis and underscoring
supplied)

Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of
respondent company’s goods and property, and consequently with its handling and protection,
hence, even if he did not occupy a managerial position, he can be said to be holding a position of
responsibility. As to his act–principal ground for his dismissal — his attempt to smuggle out the scrap
iron belonging to respondent company, the same is undoubtedly work-related. 1avvphi 1

Respondent company’s charge against petitioner was amply proven by substantial evidence
consisting of the affidavits of various employees of respondent. Contrary to the NLRC’s observation,
the security guard who apprehended petitioner, Gerardo Luega, actually executed a
statement14 relative to the smuggling out of scrap iron, which was attached to, and served as basis
for the filing of, the corresponding complaint for Qualified Theft. Petitioner’s claim that he was framed
up after he allegedly lost his pay slip to draw respondent company to suspect that he might file a
labor complaint for underpayment does not inspire credence.

It is, however, with respect to the appellate court’s finding that petitioner was not afforded procedural
due process that the Court deviates from. Procedural due process has been defined as giving an
opportunity to be heard before judgment is rendered.15 In termination cases, Perez v. Philippine
Telegraph and Telephone Company,16illuminates on the correct proceedings to be followed therein
in order to comply with the due process requirement:

The above rulings are a clear recognition that the employer may provide an employee with ample
opportunity to be heard and defend himself with the assistance of a representative or counsel in
ways other than a formal hearing. The employee can be fully afforded a chance to respond to the
charges against him, adduce his evidence or rebut the evidence against him through a wide array of
methods, verbal or written.
After receiving the first notice apprising him of the charges against him, the employee may submit a
written explanation (which may be in the form of a letter, memorandum, affidavit or position paper)
and offer evidence in support thereof, like relevant company records (such as his 201 file and daily
time records) and the sworn statements of his witnesses. For this purpose, he may prepare his
explanation personally or with the assistance of a representative or counsel. He may also ask the
employer to provide him copy of records material to his defense. His written explanation may
also include a request that a formal hearing or conference be held. In such a case, the conduct of a
formal hearing or conference becomes mandatory, just as it is where there exist substantial
evidentiary disputes or where company rules or practice requires an actual hearing as part of
employment pretermination procedure. (emphasis and underscoring supplied)

Petitioner was given the opportunity to explain his side when he was informed of the charge against
him and required to submit his written explanation with which he complied. That there might have
been no hearing is of no moment, for as Autobus Workers’ Union v. NLRC17 holds:

This Court has held that there is no violation of due process even if no hearing was
conducted, where the party was given a chance to explain his side of the controversy. What is
frowned upon is the denial of the opportunity to be heard. (emphasis supplied)

Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner should have
been afforded counsel or advised of the right to counsel. The right to counsel and the assistance of
one in investigations involving termination cases is neither indispensable nor mandatory, except
when the employee himself requests for one or that he manifests that he wants a formal hearing on
the charges against him. In petitioner’s case, there is no showing that he requested for a formal
hearing to be conducted or that he be assisted by counsel. Verily, since he was furnished a second
notice informing him of his dismissal and the grounds therefor, the twin-notice requirement had been
complied with to call for a deletion of the appellate court’s award of nominal damages to petitioner.

As for the subsequent dismissal of the criminal cases18 filed against petitioner, criminal and labor
proceedings are distinct and separate from each other. Each requires a different quantum of proof,
arising though they are from the same set of facts or circumstances. As Vergara v. NLRC19 holds:

An employee’s acquittal in a criminal case does not automatically preclude a determination that he
has been guilty of acts inimical to the employer’s interest resulting in loss of trust and confidence.
Corollarily, the ground for the dismissal of an employee does not require proof beyond reasonable
doubt; as noted earlier, the quantum of proof required is merely substantial evidence. More
importantly, the trial court acquitted petitioner not because he did not commit the offense, but merely
because of the failure of the prosecution to prove his guilt beyond reasonable doubt.. In other words,
while the evidence presented against petitioner did not satisfy the quantum of proof required for
conviction in a criminal case, it substantially proved his culpability which warranted his dismissal
from employment. (emphasis supplied)

WHEREFORE, the petition is DENIED. The Report dated December 18, 2009 of the Court of
Appeals dismissing petitioner’s complaint is AFFIRMED with MODIFICATION in that the award of
nominal damages in the amount of ₱30,000 is DELETED.

Costs against petitioner.

SO ORDERED.
CASE NO. 16

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 123294 October 20, 2010

PHILIPPINE AIRLINES, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and AIDA M. QUIJANO, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Certiorari under Rule 65 of the Rules of Court seeking to annul, reverse and set
aside the following issuances of public respondent National Labor Relations Commission (NLRC):
(1) Decision1 dated September 29, 1995 in NLRC NCR CA 007860-94 (NLRC NCR 00-03-01859-
91), entitled "Aida M. Quijano v. Philippine Airlines, Inc.," which set aside the Decision2 of Labor
Arbiter Roberto I. Santos and ordered petitioner Philippine Airlines, Inc. (PAL) to pay private
respondent Aida M. Quijano (Quijano) her separation pay in accordance with petitioner’s "Special
Retirement & Separation Program," and (2) Resolution3 dated November 14, 1995 denying
petitioner’s Motion for Reconsideration thereof.

It bears stressing that pursuant to St. Martin Funeral Home v. National Labor Relations
Commission4 and In Re: Dismissal of Special Civil Actions in NLRC Cases,5 all special civil actions
arising out of any decision, final resolution or order of the NLRC must be filed with the Court of
Appeals. However, since both parties of this case had filed their respective Memoranda prior to the
promulgation of our decision in St. Martin Funeral Home, this case was no longer referred to the
Court of Appeals.

The following are the pertinent facts, as summarized by the NLRC:

Complainant Quijano rose from the ranks starting as accounting clerk in December 1967 until she
became effective September 1, 1984, Manager-Agents Services Accounting Division (ASAD), vice
Josefina Sioson.

ASAD, the specific unit in PAL charged with the processing, verification, reconciliation, and
validation of all claims for commission filed by agents worldwide, is under the direct supervision and
control of the Vice President-Comptroller, and within the scope of the audit program of the Vice
President-Internal Audit & Control.

On May 5, 1989, an investigating committee chaired by Leslie W. Espino (hereinafter referred to as

the Espino Committee) formally charged Quijano as Manager-ASAD in connection with the
processing and payment of commission claims to Goldair Pty. Ltd. (Goldair for short) wherein PAL
overpaid commissions to the latter amounting to several million Australian dollars during the period
1984-1987. Specifically, Quijano was charged as Manager-ASAD with the following:
"Failure on the job and gross negligence resulting in loss of trust and confidence in that you failed to:

a. Exercise the necessary monitoring, control and supervision over your Senior Accounts
Analyst to ensure that the latter was performing the basic duties and responsibilities of her
job in checking and verifying the correctness and validity of the commission claims from
Goldair.

b. Adopt and perform the necessary checks and verification procedures as demanded by
your position in order to ensure that the commission claims of Goldair which you were
approving for payment were correct and valid claims thus resulting in consistent substantial
overpayments to Goldair over a period of more than three years.

c. Require or otherwise cause a final reconciliation of the remaining balance due as

commission claims to Goldair for a particular month such that a claim for a particular month
was never liquidated in a final amount and thus contributing to consistent overpayments to
Goldair."

The Senior Accounts Analyst referred to in the charge was Dora Jane Prado Curammeng who was
included as a respondent. Curammeng was specifically assigned to handle and process
commissions of agents in, among others, the Australia Region, and Goldair was among the travel
agents whose production reports and commission claims were handled by her. Curammeng was
accused of failing to verify the completeness of the documents supporting the claims; to trace and
match each ticket in the production report submitted by Goldair with the IATA, BSP and CTO sales
report; and to perform a complete verification of the net/net amounts claimed in the production
reports against the approved marketing arrangements. However, Curammeng had already resigned
and became a resident of Canada at the time of the investigation conducted by the Espino
Committee.

Pending further investigation, the Espino Committee placed Quijano under preventive suspension
and at the same time required her to submit her answer to the charges. As directed, Quijano
submitted her answer wherein, among others, she explained as follows:

"My staff processes production reports submitted by both passenger and cargo agents. In 1984, they
were only seven (7) people (with one on loan to Financial Analysis Division) and yet they process
commission claims of an average of PHP four billion annually. My colleagues who are responsible
for processing and recording gross passenger and cargo sales have around 51 people. Just the ratio
of my staff to accounting sales staff, which is one to seven, would indicate the heavy load our unit
experience.

I wish to emphasize however, that the staff assigned under my division have been selected on the
basis of their judgment competence considering the very nature of marketing arrangements with
agents are strictly private and confidential. Under the circumstances I have just mentioned, my
staff’s judgment and competence is heavily relied on particularly when random checking of
commission claims for traffic documents and airway bills against sales reports is being performed by
them. I also seek your appreciation of the work environment we are in and the intermittent conflicts
we experience due to the pressure of prompt settlement of claims to agents and yet having the
satisfaction that the processing procedures are adequate.

xxxx

May I reiterate to the Committee that when my staff informed me of their findings of double claims on
the production reports for the months of October and November 1987, I followed this up with a
representative of Goldair. On June 1988, I received a handwritten note from the representative of
Goldair signed by its General Manager Aleco Papazoglou, a xerox copy of it is hereto attached as
Annex "A". Mr. Papazoglou, in this note, guaranteed to me that he will undertake to collect any
excessive payments on the agent fees from his agents and pay these to us afterwards.

At this point, I would like to emphasize that ASAD, before known as "Confidential Staff" under the
Office of the VP-Comptroller, became a unit since 1976. Due to the confidential nature of its
functions, the accounting procedures were not written. The procedures being performed by the staff
were mainly practices handed down from their predecessors. Further, the procedures were tailored
to adopt to the market environment of the country which were based on the approved marketing
arrangements. But of course, there were inherent internal controls.

A final check whether accounting procedures being observed were appropriate in accordance with
accounting standards, is the periodic examination of both our internal and external auditors.

During all these 4-1/2 years I have been with ASAD, I did not receive any feedback that there were
weaknesses or lapses in accounting controls and procedures being followed.

In 1985, Cressop Mccormick & Paget made a study of the CMA’s. They conducted an interview of all
key personnel including me who were involved in handling CMA’s. It was of course necessary for
them to observe and evaluate the existing accounting procedures and controls. Their report,
however, did not mention any adverse findings concerning my division. 1avv phi1

In 1986, Sycip, Gorres, Velayo & Co. were engaged to look into the CMA functional specifications
and to propose the best method of allocating commission expenses to flown revenues. To be able
for them to render a report, it is, of course, necessary for them to delve into the reports we receive
and the records we maintain. It is safe to surmise that they "walked through" our accounting
procedures. No mention, however, of weaknesses on our accounting procedures and controls was
made in their report.

Again, during the early part of 1987, all the production reports from Australia for the period April to
September 1986 were borrowed and audited by Internal Audit and control. We apprised the auditor
then of the various procedures we observed in processing these production reports. We did not
receive any adverse feedback about their audit. Our confidence that the AMA’s were properly
enforced by Australian agents and that there were no irregularities committed were thus regained.
We shifted our concentration to the other agents particularly those under Nett-Nett settlement
arrangements and tried to recall any commission that should be disallowed.

In the middle of 1987, a special team from the Commission on Audit conducted a fraud audit and
again, interviewed my staff and I on our accounting procedures. Incentive commission figures by
agent by country were also furnished to them. I wasn’t informed of any flaws in our accounting
procedures and control nor existence of any fraud.

My division underwent scrutiny of three (3) prestigious consulting firms and of our own internal audit.
I relied heavily on the absence of any unfavorable findings on accounting procedures and controls
from them since their studies were quite extensive and lengthy. It is quite surprising at times why I
am now asked how I could have failed to observe that certain accounting procedures were not being
followed by my staff.

xxxx
Also, Internal Audit & Control made a regular audit in Australia in November, 1986 headed by no
less than the Vice President-Internal Audit & Control. They did not discover any fraud nor report any
questionable transaction on Passenger but on Cargo transaction only. If they, the auditors, did not
find any discrepancy when their concentration is on Australia alone, how much more with us when
our concentration is on the whole system? The production reports of Goldair was borrowed and
assessed by the auditor before and after the regular audit."

The other members of the Espino Committee were Ricardo G. Paloma, then Senior Vice President-
Strategic Planning & Corporate Services wrote a dissenting opinion to the Final Draft Majority Report
in the following manner, to wit:

"A new set of procedures was apparently installed by Romeo Ines and Josefina Sioson in April, 1984
(without any evident formal authorization by the Comptroller Dept.) upon receipt of Aleco
Papazoglou’s letter that automatic payment be made upon presentation of his production reports in
Manila Gold Air gained immunity against any possibility of cross of their production reports: it was
simply impossible to cross check the production reports against sales reports are not yet in by the
time the hand carried production reports arrive in ASAD.

Upon assumption of office by Aida Quijano this new set of procedure was carried over. She was
made to understand that these were the OFFICIAL PROCEDURES, contrary to the actual procedure
which called for production reports being initially checked by PAL Melbourne during the 1981 to
1983 period. This initial check which had until them been handled by the Regional Office was
combined with the secondary check and were all dumped on ASAD.

A mitigating factor in Quijano’s favor is that UNSEEN HANDS designed or allowed this new
procedures to be put in place. Ines, who became the VP Internal Audit should have known the
prescribed procedures (or at the very least the actual practice during the period 1981 to 1983 when
he was the VP Comptroller) and yet, did not alert her. Unknowingly, Quijano allowed the by-pass
and the automatic payment of 80% upon presentation of production reports because Sioson assured
her that was the procedure previously followed. Trustingly, she became a participant in this mess."

It should be noted that the Romeo Ines mentioned in the dissenting opinion is the same Romeo R.
Ines who was one of the members of the Espino Committee and who was later named a respondent
in the second Goldair charge, together with Chairman Espino. Romeo R. Ines was the VP-
Comptroller for the period 1981-1983 and VP-Internal Audit for the period 1984-1987. While Josefina
Sioson, as earlier shown, was the Manager-ASAD during the period 1981-1983 until she was
replaced by Quijano on September 1, 1984. Incidentally, as found by respondent’s witness Benigno
Datoc, the Goldair fraud started in 1981 and continued until its discovery sometime in the latter part
of 1987. And as of that year, Goldair had been PAL’s agent for about seventeen (17) years already.

On July 2, 1990, another Administrative charge involving the same Goldair anomaly was filed, this
time including Committee Chairman Leslie W. Espino and Committee Member Romeo R. Ines and
several others, for "gross incompetence and inefficiency, negligence, imprudence, mismanagement,
dereliction of duty, failure to observe and/or implement administrative and executive policies, and
related acts or omissions." Pending the result of investigation by another committee chaired by
Judge Martin S. Ocampo, the PAL Board of Directors suspended respondents Leslie W. Espino,
Executive Vice-President and Chief Operating Officer; Ramon C. Lozon, Senior Vice-President-
Finance; Romeo R. Ines, Vice President-Internal Audit & Control; Josefina Sioson, Manager-Staff
Pricing; except respondents VP-Comptroller Robin C. Dui and Manager-ASAD Aida Quijano who
were already suspended by the Espino Committee, and respondent Juan Yoga, former Regional
Vice President-Australia who has already retired.
Meantime, PAL filed a civil case in Australia against Goldair seeking to recover AUD 11 million.
Twice, Quijano went to Australia as witness for PAL. Thereafter, a settlement was reached whereby
Goldair was to pay PAL a total of around AUD 7 million inclusive of court costs. A criminal case was
nevertheless filed against Goldair’s owner, Alexandro Papazoglou, by the Fraud Squad Victorian
Police.

The Ocampo Committee having submitted its findings to the PAL Board of Directors, the latter, in a
resolution dated January 18, 1991, considered respondents Leslie W. Espino, Ramon C. Lozon,
Romeo R. Ines, Robin C. Dui, Josefina Sioson, and Aida M. Quijano, resigned from the service
effective immediately, for loss of confidence and for acts inimical to the interest of the company.

The Board found as follows:

"This is the extended Resolution.

The Goldair fraud has caused a total loss to PAL as of August 1990 in the amount of AUD 14.6
million (PHP 204 million). Goldair is a company that served then as the General Sales Agent of PAL
in Australia against Goldair, a settlement was reached whereby Goldair was to pay PAL a total of
around AUD 7 million inclusive of court costs. This settlement is said to be the most practical and
realistic under the circumstances. A criminal case was nevertheless filed against Goldair’s owner,
Alexandro Papazoglou, by the Fraud Squad Victorian Police. Hearings are still going on.

According to the evidence received and evaluated by the investigating committee, PAL lost the
above huge sum of money to Goldair as a result of false, padded, erroneous or irregular claims for
commissions submitted by Goldair and unwittingly paid by PAL. The Agents Services Accounting
Division (ASAD), one of the divisions under the Comptroller Department, is the specific unit in the
company charged with the processing, verification, and validation of all claims for commissions filed
by the company’s agents worldwide (excluding the U.S. which is processed by the San Francisco
Regional Office). Consequently, responsibility for the Goldair fraud has been attributed mainly to the
failure of ASAD to properly process and validate Goldair’s commission claims prior to payment.

Thus, the following lapses or irregularities were uncovered in the course of the investigations that
have been conducted:

1. No adequate effort was exerted to see to it that the supporting documents (photocopies of
tickets submitted and attached to the production report were complete). Neither was a
verification or comparison made between the tickets and the production report.

2. The simple and basic step of verifying the names of the passengers and their ticket
numbers against ticket numbers, even on a check basis, to see whether they were reported
more than once was not accomplished. If done, double or multiple reporting of tickets could
have been readily detected.

3. Validation of the correctness of prorate values, by performing the proration, was not
undertaken.

4. No reconciliation was made of all the amounts due the agent for a particular month. Such
reconciliation would have disclosed whether or not the account for a particular month could
be closed.

5. Production reports were not cross-checked against sales report or flight coupon registers.
 6. Superiors failed to adequately monitor the activities of their subordinates to ensure that the
latter were performing their duties.

7. The policy that cash vouchers could be approved only by duly authorized persons was in
several cases violated."

Resolving the case of Quijano, the Board said:

"The charge against Ms. Quijano is that:

Quijano was the Manager-ASAD (Agents Services Accounting Division) in 1984-87, and responsible
for the final scrutiny of agents’ Production Reports and final recommendation for payment of travel
agents’ commissions.

As Manager-ASAD from 1984 to 1987 (when the fraud was discovered), she failed to uncover or
detect and report or grossly disregarded the fraud although the commissions vis-à-vis production
were scandalously high.

Ms. Quijano claims that she relied heavily on Ms. Curammeng’s judgment competence to perform
her work, particularly the "completeness of the documents" check. She argues that if she were to do
the completeness check herself, there would be no need for the analyst. This argument, however,
wittingly or unwittingly, misconceives the nature of her job. Precisely, her basic role and duty as a
manager was to make sure that the analysts in her division were performing the tasks assigned to
them. But Ms. Quijano did not see to it that the completeness check was actually being performed by
Ms. Curammeng. This lapse in control, contributed materiallyto the double, multiple and fictitious
reporting of tickets, and double claims for commissions perpetrated by Goldair. Ms. Quijano was
certainly not expected to personally do and perform the completeness check herself. But as
manager, it was clearly incumbent upon her to see to it that this completeness check was being
done by her subordinates competently and efficiently. Yet, Ms. Quijano even failed to adopt ways
and means of keeping herself sufficiently informed of the activities of her staff members so as to
prevent or at least discover at an early stage the fraud being perpetrated on a massive scale by
Goldair against her company.

Her incompetence at her job is patent."

Her motion for reconsideration having been denied by the Board in a Resolution dated February 19,
1991, Quijano filed on March 25, 1991 the instant case against PAL for illegal suspension and illegal
dismissal.6

The Labor Arbiter dismissed private respondent’s complaint in a Decision dated September 7, 1994,
the dispositive portion of which reads:

WHEREFORE, in conformity with the opinion above-expressed, judgment is hereby rendered

dismissing the above-captioned case for lack of merit and, consequently, the respondent is absolved
from any liability.7

Undeterred, private respondent filed an appeal before the NLRC which rendered the assailed
Decision dated September 29, 1995, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing considerations, the decision appealed from should be, as
it is hereby, VACATED and SET ASIDE and another one entered, directing the Philippine Airlines,
Inc., thru its responsible officials, to pay Aida M. Quijano her separation pay in accordance with its
"Special Retirement & Separation Program" dated February 15, 1988, plus ten percent (10%) of the
total amount by way of attorney’s fee.8

Petitioner filed a Motion for Reconsideration but this was denied by the NLRC in its Resolution dated
November 14, 1995, the dispositive portion of which reads:

After due consideration of the Motion for Reconsideration filed by respondent-appellee on October
20, 1995, from the Decision of September 29, 1995, the Commission (Second Division) RESOLVED
to deny the same for lack of merit.9

Hence, this petition for certiorari.

Both parties submitted their respective Memoranda10 in late 1997, however, on September 11, 1998,
petitioner filed a Motion for Suspension of Proceedings11 based on Presidential Decree No. 902-A
which reads, in part:

That upon appointment of management committee, rehabilitation receiver, board or body, pursuant
to this Decree,all actions for claims against corporations, partnerships or associations under
management or receivership pending before any court, tribunal, board or body shall be suspended
accordingly.12 (Underscoring supplied.)

The said motion referred to an Order13 dated June 23, 1998 of the Securities and Exchange
Commission (SEC) which appointed an Interim Rehabilitation Receiver for petitioner pursuant to
Presidential Decree No. 902-A that was followed by the issuance of another Order14 dated July 1,
1998 which commanded that "all claims against PAL are deemed suspended."

After hearing both parties on the question of whether or not the Court should render judgment during
the state of suspension of claims, we ruled in the negative in a Resolution15 dated September 4,
2000, the dispositive portion of which reads:

IN VIEW THEREOF, the Motion for Suspension of Proceedings of petitioner is GRANTED.16

Private respondent filed a Motion for Reconsideration17 on October 3, 2000 of the above Resolution
but we denied the same in a Resolution18 dated November 13, 2000.

Since then petitioner was required by this Court to submit periodic status reports on the rehabilitation
proceedings, the last of which was dated October 22, 2007,19 declaring that the petitioner’s request
to exit from rehabilitation had been granted by the SEC via an Order20 issued on September 28,
2007, the dispositive portion of which reads:

WHEREFORE, in the light of the foregoing, and considering PAL’s firm commitment to settle its
outstanding obligations as well as the fact that its operations and its financial condition have been
normalized and stabilized in conformity with the Amended and Restated Rehabilitation Plan
exemplifying a successful corporate rehabilitation, the PAL’s request to exit from rehabilitation is
hereby GRANTED.

The PRR is likewise directed to furnish all creditors and parties concerned with copies of this Order
at the expense of the Petitioner and submit proof of service thereof to the Commission, within fifteen
(15) days from date of receipt of this Order.21
Considering the foregoing and the fact that both parties have long submitted their respective
Memoranda in the instant case, private respondent filed a Motion to Resume Proceedings and to
Render Judgment22 on December 11, 2007. In compliance with this Court’s Resolution23 dated
January 21, 2008 requiring petitioner to comment on private respondent’s motion, petitioner filed a
Comment/Manifestation24 on February 28, 2008 which confirmed that "with the issuance of the
Securities and Exchange Commission’s September 28, 2007 Order granting PAL’s request to exit
from rehabilitation, there is no longer any legal impediment to the resumption of the instant
proceedings."

In the instant petition, petitioner puts forward a singular argument, to wit:

ASSUMING ARGUENDO (WITHOUT ADMITTING) THAT THE EQUITABLE CONSIDERATIONS

CITED BY THE NLRC DID EXIST, THE SAME CANNOT JUSTIFY THE AWARD OF SEPARATION
PAY TO MRS. QUIJANO (despite the finding that she was legally suspended and thereafter legally
dismissed) IN THE FACE OF OVERWHELMING EVIDENCE SUBMITTED BY PETITIONER WHICH
CLEARLY SHOW THAT PHILIPPINE AIRLINES, INC. LOST SEVERAL MILLION AUSTRALIAN
DOLLARS AS A RESULT OF THE FRAUD COMMITTED BY GOLDAIR AND THAT SAID FRAUD
COULD ONLY HAVE BEEN MADE POSSIBLE BY MRS. QUIJANO’S PATENT MISMANAGEMENT
AND GROSS INCOMPETENCE AS ASAD MANAGER IN FAILING TO DETECT THE
IRREGULARITY. IN AWARDING SEPARATION PAY TO MRS. QUIJANO, THE NLRC
COMMITTED A GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO LACK OF
JURISDICTION.25

We affirm the NLRC ruling with modification.

At the onset, it should be noted that the parties do not dispute the validity of private respondent’s
dismissal from employment for loss of confidence and acts inimical to the interest of the employer.
The assailed September 29, 1995 Decision of the NLRC was emphatic in declaring that it was "not
prepared to rule as illegal the preventive suspension and eventual dismissal from the service of
[private respondent]"26 and rightfully so because the last position that private respondent held,
Manager-ASAD (Agents Services Accounting Division), undeniably qualifies as a position of trust
and confidence.

Loss of confidence as a just cause for termination of employment is premised from the fact that an
employee concerned holds a position of trust and confidence. This situation holds where a person is
entrusted with confidence on delicate matters, such as the custody, handling, or care and protection
of the employer’s property. But, in order to constitute a just cause for dismissal, the act complained
of must be "work-related" such as would show the employee concerned to be unfit to continue
working for the employer.27

The January 18, 1991 Resolution of the PAL Board of Directors, the relevant portions of which are
discussed in the narration of the facts of this case as culled from the assailed September 29, 1995
NLRC Decision, clearly laid out the reasons why it considered private respondent along with her
other co-employees in PAL resigned from the service effective immediately for loss of confidence
and for acts inimical to the interest of the company. In private respondent’s case, the Resolution
underscored her acts of mismanagement and gross incompetence which made her fail to detect the
irregularities in the Goldair account that resulted in huge financial losses for petitioner. Admittedly,
the said findings are not backed by proof beyond reasonable doubt but are, nevertheless, given
credence since they have been adopted by both the labor arbiter and the NLRC and are supported
by substantial evidence. As we have consistently held, the degree of proof required in labor cases is
not as stringent as in other types of cases.28
As a general rule, employers are allowed a wider latitude of discretion in terminating the employment
of managerial personnel or those who, while not of similar rank, perform functions which by their
nature require the employer’s full trust and confidence. This must be distinguished from the case of
ordinary rank and file employees, whose termination on the basis of these same grounds requires a
higher proof of involvement in the events in question; mere uncorroborated assertions and
accusations by the employer will not suffice.29

Having succinctly disposed of the issue of the validity of private respondent’s dismissal, we now
delve into the true crux of this controversy which is the legality of the award of separation pay to
private respondent despite having been lawfully terminated for a just cause.

Petitioner argues that, in light of the fact that a just cause forms the basis for her lawful termination
from the job, private respondent is not entitled to separation pay. Likewise, petitioner insists that
even assuming that the equitable considerations cited by the NLRC did exist, the same cannot justify
the award of separation pay. And, in awarding the same, the NLRC committed grave abuse of
discretion amounting to lack of jurisdiction.

We do not agree.

Grave abuse of discretion is an evasion of a positive duty or a virtual refusal to perform a duty
enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law
and evidence but on caprice, whim and despotism.30 This Court holds that the NLRC did not gravely
abuse its discretion in granting separation pay to private respondent as the same is not
characterized by caprice or arbitrariness being rooted in established jurisprudence.

The language of Article 279 of the Labor Code is pregnant with the implication that a legally
dismissed employee is not entitled to separation pay, to wit:

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.

However, in exceptional cases, this Court has granted separation pay to a legally dismissed
employee as an act of "social justice" or based on "equity." In both instances, it is required that the
dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the
employee31 or would involve moral turpitude. This equitable and humanitarian principle was first
discussed by the Court in the landmark case of Philippine Long Distance Telephone Co. (PLDT) v.
National Labor Relations Commission,32 wherein it was held:

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

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

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

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character. Where the reason for the valid dismissal is, for example,
habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it is called, on the ground of social justice.33

In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations
Commission,34 we clarified that the grant of separation pay may still be precluded even if the ground
for the employee’s dismissal is not serious misconduct under Article 282(a) of the Labor Code but
other just causes under the same article and/or other authorized causes provided for under the
Labor Code. However, the TMPCWA case still recognized the social justice exception prescribed in
Philippine Long Distance Telephone Company. To quote the relevant portions of that decision:

Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay
based on social justice¾serious misconduct (which is the first ground for dismissal under Art. 282) or
acts that reflect on the moral character of the employee. What is unclear is whether the ruling
likewise precludes the grant of separation pay when the employee is validly terminated from work on
grounds laid down in Art. 282 of the Labor Code other than serious misconduct.

A recall of recent cases decided bearing on the issue reveals that when the termination is legally
justified on any of the grounds under Art. 282, separation pay was not allowed. x x x.

xxxx

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

In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts
may opt to grant separation pay anchored on social justice in consideration of the length of service
of the employee, the amount involved, whether the act is the first offense, the performance of the
employee and the like, using the guideposts enunciated in PLDT on the propriety of the award of
separation pay.35 (Emphases supplied.)

In other words, under the present jurisprudential framework, the grant of separation pay as a matter
of equity to a validly dismissed employee is not contingent on whether the ground for dismissal is
expressly under Article 282(a) but whether the ground relied upon is akin to serious misconduct or
involves willful or wrongful intent on the part of the employee.

It, thus, becomes pertinent to examine the ground relied upon for the dismissal of private respondent
and to determine if the special circumstances described in PLDT are present in the case at bar.

Serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper
or wrong conduct. It is a transgression of some established and definite rule of action, a forbidden
act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of
judgment. To be serious within the meaning and intendment of the law, the misconduct must be of
such grave and aggravated character and not merely trivial or unimportant. However serious such
misconduct, it must, nevertheless, be in connection with the employee’s work to constitute just cause
for his separation. The act complained of must be related to the performance of the employee’s
duties such as would show him to be unfit to continue working for the employer.36 On the other hand,
moral turpitude has been defined as "everything which is done contrary to justice, modesty, or good
morals; an act of baseness, vileness or depravity in the private and social duties which a man owes
his fellowmen, or to society in general, contrary to justice, honesty, modesty, or good morals."37

In the case at bar, the transgressions imputed to private respondent have never been firmly
established as deliberate and willful acts clearly directed at making petitioner lose millions of pesos.
At the very most, they can only be characterized as unintentional, albeit major, lapses in professional
judgment. Likewise, the same cannot be described as morally reprehensible actions. Thus, private
respondent may be granted separation pay on the ground of equity which this Court had defined as
"justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law.
It is grounded on the precepts of conscience and not on any sanction of positive law, for equity finds
no room for application where there is law."38

A perusal of the assailed September 29, 1995 NLRC Decision would show that the following
equitable considerations were relied upon by the NLRC to arrive at its assailed ruling, to wit:

a) The Goldair fraud was found to have started in 1981. Private respondent became the
Manager-ASAD only on September 1, 1984. The former Manager-ASAD from 1981 to
August 1984 was Josefina Sioson.39

b) ASAD is under the direct supervision and control of the Vice President-Comptroller and
within the scope of the audit program of the Vice President-Internal Audit and Control. The
VP-Comptroller for the period 1981 to 1983 and the VP-Internal Audit for the period 1984 to
1987 was Romeo Ines.40
 c) The accounting procedures and controls inherited by private respondent when she took
over ASAD were subjected to the scrutiny of prestigious accounting firms like Cressop,
McCormick & Paget in 1985, the Sycip, Gorres, Velayo & Co., Inc. in 1986, including a
special team from the Commission on Audit in 1987 – all of which made no adverse findings
concerning ASAD.41

d) No less than the VP-Internal Audit made a regular audit in Australia in November 1986
and in the early part of 1987, by borrowing all production reports covering April to September
1986, but found no irregularities nor made any adverse feedback against ASAD.42

e) Private respondent was the first to discover the overpayment of commission claims to
Goldair in 1984 in rate differences in net/net settlement which, after her intervention, did not
recur. She was also the one who first discovered the fraud in double and fictitious
commission claims and promptly took action when she withheld all provisional payments due
Goldair.43

f) Even after the Goldair anomaly was discovered, private respondent could have availed of
PAL’s Special Retirement and Separation Program, but she stayed put and had gone twice
to Australia, while under preventive suspension, to attend court proceedings as a witness for
petitioner enabling the said company to recover and minimize its economic loss.44

g) Private respondent has no derogatory record during the entire period of her employment
with petitioner for more than two decades. She steadily rose from the ranks until she became
the ASAD Manager.45

h) In the dissenting opinion of Ricardo Paloma, Vice Chairman of the Espino Committee and
PAL Senior VP Strategic Planning and Corporate Service, to the Final Draft Majority Report,
he observed that "a mitigating factor in [private respondent’s] favor is that UNSEEN HANDS
designed or allowed this new procedures to be put in place. Ines, who became the VP
Internal Audit should have known the prescribed procedures (or at the very least the actual
practice during the period 1981 to 1983 when he was the VP Comptroller) and yet, did not
alert her. Unknowingly, [private respondent] allowed the by-pass and the automatic payment
of 80% upon presentation of production reports because Sioson assured her that was the
procedure previously followed. Trusting, she became a participant in this mess."46

Considering the foregoing uncontroverted special circumstances, we rule that the NLRC did not
commit grave abuse of discretion amounting to lack of jurisdiction in ordering petitioner to pay
private respondent separation pay for equitable considerations.

However, we do not agree with the NLRC that private respondent’s separation pay should be
awarded in accordance with PAL’s "Special Retirement & Separation Program" dated February 15,
1988 plus ten percent (10%) of the total amount by way of attorney’s fees.

At the risk of stating the obvious, private respondent was not separated from petitioner’s employ due
to mandatory or optional retirement but, rather, by termination of employment for a just cause. Thus,
any retirement pay provided by PAL’s "Special Retirement & Separation Program" dated February
15, 1988 or, in the absence or legal inadequacy thereof, by Article 287 of the Labor Code47 does not
operate nor can be made to operate for the benefit of private respondent. Even private respondent’s
assertion that, at the time of her lawful dismissal, she was already qualified for retirement does not
aid her case because the fact remains that private respondent was already terminated for cause
thereby rendering nugatory any entitlement to mandatory or optional retirement pay that she might
have previously possessed.
Likewise, attorney’s fees are not proper in this case because the same can only be awarded when
the employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to
protect his rights by reason of the unjustified act of his employer.48 The aforementioned conditions do
not obtain in this case.

As to the matter of the proper amount of separation pay to be awarded to private respondent on the
basis of equitable considerations, our pronouncement in Yrasuegui v. Philippine Airlines, Inc.49 is
instructive, to wit:

Here, We grant petitioner separation pay equivalent to one-half (1/2) month’s pay for every year of
service. It should include regular allowances which he might have been receiving. We are not blind
to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on
his moral character. We also recognize that his employment with PAL lasted for more or less a
decade.

Private respondent’s circumstances are more or less identical to the above-cited case in the sense
that, as previously discussed, her dismissal was neither for serious misconduct nor for an offense
involving moral turpitude. Furthermore, her employment with petitioner spanned more than two
decades unblemished with any derogatory record prior to the infractions at issue in the case at bar.

WHEREFORE, the assailed NLRC Decision dated September 29, 1995 as well as the Resolution
dated November 14, 1995 are AFFIRMED with the MODIFICATION that petitioner Philippine
Airlines, Inc. pay private respondent Aida Quijano one-half (1/2) month salary for every year of
service as separation pay on equitable grounds.

SO ORDERED.
CASE NO. 17

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. Nos. 180849 and 187143 November 16, 2011

PHILIPPINE NATIONAL BANK, Petitioner,

vs.
DAN PADAO, Respondent.

DECISION

MENDOZA, J.:

These are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court.

In G.R. No. 180849, petitioner Philippine National Bank (PNB) seeks the reversal of the December
14, 2006 Decision1 and October 2, 2007 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
76584, which upheld the ruling of the National Labor Relations Commission, Cagayan de Oro City
(NLRC) in its October 30, 2002 Resolution,3 reversing the June 21, 2001 Decision4 of the Executive
Labor Arbiter (ELA) which found the dismissal of respondent Dan Padao (Padao) valid.

In G.R. No. 187143, PNB seeks the reversal of the December 9, 2008 Decision5 and February 24,
2009 Resolution6 of the CA in CA-G.R. SP No. 00945, which allowed the execution of the October
30, 2002 NLRC Resolution.

THE FACTS

A. G.R. No. 180849

On August 21, 1981, Padao was hired by PNB as a clerk at its Dipolog City Branch. He was later
designated as a credit investigator in an acting capacity on November 9, 1993. On March 23, 1995,
he was appointed regular Credit Investigator III, and was ultimately promoted to the position of Loan
and Credit Officer IV.

Sometime in 1994, PNB became embroiled in a scandal involving "behest loans." A certain Sih Wat
Kai complained to the Provincial Office of the Commission on Audit (COA) of Zamboanga del Norte
that anomalous loans were being granted by its officers: Assistant Vice President (AVP) and Branch
Manager Aurelio De Guzman (AVP de Guzman), Assistant Department Manager and Cashier Olson
Sala (Sala), and Loans and Senior Credit Investigator Primitivo Virtudazo (Virtudazo).

The questionable loans were reportedly being extended to select bank clients, among them Joseph
Liong, Danilo Dangcalan, Jacinto Salac, Catherine Opulentisima, and Virgie Pango. The exposé
triggered the conduct of separate investigations by the COA and PNB’s Internal Audit Department
(IAD) from January to August 1995. Both investigations confirmed that the collateral provided in
numerous loan accommodations were grossly over-appraised. The credit standing of the loan
applicants was also fabricated, allowing them to obtain larger loan portfolios from PNB. These
borrowers eventually defaulted on the payment of their loans, causing PNB to suffer millions in
losses.

In August 1995, Credit Investigators Rolando Palomares (Palomares) and Cayo Dagpin (Dagpin)
were administratively charged with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct
Prejudicial to the Best Interest of the Service, and violation of Republic Act (R.A.) No. 3019 (Anti-
Graft and Corrupt Practices Act), in connection with an anomalous loan granted to the spouses,
Jaime and Allyn Lim (the Lims). These charges, however, were later ordered dropped by PNB, citing
its findings that Dagpin and Palomares signed the Inspection and Appraisal Report (IAR) and the
Credit Inspection Report (CIR) in support of the Lims’ loan application in good faith, and upon the
instruction of their superior officers. PNB also considered using Dagpin and Palomares as
prosecution witnesses against AVP de Guzman, Loan Division Chief Melindo Bidad (Bidad) and
Sala.

The following month, September 1995, administrative charges for Grave Misconduct, Gross Neglect
of Duty and Gross Violations of Bank Rules and Regulations and criminal cases for violation of R.A.
No. 3019 were filed against AVP de Guzman, Sala, Virtudazo, and Bidad. Consequently, they were
all dismissed from the service by PNB in November 1996. Later, Virtudazo was ordered reinstated.

On June 14, 1996, Padao and Division Chief Wilma Velasco (Velasco) were similarly
administratively charged with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct
Prejudicial to the Best Interest of the Service, and violation of R.A. No. 3019.

The case against Padao was grounded on his having allegedly presented a deceptively positive
status of the business, credit standing/rating and financial capability of loan applicants Reynaldo and
Luzvilla Baluma and eleven (11) others. It was later found that either said borrowers’ businesses
were inadequate to meet their loan obligations, or that the projects they sought to be financed did
not exist.

Padao was also accused of having over-appraised the collateral of the spouses Gardito and Alma
Ajero, the spouses Ibaba, and Rolly Pango.

On January 10, 1997, after due investigation, PNB found Padao guilty of gross and habitual neglect
of duty and ordered him dismissed from the bank. Padao appealed to the bank’s Board of Directors.
On January 20, 1997, Velasco was also held guilty of the offenses charged against her, and was
similarly meted the penalty of dismissal. Her motion for reconsideration, however, was later granted
by the bank, and she was reinstated.

On October 11, 1999, after almost three (3) years of inaction on the part of the Board, Padao
instituted a complaint7 against PNB and its then AVP, Napoleon Matienzo (Matienzo), with the Labor
Arbitration Branch of the NLRC Regional Arbitration Branch (RAB) No. IX in Zamboanga City for 1]
Reinstatement; 2] Backwages; 3] Illegal Dismissal; and 4] Treachery/Bad Faith and Palpable
Discrimination in the Treatment of Employees with administrative cases. The case was docketed as
RAB 09-04-00098-01.

In a Decision dated June 21, 2001, the ELA found Padao’s dismissal valid. Despite the finding of
legality, the ELA still awarded separation pay of one-half (1/2) month’s pay for every year of service,
citing PLDT v. NLRC & Abucay.8 The ELA held that in view of the peculiar conditions attendant to
Padao’s dismissal, there being no clear conclusive showing of moral turpitude, Padao should not be
left without any remedy.
Padao appealed to the NLRC, which, in its Resolution9 dated October 30, 2002, reversed and set
aside the ELA Decision and declared Padao’s dismissal to be illegal. He was thereby ordered
reinstated to his previous position without loss of seniority rights and PNB was ordered to pay him
full backwages and attorney’s fees equivalent to ten percent (10%) of the total monetary award.

PNB’s Motion for Reconsideration10 was denied by the NLRC in its Resolution11 dated December 27,
2002.

Aggrieved, PNB filed a petition for certiorari12 with the CA but it was dismissed in a Decision13 dated
December 14, 2006. PNB moved for reconsideration14 but the motion was denied in the CA
Resolution15 dated October 2, 2007.

B. G.R. No. 187143

During the pendency of G.R. No. 180849 before the Court, the NLRC issued an entry of judgment on
September 22, 2003, certifying that on February 28, 2003, its October 30, 2002 Resolution had
become final and executory.16

On December 5, 2003, Padao filed a Motion for Execution of the NLRC Resolution dated October
30, 2002. This was granted by the ELA on April 22, 2004.

On May 4, 2004, PNB and AVP Matienzo sought reconsideration of the ELA’s Order based on the
following grounds: (1) the October 30, 2003 Resolution was inexistent and, thus, could not become
final and executory; and (2) Padao’s motion for execution was granted without hearing.

Acting thereon, the ELA denied PNB’s motion for reconsideration on the ground that motions for
reconsideration of an order are prohibited under Section 19, Rule V of the NLRC Rules of
Procedure.

Thus, Padao filed his Motion to Admit Computation17 dated July 14, 2004. In its Comment,18 PNB
alleged that the computation was grossly exaggerated and without basis, and prayed for a period of
thirty (30) days within which to submit its counter-computation since the same would come from its
head office in Pasay City.

On September 22, 2004, the ELA issued the Order19 granting Padao’s Motion to Admit Computation.
The order cited PNB’s failure to submit its counter-computation within the two extended periods
(totaling forty days), which the ELA construed as a waiver to submit the same. Thus, the ELA
ordered the issuance of a writ of execution for the payment of backwages due to Padao in the
amount of ₱ 2,589,236.21.

In a motion20 dated September 29, 2004, PNB sought reconsideration of the order with an attached
counter-computation. The ELA denied the same in its Order21 dated October 20, 2004 on the ground
that the motions for reconsideration of orders and decisions of the Labor Arbiter are prohibited under
Section 19, Rule V of the NLRC Rules of Procedure. The ELA further stated that PNB had been
given more than ample opportunity to submit its own computation in this case, and the belatedly
submitted counter-computation of claims could not be considered. Thus, a writ of execution22 was
issued on October 21, 2004.

On November 11, 2004 and January 19, 2005, PNB filed its Motion to Quash Writ of Execution and
its Motion to Dissolve Alias Writ of Execution, respectively. Both were denied by the ELA in an
Order23 dated February 8, 2005.
On February 18, 2005, PNB filed a Notice of Appeal with Memorandum on Appeal 24 with the NLRC.
On September 20, 2005, however, the NLRC issued a Resolution25 dismissing the bank’s appeal.
PNB’s Motion for Reconsideration26 was also denied in the December 21, 2005 Resolution.27

Thus, on March 7, 2006, PNB filed a Petition for Certiorari28 with the CA, assailing the findings of
ELA Plagata and the NLRC.

In a Decision29 dated December 9, 2008, the CA dismissed the petition, and later denied PNB’s
motion for reconsideration on February 24, 2009.

ISSUES

In G.R. No. 180849, PNB presents the following Assignment of Errors:30

A. THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT THE POSITION OF

A CREDIT INVESTIGATOR IS ONE IMBUED WITH [THE] TRUST AND CONFIDENCE OF
THE EMPLOYER.

B. THE COURT OF APPEALS ERRED IN TREATING THE ACT OF FALSIFYING THE

CREDIT AND APPRAISAL REPORTS AND THAT OF MERELY AFFIXING ONE’S
SIGNATURE IN A FALSE REPORT PREPARED BY ANOTHER AS ONE AND THE SAME
DEGREE OF MISCONDUCT WHICH WARRANTS THE SAME PENALTY.

In G.R. No. 187143, PNB presents the following Assignment of Errors:31

THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN THEY INVARIABLY
IGNORED PNB’S COUNTER-COMPUTATION AND MERELY RELIED ON RESPONDENT DAN
PADAO’S SELF-SERVING COMPUTATION OF HIS MONEY AWARD.

THE LABOR COURTS AND THE APPELLATE COURT ERRED WHEN THEY ACCEPTED THE
COMPUTATION OF RESPONDENT PADAO WITHOUT REQUIRING PROOF TO SUPPORT THE
SAME.

In G.R. No. 180849, PNB argues that the position of a credit investigator is one reposed with trust
and confidence, such that its holder may be validly dismissed based on loss of trust and confidence.
In disciplining employees, the employer has the right to exercise discretion in determining the
individual liability of each erring employee and in imposing a penalty commensurate with the degree
of participation of each. PNB further contends that the findings of the CA are not in accordance with
the evidence on record, thus, necessitating a review of the facts of the present case by this Court.32

On the other hand, Padao counters that local bank policies implemented by the highest-ranking
branch officials such as the assistant vice-president/branch manager, assistant manager/cashier,
chief of the loans division and legal counsel, are presumed to be sanctioned and approved by the
bank, and a subordinate employee should not be faulted for his reliance thereon. He argues that a
person who acts in obedience to an order issued by a superior for some lawful purpose cannot be
held liable. PNB is bound by the acts of its senior officers and he, like his fellow credit investigators,
having acted in good faith in affixing his signature on the reports based on the instruction, order and
directive of senior local bank officials, should not be held liable.33
Padao also claims that PNB cruelly betrayed him by charging and dismissing him after using him as
a prosecution witness to secure the conviction of the senior bank officials, that he was never part of
the conspiracy, and that he did not derive any benefit from the scheme.34

The Court’s Ruling

In the 1987 Constitution, provisions on social justice and the protection of labor underscore the
importance and economic significance of labor. Article II, Section 18 characterizes labor as a
"primary social economic force," and as such, the State is bound to "protect the rights of workers and
promote their welfare." Moreover, workers are "entitled to security of tenure, humane conditions of
work, and a living wage."35

The Labor Code declares as policy that the State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work.36

While it is an employer’s basic right to freely select or discharge its employees, if only as a measure
of self-protection against acts inimical to its interest,37 the law sets the valid grounds for termination
as well as the proper procedure to be followed when terminating the services of an employee.38

Thus, in cases of regular employment, the employer is prohibited from terminating the services of an
employee except for a just or authorized cause.39 Such just causes for which an employer may
terminate an employee are enumerated in Article 282 of the Labor Code:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate family member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.

Further, due process requires that employers follow the procedure set by the Labor Code:

Art. 277. Miscellaneous provisions.

xxx

b. Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations Commission.
The burden of proving that the termination was for a valid or authorized cause shall rest on the
employer. The Secretary of the Department of Labor and Employment may suspend the effects of
the termination pending resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before whom such dispute is
pending that the termination may cause a serious labor dispute or is in implementation of a mass
lay-off. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)

xxx

In this case, Padao was dismissed by PNB for gross and habitual neglect of duties under Article 282
(b) of the Labor Code.

Gross negligence connotes want of care in the performance of one’s duties, while habitual neglect
implies repeated failure to perform one’s duties for a period of time, depending on the
circumstances.40 Gross negligence has been defined as the want or absence of or failure to exercise
slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.41

In the case at bench, Padao was accused of having presented a fraudulently positive evaluation of
the business, credit standing/rating and financial capability of Reynaldo and Luzvilla Baluma and
eleven other loan applicants.42Some businesses were eventually found not to exist at all, while in
other transactions, the financial status of the borrowers simply could not support the grant of loans in
the approved amounts.43 Moreover, Padao over-appraised the collateral of spouses Gardito and
Alma Ajero, and that of spouses Ihaba and Rolly Pango.44

The role that a credit investigator plays in the conduct of a bank’s business cannot be overestimated.
The amount of loans to be extended by a bank depends upon the report of the credit investigator on
the collateral being offered. If a loan is not fairly secured, the bank is at the mercy of the borrower
who may just opt to have the collateral foreclosed. If the scheme is repeated a hundredfold, it may
lead to the collapse of the bank. In the case of Sawadjaan v. Court of Appeals,45 the Court stressed
the crucial role that a credit investigator or an appraiser plays. Thus:

Petitioner himself admits that the position of appraiser/inspector is "one of the most serious [and]
sensitive job[s] in the banking operations." He should have been aware that accepting such a
designation, he is obliged to perform the task at hand by the exercise of more than ordinary
prudence. As appraiser/investigator, the petitioner was expected to conduct an ocular inspection of
the properties offered by CAMEC as collaterals and check the copies of the certificates of title
against those on file with the Registry of Deeds. Not only did he fail to conduct these routine checks,
but he also deliberately misrepresented in his appraisal report that after reviewing the documents
and conducting a site inspection, he found the CAMEC loan application to be in order. Despite the
number of pleadings he has filed, he has failed to offer an alternative explanation for his actions.
[Emphasis supplied]

In fact, banks are mandated to exercise more care and prudence in dealing with registered lands:

[B]anks are cautioned to exercise more care and prudence in dealing even with registered lands,
than private individuals, "for their business is one affected with public interest, keeping in trust
money belonging to their depositors, which they should guard against loss by not committing any act
of negligence which amounts to lack of good faith by which they would be denied the protective
mantle of the land registration statute Act 496, extended only to purchasers for value and in good
faith, as well as to mortgagees of the same character and description. It is for this reason that banks
before approving a loan send representatives to the premises of the land offered as collateral and
investigate who are the true owners thereof.46

Padao’s repeated failure to discharge his duties as a credit investigator of the bank amounted to
gross and habitual neglect of duties under Article 282 (b) of the Labor Code. He not only failed to
perform what he was employed to do, but also did so repetitively and habitually, causing millions of
pesos in damage to PNB. Thus, PNB acted within the bounds of the law by meting out the penalty of
dismissal, which it deemed appropriate given the circumstances.

The CA was correct in stating that when the violation of company policy or breach of company rules
and regulations is tolerated by management, it cannot serve as a basis for termination.47 Such ruling,
however, does not apply here. The principle only applies when the breach or violation is one which
neither amounts to nor involves fraud or illegal activities. In such a case, one cannot evade liability or
culpability based on obedience to the corporate chain of command.

Padao cited Llosa-Tan v. Silahis International Hotel,48 where the "violation" of corporate policy was
held not per se fraudulent or illegal. Moreover, the said "violation" was done in compliance with the
apparent lawful orders of the concerned employee’s superiors. Management-sanctioned deviations
in the said case did not amount to fraud or illegal activities. If anything, it merely represented flawed
policy implementation.

In sharp contrast, Padao, in affixing his signature on the fraudulent reports, attested to the
falsehoods contained therein. Moreover, by doing so, he repeatedly failed to perform his duties as a
credit investigator.

Further, even Article 11(6) of the Revised Penal Code requires that any person, who acts in
obedience to an order issued by a superior does so for some lawful purpose in order for such person
not to incur criminal liability. The succeeding article exempts from criminal liability any person who
acts under the compulsion of an irresistible force (Article 12, paragraph 6) or under the impulse of
an uncontrollable fear of an equal or greater injury (Article 12, paragraph 7).

Assuming solely for the sake of argument that these principles apply by analogy, even an extremely
liberal interpretation of these justifying or exempting circumstances will not allow Padao to escape
liability.

Also, had Padao wanted immunity in exchange for his testimony as a prosecution witness, he should
have demanded that there be a written agreement. Without it, his claim is self-serving and
unreliable.

That there is no proof that Padao derived any benefit from the scheme is immaterial.49 What is
crucial is that his gross and habitual negligence caused great damage to his employer. Padao was
aware that there was something irregular about the practices being implemented by his superiors,
but he went along with, became part of, and participated in the scheme.

It does not speak well for a person to apparently blindly follow his superiors, particularly when, with
the exercise of ordinary diligence, one would be able to determine that what he or she was being
ordered to do was highly irregular, if not illegal, and would, and did, work to the great disadvantage
of his or her employer.

PNB, as an employer, has the basic right to freely select and discharge employees (subject to the
Labor Code requirements on substantive and procedural due process), if only as a measure of self-
protection against acts inimical to its interests.50 It has the authority to impose what penalty it deems
sufficient or commensurate to an employee’s offense. Having satisfied the requirements of
procedural and substantive due process, it is thus left to the discretion of the employer to impose
such sanction as it sees befitting based on the circumstances.

Finally, Padao claims that he should be accorded the same treatment as his co-employees.51 As the
ELA, however, correctly observed:

[A]s pointed out by the respondents, the case of the complainant was different, and his culpability,
much more than his aforementioned co-employees. In the case of Palomares and Dagpin, they
1âwphi1

were involved in only one case of over-appraisal of collateral in the loan account of the spouses
Jaime Lim and Allyn Tan (Respondents’ Comments, p. 1), but in the case of complainant, his over-
appraisals involved three (3) loan accounts and amounting to ₱ 9,537,759.00 (Ibid.), not to mention
that he also submitted falsified Credit Investigation Reports for the loan accounts of seven (7) other
borrowers of PNB (Ibid., pp. 1-2).

xxx

The number of over-appraisals (3) and falsified credit investigation reports (7) or countersigned by
the complainant indicates habituality, or the propensity to do the same. The best that can be said of
his acts is the lack of moral strength to resist the repeated commission of illegal or prohibited acts in
loan transactions. He thus cannot interpose undue pressure or coercion exerted upon [him] by his
superiors, to absolve himself of liability for his signing or countersigning the aforementioned falsified
reports. It may have been allowable or justifiable for him to give in to one anomalous loan
transaction report, but definitely not for ten (10) loan accounts. It is axiomatic that obedience to one’s
superiors extends only to lawful orders, not to unlawful orders calling for unauthorized, prohibited or
immoral acts to be done.

In the case of Wilma Velasco, PNB did not pursue legal action and even discontinued the
administrative case filed against her because, according to PNB, she appeared to have been the
victim of the misrepresentations and falsifications of the credit investigation and appraisal reports of
the complainant upon which she had to reply in acting on loan applications filed with the PNB and for
which such reports were made. She was not obliged to conduct a separate or personal appraisal of
the properties offered as collaterals, or separate credit investigations of the borrowers of PNB.
These functions pertained to PNB inspectors/credit investigators, like the complainant.
Unfortunately, the latter was derelict in the performance of those duties, if he did not deliberately
misuse or abuse such duties.

As can be seen, therefore, the complainant and Wilma Velasco did not stand on the same footing
relative to their involvement or participation in the anomalous loan transactions earlier mentioned.
Therefore, PNB cannot be faulted for freeing her from liability and punishment, while dismissing the
complainant from service. [Emphases supplied]

Given the above ruling of the Court in G.R. No. 180849, the ruling of the CA in CA-G.R. SP No.
00945, an action stemming from the execution of the decision in said case, must perforce be
reversed.

However, Padao is not entitled to financial assistance. In Toyota Motor Phils. Corp. Workers
Association v. NLRC,52 the Court reaffirmed the general rule that separation pay shall be allowed as
a measure of social justice only in those instances where the employee is validly dismissed for
causes other than serious misconduct, willful disobedience, gross and habitual neglect of
duty, fraud or willful breach of trust, commission of a crime against the employer or his
family, or those reflecting on his moral character. These five grounds are just causes for
dismissal as provided in Article 282 of the Labor Code.

In Central Philippine Bandag Retreaders, Inc. v. Diasnes,53 cited in Quiambao v. Manila Electric
Company,54 we discussed the parameters of awarding separation pay to dismissed employees as a
measure of financial assistance:

To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of
separation pay based on social justice when an employee’s dismissal is based on serious
misconduct or willful disobedience;gross and habitual neglect of duty; fraud or willfull breach of
trust; or commission of a crime against the person of the employer or his immediate family – grounds
under Art. 282 of the Labor Code that sanction dismissal of employees. They must be judicious and
circumspect in awarding separation pay or financial assistance as the constitutional policy to provide
full protection to labor is not meant to be an instrument to oppress the employers. The commitment
of the Court to the cause of labor should not embarrass us from sustaining the employers when they
are right, as here. In fine, we should be more cautions in awarding financial assistance to the
undeserving and those who are unworthy of the liberality of the law.55 [Emphasis original.
Underscoring supplied]

Clearly, given the Court’s findings, Padao is not entitled to financial assistance. 1avv phi 1

WHEREFORE, the petitions in G.R. No. 180849 and G.R. No. 187143 are GRANTED. In G.R. No.
180849, the December 14, 2006 Decision and the October 2, 2007 Resolution of the Court of
Appeals in CA-G.R. SP No. 76584 are REVERSED and SET ASIDE.

In G.R. No. 187143, the December 9, 2008 Decision and the February 24, 2009 Resolution of the
Court of Appeals in CA-G.R. SP No. 00945 are REVERSED and SET ASIDE.

The June 21, 2001 Decision of the Executive Labor Arbiter is hereby ordered REINSTATED, with
theMODIFICATION that the award of financial assistance is DELETED.

SO ORDERED.
CASE NO. 18

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 176287 January 31, 2011

HOSPITAL MANAGEMENT SERVICES, INC. - MEDICAL CENTER MANILA, Petitioner,

vs.
HOSPITAL MANAGEMENT SERVICES, INC. - MEDICAL CENTER MANILA EMPLOYEES
ASSOCIATION-AFW and EDNA R. DE CASTRO, Respondents.

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari seeking to set aside the Decision1 dated May
24, 2006 and Resolution2 dated January 10, 2007 of the Court of Appeals (CA), Special First
Division, in CA-G.R. SP No. 73189, entitled Hospital Management Services, Inc.-Medical Center
Manila Employees Association-AFW and Edna R. De Castro v. National Labor Relations
Commission, Hospital Management Services, Inc.-Medical Center Manila and Asuncion Abaya-
Morido, which reversed and set aside the Decision3 dated February 28, 2002 of the National Labor
Relations Commission (NLRC), Second Division, in NLRC NCR No. 00-07-07716-99 (CA No.
027766-01), and its Resolution4 dated May 31, 2002. The assailed CA decision ordered petitioner
Hospital Management Services, Inc.-Medical Center Manila to reinstate respondent Edna R. De
Castro to her former position without loss of seniority rights or by payroll reinstatement, pursuant to
the Labor Arbiter's Decision dated January 18, 2001, but with payment of full backwages and other
benefits or their monetary equivalent, computed from the expiration of the 14-day suspension period
up to actual reinstatement.

The antecedent facts are as follows:

Respondent De Castro started working as a staff nurse at petitioner hospital since September 28,
1990, until she was dismissed on July 20, 1999.

Between 2:00 a.m. to 3:00 a.m. of March 24, 1999, while respondent De Castro and ward-clerk
orientee Gina Guillergan were at the nurse station on night duty (from 10:00 p.m. of March 23, 1999
to 6:00 a.m. of March 24, 1999), one Rufina Causaren, an 81-year-old patient confined at Room
724-1 of petitioner hospital for "gangrenous wound on her right anterior leg and right forefoot" and
scheduled for operation on March 26, 1999, fell from the right side of the bed as she was trying to
reach for the bedpan. Because of what happened, the niece of patient Causaren staying in the room
was awakened and she sought assistance from the nurse station. Instead of personally seeing the
patient, respondent De Castro directed ward-clerk orientee Guillergan to check the patient. The vital
signs of the patient were normal. Later, the physician on duty and the nursing staff on duty for the
next shift again attended to patient Causaren.

Chief Nurse Josefina M. Villanueva informed Dr. Asuncion Abaya-Morido, president and hospital
director, about the incident and requested for a formal investigation. On May 11, 1999, the legal
counsel of petitioner hospital directed respondent De Castro and three other nurses on duty, Staff
Nurse Janith V. Paderes and Nursing Assistants Marilou Respicio and Bertilla T. Tatad, to appear
before the Investigation Committee on May 13, 1999, 2:00 p.m., at the conference room of petitioner
hospital. During the committee investigation, respondent De Castro explained that at around 2:30
a.m. to 3:00 a.m., she was attending to a newly-admitted patient at Room 710 and, because of this,
she instructed Nursing Assistant Tatad to check the vital signs of patient Causaren, with ward-clerk
orientee Guillergan accompanying the latter. When the two arrived at the room, the patient was in a
squatting position, with the right arm on the bed and the left hand holding on to a chair.

In the Investigation Report5 dated May 20, 1999, the Investigation Committee found that the subject
incident happened between 11:00 a.m. to 11:30 a.m. of March 23, 1999. The three other nurses for
the shift were not at the nurse station. Staff Nurse Paderes was then in another nurse station
encoding the medicines for the current admissions of patients, while Nursing Assistant Respicio was
making the door name tags of admitted patients and Nursing Assistant Tatad delivered some
specimens to the laboratory. The committee recommended that despite her more than seven years
of service, respondent De Castro should be terminated from employment for her lapse in responding
to the incident and for trying to manipulate and influence her staff to cover-up the incident. As for
Staff Nurse Paderes and Nursing Assistants Respicio and Tatad, the committee recommended that
they be issued warning notices for failure to note the incident and endorse it to the next duty shift
and, although they did not have any knowledge of the incident, they should be reminded not to
succumb to pressure from their superiors in distorting the facts.

On July 5, 1999, Janette A. Calixijan, HRD Officer of petitioner hospital, issued a notice of
termination, duly noted by Dr. Abaya-Morido, upon respondent De Castro, effective at the close of
office hours of July 20, 1999, for alleged violation of company rules and regulations, particularly
paragraph 16 (a), Item 3, Chapter XI of the Employee's Handbook and Policy Manual of 1996
(Employee's Handbook):6 (1) negligence to follow company policy on what to do with patient Rufina
Causaren who fell from a hospital bed; (2) failure to record and refer the incident to the physician-
[on- duty and] allow[ing] a significant lapse of time before reporting the incident; (3) deliberately
instructing the staff to follow her version of the incident in order to cover up the lapse; and (4)
negligence and carelessness in carrying out her duty as staff nurse-on-duty when the incident
happened.

On July 21, 1999, respondent De Castro, with the assistance of respondent Hospital Management
Services Inc.-Medical Center Manila Employees Association-AFW, filed a Complaint7 for illegal
dismissal against petitioners with prayer for reinstatement and payment of full backwages without
loss of seniority rights, ₱20,000.00 moral damages, ₱10,000.00 exemplary damages, and 10% of the
total monetary award as attorney's fees.

On January 18, 2001, the Labor Arbiter rendered a Decision,8 ordering petitioner hospital to reinstate
respondent De Castro to her former position or by payroll reinstatement, at the option of the former,
without loss of seniority rights, but without backwages and, also, directing petitioners to notify her to
report to work. Her prayer for damages and attorney's fees was denied. The Labor Arbiter concluded
that although respondent De Castro committed the act complained of, being her first offense, the
penalty to be meted should not be dismissal from the service, but merely 7 to 14 days suspension as
the same was classified as a less serious offense under the Employee’s Handbook.

On appeal by respondent De Castro, the NLRC rendered a Decision dated February 28, 2002,
reversing the findings of the Labor Arbiter and dismissing the complaint against the petitioners. It
observed that respondent De Castro lacked diligence and prudence in carrying out her duty when,
instead of personally checking on the condition of patient Causaren after she fell from the bed, she
merely sent ward-clerk orientee Guillergan to do the same in her behalf and for influencing her staff
to conceal the incident.

On May 31, 2002, the NLRC denied respondent De Castro's Motion for Reconsideration dated April
16, 2002.

On May 24, 2006, the CA reversed and set aside the Decision of the NLRC and reinstated the
Decision of the Labor Arbiter, with modification that respondent De Castro should be entitled to
payment of full backwages and other benefits, or their monetary equivalent, computed from the
expiration of the 14-day-suspension period up to actual reinstatement. The CA ruled that while
respondent De Castro's failure to personally attend to patient Causeran amounted to misconduct,
however, being her first offense, such misconduct could not be categorized as serious or grave that
would warrant the extreme penalty of termination from the service after having been employed for
almost 9 years. It added that the subject infraction was a less serious offense classified under
"commission of negligent or careless acts during working time or on company property that resulted
in the personal injury or property damage causing expenses to be incurred by the company" stated
in subparagraph 11, paragraph 3 (B), Chapter XI [on the Rules on Discipline] of the Employee's
Handbook9 of petitioner hospital. The CA did not sustain the NLRC's ruling that respondent De
Castro's dismissal was proper on the ground that her offense was aggravated to serious misconduct
on account of her alleged act of asking her co-employees to lie for her as this fact was not proven.

Petitioners' motion for reconsideration was denied by the CA in the Resolution dated January 10,
2007.

Hence, this present petition.

Petitioners allege that the deliberate refusal to attend to patient Causaren after the latter fell from the
bed justifies respondent De Castro's termination from employment due to serious misconduct. They
claim that respondent De Castro failed to: (a) personally assist the patient; (b) check her vital signs
and examine if she sustained any injury; (c) refer the matter to the patient's attending physician or
any physician-on-duty; and (d) note the incident in the report sheet for endorsement to the next shift
for proper monitoring. They also aver that respondent De Castro persuaded her co-nurses to follow
her version of what transpired so as to cover up her nonfeasance.

In her Comment, respondent De Castro counters that there was no serious misconduct or gross
negligence committed, but simple misconduct or minor negligence which would warrant the penalty
of 7 to 14 days of suspension under the Employee's Handbook of petitioner hospital. She denies
exerting influence over the four nursing personnel, but points out that it was Chief Nurse Villanueva,
a close friend of patient Causaren's niece, who persuaded the four nursing staff to retract their
statements appearing in the incident reports as to the approximate time of occurrence, from 2:00
a.m. to 3:00 a.m. of March 24, 1999 to 11:00 p.m. to 11:30 p.m. of March 23, 1999, so as to pin her
for negligence. She appeals for leniency, considering that the subject infraction was her first offense
in a span of almost nine years of employment with petitioner hospital.

We affirm with modification the CA ruling which declared petitioners guilty of illegal dismissal.

Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross
and habitual neglect by the employee of his duties. The CA ruled that per the Employee’s Handbook
of petitioner hospital, respondent De Castro’s infraction is classified as a less serious offense for
"commission of negligent acts during working time" as set forth in subparagraph 11, paragraph 3 (B)
of Chapter XI10 thereof. Petitioners anchor respondent De Castro’s termination of employment on the
ground of serious misconduct for failure to personally attend to patient Causaren who fell from the
bed as she was trying to reach for the bedpan. Based on her evaluation of the situation, respondent
De Castro saw no necessity to record in the chart of patient Causaren the fact that she fell from the
bed as the patient did not suffer any injury and her vital signs were normal. She surmised that the
incident was not of a magnitude that would require medical intervention as even the patient and her
niece did not press charges against her by reason of the subject incident.

It is incumbent upon respondent De Castro to ensure that patients, covered by the nurse station to
which she was assigned, be accorded utmost health care at all times without any qualification or
distinction. Respondent De Castro’s failure to personally assist patient Causaren, check her vital
signs and examine if she sustained any injury, refer the matter to the patient's attending physician or
any physician-on-duty, and note the incident in the report sheet for endorsement to the next shift for
proper monitoring constitute serious misconduct that warrants her termination of employment. After
attending to the toxic patients under her area of responsibility, respondent De Castro should have
immediately proceeded to check the health condition of patient Causaren and, if necessary, request
the physician-on-duty to diagnose her further. More importantly, respondent De Castro should make
everything of record in the patient’s chart as there might be a possibility that while the patient may
appear to be normal at the time she was initially examined, an injury as a consequence of her fall
may become manifest only in the succeeding days of her confinement. The patient’s chart is a
repository of one’s medical history and, in this regard, respondent De Castro should have recorded
the subject incident in the chart of patient Causaren so that any subsequent discomfort or injury of
the patient arising from the incident may be accorded proper medical treatment.

Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence
1âwphi 1

connotes want of care in the performance of one's duties. Habitual neglect implies repeated failure to
perform one's duties for a period of time, depending upon the circumstances. A single or isolated act
of negligence does not constitute a just cause for the dismissal of the employee.11 Despite our
finding of culpability against respondent De Castro; however, we do not see any wrongful intent,
deliberate refusal, or bad faith on her part when, instead of personally attending to patient Causaren,
she requested Nursing Assistant Tatad and ward-clerk orientee Guillergan to see the patient, as she
was then attending to a newly-admitted patient at Room 710. It was her judgment call, albeit an error
of judgment, being the staff nurse with presumably more work experience and better learning curve,
to send Nursing Assistant Tatad and ward-clerk orientee Guillergan to check on the health condition
of the patient, as she deemed it best, under the given situation, to attend to a newly-admitted patient
who had more concerns that needed to be addressed accordingly. Being her first offense,
respondent De Castro cannot be said to be grossly negligent so as to justify her termination of
employment. Moreover, petitioners’ allegation, that respondent De Castro exerted undue pressure
upon her co-nurses to alter the actual time of the incident so as to exculpate her from any liability,
was not clearly substantiated.

Negligence is defined as the failure to exercise the standard of care that a reasonably prudent
person would have exercised in a similar situation.12 The Court emphasizes that the nature of the
business of a hospital requires a higher degree of caution and exacting standard of diligence in
patient management and health care as what is involved are lives of patients who seek urgent
medical assistance. An act or omission that falls short of the required degree of care and diligence
amounts to serious misconduct which constitutes a sufficient ground for dismissal.

However, in some cases, the Court had ruled that sanctioning an erring employee with suspension
would suffice as the extreme penalty of dismissal would be too harsh.13 Considering that this was the
first offense of respondent De Castro in her nine (9) years of employment with petitioner hospital as
a staff nurse without any previous derogatory record and, further, as her lapse was not characterized
by any wrongful motive or deceitful conduct, the Court deems it appropriate that, instead of the harsh
penalty of dismissal, she would be suspended for a period of six (6) months without pay, inclusive of
the suspension for a period of 14 days which she had earlier served. Thereafter, petitioner hospital
should reinstate respondent Edna R. De Castro to her former position without loss of seniority rights,
full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed
from the expiration of her suspension of six (6) months up to the time of actual reinstatement.

WHEREFORE, the petition is DENIED. The Decision dated May 24, 2006 and Resolution dated
January 10, 2007 of the Court of Appeals, Special First Division, in CA-G.R. SP No. 73189, which
reversed and set aside the Decision dated February 28, 2002 and Resolution dated May 31, 2002 of
the National Labor Relations Commission, Second Division, are AFFIRMED WITH MODIFICATION
insofar as respondent Edna R. De Castro is found guilty of gross negligence and is SUSPENDED for
a period of SIX (6) MONTHS without pay, inclusive of the suspension for a period of 14 days which
she had earlier served. Petitioner Hospital Management Services, Inc.-Medical Center Manila is
ORDERED to reinstate respondent Edna R. De Castro to her former position without loss of seniority
rights, full backwages, inclusive of allowances and other benefits, or their monetary equivalent,
computed from the expiration of her suspension of six (6) months up to the time of actual
reinstatement.

SO ORDERED.
CASE NO. 19

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 197384 January 30, 2013

SAMPAGUITA AUTO TRANSPORT CORPORATION, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMMISSION and EFREN I. SAGAD, Respondents.

DECISION

BRION, J.:

Before the Court is the petition for review on certiorari1 in caption, assailing the decision2 dated
March 4, 2011 and the resolution3 dated June 13, 2011 of the Court of Appeals (CA) in CA-G.R. SP
No. 112760.

The Antecedents

In a complaint4 dated August 10, 2007, respondent Efren I. Sagad charged the petitioner
Sampaguita Auto Transport Corporation (company); Andy Adagio, President and General Manager;
Monina Ariola Adagio, Vice-President and Finance Manager; Virgilio Olunan (referred to as Olonan
by Sagad), Operations Manager; and Gerry Dimate, HRO Officer, with illegal dismissal and
damages plus attorney's fees.

Sagad alleged that on May 14, 2006, the company hired him as a regular bus driver, not as a
probationary employee as the company claimed. He disowned his purported signature on the
contract of probationary Employment5 submitted in evidence by the company. He maintained that his
signature was forged. He further alleged that on November 5, 2006, he was dismissed by the
company for allegedly conniving with conductor Vitola in issuing tickets outside their assigned route.

The company countered that it employed Sagad as a probationary bus driver (evidenced by a
probationary employment contract6) from May 14, 2006 to October 14, 2006; he was duly informed
of his corresponding duties and responsibilities.7 He was further informed that during the
probationary period, his attendance, performance and work attitude shall be evaluated to determine
whether he would qualify for regular employment. For this purpose and as a matter of company
policy, an evaluator was deployed on a company bus (in the guise of a passenger) to observe the
driver’s work performance and attitude.

Allegedly, on September 21, 2006, an evaluator boarded Sagad’s bus. The evaluator described
Sagad’s manner of driving as "reckless driver, nakikipaggitgitan, nakikipaghabulan, nagsasakay sa
gitna ng kalsada, sumusubsob ang pasahero."8 Sagad disputed the evaluator’s observations. In an
explanation (rendered in Filipino),9 he claimed that he could not have been driving as reported
because his wife (who was pregnant) and one of his children were with him on the bus. He admitted
though that at one time, he chased an "Everlasting" bus to serve warning on its driver not to block
his bus when he was overtaking. He also admitted that once in a while, he sped up to make up for
lost time in making trips.

The company further alleged that on October 13, 2006, it conducted a thorough evaluation of
Sagad’s performance. It requested conductors who had worked with Sagad to comment on his work.
Conductors A. Hemoroz and Israel Lucero revealed that Sagad proposed that they cheat on the
company by way of an unreported early bus trip.10 Dispatcher E. Castillo likewise submitted a
negative report and even recommended the termination of Sagad’s employment.11 The company
also cited Sagad’s involvement in a hit-and-run accident on September 9, 2006 along
Commonwealth Avenue in Quezon City while on a trip (bus with Plate No. NYK-216 and Body No.
3094).12 Allegedly, Sagad did not report the accident to the company.

On October 15, 2006, upon conclusion of the evaluation, the company terminated Sagad’s
employment for his failure to qualify as a regular employee.13

The Compulsory Arbitration Rulings

In her decision dated May 8, 2008,14 Labor Arbiter Marita V. Padolina dismissed the complaint for
lack of merit. She ruled that the company successfully proved that Sagad failed to qualify as a
regular employee. Labor Arbiter Padolina stressed that on October 15, 2006, the company ordered
Sagad not to work anymore as his probationary employment had expired. While Sagad claimed that
he worked until November 5, 2006, she pointed out that "there is no record to show that he worked
beyond October 14, 2006."15

Sagad appealed the Labor Arbiter’s ruling. On July 10, 2009, the National Labor Relations
Commission (NLRC) rendered a decision16 declaring that Sagad had been illegally dismissed. It held
that Sagad was not a probationary employee as the company failed to prove by substantial evidence
the due execution of Sagad’s supposed probationary employment contract. It found credible Sagad’s
submission that his signature on the purported contract was a forgery. It opined that his signature on
the contract was "extremely different" from his signatures in his pleadings and in other documents on
record. Further, the NLRC brushed aside the company memorandum dated October 15,
200617 supposedly terminating Sagad’s probationary employment as there was no showing that the
memorandum had been served on him.

The NLRC disregarded Sagad’s alleged infractions that served as grounds for the termination of his
employment, holding that his dismissal was not based on these infractions but on his alleged
connivance with a conductor in defrauding the company. The NLRC awarded Sagad backwages of
₱559,050.00 and separation pay of ₱45,000.00 in lieu of reinstatement, in view of the strained
relations between the parties resulting from the filing of the complaint.

Both parties moved for reconsideration of the NLRC decision, to no avail. The company then
elevated the case to the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA Decision

The CA, in its currently assailed decision,18 affirmed the NLRC rulings in toto, finding no grave abuse
of discretion in the labor tribunal’s reversal of the labor arbiter’s dismissal of the complaint. It found
the "genuineness of respondent’s signature on the employment contract is tainted with doubt."19 It
agreed with the NLRC that Sagad had been illegally dismissed considering, as it noted, that the
grounds the company relied upon for the termination of Sagad’s employment were not among the
causes for a valid dismissal enumerated under Article 282 of the Labor Code. It added that even if it
had been otherwise, the company failed to comply with the twin-notice requirement in employee
dismissals.

The Petition

The company seeks the reversal of the appellate court’s decision through the present appeal,20 and
raises the following issues:

1. Whether it dismissed Sagad illegally; and

2. Whether Sagad is entitled to backwages and separation pay, totaling ₱604,050.00, after
working with the company for barely five months.

The company insists that Sagad entered into a contract of probationary employment with it. It was
thus surprised with Sagad’s allegation that his signature appearing in the contract was a forgery. It
explained that his signature on the contract is the same as his signatures on his employment papers
(which include the probationary employment contract). In any event, it faults the NLRC for not
considering other pieces of evidence indicating Sagad’s actual employment status.

The company points out that one such piece of competent and compelling evidence is Sagad’s
admission of the nature of his employment expressed in his letter dated October 16, 2006,
addressed to Adagio and Olunan.21 In this letter, he asked for another chance to work with the
company.

The company posits that with the letter, Sagad acknowledged that his probationary employment had
expired.22

The company maintains that it terminated Sagad’s employment in good faith. They are not expected
to follow the procedure for dismissing a regular employee, as the NLRC opined, considering that
Sagad was merely on probation. Lastly, it contends that the award of backwages and separation pay
to Sagad amounting to ₱604,050.00 is unwarranted and confiscatory since he worked for only five
months. It laments that the award would put a premium on reckless driving and would encourage
other drivers to follow Sagad’s example.

The company disputes the NLRC‘s basis for the award — Sagad’s purported average daily
commission of ₱1,000.00 — as non-existent. They contend in this respect that the payslips Sagad
submitted to the NLRC rarely showed his daily commission to reach ₱1,000.00. It explains that
Sagad presented only one (1) payslip for November 2006, five (5) for October 2006, one (1) each for
July, August and September 2006. It posits that the company payrolls from June 29, 2006 to
October 8, 2006 showed that his daily commissions were below ₱1,000.00.

The Case for Sagad

Through his Comment (on the Petition),23 Sagad asks that the petition be denied due course. He
presents the following arguments:

1. He was not a probationary employee. The signature on the alleged probationary

employment contract attributed to him was not his; it was a forgery, as confirmed by the
NLRC and the CA. The same thing is true with the supposed letter (dated October 16,
2006)24 in which he allegedly appealed to be given another chance to work for the company.
 Not only was the letter not in his handwriting (it allegedly belonged to Vitara, a bus conductor
of the company), the signature on the letter attributed to him was also falsified.

2. On the assumption that he was a probationary employee, it is not correct to say that he
failed to qualify for regular employment. The written statements of bus conductors Hemoroz
and Lucero25 regarding his alleged attempt to cheat on the company are without probative
value. The statements were not under oath and the irregular acts he allegedly proposed
could only be done by the conductors.

The company’s claim that he figured in a "hit-and-run" accident on September 9, 2006, which he
allegedly did not report to management, is not also correct. It was not his bus that was involved in
the accident that he duly reported to the management. Further, the company’s contention that he
drove recklessly on September 16, 2006 cannot be used to support his dismissal as he had already
been penalized for the incident with a five-day suspension.26

Also, the company grounds in Castillo’s evaluation report27 (that the company relied upon to justify
the non-renewal of his contract) are not just causes for the termination of his employment as the CA
correctly ruled.

3. He was a regular employee. He continued to work as driver until November 4, 2006. The
company’s notice of termination of his Employment28 was not served on him because no
such letter existed. If his probationary employment was to expire on October 14, 2006, he
asks: why was he evaluated only on October 13 and 14, 2006 and why did the company
serve him the termination notice only on October 15, 2006, when he was supposed to have
been separated the previous day, October 14, 2006? He adds: when was the notice served
on him that would have prompted him to write the company a letter on October 16, 2006 to
ask for a second chance? All these nagging questions, he stresses, demonstrate the
incredibility of the company’s claim that he was a probationary employee.

4. He does not have to prove his denial that the signatures on the above-mentioned
documents were not really his. He posits that evidence need not be given in support of a
negative allegation and this is particularly true in dismissal cases where the burden of proof
is on the employer.

5. The petition suffers from a procedural defect as it raises only questions of fact and not of
law, in violation of Rule 45 of the Rules of Court.

The Court’s Ruling

The procedural issue

This Court, as a rule, only reviews questions of law in a Rule 45 petition for review. In labor cases,
the factual findings of the labor arbiter and of the NLRC are generally respected and, if supported by
substantial evidence, accorded finality. This rule, however, is not absolute. When the factual findings
of the CA conflict with those of the labor authorities, the Court is forced to review the evidence on
record.29

In this case, the labor arbiter’s factual conclusions, on the one hand, and those of the NLRC and the
CA, on the other hand, differ. The labor arbiter found that Sagad was a probationary employee and
was validly dismissed for his failure to qualify for regular employment, whereas the NLRC and the
CA concluded that he was a regular employee and was illegally dismissed. We thus find the need to
review the facts in the present labor dispute.
The merits of the case

After a review of the records, we are convinced that Sagad was dismissed, not as a probationary
employee, but as one who had attained regular status. The company’s evidence on Sagad’s
purported hiring as a probationary employee is inconclusive. To start with, Sagad denied that he
entered into a probationary employment contract with the company, arguing that the signature on the
supposed contract was not his.30 He also denied receiving the alleged notice31 terminating his
probationary employment. The same thing is true with his purported letter32asking that he be given
another chance to work for the company. He asserts that not only is the letter not in his handwriting,
the signature on the letter was also not his.

The submissions of the parties on the issue created a doubt on whether Sagad really entered into a
probationary employment contract with the company. The NLRC resolved the doubt in Sagad’s
favor, ruling that Sagad’s signature on the contract was not his, because it was a forgery. It declared
that his signature on the contract "is extremely different from those in his pleadings and from the
other documents on record,"33 without explaining how and why the two sets of signatures were vastly
different. Lending further support to the NLRC conclusion, which the CA upheld, is its finding that the
company failed to refute Sagad’s denial of his signature in the contract, which the labor tribunal
considered as an admission of the veracity of Sagad’s statement, pursuant to the Rules of Court.34

Independently of the above discussion and even if we were to consider that Sagad went through a
probationary period, the records indicate that he was retained even beyond the expiration of his
supposed probationary employment on October 14, 2006. As the NLRC noted, Sagad claimed that
he was dismissed by the company on November 5, 2006, after he was accused of conniving with
conductor Vitola in issuing tickets outside their assigned route.

The company never refuted this particular assertion of Sagad and its silence can only mean that
Sagad remained in employment until November 4, 2006, thereby attaining regular status as of that
date. Under the law, "an employee who is allowed to work after a probationary period shall be
considered a regular employee."35

Further, when the company questioned the payslips submitted by Sagad to substantiate his claim
that he earned on the average a daily commission of ₱1,000.00, it pointed out that Sagad presented
only one (1) payslip for the whole month of November 2006, five (5) payslips for the month of
October 2006, and one (1) payslip each for the months of July, August and September 2006.36 This
seemingly harmless allegation is significant in that it revealed that Sagad continued working until the
first week of November 2006 and was paid his salary for at least one payroll period. Sagad,
therefore, had become a regular employee when he was dismissed on November 5, 2006.

Is Sagad’s dismissal illegal?

The NLRC and the CA ruled in the affirmative. The labor tribunal opined that the infractions which
Sagad allegedly committed and which disqualified him from attaining regular status are "unavailing"
with respect to his dismissal because the dismissal was not based on those infractions but on his
alleged connivance with conductor Vitola to cheat on the company.

The CA concurred with the NLRC but for a different reason. It declared that the "grounds upon which
petitioners based respondent’s termination from employment, viz: ‘hindi lahat ng schedule
nailalabas,’ ‘mababa ang revenue ng bus, laging kasama ang asawa sa byahe’ and ‘maraming
naririnig na kwento tungkol sa kanya, nag-uutos ng conductor para kumita sa hindi magandang
paraan,’ xxx are not among those enumerated under Article 282 of the Labor Code as just causes
for termination of employment."37 The CA added that on the assumption that the cited grounds can
be considered just causes, the company nonetheless failed to comply with the twin-notice
requirement for the termination of Sagad’s employment.

We disagree with the finding that Sagad’s dismissal had no basis.

First. It is not disputed that the company called Sagad’s attention to his negative actuations as a bus
driver, which were reported by a company evaluator38 who boarded his bus on September 21, 2006.
The evaluator reported that he was driving recklessly, racing and jostling for position on the road,
thereby jarring the passengers on their seats, and picking up passengers on the middle of the road.
He disputed the evaluator’s observations,39 claiming that he could not have been driving as reported
because his pregnant wife and one of his children were with him on the bus at the time. He admitted,
however, that on one occasion, he chased an "Everlasting" bus to warn its driver not to block him.
He also admitted that once in a while, he sped up to compensate for lost time in his trips.

Sagad’s explanation reveals more than what it stated. During his brief employment with the
company, he exhibited the tendency to speed up when he finds the need for it, very obviously in
violation of traffic rules, regulations and company policy. Instead of negating the evaluator’s
observations, his admissions make them credible.

Second. He was also asked to react to the comments of conductors who had worked with him
(Hemoroz and Lucero) to the effect that he proposed to them that they cheat on the company by
making early (but not to be reported) bus trips.40 Further, there was Castillo’s evaluation dated

October 13, 2006,41 rating Sagad’s work performance as poor on account of: (1) the low revenue of
Sagad’s bus; (2) his inability to make all his scheduled trips; and (3) his habit of bringing his wife with
him on his trips. Castillo also heard of talks of Sagad’s orders to the conductors to earn money in a
questionable way.

During the arbitration, Sagad disputed the conductors’ comments, maintaining that they were not
under oath and that the fraudulent proposal they mentioned could only be committed by conductors.
With respect to Castillo’s evaluation, Sagad invoked the CA’s pronouncement that the infractions
mentioned in the report are not just causes for the termination of his employment.

Sagad’s position fails to convince us. We find no evidence that Hemoroz and Lucero had an ax to
grind against Sagad so that they would lie about their impression of him as a bus driver.
Significantly, their statements validate Castillo’s own observation that he heard talks of Sagad’s
orders to the conductors for them to cheat on the company. The scheme, contrary to Sagad’s
explanation, can only be committed with the cooperation, or even at the behest, of the driver, as the
proposed scheme is for the bus to make unscheduled, but unreported, early trips.

Lastly, the company cites Sagad’s involvement in a hit-and-run incident on September 9, 2006 while
driving his assigned bus (with Plate No. NYK-216 and Body No. 3094).42 Once more, he denies the
charge, claiming that it was not his bus, but two other vehicles, a Honda City and an Elf truck, which
figured in the incident.43 To prove his point, he submitted the "SALAYSAY"44 of his replacement
driver, Carlito Laude, for September 10, 2006, saying that there was no dents or scratches on the
bus.

Again, Sagad’s stance fails to persuade us. Sagad’s statements vis-à-vis the incident, as well as
those of Laude, are belied by the Traffic Accident Investigation Report45 which mentioned the
"Unidentified driver of Public Utility Bus with plate No. NYK-216 and Body No. 3094." The report was
corroborated by the sworn statements of Ronald Apura, driver of the Elf truck, UFF-597, the second
party in the incident,46 and Bibiana Fuentes, driver of the White Honda City, WDV-422 (owned by
Purefoods Hormel Co.), the first party in the vehicular accident. There was also the letter to the
company of Standard Insurance Co., Inc. dated February 14, 200747 demanding the reimbursement
of ₱24,667.54 it paid to Purefoods Hormel Co. by way of damages sustained by the Honda City.

Third. The CA misappreciated the law when it declared that the grounds relied upon by the company
in terminating Sagad’s employment are not among those enumerated under Article 282 of the Labor
Code as just causes for employee dismissals. Article 282 of the Code provides:
1âwphi1

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

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing. [emphasis supplied]

The irregularities or infractions committed by Sagad in connection with his work as a bus driver
constitute a serious misconduct or, at the very least, conduct analogous to serious misconduct,
under the above-cited Article 282 of the Labor Code. To be sure, his tendency to speed up during
his trips, his reckless driving, his picking up passengers in the middle of the road, his racing with
other buses and his jostling for vantage positions do not speak well of him as a bus driver. While he
denies being informed, when he was hired, of the duties and responsibilities of a driver — contained
in a document submitted in evidence by the company48 — the requirement "3. to obey traffic rules
and regulations as well as the company policies. 4. to ensure the safety of the riding public as well
as the other vehicles and motorist (sic)"49 is so fundamental and so universal that any bus driver is
expected to satisfy the requirement whether or not he has been so informed.

Sagad tries to minimize the adverse effect of the evaluator’s report of September 21, 2006 about his
conduct as a driver with the argument that he had already been penalized with a five-day
suspension for chasing an "Everlasting" bus at one time. The suspension is of no moment. He was
penalized for one reckless driving incident, but it does not erase all the other infractions he
committed. The conductors’ comments and the dispatcher’s evaluation, together with the earlier on-
board evaluation, all paint a picture of a reckless driver who endangers the safety of his passengers,
other motorists and the general public. With this record, it is not surprising that he figured in a hit-
and-run accident on September 9, 2006.

Under the circumstances, Sagad has become a liability rather than an asset to his employer, more
so when we consider that he attempted to cheat on the company or could have, in fact, defrauded
the company during his brief tenure as a bus driver. This calls to mind Castillo’s report on the low
revenue of Sagad’s bus, an observation which is validated by the company’s Daily Operation
Reports from June to October 2006.50
All told, we find substantial evidence supporting Sagad’s removal as a bus driver. Through his
reckless driving and his schemes to defraud the company, Sagad committed serious misconduct
and breach of the trust and confidence of his employer, which, without doubt, are just causes for his
separation from the service. It is well to stress, at this point, an earlier pronouncement of the Court
"that justice is in every case for the deserving, to be dispensed in the light of the established facts
and applicable law and doctrine."51

The twin-notice requirement

Even as we find a just cause for Sagad’s dismissal, we agree with the CA that the company failed to
comply with the two-notice rule. It failed to serve notice of: (1) the particular acts for which Sagad
was being dismissed on November 5, 2006 and (2) his actual dismissal. Consistent with our ruling in
Agabon v. NLRC, 52 we hold that the violation of Sagad's right to procedural due process entitles him
to an indemnity in the form of nominal damages. Considering the circumstances in the present case,
we deem it appropriate to award Sagad ₱30,000.00.

WHEREFORE, premises considered, the appeal is granted. The assailed decision and resolution of
the Court of Appeals are SET ASIDE. The complaint is DISMISSED for lack of merit. Efren I. Sagad
is awarded nominal damages of ₱30,000.00 for violation of his right to procedural due process.

SO ORDERED.
CASE NO. 20

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 162017 April 23, 2010

CALTEX (PHILIPPINES), INC., WILLIAM P. TIFFANY, E.C. CAVESTANY, and E.M.

CRUZ, Petitioners,
vs.
HERMIE G. AGAD and CALTEX UNITED SUPERVISORS' ASSOCIATION, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated 22 May 2003 and
Resolution3dated 27 January 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 74199, which
reversed the Decision4dated 6 June 2001 and Resolution5 dated 24 September 2002 of the National
Labor and Relations Commission (NLRC) in NLRC NCR CA No. 018872-99.

The Facts

On 1 September 1983, petitioner Caltex Philippines, Inc. (Caltex) employed respondent Hermie G.
Agad (Agad) as Depot Superintendent-A on a probationary basis for six months. On 28 February
1984, Agad became a regular employee with a monthly salary of ₱2,560 and cost of living
assistance of ₱380.

For the next eleven years, Agad obtained various commendations6 and held the positions of Depot
Superintendent-A, Field Engineer, Senior Superintendent, and Bulk Depot Superintendent until his
dismissal on 8 August 1994. Agad received a monthly gross salary of ₱31,000, a mid-year bonus
equivalent to one month’s salary and 13th month pay at the time of his termination.

After Agad had served for two years since 1990 as Superintendent of the Tacloban Bulk Depot
(Depot) in Leyte, Caltex transferred Agad to Bauan Bulk Depot in Batangas effective 16 May 1992.7

To transfer his belongings from Leyte to Batangas, Agad secured the carpentry services of Alfredo
Delda (Delda), the owner of A.A. Delda Engineering Services (Delda Services) for the construction
of two crates. Agad paid Delda ₱15,500, evidenced by Official Receipt No. 09708 dated 12 May
1992. Agad submitted the receipt sometime in August 1992 and Caltex reimbursed him the said
amount.

On 13 April 1993, Caltex conducted its regular audit of employees’ account and expenses as of 31
December 1992.9 The company auditor of Caltex verified the crating expense incurred by Agad with
Delda. Delda, through an Affidavit dated 5 May 1993,10 disclosed that Delda Services did not perform
any crating service for Agad or receive the amount of ₱15,500 as stated in the official receipt. Delda
alleged that he was forced by Agad to issue the official receipt in order to get a favorable
recommendation from the incoming superintendent of the Depot.

Further investigations revealed that Arsenio Asperas (Asperas), a carpenter from Tacloban, was
commissioned by Agad to build two wooden crates on 12 May 1992. Asperas attested that Agad
paid him the amount of ₱400 and he completed the work in 2 ½ days beside the quarters of Agad
inside the Depot.11 Basilia Villalino (Villalino), a household staff of the Depot Staff House,
corroborated Asperas’ statement in a Sworn Testimony dated 24 May 1993 that Agad did hire
Asperas to make two wooden crates inside the Depot before he left for his next post.12

In another audit report dated 12 May 1993,13 the company auditor declared that 190 pieces of 11 kg.
liquefied petroleum gas (LPG) cylinders from the Depot were allegedly withdrawn for scrap and
repair purposes without proper documentation on 8 February 1991 when Agad was still depot
superintendent. Isidro B. Millanes (Millanes), the depot’s LPG cylinder repair/reconditioning
contractor and owner of IBM Enterprises, claimed that the LPG cylinders were hauled to his
compound and allegedly later sold, upon the express instructions of Agad, to Leyte Development
Corporation and Ernesto Mercado, a service station dealer.

On 5 July 1993, petitioner E.C. Cavestany (Cavestany), the Regional Manager of Caltex, issued a
Memorandum14to Agad directing him to explain the following audit review findings: (1) the
questionable reimbursement of crating expense; and (2) the alleged unauthorized withdrawal and
sale of 190 pieces of LPG cylinders.

On 29 July 1993, Agad sent his reply15 answering all the charges against him. Agad stated: (1) that
Delda Services constructed the two crates worth ₱15,500 as evidenced by an official receipt issued
by Delda; and (2) that the withdrawal of the scrap LPG cylinders formed part of his housekeeping
duties as depot superintendent. The scrap materials consisting of tanks, pumps and pipelines of
Gebarin, a logging account of Caltex located in Marabut, Samar, were bidded out to a certain
Rogelio "Boy" H. Bato on an "as is, where is" basis.16 However, the scrap materials went missing
and Boy Bato demanded that such be replaced with equivalent materials. The scrap LPG cylinders
were released instead after Agad secured the approval of his superiors as evidenced in a
Memorandum dated 12 February 1992.17 After the approval, Boy Bato’s buyer, a certain Mr. Ang,
allegedly acquired the scrap cylinders from IBM Enterprises.

Caltex created an investigating panel chaired by Cavestany to look into the offenses allegedly
committed. On 17 August 1993, the investigating panel held its first formal inquiry.18 The transcript of
the investigation was dated 2 September 1993.19

On 29 April 1994, Caltex placed Agad under preventive suspension. On 26 May 1994 or almost 10
months after the first formal inquiry, the investigating panel conducted another hearing.20 Two other
hearings were held on 14 June and 6 July 1994.

In a Confidential Memorandum dated 8 August 1994,21 Cavestany informed Agad of his dismissal on
the grounds of serious misconduct and loss of trust and confidence, both just causes for termination
of employment. Agad received the memorandum on 25 August 1994.

On 1 September 1994, respondents Agad and Caltex United Supervisors’ Association filed a
complaint22 with the Labor Arbiter (LA) for illegal dismissal, illegal suspension with prayer for full
backwages of ₱31,000 per month from 25 August 1994 until reinstatement, moral damages of
₱5,000,000, exemplary damages of ₱5,000,000 and 10% of the total monetary award as attorney’s
fees against petitioners Caltex and its officers – William P. Tiffany, President and Chief Executive
Officer; E.M. Cruz, General Manager for Distribution; and Cavestany.
On 16 November 1998, the LA rendered a decision in favor of Agad.23 The LA held that there were
no just causes for Agad’s termination of employment. On the charge of fraudulent reimbursement of
crating expense, the LA found no basis for this since Delda issued an official receipt which served as
best evidence that the crating expense was actually incurred. According to the LA, Delda’s claim that
he was only forced by Agad to issue the receipt for fear of losing his job as a contractor does not
appear to be credible. In the administrative inquiry held on 26 May 1994, it was clearly established
that Delda held a grudge against Agad since Agad did not recommend him to be a contractor of
Caltex for failure to meet the minimum capital required of aspiring contractors. Also, the LA did not
give any weight to the testimonies of Asperas and Villalino since they were not presented for cross-
examination during the investigation.

As to the charge of unauthorized withdrawal and sale of the LPG cylinders, the LA ruled that Agad
was denied the right to present his witnesses and other evidence in support of his defense which
constitutes a denial of due process. Thus, the LA ruled that Agad had been illegally dismissed by
Caltex. The dispositive portion of the LA’s decision states:

Since there was no just cause for termination of the services of the complainant; and since the
complainant was not given due process in the proceedings to terminate his services; and since he
was illegally placed under preventive suspension, we therefore rule that the complainant is entitled
to the twin remedies of reinstatement, with full backwages, from the time of his dismissal until his
reinstatement to his former position as Depot Superintendent of the Bauan Bulk Depot, or to a
similar position, without any loss of seniority rights.

By reason of the arbitrary nature of the termination of the service of the complainant, and the denial
of due process in the denial of his right to present evidence in his defense in the administrative
inquiry prior to the termination of his services, we hold further the respondents liable to the
complainant for moral damages, in the sum of ₱5,000,000.00; exemplary damages in the sum of
₱5,000,000.00; and attorney’s fees in the sum of ten (10%) percent of the total monetary awards.

SO ORDERED.24

Caltex filed an appeal with the NLRC.

The Ruling of the NLRC

On 6 June 2001, the NLRC reversed the decision of the LA. The NLRC held that there existed just
causes which justified Agad’s dismissal. With regard to the first allegation, the NLRC ruled that the
amount of crating expense reimbursed by Agad was fictitious. The fact that a receipt was issued by
Delda does not conclusively prove that the crating service was performed by Delda. At the most, the
existence of the receipt only proves its execution. The NLRC declared that Delda’s testimony, made
under oath, enjoys the presumption of regularity and good faith. Corroborated by two other
witnesses, Asperas and Villalino, Delda’s testimony clearly established that Agad was dishonest in
his dealings. The NLRC added that even if the amount involved was only worth ₱15,500, the same
was of no moment since what was involved was Agad’s propensity to commit dishonesty against the
company. As a supervisor, a greater degree of diligence, honesty and trust was expected of him.
The NLRC further stated that Caltex had no bad motive to pick on Agad and tell lies about him if
indeed he was trustworthy since Agad was given awards and commendations before the discovery
of the questioned acts.

On the second allegation, the NLRC ruled that Agad had no authority to withdraw the LPG cylinders
from the Depot. The NLRC declared that Agad did not observe existing company rules and
regulations in procuring the required forms, in the submission of periodic LPG cylinders inventory
and in selling the LPG cylinders without the requisite bidding. Thus, the NLRC concluded that Caltex
validly dismissed Agad. The dispositive portion of the NLRC’s decision states:

WHEREFORE, finding sufficient reasons/grounds to warrant reversal of the findings of the Arbiter a
quo, the assailed decision is hereby SET ASIDE and a new one entered ordering the DISMISSAL of
the complaint for lack of basis both in fact and in law.

SO ORDERED.25

Agad filed a Motion for Reconsideration which was denied in a Resolution dated 24 September
2002.

Agad then filed a petition for certiorari under Rule 65 with the CA. Agad sought the nullification of the
decision of the NLRC.

The Ruling of the Court of Appeals

On 22 May 2003, the CA modified the judgment of the NLRC and ruled in favor of Agad. On the
issue of fraudulent reimbursement of crating expense, the CA concurred with the LA. According to
the CA, the regularity of the official receipt remained untarnished since the only other proof relied
upon by petitioners, Delda’s affidavit, failed to substantiate his allegations. Delda never assailed the
due execution of the receipt and even admitted that he actually issued the receipt. The supporting
affidavits of Asperas and Villalino, since they were not cross-examined, must be rejected for being
hearsay. Thus, no sufficient evidence was presented to prove that the amount in the receipt was
fictitious. Further, the CA indicated that Caltex did not make any limitations to the crating expense to
be reimbursed such that Agad was entitled to move his personal and household effects at
reasonable costs.

On the second issue of unauthorized withdrawal and sale of LPG cylinders, the CA agreed with the
NLRC that Agad did not comply with company rules and regulations. Nonetheless, the CA held that
the penalty of dismissal imposed upon Agad was too harsh considering that this was his first
infraction and that Agad had been awarded several commendations in the past and had worked for
Caltex for more than 10 years. The dispositive portion of the CA’s decision states:

WHEREFORE, premises considered, the petition is hereby GRANTED, and the judgment of the
NLRC is hereby MODIFIED. Accordingly, finding no just cause for the termination of employment of
the petitioner Hermie G. Agad, we therefore rule that the petitioner was illegally dismissed; he should
be entitled to reinstatement, with full backwages, from the time of his illegal dismissal until his
reinstatement to his former position as Depot Superintendent of the Bauan Bulk Depot, or to a
similar position without any loss of seniority rights.

SO ORDERED.26

Caltex filed a Motion for Reconsideration which was denied in a Resolution dated 27 January 2004.

Hence, the instant petition.

The Issue
The main issue is whether Caltex legally terminated Agad’s employment on just causes: (1) acts
tantamount to serious misconduct and willful violation of company rules and regulations; and (2)
willful breach of trust and confidence as Depot Superintendent.

The Court’s Ruling

Article 282 of the Labor Code states:

ART. 282. TERMINATION BY EMPLOYER. – An employer may terminate an employment for any of
the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.

In termination cases, the burden of proof rests on the employer to show that the dismissal is for just
cause. When there is no showing of a clear, valid, and legal cause for the termination of
employment, the law considers the matter a case of illegal dismissal and the burden is on the
employer to prove that the termination was for a valid or authorized cause.27

The quantum of proof which the employer must discharge is substantial evidence. An employee’s
dismissal due to serious misconduct and loss of trust and confidence must be supported by
substantial evidence. Substantial evidence is that amount of relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise.28

In the present case, petitioners terminated Agad’s employment based on these acts: (1) Agad’s
submission of a fictitious crating expense amounting to ₱15,1500; and (2) the unauthorized
withdrawal and sale of 190 pieces of 11 kg. LPG cylinders for his personal gain and profit.

Crating expense is reasonable

Petitioners insist that the CA erred in ruling that the crating expense of ₱15,500 was justifiable
without however stating the basis for such a ruling. According to petitioners, the records prove that
there were more than ample evidence to show that the crating expense was fictitious. Petitioners
reiterate the sworn testimonies of Delda, Esperas, and Villalino, and that of Augusto Cabugao, the
Regional Audit Manager of Caltex, who testified that the crating expense of ₱15,500 was
unreasonably high considering that depot houses of Caltex were fully furnished and expenses
incurred in transferring personal effects were usually very small.

Respondents, on the other hand, maintain that the crating expense was necessary and reasonable
under the circumstances. First, Caltex readily approved the reimbursement claim when Agad
submitted the official receipt. It was only a year later, during a regular audit, when Caltex sought
Delda’s affidavit of denial when the company questioned the authenticity and reasonableness of the
amount of the crating expense. Second, of the first three witnesses for the petitioners, only Delda
was presented for cross-examination during the administrative investigation. Thus, the affidavits of
Esperas and Villalino remain hearsay and deserve scant consideration. Last, George Taberrah, the
former Manager for Distribution of Caltex, testified on 26 February 1996 that the amount of ₱15,500
for crating expense was reasonable. Even Roger San Jose, the former auditor of Caltex, testified on
the necessity and reasonableness of said amount.

In R & E Transport, Inc. v. Latag,29 we held that factual issues may be reviewed by the CA when the
findings of fact of the NLRC conflict with those of the LA. By the same token, this Court may review
factual conclusions of the CA when they are contrary to those of the NLRC or of the LA.

In the present case, the evidence of the parties with respect to the crating expense reimbursed by
Agad finds discord on the official receipt issued by Delda vis-a-vis Delda’s sworn testimony denying
that he received the amount stated in the receipt or rendered any crating service for Agad. The
petitioners presented the affidavits of Asperas and Villalino to corroborate Delda’s testimony while
Agad relied on the official receipt as the best evidence that he contracted Delda’s services and that
Delda indeed issued said receipt. The decisions of the CA and NLRC produced different factual
conclusions on this issue.

After a careful review of the records, we find no cogent reason to disturb the findings of the CA.

First, the official receipt submitted by Agad serves as the best evidence of payment and is
presumed regular on its face absent any showing to the contrary.

Second, records show that the reimbursement of the crating expense was approved by
Agad’s superior upon presentment of the receipt. At the time, Agad’s superior did not
mention that the amount of the crating expense incurred was unreasonable.

Third, Delda, in his affidavit, disclosed that he was forced to issue the receipt in order to get
a favorable recommendation from the incoming superintendent who would replace Agad in
the Depot. However, in the same affidavit, Delda mentioned that he had been a standby
worker at the Depot from 1956 to 1982 and a piece-worker from 1982 up to 1993, the date
he executed the affidavit. It appears then that Delda had established a name for himself and
his business with Caltex. Any favorable recommendation from Agad, as the outgoing
superintendent, would not provide much impact compared to the reputation he had built all
those years.

Fourth, the testimonies of the two corroborating witnesses, Esperas and Villalino, cannot be
given credence since Agad was not given an opportunity to cross-examine them. Their
testimonies are considered as hearsay evidence.

Last, petitioners did not present any other evidence to show that Agad violated company
policy dealing with crating expenses to be limited to a certain amount. Reasonableness was
the only criterion given by the employer.

Thus, all these taken into consideration, we conclude that petitioners were not able to fully
substantiate the alleged fictitious reimbursement of the crating expense. Delda’s testimony alone,
without any corroborating evidence to prove otherwise, is insufficient to overcome the presumption
of regularity in the issuance of his own official receipt which he gave to Agad.
Withdrawal and sale of 190 pieces of LPG cylinders is unauthorized

Petitioners assert that Agad committed serious violation of internal control procedures and company
policies due to the following: (1) no Records of Materials Received/Delivered (RMRD) were issued to
cover the withdrawal of the empty cylinders for repair purposes; (2) the testimony of Millanes
demonstrates that the cylinders were initially stored at his premises on 8 February 1991 and later
sold as good units without bidding, upon the instructions of Agad, to Leyte Development and Ernesto
Mercado; (3) no evidence was submitted to show that the sales proceeds were turned over to Caltex
and petitioners surmise that the total prevailing price of the LPG cylinders would have been from a
low of ₱95,000 to a high of ₱133,000; (4) the periodic report of inventory of the LPG cylinders,
considered part of storehouse materials, to Head Office Accounting was not submitted by the depot;
and (5) the depot clerk acted beyond his authority when he approved the gate passes for the
withdrawal of the cylinders.30
1avv phi1

Respondents, on the other hand, maintain the following: (1) that as depot superintendent, Agad had
the authority to transfer materials, including

scrap, from one place to another; (2) Agad had specific authority, per Memorandum dated 12
February 1992, to withdraw the scrap materials as replacement for the missing scrap tanks, pumps
and pipelines earlier sold to Boy Bato; (3) the withdrawal of the LPG cylinders was covered by gate
passes 8499 and 8500, negating any fraudulent intent on Agad’s part; and (4) petitioners’ own
witness, Millanes, testified that the LPG cylinders withdrawn were actually junk or scrap materials
and of no accounting value. In addition, even assuming that the withdrawal of the LPG cylinders was
unauthorized, the penalty of dismissal is too harsh a penalty.

We agree with petitioners.

The findings of the CA in the present case revealed:

With regard to the second issue, the petitioner contends that the withdrawal/sale of 190 LPG
cylinders in the Tacloban Bulk Depot was well within his authority as a Depot Superintendent and
covered by an authority stated in an instrument, as a consequence of a contract of sale with Mr.
Bato. Furthermore, such cylinders were already considered as scrap or without monetary value.
Therefore, its withdrawal/sale could not constitute just cause for dismissal.

The contention is without merit. Although his position as Depot Superintendent includes such
authority, as part of his housekeeping duties, it does not automatically justify his acts which were
contrary to company rules and regulations. The company rules required the issuance of RMRDs for
any company properties with value to be withdrawn from the Bulk Depot. Petitioner failed to comply
with this rule. Furthermore, he ordered the sale of the cylinders without bidding, and there were no
evidence that the proceeds of such sale were turned over to the company. Mere existence of
authority does not justify his acts, he must show that he properly exercised such authority as
contemplated in the company rules and regulations, especially when the act is not within his
discretion.

His contention that such withdrawal mas merely a part of a contract of sale between the company
and Mr. Bato, is likewise erroneous. The instrument never mentioned of any LPG cylinders, what
was mentioned therein was 3,000 B.I. plates. And even if the contract involved LPG cylinders, still,
its withdrawal must be accounted for.

The petitioners’ assumption that the subject LPG cylinders were merely scrap materials is likewise
erroneous. The cylinders, although declared as scraps, still has monetary value because it can still
be sold even as scrap materials. Moreover, even if such cylinders were merely scrap, the petitioner
cannot just appropriate them without the company’s consent. Being company property, its disposal is
still within the discretion and prerogative of the company.31

In the same manner, the NLRC, in its Decision dated 6 June 2001, held:

x x x It was sufficiently established that complainant Agad had no authority to withdraw the LPG
cylinders from the Tacloban Bulk Depot. Complainant Agad’s claim that he merely withdrew the LPG
cylinders in view of the loss of certain scrap materials earlier sold to Mr. Boy Bato is belied by the
fact that the alleged loss was not established. On the other hand, the records show that complainant
Agad’s request for the withdrawal of scrap materials only covered 3,000 kilograms of B.I. plates. This
request, however, did not include the LPG cylinders, numbering 190, which were withdrawn from the
Tacloban Depot.

Complainant Agad also did not observe the existing company rules and regulations on the
withdrawal of LPG cylinders from the Tacloban Bulk Depot. According to the Audit Report, which
was not controverted by complainant Agad, no Records of Materials Received/Delivered were
issued to cover the withdrawal of the cylinders. Also, the periodic inventory of the LPG cylinders was
not submitted by complainant Agad to the accounting department. Further, the LPG cylinders were
not sold through bidding, which was corroborated by the statement of Mr. Isidro B. Millanes, who
testified that the subject LPG cylinders were first stored at his premises and later sold without
bidding upon the express instructions of complainant Agad.

In this regards, it cannot be validly claimed that the LPG cylinders in question were mere scrap
materials, i.e. they had no monetary value anymore and therefore not subject to the strict
requirement laid down by the company rules and regulations. As testified to by Mr. Cabugao, and by
no less than complainant Agad himself and his own witnesses, Mr. George Taberrah, and Mr. Roger
San Jose, Jr., the LPG containers have monetary value as they can still be sold even as scrap.32

The findings of the CA and NLRC establish the following: (1) Agad’s request for withdrawal of the
190 pieces of LPG cylinders as stated in a Memorandum dated 12 February 1992 cannot be given
credence since the Memorandum pertains to the replacement of the scrap materials due to Boy Bato
consisting of 3,000 kilograms of black iron plates and not to the subject LPG cylinders; (2) Agad did
not observe Caltex’s rules and regulations when he transferred the said cylinders to Millanes’
compound without the RMRD form as required under Caltex’s Field Accounting Manual; (3) Agad
gave specific instructions to Millanes to sell the cylinders without bidding to third parties in violation
of company rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the
accounting department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6)
even if considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot
appropriate for himself without Caltex’s consent.

Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of
company property. This act is akin to a serious misconduct or willful disobedience by the employee
of the lawful orders of his employer in connection with his work, a just cause for termination of
employment recognized under Article 282(a) of the Labor Code.

Misconduct has been defined as a transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error
in judgment. To be serious, the misconduct must be of such grave and aggravated character.33
Further, Agad’s conduct constitutes willful breach of the trust reposed in him, another just cause for
termination of employment recognized under Article 282(c) of the Labor Code. Loss of trust and
confidence, as a just cause for termination of employment, is premised on the fact that the employee
concerned holds a position of responsibility, trust and confidence. The employee must be invested
with confidence on delicate matters, such as the custody, handling, care and protection of the
employer’s property and funds.34

As a superintendent, Agad occupied a position tasked to perform key and sensitive functions which
necessarily involved the custody and protection of Caltex’s properties. Consequently, Agad comes
within the purview of the trust and confidence rule.

In Sagales v. Rustan’s Commercial Corporation,35 we held that in loss of trust and confidence, as a
just cause for dismissal, it is sufficient that there must only be some basis for the loss of trust and
confidence or that there is reasonable ground to believe, if not to entertain the moral conviction, that
the employee concerned is responsible for the misconduct and that his participation in the
misconduct rendered him absolutely unworthy of trust and confidence.

In sum, even if Agad did not commit the alleged charge of fictitious reimbursement of crating
expense, he was found to have acted without authority, a serious infraction amounting to theft of
company property, in the withdrawal and sale of the 190 pieces of LPG cylinders owned by the
company. Caltex, as the employer, has discharged the burden of proof necessary in terminating the
services of Agad, who was ascertained to have blatantly abused his position and authority. Thus,
Agad’s dismissal from employment based on (1) acts tantamount to serious misconduct or willful
violation of company rules and regulations; and (2) willful breach of trust and confidence as Depot
Superintendent was lawful and valid under the circumstances as mandated by Article 282 (a) and (c)
of the Labor Code.

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 22 May 2003 and
Resolution dated 27 January 2004 of the Court of Appeals in CA-G.R. SP No. 74199.
We DECLARE as valid the termination from employment of respondent Hermie G. Agad for just
causes prescribed under the law.

SO ORDERED.
CASE NO. 21

Republic of the Philippines

SUPREME COURT
Baguio City

SECOND DIVISION

G.R. No. 187605 April 13, 2010

TECHNOL EIGHT PHILIPPINES CORPORATION, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND DENNIS AMULAR, Respondents.

DECISION

BRION, J.:

For resolution is the present Petition for Review on Certiorari1 addressing the decision2 and
resolution3 of the Court of Appeals (CA) of November 18, 2008 and April 17, 2009, respectively, in
CA-G.R. SP No. 100406.4

THE ANTECEDENTS

The facts are summarized below.

The petitioner Technol Eight Philippines Corporation (Technol), located at 127 East Main Avenue,
Laguna Technopark, Biñan, Laguna, manufactures metal parts and motor vehicle components. It
hired the respondent Dennis Amular (Amular) in March 1998 and assigned him to Technol’s
Shearing Line, together with Clarence P. Ducay (Ducay). Rafael Mendoza (Mendoza) was the line’s
team leader.

On April 16, 2002 at about 5:30 p.m., Mendoza went to the Surf City Internet Café in Balibago, Sta.
Rosa, Laguna. As Mendoza was leaving the establishment, he was confronted by Amular and Ducay
who engaged him in a heated argument regarding their work in the shearing line, particularly
Mendoza’s report to Avelino S. De Leon, Jr. (De Leon), Technol’s Production Control and Delivery
(PCD) assistant supervisor, about Amular’s and Ducay’s questionable behavior at work. The heated
argument resulted in a fistfight that required the intervention of the barangay tanods in the area.

Upon learning of the incident, Technol’s management sent to Amular and Ducay a notice of
preventive suspension/notice of discharge dated May 18, 20025 advising them that their fistfight with
Mendoza violated Section 1-k of Technol’s Human Resource Department (HRD) Manual. The two
were given forty-eight (48) hours to explain why no disciplinary action should be taken against them
for the incident. They were placed under preventive suspension for thirty (30) days, from May 19,
2002 to June 17, 2002 for Ducay, and May 21, 2002 to June 20, 2002 for Amular. Amular submitted
a written statement on May 20, 2002.6

Thereafter, Amular received a notice dated June 8, 20027 informing him that Technol management
will conduct an administrative hearing on June 14, 2002. He was also given two (2) days to respond
in writing to the statements attached to and supporting the notice. A day before the hearing or on
June 13, 2002, Amular filed a complaint for illegal suspension/constructive dismissal with a prayer
for separation pay, backwages and several money claims, against Technol. Amular failed to attend
the administrative hearing. On July 4, 2002, Technol sent him a notice of dismissal.8

Before the Labor Arbiter, Amular alleged that in the afternoon of April 16, 2002, while he and his co-
employee Ducay were walking around the shopping mall in Balibago, Sta. Rosa, Laguna, they
"incidentally" saw Mendoza with whom they wanted to discuss some personal matters. When they
approached Mendoza, the latter raised his voice and asked what they wanted from him; Amular
asked Mendoza what the problem was because Mendoza appeared to be always angry at him
(Amular). Mendoza instead challenged Amular and Ducay to a fistfight and then punched Amular
who punched Mendoza in return. Thereafter, a full-blown fistfight ensued until the barangay tanods
in the area pacified the three.

Amular further alleged that he was asked by his immediate supervisor to submit a report on the
incident, which he did on April 18, 2002.9 Subsequently, Amular, Mendoza and Ducay were called by
Technol management to talk to each other and to settle their differences; they agreed and settled
their misunderstanding.

THE COMPULSORY ARBITRATION DECISIONS

On November 18, 2003, Executive Labor Arbiter Salvador V. Reyes rendered a decision10 finding
that Amular’s preventive suspension and subsequent dismissal were illegal. He ruled that Amular’s
preventive suspension was based solely on unsubscribed written statements executed by Mendoza,
Rogelio R. Garces and Mary Ann Palma (subscribed only on August 8, 2002) and that Mendoza,
Amular and Ducay had settled their differences even before Amular was placed under preventive
suspension. With respect to Amular’s dismissal, the Arbiter held that Technol failed to afford him
procedural due process since he was not able to present his side because he had filed a case
before the National Labor Relations Commission (NLRC) at the time he was called to a hearing;
Technol also failed to substantiate its allegations against Amular; the fistfight occurred around 200 to
300 meters away from the work area and it happened after office hours. Arbiter Reyes awarded
Amular separation pay (since he did not want to be reinstated), backwages, 13th month pay, service
incentive leave pay and attorney’s fees in the total amount of ₱158,987.70.

Technol appealed to the NLRC. In its decision promulgated on March 30, 2005,11 the NLRC affirmed
the labor arbiter’s ruling. It found that Amular was unfairly treated and subjected to discrimination
because he was the only one served with the notice to explain and placed under preventive
suspension; his co-employee Ducay who was also involved in the incident was not. Technol moved
for reconsideration, but the NLRC denied the motion in a resolution rendered on May 30,
2007.12 Technol thereafter sought relief from the CA through a petition for certiorari under Rule 65 of
the Rules of Court.13

THE CA DECISION

In its decision promulgated on November 18, 2008, the CA found no grave abuse of discretion on
the part of the NLRC when it affirmed the labor arbiter’s ruling that Amular was illegally dismissed.
While the appellate court noted that Amular was dismissed on the ground of serious misconduct, a
just cause for employee dismissal under the Labor Code,14 it opined that Technol failed to comply
with the jurisprudential guidelines that misconduct warranting a dismissal: (1) must be serious; (2)
must relate to the performance of the employees duties; and (3) must show that the employee has
become unfit to continue working for the employer.15

The appellate court pointed out that the mauling incident occurred outside the company premises
and after office hours; it did not in any manner disrupt company operations nor pose a threat to the
safety or peace of mind of Technol workers; neither did it cause substantial prejudice to the
company. It explained that although it was not condoning Amular’s misconduct, it found that "the
penalty of dismissal imposed by Technol on Amular was too harsh and evidently disproportionate to
the act committed."16 The CA denied the motion for reconsideration Technol subsequently
filed;17 hence, the present petition.18

THE PETITION

Technol posits that the CA gravely erred in ruling that Amular was illegally dismissed, contending
that Amular was discharged for violation of Section 1-k of its HRD Manual which penalizes the
commission of a crime against a co-employee. It submits that Section 1-k of the HRD Manual is a
reasonable company rule issued pursuant to its management prerogative. It maintains that the case
should have been examined from the perspective of whether the company rule is reasonable and
not on the basis of where and when the act was committed, or even whether it caused damage to
the company. It adds that the manual does not distinguish whether the crime was committed inside
or outside work premises or during or after office hours. It insists that if the rule were otherwise, any
employee who wishes to harm a co-employee can just wait until the co-employee is outside the
company premises to inflict harm upon him, and later argue that the crime was committed outside
work premises and after office hours. It submits that the matter assumes special and utmost
significance in this case because Amular inflicted physical injuries on a supervisor. In any event,
Technol argues that even if the misconduct was committed outside company premises, the
perpetrator can still be disciplined as long as the offense was work-related, citing Oania v.
NLRC19 and Tanala v. NLRC20 in support of its position.

Technol bewails the CA’s appreciation of the implication of Amular’s misconduct in the workplace,
especially the court’s observation that it did not cause damage to the company because it did not
disrupt company operation, that it did not create a hostile environment inside the company, and that
the fight was "nipped in the bud by the timely intervention of those who saw the incident."21 Technol
insists that it had to order Amular’s dismissal in order to uphold the integrity of the company rules
and to avoid the erosion of discipline among its employees. Also, it disputes the CA’s conclusion that
the fact that Amular’s liability should be mitigated because the fight "was nipped in the bud." It
submits that Mendoza had already sustained grave injuries when the mauling was stopped.

Further, Technol maintains that the CA gravely erred in going beyond the issues submitted to it,
since the NLRC decision only declared Amular’s dismissal illegal on the ground that he was the only
one subjected to disciplinary action and that the company merely relied on the written statements of
Amular’s co-employees.

On the rejection by the CA of the statements of Amular’s co-employees regarding the incident,
Technol contends that the statements of the witnesses, together with Amular’s admission, constitute
substantial evidence of guilt. It points out that the statement of Mendoza on the matter submitted
during the company investigation and before the labor arbiter was not a "stand alone" statement;
Mendoza’s statement was corroborated by the statements of Rogelio R. Garces and Mary Ann
Palma, verified under oath in the reply22 it submitted to the arbiter. The statements were all in their
handwriting, indicating that they were not pro forma or prepared on command; a medical
certificate23 and a barangay report24 were likewise submitted.

Technol likewise disputes the NLRC’s conclusion that Amular was discriminated against and unfairly
treated because he was the only one preventively suspended after the mauling incident. It maintains
that from the records of the case and as admitted by Amular himself in his position paper,25 his co-
employee Ducay was also preventively suspended.26 That Mendoza was not similarly placed under
preventive suspension was considered by Technol as an exercise of its management prerogative,
since the circumstances surrounding the incident indicated the existence of a reasonable threat to
the safety of Amular’s co-employees and that Mendoza appeared to be the victim of Amular’s and
Ducay’s assault.

THE CASE FOR AMULAR

In his Comment filed on August 12, 2009,27 Amular asks that the petition be dismissed for "utter lack
of merit." He admits that the mauling incident happened, but claims however that on April 18, 2002,
the Technol’s management called Mendoza, Ducay, and him to a meeting, asked them to explain
their sides and thereafter requested them to settle their differences; without hesitation, they agreed
to settle and even shook hands afterwards. He was therefore surprised that on May 18, 2002, he
received a memorandum from Technol’s HRD charging him and his co-employee Ducay for the
incident. Without waiting for an explanation, Technol’s management placed him under preventive
suspension, but not Ducay. Adding insult to injury, when Amular followed up his case while on
preventive suspension, he was advised by the HRD manager to simply resign and accept
management’s offer of ₱22,000.00, which offer was reiterated during the mandatory conference
before the labor arbiter.

Amular particularly laments that his employment was terminated while the constructive dismissal
case he filed against the company was still pending. He posits that his employment was terminated
first before he was informed of the accusations leveled against him – an indication of bad faith on the
part of Technol.

Amular asks: if it were true that the mauling incident was a serious offense under company policy,
why did it take Technol a month to give him notice to explain the mauling incident? He submits that
the memorandum asking him to explain was a mere afterthought; he was dismissed without giving
him the benefit to be informed of the true nature of his offense, thus denying him his right to be
heard.

Finally, Amular questions the propriety of the present petition contending that it only raises questions
of fact, in contravention of the rule that only questions of law may be raised in a petition for review on
certiorari.28 He points out that the findings of facts of the labor tribunals and the CA are all the same
and therefore must be given respect, if not finality.29

THE RULING OF THE COURT

The Procedural Issue

We find no procedural impediment to the petition. An objective reading of the petition reveals that
Technol largely assails the correctness of the conclusions drawn by the CA from the set of facts it
considered. The question therefore is one of law and not of fact, as we ruled in Cucueco v. Court of
Appeals.30 Thus, while there is no dispute that a fight occurred between Amular and Ducay, on the
one hand, and Mendoza, on the other, the CA concluded that although Amular committed a
misconduct, it failed to satisfy jurisprudential standards to qualify as a just cause for dismissal – the
conclusion that Technol now challenges. We see no legal problem, too, in wading into the factual
records, as the tribunals below clearly failed to properly consider the evidence on record. This is
grave abuse of discretion on the part of the labor tribunals that the CA failed to appreciate.

The Merits of the Case

The CA misappreciated the true nature of Amular’s involvement in the mauling incident. Although it
acknowledged that Amular committed a misconduct, it did not consider the misconduct as work-
related and reflective of Amular’s unfitness to continue working for Technol. The appellate court’s
benign treatment of Amular’s offense was based largely on its observation that the incident
happened outside the company premises and after working hours; did not cause a disruption of work
operations; and did not result in a hostile environment in the company. Significantly, it did not
condone Amular’s infraction, but it considered that Amular’s dismissal was a harsh penalty that is
disproportionate with his offense. It found support for this liberal view from the pronouncement of the
Court in Almira v. B.F. Goodrich Philippines, Inc.,31 that "where a penalty less punitive would suffice,
whatever missteps may be committed by labor ought not to be visited with a consequence so
severe."

The record of the case, however, gives us a different picture. Contrary to the CA’s perception, we
find a work-connection in Amular's and Ducay’s assault on Mendoza. As the CA itself noted,32 the
underlying reason why Amular and Ducay confronted Mendoza was to question him about his report
to De Leon – Technol’s PCD assistant supervisor – regarding the duo’s questionable work behavior.
The motivation behind the confrontation, as we see it, was rooted on workplace dynamics as
Mendoza, Amular and Ducay interacted with one another in the performance of their duties.

The incident revealed a disturbing strain in Amular's and Ducay’s characters – the urge to get even
for a perceived wrong done to them and, judging from the circumstances, regardless of the place
and time. The incident could very well have happened inside company premises had the two
employees found time to confront Mendoza in the workplace as they intimated in their written
statements.33 Having been the subject of a negative report regarding his work must have rankled on
Amular that he resolved to do something about it; thus, he confronted Mendoza.

From the records, Ducay appeared to have cooperated with Amular in the violent confrontation with
Mendoza. Ducay, however, resigned on June 7, 2002 a week before the filing of the
complaint.34 Hence, Technol did not act against him – a move that is within its prerogative to make. 1avvphi1

In an obvious effort to mitigate his involvement in the mauling incident, Amular claimed in the
administrative proceedings that while he and Ducay were walking around the shopping mall in
Balibago, Sta. Rosa, Laguna, they "incidentally" saw their co-employee Mendoza "with whom they
wanted to clear some personal matters."35 We find this claim a clear distortion of what actually
happened. Again, based on their written statements,36 Amular and Ducay purposely set out for the
Balibago commercial area on April 16, 2002 looking for Mendoza. It was not an incidental or casual
encounter. They sought Mendoza out and confronted him regarding what they perceived as
Mendoza’s negative attitude towards them or "pamamarako" as Mendoza described it.37 Considering
the subject Amular and Ducay raised with Mendoza, it is not surprising that they had a heated verbal
exchange (mostly between Amular and Mendoza) that deteriorated into a fistcuff fight, with Mendoza
at the losing end as he suffered injuries from the blows he received.

Amular and Ducay point to Mendoza as the proximate cause of the fight because he challenged
them to a one-on-one (isa-isa lang) bout.38 Looking back at the reason why Amular and Ducay were
at the mall in the first place, this attributed causation hardly makes sense. To reiterate, they were
purposely there to confront Mendoza about their work-related problem. They waited for him at the
place where they expected him to be. When Mendoza appeared, they accosted him and put into
motion the entire sorry incident.

Under these circumstances, Amular undoubtedly committed a misconduct or exhibited improper

behavior that constituted a valid cause for his dismissal under the law39 and jurisprudential
standards.40 The circumstances of his misdeed, to our mind, rendered him unfit to continue working
for Technol; guilt is not diminished by his claim that Technol’s management called the three of them
to a meeting, and asked them to explain their sides and settle their differences, which they
did.41 Mendoza significantly denied the alleged settlement, maintaining that while they were
summoned by De Leon after the incident, he could not shake hands and settle with Amular and
Ducay since they did not even apologize or ask forgiveness for what they did.42 We do not find
Mendoza’s denial of Amular’s claim unusual as Mendoza would not have stood his ground in this
case if a settlement had previously been reached. That a meeting had taken place does not appear
disputed, but a settlement cannot be inferred simply because a meeting took place.

Neither do we believe that Amular was discriminated against because he was not the only one
preventively suspended. As the CA itself acknowledged, Ducay received his notice of preventive
suspension/notice of charge43on May 19, 2002 while Amular received his on May 21, 2002. These
notices informed them that they were being preventively suspended for 30 days from May 19, 2002
to June 17, 2002 for Ducay, and May 21, 2002 for Amular.44

Thus, Amular was not illegally dismissed; he was dismissed for cause.

The Due Process Issue

The labor arbiter ruled that Technol failed to afford Amular procedural due process, since he was not
able to present his side regarding the incident; at the time he was called to a hearing, he had already
filed the illegal dismissal complaint.45 The NLRC, on the other hand, held that the memorandum
terminating Amular’s employment was a mere formality, an afterthought designed to evade company
liability since Amular had already filed an illegal dismissal case against Technol.46

We disagree with these conclusions. The notice of preventive suspension/notice of discharge served
on Amular and Ducay required them to explain within forty-eight (48) hours why no disciplinary
action should be taken against them for their involvement in the mauling incident.47 Amular submitted
two written statements: the first received by the company on May 19, 200248 and the other received
on May 20, 2002.49 On June 8, 2002, Technol management sent Amular a memorandum informing
him of an administrative hearing on June 14, 2002 at 10:00 a.m., regarding the charges against
him.50 At the bottom left hand corner of the memorandum, the following notation appears: "accept the
copy of notice but refused to receive, he will study first." A day before the administrative hearing or
on June 13, 2002, Amular filed the complaint for illegal suspension/dismissal51 and did not appear at
the administrative hearing. On July 4, 2002, the company sent Amular a notice of dismissal.52

What we see in the records belie Amular’s claim of denial of procedural due process. He chose not
to present his side at the administrative hearing. In fact, he avoided the investigation into the
charges against him by filing his illegal dismissal complaint ahead of the scheduled investigation.
Under these facts, he was given the opportunity to be heard and he cannot now come to us
protesting that he was denied this opportunity. To belabor a point the Court has repeatedly made in
employee dismissal cases, the essence of due process is simply an opportunity to be heard; it is the
denial of this opportunity that constitutes violation of due process of law.53

In view of all the foregoing, we find the petition meritorious.

WHEREFORE, premises considered, we hereby GRANT the petition. The assailed decision and
resolution of the Court of Appeals are REVERSED and SET ASIDE. The complaint for illegal
dismissal is DISMISSED for lack of merit. Costs against respondent AMULAR.

SO ORDERED.
CASE NO. 22

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173189 February 13, 2013

JONATHAN I. SANG-AN, Petitioner,

vs.
EQUATOR KNIGHTS DETECTIVE AND SECURITY AGENCY, INC., Respondents.

DECISION

BRION, J.:

Before the Court is the petition for review on certiorari1 filed by petitioner Jonathan I. Sang-an
assailing the decision2 dated September 29, 2005 and the resolution3 dated May 29, 2006 of the
Court of Appeals (CA) in CA-G.R. SP. No. 86677. TheCA set aside the decision4 dated December
15, 2003 of the National Labor Relations Commission (NLRC) and reinstated the decision5 dated
July 30, 200 I of Labor Arbiter Geoffrey P. Villahermosa(LA).

The Facts

Jonathan was the Assistant Operation Manager of respondent Equator Knights Detective and
Security Agency, Inc. (Equator). He was tasked, among others, with the duty of assisting in the
operations of the security services; he was also in charge of safekeeping Equator’s firearms.

On April 21, 2001, Equator discovered that two firearms were missing from its inventory. The
investigation revealed that it was Jonathan who might have been responsible for the loss.6 On April
24, 2001, Jonathan wastemporarily suspended from work pending further investigation.

On May 8, 2001, while Jonathan was under suspension, a security guard from Equator was
apprehended by policemen for violating the Commission on Elections’ gun ban rule. The security
guard stated in his affidavit7 thatthe unlicensed firearm had been issued to him by Jonathan.

On May 24, 2001, Jonathan filed with the NLRC a complaint for illegal suspension with prayer
for reinstatement.8 In his position paper, however, he treated his case as one for illegal dismissal
and alleged that he had been denied due process when he was dismissed.9 Equator, on the other
hand, argued that Jonathan’s dismissal was not illegal but was instead for a just cause under Article
282 of the Labor Code.10

On July 30, 2001, the LA rendered a decision11 dismissing the complaint. It declared that no
illegal dismissal took place as Jonathan’s services were terminated pursuant to a just cause. The LA
found that Jonathan was dismissed due to the two infractions he committed:

The basis for the termination of the complainant was first, when he was suspended when he issued
a firearm [to] a security guard and then replaced it with another one, then took the respondent[’s]
firearm with him and since then both firearms were lost. x x x.
 xxxx

His second offense which resulted in his being terminated was when he issued an unlicensed
firearm to a Security Guard stationed in one of the business establishment[s] in Bais City which is a
client of the respondents.

xxxx

WHEREFORE, in the light of the foregoing, judgment is hereby rendered DISMISSING this case for
lack of legal and factual basis.12

Jonathan appealed the LA’s decision to the NLRC, contending that no charge had been laid against
him; there was no hearing or investigation of any kind; and he was not given any chance or
opportunity to defend himself.

The NLRC sustained the findings of the LA that there had been just cause for his dismissal.
However, it found that Jonathan had been denied his right to due process when he was
dismissed. It held that Equator’s letter informing him of his temporary suspension until further notice
did not satisfy the requirements of due process for a valid dismissal. Thus, the NLRC modified the
LA’s decision and ordered Equator to pay Jonathan backwages from April 24, 2001 until the date of
the NLRC’s decision. Equator moved for reconsideration but the NLRC denied the motion, prompting
the filing of a petition for certiorari under Rule 65 of the Rules of Court with the CA. Equator argued
that the NLRC committed grave abuse of discretion when it found that Jonathan had been denied
procedural due process.

The CA reversed the decision of the NLRC, finding that Equator substantially complied with the
procedural requirements of due process. It found that the letter given to Jonathan did not mean that
he had been dismissed; rather, he was only suspended – the very reason for the case for illegal
suspension Jonathan filed before the LA. 1âwphi1

The CA found that Jonathan filed his complaint for illegal suspension on May 2, 2001. During the
pendency of the illegal suspension case before the LA, Jonathan committed another offense on May
8, 2001 when he issued the unlicensed firearm to Equator’s security guard. The CA found that
Equator’s June 7, 2001 position paper brought Jonathan’s second offense before the LA for
resolution; thus, Jonathan was not denied due process. The CA reinstated the LA’s decision
dismissing Jonathan’s complaint. Jonathan filed a motion for reconsideration which the CA
denied. He thereafter filed the present petition.

The Parties’ Arguments

Jonathan contends that when Equator filed a petition for certiorari under Rule 65 of the Rules of
Court alleging grave abuse of discretion by the NLRC, it failed to post a cash or surety bond as
required by Article 223 of the Labor Code. Without complying with this condition, the petition
for certiorari should have been dismissed outright. Also, Jonathan contends that the CA’s findings of
fact are contrary to the findings of fact by the NLRC. Since the findings of fact of quasi-judicial
agencies are accorded respect and finality, he argues that the NLRC’s decision must be sustained.

Equator, on the other hand, submits that the rule on posting of cash or surety bond as required by
Article 223 of the Labor Code is not applicable in a petition for certiorari under Rule 65 of the Rules
of Court. It also submits that both the LA and the NLRC concur in finding just cause for the dismissal
of Jonathan; hence, Jonathan’s subsequent dismissal is valid.
 The Issues

Given the parties’ arguments, the case poses the following issues for the Court’s resolution:

1. whether the posting of a cash or surety bond is required for the filing of a petition
for certiorari under Rule 65 of the Rules of Court with the CA; and

2. whether Jonathan was validly dismissed.

The Court’s Ruling

We find the petition partially meritorious.

A cash/surety bond is not needed in a Petition for Certiorari under Rule 65

The requirement of a cash or surety bond as provided under Article 223 of the Labor Code only
applies to appeals from the orders of the LA to the NLRC. It does not apply to special civil actions
such as a petition forcertiorari under Rule 65 of the Rules of Court. In fact, nowhere under Rule 65
does it state that a bond is required for the filing of the petition.

A petition for certiorari is an original and independent action and is not part of the proceedings that
resulted in the judgment or order assailed before the CA. It deals with the issue of jurisdiction, and
may be directed against an interlocutory order of the lower court or tribunal prior to an appeal from
the judgment, or to a final judgment where there is no appeal or any plain, speedy or adequate
remedy provided by law or by the rules.

Jonathan filed a complaint for illegal dismissal

Contrary to the findings of the CA, Jonathan was not merely suspended but was dismissed from the
service. While Jonathan initially filed an action for illegal suspension, the position papers both parties
filed treated the case as one for illegal dismissal. Jonathan alleged in his position paper that "the
[r]espondent illegally SUSPENDED (DISMISSED) the x x x complainant[,]" and claimed that his
dismissal lacked the required due process.13 Similarly, Equator’s position paper states that after the
commission of the second offense on May 8, 2001, "[management] made up a decision to
dismiss [Jonathan]."14 Even the LA treated the case before him as "a case for illegal
dismissal[.]"15 In Equator’s memorandum to this Court, it admitted that Jonathan was dismissed.16

We also find that Jonathan did not file his complaint for illegal suspension on May 2, 2001. The
records of the case disclose that the receiving date stamped on the complaint is May 24, 2001. The
date relied upon by the CA, May 2, 2001, was the date when the complaint was subscribed and
sworn to before a notary public.17 Due to the second offense committed by Jonathan on May 8,
2001, Equator decided to dismiss him. Therefore, when the LA tried the case, Jonathan had already
been dismissed.

Equator failed to comply with the procedural due process

In order to validly dismiss an employee, it is fundamental that the employer observe both substantive
and procedural due process – the termination of employment must be based on a just or authorized
cause and the dismissal can only be effected, after due notice and hearing.18
This Court finds that Equator complied with the substantive requirements of due process when
Jonathan committed the two offenses.

Article 282(A) of the Labor Code provides that an employee may be dismissed on the ground
of serious misconduct or willful disobedience of the lawful orders of his employer or representative
in connection with his work. Misconduct is improper or wrongful conduct; it is the transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error of judgment. The misconduct, to be serious within the
meaning of the Labor Code, must be of such grave and aggravated character and not merely trivial
or unimportant. It is also important that the misconduct be in connection with the employee's work to
constitute just cause for his separation.19

By losing two firearms and issuing an unlicensed firearm, Jonathan committed serious misconduct.
He did not merely violate a company policy; he violated the law itself (Presidential Decree No. 1866
or Codifying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing in, Acquisition or
Disposition, of Firearms, Ammunition or Explosives or Instruments Used in the Manufacture of
Firearms, Ammunition or Explosives, and Imposing Stiffer Penalties for Certain Violations Thereof
and for Relevant Purposes),20 and placed Equator and its employees at risk of being made legally
liable. Thus, Equator had a valid reason that warranted Jonathan’s dismissal from employment as
Assistant Operation Manager.

The Court, however, finds that Equator failed to observe the proper procedure in terminating
Jonathan’s services. Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor
Code provides that:

Section 2. Standard of due process: requirements of notice. – In all cases of termination of

employment, the following standards of due process shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(a) A written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his
evidence, or rebut the evidence presented against him; and

(c) A written notice [of] termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.21

Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish
the employee with two written notices before termination of employment can be effected: a first
written notice that informs the employee of the particular acts or omissions for which his or her
dismissal is sought, and a second written notice which informs the employee of the employer's
decision to dismiss him. In considering whether the charge in the first notice is sufficient to warrant
dismissal under the second notice, the employer must afford the employee ample opportunity to be
heard.

A review of the records shows that Jonathan was not furnished with any written notice that informed
him of the acts he committed justifying his dismissal from employment. The notice of suspension
given to Jonathan only pertained to the first offense, i.e., the loss of Equator’s firearms under
Jonathan’s watch. With respect to his second offense (i.e., the issuance of an unlicensed firearm to
1âwphi1

Equator’s security guard – that became the basis for his dismissal), Jonathan was never given any
notice that allowed him to air his side and to avail of the guaranteed opportunity to be heard. That
Equator brought the second offense before the LA does not serve as notice because by then,
Jonathan had already been dismissed.

In order to validly dismiss an employee, the observance of both substantive and procedural due
process by the employer is a condition sine qua non. Procedural due process requires that the
employee be given a notice of the charge against him, an ample opportunity to be heard, and a
notice of termination.22

Since Jonathan had been dismissed in violation of his right to procedural due process but for a just
cause, Equator should pay him nominal damages of ₱30,000.00, in accordance with Agabon v.
NLRC.23 The decision of the NLRC, although final, was brought to CA on a petition for certiorari and
was eventually nullified for grave abuse of discretion. When the CA ruled on the case, this Court had
abandoned the ruling in Serrano v. NLRC24 in favor of the Agabon ruling.

WHEREFORE, we hereby PARTIALLY GRANT the petition. The decision dated September 29,
2005 and the resolution dated May 29, 2006 of the Court of Appeals in CA-G.R. SP. No. 86677
are AFFIRMED withMODIFICATION. The employer, Equator Knights Detective and Security
Agency, Inc., had sut1icient basis to terminate the employment of Jonathan I. Sang-an whose
dismissal is thus declared to be substantively valid. However, he was denied his right to procedural
due process for lack of the required notice of dismissal. Consequently, Equator Knights Detective
and Security Agency, Inc. is ordered to pay petitioner Jonathan I. Sang-an ₱30,000.00 as nominal
damages for its non-compliance with procedural due process.

SO ORDERED.
CASE NO. 23

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 166109 February 23, 2011

EXODUS INTERNATIONAL CONSTRUCTION CORPORATION and ANTONIO P.

JAVALERA, Petitioners,
vs.
GUILLERMO BISCOCHO, FERNANDO PEREDA, FERDINAND MARIANO, GREGORIO BELLITA
and MIGUEL BOBILLO, Respondents.

DEL CASTILLO, J.:

In illegal dismissal cases, it is incumbent upon the employees to first establish the fact of their
dismissal before the burden is shifted to the employer to prove that the dismissal was legal.

This Petition for Review on Certiorari1 assails the Decision2 dated August 10, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 79800, which dismissed the petition for certiorari challenging the
Resolutions dated January 17, 20033 and July 31, 20034 of the National Labor Relations
Commission (NLRC) in NLRC NCR CASE Nos. 30-11-04656-005 and 30-12-04714-00.

Factual Antecedents

Petitioner Exodus International Construction Corporation (Exodus) is a duly licensed labor contractor
for the painting of residential houses, condominium units and commercial buildings. Petitioner
Antonio P. Javalera is the President and General Manager of Exodus.

On February 1, 1999, Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a contract6 for
the painting of the Imperial Sky Garden located at Ongpin Street, Binondo, Manila. On July 28, 1999,
Dutch Boy awarded another contract7 to Exodus for the painting of Pacific Plaza Towers in Fort
Bonifacio, Taguig City.

In the furtherance of its business, Exodus hired respondents as painters on different dates with the
corresponding wages appearing opposite their names as hereunder listed:

NAME DATE EMPLOYED DAILY SALARY

1. Guillermo B. Biscocho Feb. 8, 1999 ₱ 222.00
2. Fernando S. Pereda Feb. 8, 1999 235.00
3. Ferdinand M. Mariano April 12, 1999 235.00
4. Gregorio S. Bellita May 20, 1999 225.00
5. Miguel B. Bobillo March 10, 2000 220.00
Guillermo Biscocho (Guillermo) was assigned at the Imperial Sky Garden from February 8, 1999 to
February 8, 2000. Fernando Pereda (Fernando) worked in the same project from February 8, 1999
to June 17, 2000. Likewise, Ferdinand Mariano (Ferdinand) worked there from April 12, 1999 to
February 17, 2000. All of them were then transferred to Pacific Plaza Towers.

Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo Yap in Ayala
Alabang, Muntinlupa City from May 20, 1999 to December 4, 1999. Afterwards he was transferred to
Pacific Plaza Towers.

Miguel B. Bobillo (Miguel) was hired and assigned at Pacific Plaza Towers on March 10, 2000.

On November 27, 2000, Guillermo, Fernando, Ferdinand, and Miguel filed a complaint8 for illegal
dismissal and non-payment of holiday pay, service incentive leave pay, 13th month pay and night-
shift differential pay. This was docketed as NLRC NCR CASE No. 30-11-04656-00.

On December 1, 2000, Gregorio also filed a complaint9 which was docketed as NLRC NCR CASE
No. 30-12-04714-00. He claimed that he was dismissed from the service on September 12, 2000
while Guillermo, Fernando, Ferdinand, and Miguel were orally notified of their dismissal from the
service on November 25, 2000.

Petitioners denied respondents’ allegations. As regards Gregorio, petitioners averred that on

September 15, 2000, he absented himself from work and applied as a painter with SAEI-EEI which
is the general building contractor of Pacific Plaza Towers. Since then, he never reported back to
work.

Guillermo absented himself from work without leave on November 27, 2000. When he reported for
work the following day, he was reprimanded for being Absent Without Official Leave (AWOL).
Because of the reprimand, he worked only half-day and thereafter was unheard of until the filing of
the instant complaint.

Fernando, Ferdinand, and Miguel were caught eating during working hours on November 25, 2000
for which they were reprimanded by their foreman. Since then they no longer reported for work.

Ruling of the Labor Arbiter

On March 21, 2002, the Labor Arbiter rendered a Decision10 exonerating petitioners from the charge
of illegal dismissal as respondents chose not to report for work. The Labor Arbiter ruled that since
there is neither illegal dismissal nor abandonment of job, respondents should be reinstated but
without any backwages. She disallowed the claims for premium pay for holidays and rest days and
nightshift differential pay as respondents failed to prove that actual service was rendered on such
non-working days. However, she allowed the claims for holiday pay, service incentive leave pay and
13th month pay. The dispositive portion of the Labor Arbiter’s Decision reads:

WHEREFORE, premises considered, respondents Exodus International Construction Corporation

and/or Antonio Javalera are hereby ordered to reinstate complainants to their former positions as
painters without loss of seniority rights and other benefits appurtenant thereto without any
backwages.

Respondents are likewise hereby ordered to pay complainants the following:

1. Guillermo Biscocho
 ₱ 1,968.75 - Service Incentive Leave Pay
10,237.50 - 13th Month Pay
3,600.00 - Holiday Pay

₱ 15,806.25 - Sub-Total
+ 1,580.87 - 10% Attorney’s Fees

P 17,386.86 Total

2. Fernando Pereda

₱ 2,056.25 - Service Incentive Leave Pay

10,692.50 - 13th Month Pay

3,525.00 - Holiday Pay

₱ 16,273.75 - Sub-Total
+ 1,627.37 - 10% Attorney’s Fees

₱ 17,901.12 Total

3. Miguel Bobillo

₱ 3,813.34 - 13th Month Pay

1,320.00 - Holiday Pay

₱ 5,133.34 - Sub-Total
+ 513.33 - 10% Attorney’s Fees

P 5,646.67 Total

4. Ferdinand Mariano

₱ 1,860.42 - Service Incentive Leave Pay - 13th Month Pay

9,674.19
3,055.00 - Holiday Pay
 ₱ 14,589.61 - Sub-Total
+ 1,458.96 - 10% Attorney’s Fees Total
₱ 16,048.57

5. Gregorio Bellita

₱ 1,500.00 - Service Incentive Leave Pay - 13th Month Pay

7,800.00

2,700.00 - Holiday Pay

₱ 12,000.00 - Sub-Total
+ 1,200.00 - 10% Attorney’s Fees

₱ 13,200.00 Total

or the total aggregate sum of Seventy Thousand, One Hundred Eighty Three and 23/100
(₱70,183.23) Pesos, inclusive of the ten (10%) percent of the award herein by way of
attorney’s fees, all within ten (10) days from receipt hereof;

The rest of complainants’ claims for lack of merit are hereby Dismissed.

SO ORDERED.11

Ruling of the National Labor Relations Commission

Petitioners sought recourse to the NLRC limiting their appeal to the award of service incentive leave
pay, 13th month pay, holiday pay and 10% attorney’s fees in the sum of ₱70,183.23.

On January 17, 2003, the NLRC dismissed the appeal. It ruled that petitioners, who have complete
control over the records of the company, could have easily rebutted the monetary claims against it.
All that it had to do was to present the vouchers showing payment of the same. However, they opted
not to lift a finger, giving an impression that they never paid said benefits.

As to the award of attorney’s fees, the NLRC found the same to be proper because respondents
were forced to litigate in order to validate their claim.

The NLRC thus affirmed the Decision of the Labor Arbiter, viz:

Accordingly, premises considered, the decision appealed from is hereby AFFIRMED and the appeal
DISMISSED for lack of merit.

SO ORDERED.12
Petitioners filed a Motion for Reconsideration13 which was denied by the NLRC in a
Resolution14 dated July 31, 2003.

Ruling of the Court of Appeals

Aggrieved, petitioners filed with the CA a petition for certiorari. The CA through a Resolution15 dated
October 22, 2003, directed the respondents to file their comment. On December 4, 2003,
respondents filed their comment.16On January 12, 2004, petitioners filed their reply.17

On August 10, 2004, the CA dismissed the petition and affirmed the findings of the Labor Arbiter and
the NLRC. It opined that in a situation where the employer has complete control over the records
and could thus easily rebut any monetary claims against it but opted not to lift any finger, the burden
is on the employer and not on the complainants. This is so because the latter are definitely not in a
position to adduce any documentary evidence, the control of which being not with them.

However, in addition to the reliefs awarded to respondents in the March 21, 2002 Decision of the
Labor Arbiter which was affirmed by the NLRC in a Resolution dated January 17, 2003, the
petitioners were directed by the CA to solidarily pay full backwages, inclusive of all benefits the
respondents should have received had they not been dismissed.

The dispositive portion of the CA Decision reads:

WHEREFORE, the instant petition for certiorari is dismissed. However, in addition to the reliefs
awarded to private respondents in the decision dated March 21, 2002 of Labor Arbiter Aldas and
resolution of the NLRC dated January 17, 2003, the petitioners are directed to solidarily pay private
respondents full backwages, inclusive of all benefits they should have received had they not been
dismissed, computed from the time their wages were withheld until the time they are actually
reinstated. Such award of full backwages shall be included in the computation of public respondents’
award of ten percent (10%) attorney’s fees.

SO ORDERED.18

Petitioners moved for reconsideration,19 but to no avail. Hence, this appeal anchored on the following
grounds:

Issues

I.

The Honorable Court of Appeals erred and committed grave abuse of discretion in ordering
the reinstatement of respondents to their former positions which were no longer existing
because its findings of facts are premised on misappreciation of facts.

II.

The Honorable Court of Appeals also seriously erred and committed grave abuse of
discretion in affirming the award of service incentive leave pay, 13th month pay, and holiday
pay in the absence of evidentiary and legal basis therefor.

III.
 The Honorable Court of Appeals likewise seriously erred and committed grave abuse of
discretion in affirming the award of attorney's fees even in the absence of counsel on record
to handle and prosecute the case.

IV.

The Honorable Court of Appeals also seriously erred and gravely abused its discretion in
holding individual petitioner solidarily liable with petitioner company without specific evidence
on which the same was based.20

Petitioners’ Arguments

Petitioners contend that, contrary to their allegations, respondents were never dismissed from the
service. If respondents find themselves no longer in the service of petitioners, it is simply because of
their refusal to report for work. Further, granting that they were dismissed, respondents’ prolonged
absences is tantamount to abandonment which is a valid ground for the termination of their
employment. As to respondents monetary claims, it is incumbent upon them to prove the same
because the burden of proof rests on their shoulders. But since respondents failed to prove the
same, their claims should be denied.

Respondents’ Arguments

Respondents, in support of their claim that they were illegally dismissed, argue that as painters, they
performed activities which were necessary and desirable in the usual business of petitioners, who
are engaged in the business of contracting painting jobs. Hence, they are regular employees who,
under the law, cannot just be dismissed from the service without prior notice and without any just or
valid cause. According to the respondents, they did not abandon their job. For abandonment to
serve as basis for a valid termination of their employment, it must first be established that there was
a deliberate and unjustified refusal on their part to resume work. Mere absences are not sufficient for
these must be accompanied by overt acts pointing to the fact that they simply do not want to work
anymore. Petitioners failed to prove this. Furthermore, the filing of a complaint for illegal dismissal
ably defeats the theory of abandonment of the job.

Our Ruling

The petition is partly meritorious.

"[T]his Court is not unmindful of the rule that in cases of illegal dismissal, the employer bears the
burden of proof to prove that the termination was for a valid or authorized cause."21 But "[b]efore the
[petitioners] must bear the burden of proving that the dismissal was legal, [the respondents] must
first establish by substantial evidence" that indeed they were dismissed. "[I]f there is no dismissal,
then there can be no question as to the legality or illegality thereof."22

There was no dismissal in this case, hence, there is no question that can be entertained regarding
its legality or illegality.

As found by the Labor Arbiter, there was no evidence that respondents were dismissed nor were
they prevented from returning to their work. It was only respondents’ unsubstantiated conclusion that
they were dismissed. As a matter of fact, respondents could not name the particular person who
effected their dismissal and under what particular circumstances.
In Machica v. Roosevelt Services Center, Inc.,23 this Court sustained the employer's denial as
against the employees' categorical assertion of illegal dismissal. In so ruling, this Court held that:

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.

In this case, petitioners were able to show that they never dismissed respondents. As to the case of
Fernando, Miguel and Ferdinand, it was shown that on November 25, 2000, at around 7:30 a.m., the
petitioners’ foreman, Wenifredo Lalap (Wenifredo) caught the three still eating when they were
supposed to be working already. Wenifredo reprimanded them and, apparently, they resented it so
they no longer reported for work. In the case of Gregorio, he absented himself from work on
September 15, 2000 to apply as a painter with SAEI-EEI, the general contractor of Pacific Plaza
Towers. Since then he never reported back to work. Lastly, in the case of Guillermo, he absented
himself without leave on November 27, 2000, and so he was reprimanded when he reported for work
the following day. Because of the reprimand, he did not report for work anymore.

Hence, as between respondents’ general allegation of having been orally dismissed from the service
vis-a-vis those of petitioners which were found to be substantiated by the sworn statement of
foreman Wenifredo, we are persuaded by the latter. Absent any showing of an overt or positive act
proving that petitioners had dismissed respondents, the latters’ claim of illegal dismissal cannot be
sustained. Indeed, a cursory examination of the records reveal no illegal dismissal to speak of.

There was also no abandonment of work on the part of the respondents.

The Labor Arbiter is also correct in ruling that there was no abandonment on the part of respondents
that would justify their dismissal from their employment.

It is a settled rule that "[m]ere absence or failure to report for work x x x is not enough to amount to
abandonment of work."24 "Abandonment is the deliberate and unjustified refusal of an employee to
resume his employment."25

In Northwest Tourism Corporation v. Former Special 3rd Division of the Court of Appeals26 this Court
held that "[t]o constitute abandonment of work, two elements must concur, [namely]:

(1) the employee must have failed to report for work or must have been absent without valid
or justifiable reason; and

(2) there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act."

"It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the
employee to resume his employment without any intention of returning."27 It is therefore incumbent
upon petitioners to ascertain the respondents’ interest or non-interest in the continuance of their
employment. However, petitioners failed to do so.

Respondents must be reinstated and paid their holiday pay, service incentive leave pay, and 13th
month pay.
Clearly therefore, there was no dismissal, much less illegal, and there was also no abandonment of
job to speak of. The Labor Arbiter is therefore correct in ordering that respondents be reinstated but
without any backwages.

However, petitioners are of the position that the reinstatement of respondents to their former
positions, which were no longer existing, is impossible, highly unfair and unjust. The project was
already completed by petitioners on September 28, 2001. Thus the completion of the project left
them with no more work to do. Having completed their tasks, their positions automatically ceased to
exist. Consequently, there were no more positions where they can be reinstated as painters.

Petitioners are misguided. They forgot that there are two types of employees in the construction
industry. The first is referred to as project employees or those employed in connection with a
particular construction project or phase thereof and such employment is coterminous with each
project or phase of the project to which they are assigned. The second is known as non-project
employees or those employed without reference to any particular construction project or phase of a
project.

The second category is where respondents are classified. As such they are regular employees of
petitioners. It is clear from the records of the case that when one project is completed, respondents
were automatically transferred to the next project awarded to petitioners. There was no employment
agreement given to respondents which clearly spelled out the duration of their employment, the
specific work to be performed and that such is made clear to them at the time of hiring. It is now too
late for petitioners to claim that respondents are project employees whose employment is
coterminous with each project or phase of the project to which they are assigned.

Nonetheless, assuming that respondents were initially hired as project employees, petitioners must
be reminded of our ruling in Maraguinot, Jr. v. National Labor Relations Commission28 that "[a]
project employee x x x may acquire the status of a regular employee when the following [factors]
concur:

1. There is a continuous rehiring of project employees even after cessation of a project; and

2. The tasks performed by the alleged "project employee" are vital, necessary and
indespensable to the usual business or trade of the employer."

In this case, the evidence on record shows that respondents were employed and assigned
continuously to the various projects of petitioners. As painters, they performed activities which were
necessary and desirable in the usual business of petitioners, who are engaged in subcontracting
jobs for painting of residential units, condominium and commercial buildings. As regular employees,
respondents are entitled to be reinstated without loss of seniority rights.

Respondents are also entitled to their money claims such as the payment of holiday pay, service
incentive leave pay, and 13th month pay. Petitioners as the employer of respondents and having
complete control over the records of the company could have easily rebutted the monetary claims
against it. All that they had to do was to present the vouchers or payrolls showing payment of the
same. However, they decided not to provide the said documentary evidence. Our conclusion
therefore is that they never paid said benefits and therefore they must be ordered to settle their
obligation with the respondents.1avv phi 1

Respondents are also entitled to the payment of attorney’s fees.

Even though respondents were not represented by counsel in most of the stages of the proceedings
of this case, the award of attorney’s fees as ruled by the Labor Arbiter, the NLRC and the CA to the
respondents is still proper. In Rutaquio v. National Labor Relations Commission,29 this Court held
that:

It is settled that in actions for recovery of wages or where an employee was forced to litigate and,
thus, incur expenses to protect his rights and interest, the award of attorney’s fees is legally and
morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals30 this Court ruled that:

Attorney’s fees may be awarded when a party is compelled to litigate or to incur expenses to protect
his interest by reason of an unjustified act of the other party.

In this case, respondents filed a complaint for illegal dismissal with claim for payment of their holiday
pay, service incentive leave pay, and 13th month pay. The Labor Arbiter, the NLRC and the CA were
one in ruling that petitioners did not pay the respondents their holiday pay, service incentive leave
pay, and 13th month pay as mandated by law. For sure, this unjustified act of petitioners had
compelled the respondents to institute an action primarily to protect their rights and interests.

The CA erred when it ordered reinstatement of respondents with payment of full backwages.

It must be noted that the Labor Arbiter’s disposition directed petitioners to reinstate respondents
without any backwages and awarded the payment of service incentive leave pay, holiday pay, 13th
month pay, and 10% attorney’s fees in the sum of ₱70,183.23.

On appeal to the NLRC, petitioners limited their appeal to the award of service incentive leave pay,
holiday pay, 13th month pay, and 10% attorney’s fees. No appeal was made on the order of
reinstatement.

In the proceedings before the CA, it is only the award of service incentive leave pay, holiday pay,
13th month pay, and 10% attorney’s fees that were raised by the petitioners. The CA in fact
dismissed the petition. However, the CA further concluded in its Decision that since there is no
abandonment to speak about, it is therefore indisputable that respondents were illegally dismissed.
Therefore, they deserve not only reinstatement but also the payment of full backwages.

We do not agree with this ruling of the CA.

In cases where there is no evidence of dismissal, the remedy is

reinstatement but without backwages. In this case, both the Labor Arbiter and the NLRC made a
finding that there was no dismissal much less an illegal one. "It is settled that factual findings of
quasi-judicial agencies are generally accorded respect and finality so long as these are supported by
substantial evidence."31

In Leonardo v. National Labor Relations Commission,32 this Court held that:

In a case where the employee’s failure to work was occasioned neither by his abandonment nor by a
termination, the burden of economic loss is not rightfully shifted to the employer; each party must
bear his own loss.
Thus, inasmuch as no finding of illegal dismissal had been made, and considering that the absence
of such finding is supported by the records of the case, this Court is bound by such conclusion and
cannot allow an award of the payment of backwages.

Lastly, since there was no need to award backwages to respondents, the ruling of the CA that
Javalera is solidarily liable with Exodus International Construction Corporation in paying full
backwages need not be discussed.

WHEREFORE, the instant petition for review on certiorari is PARTLY GRANTED. The Decision of
the Court of Appeals in CA-G.R. SP No. 79800 dated August 10, 2004, is AFFIRMED with
MODIFICATION that the award of full backwages is DELETED for lack of legal basis.

SO ORDERED.
CASE NO. 26

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 115795 March 6, 1998

JOSE S. SANTOS, JR., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, HAGONOY INSTITUTE INC., ITS DIRECTRESS,
MARTA B. ZUNIGA and PRINCIPAL B. BANAG, respondents.

ROMERO, J.:

It is to state the obvious that schools, next only to the home, wield a weighty influence upon the
students, especially during the latters' formative years, for it instills in them the values and mores
which shall prepare them to discharge their rightful responsibilities as mature individuals in society.
At the vanguard in nurturing their growth are the teachers who are directly charged with rearing and
educating them. As such, a teacher serves as a role model for his students. Corollarily, he must not
bring the teaching profession into public disrespect or disgrace.1For failure to live up to the
exacting moral standards demanded by his profession, petitioner Jose Santos was dismissed
from his employment on the ground of immorality. We uphold his dismissal.

The following facts are hereunder narrated.

Petitioner, a married man, was employed as a teacher by the private respondent Hagonoy
Institute Inc. from June 1980 until his dismissal on June 1, 1991. Likewise working as a
teacher for the private respondent was Mrs. Arlene T. Martin, also married. In the course of
their employment, the couple fell in love. Thereafter, rumors regarding the couple's
relationship spread, especially among the faculty members and school officials.

Concerned about the rumors, on November 3, 1990, the private respondent advised Mrs.
Martin to take a leave of absence which she ignored, as she continued to report for work.
Consequently, on November 9, 1990, she was barred from reporting for work and was not
allowed to enter the private respondent's premises, effectively dismissing her from her
employment.

In view of her termination from the service, on November 13, 1990, Mrs. Martin filed a case for
illegal dismissal before the NLRC Regional Arbitration Branch No. III, San Fernando,
Pampanga2 against the private respondent. After the parties had submitted their respective
evidence and position paper, Labor Arbiter Ariel Santos rendered a decision dismissing the
complaint, the dispositive part of which states:
 WHEREFORE, the complaint filed by the complainant Arlene Martin is hereby
DISMISSED for utter lack of merit.

However, considering the length of service of complaint and for humanitarian reason
she would be given financial assistance based on one-month pay on every year of
service.

On appeal, the NLRC in a decision dated February 26, 1993, reversed the labor arbiter's
ruling, the dispositive portion of the decision3 reads:

WHEREFORE, the appealed Decision is hereby SET ASIDE and VACATED. Another
one ENTERED ordering respondent to pay complainant her backwages and separation
pay in the total amount of P83,392.40. Complainant's other claims are hereby
DISMISSED for lack of merit.

SO ORDERED.

The reversal was anchored on the failure by the private respondent, in dismissing Mrs.
Martin, to accord her the necessary procedural due process.4

Meanwhile, private respondent set up a committee to investigate the veracity of the rumors.
After two weeks of inquiry, the committee rendered its report confirming the illicit
relationship between the petitioner and Mrs. Martin.5

In view of the committee's finding, on December 19, 1990, petitioner was charged
administratively for immorality and was required to present his side on the controversy. Five
months later or in May 1991, petitioner was informed by the private respondent's Board of
Directors of his dismissal effective June 1, 1991.6 Unable to accept such verdict, petitioner
filed a complaint for illegal dismissal on August 12, 1991 before the NLRC Regional
Arbitration Branch No. III, San Fernando, Pampanga. After a full blown trial was conducted,
Labor Arbiter Quintin C. Mendoza rendered a decision dated January 12, 1993, dismissing
petitioner's complaint but at the same time awarding monetary sums as financial assistance,
the dispositive portion of which reads, thus:

WHEREFORE, judgment is hereby issued dismissing the complaint, but ordering

respondent Hagonoy Institute Inc. and/or Mrs. Elisea B. Banag (respondent Principal)
or Mrs. Marta B. Zuniga (respondent Directress) to pay complainant (petitioner) the
sum of thirteen thousand and seven hundred fifty (P13,750.00) pesos (as financial
assistance), the rest of the complaint being hereby dismissed for lack of basis or
merit.

SO ORDERED.

In an effort to seek the reversal of the labor arbiter's decision, petitioner filed an appeal
before the NLRC, which, however, did not find any substantial reason to overturn the labor
arbiter's ruling. Thus, in a decision7 dated November 29, 1993, the NLRC dismissed the
appeal, to wit:

WHEREFORE, premises considered, the instant appeal should be, as it is hereby,

dismissed for lack of merit.
 SO ORDERED.

Petitioner's motion for reconsideration suffered the same fate.8 Thus, this petition
for certiorari under Rule 65 of the Rules of Court.

We hereby uphold the NLRC's finding dismissing petitioner from his employment.

The crux of the controversy is whether the illicit relationship between the petitioner and Mrs.
Martin could be considered immoral as to constitute just cause to terminate an employee
under Article 282 of the Labor Code.

We have consistently held that in order to constitute a valid dismissal, two requisites must
concur: (a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor
Code, and (b) the employee must be accorded due process, basic of which are the
opportunity to be heard and defend himself.9

Under Article 282 of the Labor Code, as amended, the following are deemed just causes to
terminate an employee:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties:

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

(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorize representative; and

(e) Other causes analogous to the foregoing.

Moreover, it is provided inter alia under Section 9410 of the Manual of Regulations for Private
Schools:

Sec. 94. Causes of Terminating Employment. In addition to the just cases enumerated
in the Labor Code, the employment of school personnels, including faculty, may be
terminated for any of the following causes:

xxx xxx xxx

E. Disgraceful or immoral conduct.

Private respondent, in justifying the termination of the petitioner, contends that being a
teacher, he "must live up to the high moral standards required of his position." In other
words, it asserts that its purpose in dismissing the petitioner was to preserve the respect of
the community towards the teachers and to strengthen the educational system.11

On the other hand, petitioner merely argues that the alleged illicit relationship was not
substantially proven by convincing evidence by the private respondent as to justify his
dismissal.
On the outset, it must be stressed that to constitute immorality, the circumstances of each
particular case must be holistically considered and evaluated in light of the prevailing norms
of conduct and applicable laws.12 America jurisprudence has defined immorality as a course
of conduct which offends the morals of the community and is a bad example to the youth
whose ideals a teacher is supposed to foster and to elevate,13 the same including sexual
misconduct.14 Thus, in petitioner's case, the gravity and seriousness of the charges against
him stem from his being a married man and at the same time a teacher.

We cannot overemphasize that having an extra-marital affair is an affront to the sanctity of

marriage, which is a basic institution of society. Even our Family Code provides that husband
and wife must live together, observe mutual love, respect and fidelity.15 This is rooted in the
fact that both our Constitution and our laws cherish the validity of marriage and unity of the
family.16 Our laws, in implementing this constitutional edict on marriage and the family
underscore their permanence, inviolability and solidarity.17

As a teacher, petitioner serves as an example to his pupils, especially during their formative
years18and stands in loco parentis to them.19 To stress their importance in our society,
teachers are given substitute and special parental authority under our laws.20

Consequently, it is but stating the obvious to assert that teachers must adhere to the
exacting standards of morality and decency. There is no dichotomy of morality. A teacher,
both in his official and personal conduct, must display exemplary behavior. He must freely
and willingly accept restrictions on his conduct that might be viewed irksome by ordinary
citizens. In other words, the personal behavior of teachers, in and outside the classroom,
must be beyond reproach.

Accordingly, teachers must abide by a standard of personal conduct which not only
proscribes the commission of immoral acts, but also prohibits behavior creating a suspicion
of immorality because of the harmful impression it might have on the students.21 Likewise,
they must observe a high standard of integrity and honesty.22

From the foregoing, it seems obvious that when a teacher engages in extra-marital
relationship, especially when the parties are both married, such behavior amounts to
immorality, justifying his termination from employment.23

Having concluded that immorality is a just cause for dismissing petitioner, it is imperative
that the private respondent prove the same. Since the burden of proof rests upon the
employer to show that the dismissal was for a just and valid cause,24 the same must be
supported by substantial evidence.25

Undoubtedly, the question of immorality by the petitioner is factual in nature. Thus, we

reiterate the well-settled rule that factual findings by the NLRC, particularly when it coincides
with those by the Labor Arbiter, are accorded respect, even finality, and will not be disturbed
for as long as such findings are supported by substantial evidence.26 A scrutiny of the
records of the instant petition leads us to concur with the NLRC's finding that petitioner
indeed entered into an illicit relationship with his co-teacher. This fact was attested to by the
testimonies of nine witnesses (a fourth year student, a security guard, a janitor and six co-
teachers) which petitioner failed to rebut.

In fact, the petitioner's only recourse was to deny the accusation and insinuate that these
witnesses were coerced by the private respondent to give their testimonies. However, under
such circumstances, it is not enough for petitioner to simply cast doubt on the motives of the
witnesses; he must present countervailing evidence to prove that no such affair took place.

In short, we cannot just ignore the witnesses' affidavits and their subsequent testimonies
during the investigation as to the culpability of the petitioner on the sole basis of the latter's
denial. In any event, we have held that denial, if unsubstantiated by clear and convincing
evidence, is a negative and self-serving evidence which has no weight in law and cannot be
given greater evidentiary value over the testimony of credible witnesses who testified on
affirmative matters.27

Further bolstering the witnesses' testimonies is the absence of any motive on their part to
falsely testify against the petitioner. Thus, since there is nothing to indicate that the
witnesses were moved by dubious or improper motives to testify falsely against the
petitioner, their testimonies are hereby accorded full faith and credit.

Likewise, petitioner cannot take comfort from the letter dated November 7, 1990 signed by 28
of his co-teachers, expressing their unequivocal support for Mrs. Arlene Martin.28 It must be
noted that the said letter did not in any way absolve Mrs. Martin from any wrongdoing. It
merely affirmed the fact that when she was forcibly asked to take a leave of absence on
November 3, 1990 the same was done in a precipitous manner, without the benefit of due
process. Moreover, it must be stressed that the expression of support was personal to Mrs.
Martin, and the same should not redound to the benefit of the petitioner. Indeed, if petitioner
really had the support of his peers, then it should have been easy for him to obtain a similar
letter from them in the course of his administrative investigation. However, not only did he
not get such support, but six of his co-teachers even testified against him during the inquiry.

Finally, petitioner cannot invoke in his favor the ruling in the Arlene Martin case, wherein the
NLRC ruled that her dismissal was illegal. It must be noted that the reason for declaring
Martin's dismissal as illegal was the failure by the private respondent to accord her the
required due process.29

As aptly observed by the NLRC in its decision:30

In the case at bar, the complainant was amply afforded the due process requirements
of law. He was dismissed only on June 1, 1991 after an exhaustive investigation. A
committee was formed to conduct an inquiry. (Rollo, pp. 43-44) An administrative
charge for immorality was filed against him. (Rollo, p. 45) He was even required to
testify in said case. (Rollo, p. 46) He was given the opportunity to answer said
accusation. (Rollo, p. 47) He was in fact present during the hearing on January 17,
1991 and gave his side. . . . In fine, herein complainant (petitioner) cannot successfully
seek refuge in the cited case of Martin. (Rollo, pp. 48-49)

In view of our finding that petitioner's dismissal was for a just and valid cause, the grant of
financial assistance by the NLRC is without any factual and legal basis. In PLDT v. NLRC,31 we
held that:

We hold henceforth separation pay shall be as a measure of social justice only in

these instances where the employee is validly dismissed for cause other than serious
misconduct or those reflecting his moral character. Where the reason for the valid
dismissal is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relationship with a fellow worker, the employer may
 not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice.

The above ruling has consistently been applied in terminating an employee when it involves
his moral character.32

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED. The questioned
Resolution dated March 8, 1994 and the decision of the National Labor Relations Commission
dated November 29, 1993, are AFFIRMED with the MODIFICATION deleting the financial
assistance granted to petitioner in the amount of P13,750.00. Costs against petitioner.

SO ORDERED.
CASE NO. 27

SECOND DIVISION

[G.R. No. 125031. January 24, 2000]

PERMEX INC. and/or JANE (JEAN) PUNZALAN, PERSONNEL MANAGER and EDGAR LIM,
MANAGER, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL
FILOTEO, respondents. ALEX

DECISION

QUISUMBING, J.:

This special civil action for certiorari impugns the Resolution of the National Labor Relations
Commission, Fifth Division, dated March 14, 1996, which reversed the decision of the Labor Arbiter
in NLRC Case No. RAB-09-09-00259-94, as well as its Resolution, dated April 17, 1996, denying the
motion for reconsideration.

Petitioner, Permex Producer and Exporter Corporation (hereinafter Permex), is a company engaged
in the business of canning tuna and sardines, both for export and domestic consumption. Its office
and factory are both located in Zamboanga City. Ncm

Co-petitioners Edgar Lim and Jean Punzalan[1] are its Manager and Personnel Manager,
respectively.

Private respondent Emmanuel Filoteo, an employee of Permex, was terminated by petitioners

allegedly for flagrantly and deliberately violating company rules and regulations. More specifically, he
was dismissed allegedly for falsifying his daily time record.

The pertinent facts, as found by both the NLRC and the Labor Arbiter, are as follows:

Permex initially hired Emmanuel Filoteo on October 1, 1990, as a mechanic. Eventually, Filoteo was
promoted to water treatment operator, a position he held until his termination on August 29, 1994. As
water treatment operator, Filoteo did not have a fixed working schedule. His hours of work were
dependent upon the company's shifting production schedules. Ncmmis

On July 31, 1994, Filoteo was scheduled for the night shift from 7:00 p.m. to 7:00 a.m. the following
day. That night he reported for work together with his co-workers, Felix Pelayo and Manuel Manzan.
They logged in at the main gate and guardhouse of the petitioner's factory. Filoteo entered his time-
in at 8:45 p.m. and since he was scheduled to work until 7:00 a.m. the next day, he wrote 7:00 a.m.
in his scheduled time-out. This practice of indicating the time out at the moment they time in, was
customarily done by most workers for convenience and practicality since at the end of their work
shift, they were often tired and in a hurry to catch the available service vehicle for their trip home, so
they often forgot to log out. There were times also when the Log Book was brought to the Office of
the Personnel Manager and they could not enter their time out. The company had tolerated the
practice.

On the evening of July 31,1994, at around 9:20 p.m., Filoteo, together with Pelayo, went to see the
Assistant Production Manager to inquire if "butchering" of fish would be done that evening so they
could start operating the boiler. They were advised to wait from 9:30 p.m. to 10:00 p.m. for
confirmation. Scncm

At or about 10:00 p.m., Filoteo and Pelayo went back to the Assistant Production Manager's office.
There they were informed that there would be no "butchering" of tuna that night. Filoteo then sought
permission to go home, which was granted. Filoteo then hurriedly got his things and dashed off to
the exit gate to catch the service jeep provided by Permex.

The next day, August 1, 1994, Filoteo reported for work as usual. He then remembered that he had
to make a re-entry in his daily time record for the previous day. He proceeded to the Office of the
Personnel Manager to retime his DTR entry. Later, he received a memorandum from the Assistant
Personnel Officer asking him to explain, in writing, the entry he made in his DTR. Filoteo complied
and submitted his written explanation that same evening. Sdaamiso

On August 8, 1994, Filoteo was suspended indefinitely. His explanation was found unsatisfactory.
He was dismissed from employment on August 23, 1994.

The dismissal arose from Filoteo's alleged violation of Article 2 of the company rules and regulations.
The offense charged was entering in his DTR that he had worked from 8:45 p.m. of July 31, 1994 to
7:00 a.m. of August 1,1994, when in fact he had worked only up to 10:00 p.m.

On September 5, 1994, Filoteo filed a complaint for illegal dismissal with claims for separation pay,
damages, and attorney's fees with the Labor Arbiter. His complaint was docketed as NLRC Case
No. RAB 09-09-00259-94. Sdaad

On June 9, 1995, the Labor Arbiter dismissed the complaint for lack of merit. The decretal portion of
the decision reads:

"WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered

dismissing the complaint for lack of merit. However, for violation of compliance of
(sic) procedural due process, the respondent is hereby ordered thru its Authorized
Officer to pay complainant P1,000.00 by way of indemnity pay. Furthermore,
complainant's claims for damages and attorney's fees be dismissed for lack of merit.

"SO ORDERED."[2]

Filoteo appealed to the NLRC. Finding merit therein, the Commission's Fifth Division promulgated its
resolution, reversing and setting aside the Labor Arbiter's decision, by disposing as follows: Scsdaad

"WHEREFORE, the decision appealed from, is Vacated and Set Aside and a new
one entered declaring the complainant to have been illegally dismissed by
respondent company. Accordingly, respondent Permex, Inc., through its corporate
officers, is hereby ordered and directed to pay complainant, Emmanuel Filoteo,
separation pay at the rate of one (1) month salary for every year of service or in the
equivalent of four (4) months separation pay and backwages effective August 23,
1994 up to the promulgation of this decision, inclusive of fringe benefits, if any.
Further, respondent company is ordered to pay complainant moral and exemplary
damages in the sum of P10,000.00 and P5,000.00, respectively, as well as attorney's
fees equivalent to ten (10%) percent of the total monetary award after computation
thereof at the execution stage.
 "SO ORDERED."[3]

On April 3, 1996, petitioners filed a motion for reconsideration. It was denied for lack of merit by the
NLRC in a resolution dated April 17, 1996.

Hence, the present petition, assigning the following errors: Suprema

PUBLIC RESPONDENT'S RESOLUTIONS ARE CONTRARY TO THE EVIDENCE

ON RECORD AND ADMITTED FACTS.

II

PUBLIC RESPONDENT ERRED WHEN IT RULED THAT PRIVATE RESPONDENT

WAS ILLEGALLY DISMISSED. Oldmiso

III

PUBLIC RESPONDENT ERRED WHEN IT AWARDED PRIVATE RESPONDENT

SEPARATION PAY, BACKWAGES, DAMAGES AND ATTORNEY'S FEES SANS
FACTUAL AND LEGAL BASIS.

We will now consider these assigned errors to resolve the principal issue of whether or not private
respondent was illegally terminated from his employment.

Note that, firstly, petitioners seek a reversal of the public respondent's findings of the facts. But as
the Court has repeatedly ruled the findings of facts of the NLRC, particularly where the NLRC and
the Labor Arbiter are in agreement, are deemed binding and conclusive upon the Court.[4] For the
Court is not a trier of facts.[5] Second, resort to judicial review of the decisions of the NLRC in a
special civil action forcertiorari under Rule 65 of the Rules of Court, is limited only to the question
generally of grave abuse of discretion amounting to lack or excess of jurisdiction.[6] Thirdly, in this
case, the NLRC's factual findings are supported by the evidence on record. We are therefore
constrained not to disturb said findings of fact.

Whether private respondent was illegally dismissed or not is governed by Article 282 of the Labor
Code.[7] To constitute a valid dismissal from employment, two requisites must concur: (a) the
dismissal must be for any of the causes provided for in Article 282 of the Labor Code; and (b) the
employee must be afforded an opportunity to be heard and defend himself.[8] This means that an
employer can terminate the services of an employee for just and valid causes, which must be
supported by clear and convincing evidence.[9] It also means that, procedurally, the employee must
be given notice, with adequate opportunity to be heard,[10] before he is notified of his actual dismissal
for cause.

In the present case, the NLRC found that the two-fold requirements for a valid dismissal were not
satisfied by the petitioners. Sccalr

First, petitioner's charge of serious misconduct of falsification or deliberate misrepresentation was

not supported by the evidence on the record contrary to Art. 277 of the Labor Code which provides
that:
 "Art. 277. Miscellaneous provisions. -

xxx

(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...The burden of
proving that the termination was for a valid or authorized cause shall rest on the
employer..."

Second, the private respondent was not afforded an opportunity to be heard. As found by the
NLRC: Calrsc

"... Aside from the fact that there was no valid and justifiable cause for his outright
dismissal from the service, complainant's dismissal as correctly held by the Labor
Arbiter was tainted with arbitrariness for failure of respondent company (petitioner
herein) to observe procedural due process in effecting his dismissal. Admittedly,
complainant was suspended indefinitely on August 8, 1994 and subsequently
dismissed on August 23, 1994 without any formal investigation to enable complainant
to defend himself."[11]

Such dismissal, in our view, was too harsh a penalty for an unintentional infraction, not to mention
that it was his first offense committed without malice, and committed also by others who were not
equally penalized.[12] Sppedsc

It is clear that the alleged false entry in private respondent's DTR was actually the result of having
logged his scheduled time-out in advance on July 31, 1994. But it appears that when he timed in, he
had no idea that his work schedule (night shift) would be cancelled. When it was confirmed at 10:00
p.m. that there was no "butchering" of tuna to be done, those who reported for work were allowed to
go home, including private respondent. In fact, Filoteo even obtained permission to leave from the
Assistant Production Manager.

Considering the factory practice which management tolerated, we are persuaded that Filoteo, in his
rush to catch the service vehicle, merely forgot to correct his initial time-out entry. Nothing is shown
to prove he deliberately falsified his daily time record to deceive the company. The NLRC found that
even management's own evidence reflected that a certain Felix Pelayo, a co-worker of private
respondent, was also allowed to go home that night and like private respondent logged in advance
7:00 a.m. as his time-out. This supports Filoteo's claim that it was common practice among night-
shift workers to log in their usual time-out in advance in the daily time record. Sdjad

Moreover, as early as Tide Water Associated Oil Co. v. Victory Employees and
Laborers Association, 85 Phil. 166 (1949), we ruled that, where a violation of company policy or
breach of company rules and regulations was found to have been tolerated by management, then
the same could not serve as a basis for termination.

All told we see no reason to find that the NLRC gravely abused its discretion when it ruled that
private respondent was illegally dismissed. Hence we concur in that ruling. Nonetheless, we find that
the award of moral and exemplary damages by the public respondent is not in order and must be
deleted. Moral damages are recoverable only where the dismissal of the employee was tainted by
bad faith or fraud, or where it constituted an act oppressive to labor, and done in a manner contrary
to morals, good customs, or public policy.[13] Exemplary damages may be awarded only if the
dismissal was done in a wanton, oppressive, or malevolent manner.[14] None of these circumstances
exist in the present case. Misact
WHEREFORE, the petition is DENIED. The assailed resolutions of the National Labor Relations
Commission dated March 14, 1996 and April 17, 1996 in NLRC CA No. M-002808-95 are
AFFIRMEDwith MODIFICATION. Petitioner Permex, through its corporate officers, is ORDERED to
pay jointly and solidarily the private respondent separation pay at the rate of one (1) month salary
for every year of service as well as backwages effective August 23, 1994, inclusive of fringe benefits
if any, with legal interest until fully paid, and attorney's fees equivalent to ten (10%) percent of the
total monetary award computed at the execution stage hereof. The award of moral and exemplary
damages, however, is DELETED. Costs against petitioners.

SO ORDERED.
CASE NO. 28

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 153510 February 13, 2008

R.B. MICHAEL PRESS and ANNALENE REYES ESCOBIA, petitioners,

vs.
NICASIO C. GALIT, respondent.

DECISION

VELASCO, JR., J.:

The Case

Year in, year out, a copious number of illegal dismissal cases reach the Court of Appeals (CA) and
eventually end up with this Court. This petition for review under Rule 45 registered by petitioners
R.B. Michael Press and Annalene Reyes Escobia against their former machine operator, respondent
Nicasio C. Galit, is among them. It assails the November 14, 2001 Decision of the CA in CA-G.R. SP
No. 62959, finding the dismissal of respondent illegal. Likewise challenged is the May 7, 2002
Resolution denying reconsideration.

The Facts

On May 1, 1997, respondent was employed by petitioner R.B. Michael Press as an offset machine
operator, whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays to Saturdays, and he was
paid PhP 230 a day. During his employment, Galit was tardy for a total of 190 times, totaling to 6,117
minutes, and was absent without leave for a total of nine and a half days.

On February 22, 1999, respondent was ordered to render overtime service in order to comply with a
job order deadline, but he refused to do so. The following day, February 23, 1999, respondent
reported for work but petitioner Escobia told him not to work, and to return later in the afternoon for a
hearing. When he returned, a copy of an Office Memorandum was served on him, as follows:

To : Mr. Nicasio Galit

From : ANNALENE REYES-ESCOBIA
Re : WARNING FOR DISMISSAL; NOTICE OF HEARING

This warning for dismissal is being issued for the following offenses:

(1) habitual and excessive tardiness

(2) committing acts of discourtesy, disrespect in addressing superiors

(3) failure to work overtime after having been instructed to do so

 (4) Insubordination - willfully disobeying, defying or disregarding company authority

The offenses you’ve committed are just causes for termination of employment as provided by
the Labor Code. You were given verbal warnings before, but there had been no improvement
on your conduct.

Further investigation of this matter is required, therefore, you are summoned to a hearing at
4:00 p.m. today. The hearing wills determine your employment status with this company.

(SGD) ANNALENE REYES-ESCOBIA

Manager1

On February 24, 1999, respondent was terminated from employment. The employer, through
petitioner Escobia, gave him his two-day salary and a termination letter, which reads:

February 24, 1999

Dear Mr. Nicasio Galit,

I am sorry to inform you that your employment with this company has been terminated
effective today, February 24, 1999. This decision was not made without a thorough and
complete investigation.

You were given an office memo dated February 23, 1999 warning you of a possible
dismissal. You were given a chance to defend yourself on a hearing that was held in the
afternoon of the said date.

During the hearing, Mrs. Rebecca Velasquez and Mr. Dennis Reyes, were present in their
capacity as Production Manager and Supervisor, respectively.

Your admission to your offenses against the company and the testimonies from Mrs.
Velasquez and Mr. Reyes justified your dismissal from this company,

Please contact Ms. Marly Buita to discuss 13th-Month Pay disbursements.

Cordially,

(SGD) Mrs. Annalene Reyes-Escobia2

Respondent subsequently filed a complaint for illegal dismissal and money claims before the
National Labor Relations Commission (NLRC) Regional Arbitration Branch No. IV, which was
docketed as NLRC Case No. RAB IV-2-10806-99-C. On October 29, 1999, the labor arbiter
rendered a Decision,

WHEREFORE, premises considered, there being a finding that complainant was illegally
dismissed, respondent RB MICHAEL PRESS/Annalene Reyes-Escobia is hereby ordered to
reinstate complainant to his former position without loss of seniority rights and other benefits,
and be paid his full backwages computed from the time he was illegally dismissed up to the
time of his actual reimbursement.

All other claims are DISMISSED for lack of evidence.

 SO ORDERED.3

On January 3, 2000, petitioners elevated the case to the NLRC and their appeal was docketed as
NLRC NCR CA No. 022433-00. In the April 28, 2000 Decision, the NLRC dismissed the appeal for
lack of merit.

Not satisfied with the ruling of the NLRC, petitioners filed a Petition for Certiorari with the CA. On
November 14, 2001, the CA rendered its judgment affirming with modification the NLRC’s Decision,
thus:

WHEREFORE, the petition is DISMISSED for lack of merit. The Decision of public
respondent is accordingly modified in that the basis of the computation of the backwages,
13th month pay and incentive pay should be respondent’s daily wage of P230.00; however,
backwages should be computed from February 22, 1999 up to the finality of this decision,
plus the 13th month and service incentive leave pay.4

The CA found that it was not the tardiness and absences committed by respondent, but his refusal to
render overtime work on February 22, 1999 which caused the termination of his employment. It ruled
that the time frame in which respondent was afforded procedural due process is dubitable; he could
not have been afforded ample opportunity to explain his side and to adduce evidence on his behalf.
It further ruled that the basis for computing his backwages should be his daily salary at the time of
his dismissal which was PhP 230, and that his backwages should be computed from the time of his
dismissal up to the finality of the CA’s decision.

On December 3, 2001, petitioners asked for reconsideration5 but was denied in the CA’s May 7,
2002 Resolution.

Persistent, petitioners instituted the instant petition raising numerous issues which can be
summarized, as follows: first, whether there was just cause to terminate the employment of
respondent, and whether due process was observed in the dismissal process; and second, whether
respondent is entitled to backwages and other benefits despite his refusal to be reinstated.

The Court’s Ruling

It is well settled that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only
respect but even finality if the findings are supported by substantial evidence. This is especially so
when such findings of the labor arbiter were affirmed by the CA.6 However, this is not an iron-clad
rule. Though the findings of fact by the labor arbiter may have been affirmed and adopted by the
NLRC and the CA as in this case, it cannot divest the Court of its authority to review the findings of
fact of the lower courts or quasi-judicial agencies when it sees that justice has not been served,
more so when the lower courts or quasi-judicial agencies’ findings are contrary to the evidence on
record or fail to appreciate relevant and substantial evidence presented before it.7

Petitioners aver that Galit was dismissed due to the following offenses: (1) habitual and excessive
tardiness; (2) commission of discourteous acts and disrespectful conduct when addressing
superiors; (3) failure to render overtime work despite instruction to do so; and (4) insubordination,
that is, willful disobedience of, defiance to, or disregard of company authority.8 The foregoing
charges may be condensed into: (1) tardiness constituting neglect of duty; (2) serious misconduct;
and (3) insubordination or willful disobedience.

Respondent’s tardiness cannot be considered condoned by petitioners

Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to
work on time everyday exhibit the employee’s deportment towards work. Habitual and excessive
tardiness is inimical to the general productivity and business of the employer. This is especially true
when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive
period of time.

In resolving the issue on tardiness, the labor arbiter ruled that petitioners cannot use respondent’s
habitual tardiness and unauthorized absences to justify his dismissal since they had already
deducted the corresponding amounts from his salary. Furthermore, the labor arbiter explained that
since respondent was not subjected to any admonition or penalty for tardiness, petitioners then had
condoned the offense or that the infraction is not serious enough to merit any penalty. The CA then
supported the labor arbiter’s ruling by ratiocinating that petitioners cannot draw on respondent’s
habitual tardiness in order to dismiss him since there is no evidence which shows that he had been
warned or reprimanded for his excessive and habitual tardiness.

We find the ruling incorrect.

The mere fact that the numerous infractions of respondent have not been immediately subjected to
sanctions cannot be interpreted as condonation of the offenses or waiver of the company to enforce
company rules. A waiver is a voluntary and intentional relinquishment or abandonment of a known
legal right or privilege.9 It has been ruled that "a waiver to be valid and effective must be couched in
clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or
benefit which legally pertains to him."10 Hence, the management prerogative to discipline employees
and impose punishment is a legal right which cannot, as a general rule, be impliedly waived.

In Cando v. NLRC,11 the employee did not report for work for almost five months when he was
charged for absenteeism. The employee claimed that such absences due to his handling of union
matters were condoned. The Court held that the employee did not adduce proof to show
condonation coupled with the fact that the company eventually instituted the administrative complaint
relating to his company violations.

Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation
or waiver on the part of management to forego the exercise of its right to impose sanctions for
breach of company rules.

In the case at bar, respondent did not adduce any evidence to show waiver or condonation on the
part of petitioners. Thus the finding of the CA that petitioners cannot use the previous absences and
tardiness because respondent was not subjected to any penalty is bereft of legal basis. In the case
of Filipio v. The Honorable Minister Blas F. Ople,12 the Court, quoting then Labor Minister Ople, ruled
that past infractions for which the employee has suffered the corresponding penalty for each
violation cannot be used as a justification for the employee’s dismissal for that would penalize him
twice for the same offense. At most, it was explained, "these collective infractions could be used as
supporting justification to a subsequent similar offense." In contrast, the petitioners in the case at bar
did not impose any punishment for the numerous absences and tardiness of respondent. Thus, said
infractions can be used collectively by petitioners as a ground for dismissal.

The CA however reasoned out that for respondent’s absences, deductions from his salary were
made and hence to allow petitioners to use said absences as ground for dismissal would amount to
"double jeopardy."

This postulation is incorrect.

Respondent is admittedly a daily wage earner and hence is paid based on such arrangement. For
said daily paid workers, the principle of "a day’s pay for a day’s work" is squarely applicable. Hence it
cannot be construed in any wise that such nonpayment of the daily wage on the days he was absent
constitutes a penalty.

Insubordination or willful disobedience

While the CA is correct that the charge of serious misconduct was not substantiated, the charge of
insubordination however is meritorious.

For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the
employee’s assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties which he had been engaged to discharge.13

In the present case, there is no question that petitioners’ order for respondent to render overtime
service to meet a production deadline complies with the second requisite. Art. 89 of the Labor Code
empowers the employer to legally compel his employees to perform overtime work against their will
to prevent serious loss or damage:

Art. 89. EMERGENCY OVERTIME WORK

Any employee may be required by the employer to perform overtime work in any of the
following cases:

xxxx

(c) When there is urgent work to be performed on machines, installations, or equipment, in

order to avoid serious loss or damage to the employer or some other cause of similar nature;

xxxx

In the present case, petitioners’ business is a printing press whose production schedule is
sometimes flexible and varying. It is only reasonable that workers are sometimes asked to render
overtime work in order to meet production deadlines.

Dennis Reyes, in his Affidavit dated May 3, 1999, stated that in the morning of February 22, 1999,
he approached and asked respondent to render overtime work so as to meet a production deadline
on a printing job order, but respondent refused to do so for no apparent reason. Respondent, on the
other hand, claims that the reason why he refused to render overtime work was because he was not
feeling well that day.

The issue now is, whether respondent’s refusal or failure to render overtime work was willful; that is,
whether such refusal or failure was characterized by a wrongful and perverse attitude. In Lakpue
Drug Inc. v. Belga, willfulness was described as "characterized by a wrongful and perverse mental
attitude rendering the employee’s act inconsistent with proper subordination."14 The fact that
respondent refused to provide overtime work despite his knowledge that there is a production
deadline that needs to be met, and that without him, the offset machine operator, no further printing
can be had, shows his wrongful and perverse mental attitude; thus, there is willfulness.
Respondent’s excuse that he was not feeling well that day is unbelievable and obviously an
afterthought. He failed to present any evidence other than his own assertion that he was sick. Also, if
it was true that he was then not feeling well, he would have taken the day off, or had gone home
earlier, on the contrary, he stayed and continued to work all day, and even tried to go to work the
next day, thus belying his excuse, which is, at most, a self-serving statement.

After a re-examination of the facts, we rule that respondent unjustifiably refused to render overtime
work despite a valid order to do so. The totality of his offenses against petitioner R.B. Michael Press
shows that he was a difficult employee. His refusal to render overtime work was the final straw that
broke the camel’s back, and, with his gross and habitual tardiness and absences, would merit
dismissal from service.

Due process: twin notice and hearing requirement

On the issue of due process, petitioners claim that they had afforded respondent due process.
Petitioners maintain that they had observed due process when they gave respondent two notices
and that they had even scheduled a hearing where he could have had explained his side and
defended himself.

We are not persuaded.

We held in Agabon v. NLRC:

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer
must give the employee two written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment: a notice specifying the
grounds for which dismissal is sought a hearing or an opportunity to be heard and after
hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal
is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the
effectivity of his separation.15

Under the twin notice requirement, the employees must be given two (2) notices before his
employment could be terminated: (1) a first notice to apprise the employees of their fault, and (2) a
second notice to communicate to the employees that their employment is being terminated. Not to
be taken lightly of course is the hearing or opportunity for the employee to defend himself personally
or by counsel of his choice.

In King of Kings Transport v. Mamac,16 we had the occasion to further elucidate on the procedure
relating to the twin notice and hearing requirement, thus:

(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are given
the opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently prepare
their explanation and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A general
 description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct
a hearing or conferencewherein the employees will be given the opportunity to: (1) explain
and clarify their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity to come to an amicable
settlement.

(3) After determining that termination of employment is justified, the employers shall serve
the employees awritten notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.

In addition, if the continued employment poses a serious and imminent threat to the life or property
of the employers or of other employees like theft or physical injuries, and there is a need for
preventive suspension,17the employers can immediately suspend the erring employees for a period
of not more than 30 days. Notwithstanding the suspension, the employers are tasked to comply with
the twin notice requirement under the law. The preventive suspension cannot replace the required
notices.18 Thus, there is still a need to comply with the twin notice requirement and the requisite
hearing or conference to ensure that the employees are afforded due process even though they may
have been caught in flagrante or when the evidence of the commission of the offense is strong.

On the surface, it would seem that petitioners observed due process (twin notice and hearing
requirement): On February 23, 1999 petitioner notified respondent of the hearing to be conducted
later that day. On the same day before the hearing, respondent was furnished a copy of an office
memorandum which contained a list of his offenses, and a notice of a scheduled hearing in the
afternoon of the same day. The next day, February 24, 1999, he was notified that his employment
with petitioner R.B. Michael Press had been terminated.

A scrutiny of the disciplinary process undertaken by petitioners leads us to conclude that they only
paid lip service to the due process requirements.

The undue haste in effecting respondent’s termination shows that the termination process was a
mere simulation—the required notices were given, a hearing was even scheduled and held, but
respondent was not really given a real opportunity to defend himself; and it seems that petitioners
had already decided to dismiss respondent from service, even before the first notice had been given.

Anent the written notice of charges and hearing, it is plain to see that there was merely a general
description of the claimed offenses of respondent. The hearing was immediately set in the afternoon
of February 23, 1999—the day respondent received the first notice. Therefore, he was not given any
opportunity at all to consult a union official or lawyer, and, worse, to prepare for his defense.

Regarding the February 23, 1999 afternoon hearing, it can be inferred that respondent, without any
lawyer or friend to counsel him, was not given any chance at all to adduce evidence in his defense.
At most, he was asked if he did not agree to render overtime work on February 22, 1999 and if he
was late for work for 197 days. He was never given any real opportunity to justify his inability to
perform work on those days. This is the only explanation why petitioners assert that
respondent admitted all the charges.

In the February 24, 1999 notice of dismissal, petitioners simply justified respondent’s dismissal by
citing his admission of the offenses charged. It did not specify the details surrounding the offenses
and the specific company rule or Labor Code provision upon which the dismissal was grounded.

In view of the infirmities in the proceedings, we conclude that termination of respondent was
railroaded in serious breach of his right to due process. And as a consequence of the violation of his
statutory right to due process and following Agabon, petitioners are liable jointly and solidarily to pay
nominal damages to the respondent in the amount of PhP 30,000.19

WHEREFORE, premises considered, the November 14, 2001 CA Decision in CA-G.R. SP No.
62959, the April 28, 2000 Decision of the NLRC in NLRC NCR CA No. 022433-00, and the October
29, 1999 Decision of the Labor Arbiter in NLRC Case No. RAB IV-2-10806-99-C are
hereby REVERSED and SET ASIDE. The Court declares respondent’s dismissal from
employment VALID and LEGAL. Petitioners are, however, ordered jointly and solidarily to pay
respondent nominal damages in the amount of PhP 30,000 for violation of respondent’s right to due
process.

No costs.

SO ORDERED.
CASE NO. 29

FIRST DIVISION

RENATO S. GATBONTON, G.R. NO. 146779

Petitioner,

Present:

ARTEMIO V. PANGANIBAN, C.J., (Chairman)

YNARES-SANTIAGO,

- versus - AUSTRIA-MARTINEZ

CALLEJO, SR., and

NAZARIO, JJ.

NATIONAL LABOR RELATIONS

COMMISSION, MAPUA INSTITUTE

OF TECHNOLOGY and JOSE

CALDERON, Promulgated:

Respondents. January 23, 2006

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DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court which
seeks to set aside the Decision[1] dated November 10, 2000 of the Court of Appeals (CA) in CA-G.R.
SP No. 57470, affirming the decision of the National Labor Relations Commission (NLRC); and the
CA Resolution dated January 16, 2001, denying the motion for reconsideration.[2]
Petitioner Renato S. Gatbonton is an associate professor of respondent Mapua Institute of
Technology (MIT), Faculty of Civil Engineering. Some time in November 1998, a civil engineering
student of respondent MIT filed a letter-complaint against petitioner for unfair/unjust grading system,
sexual harassment and conduct unbecoming of an academician. Pending investigation of the
complaint, respondent MIT, through its Committee on Decorum and Investigation placed petitioner
under a 30-day preventive suspension effective January 11, 1999. The committee believed that
petitioners continued stay during the investigation affects his performance as a faculty member, as
well as the students learning; and that the suspension will allow petitioner to prepare himself for the
investigation and will prevent his influences to other members of the community.[3]

Thus, petitioner filed with the NLRC a complaint for illegal suspension, damages and attorneys
fees,[4] docketed as NLRC-NCR Case No. 01-00388-99.

Petitioner questioned the validity of the administrative proceedings with the Regional Trial
Court of Manila in a petition for certiorari but the case was terminated on May 21, 1999 when the
parties entered into a compromise agreement wherein respondent MIT agreed to publish in
the school organ the rules and regulations implementing Republic Act No. 7877 (R.A. No. 7877) or
the Anti-Sexual Harassment Act; disregard the previous administrative proceedings and conduct
anew an investigation on the charges against petitioner. Petitioner agreed to recognize the validity of
the published rules
and regulations, as well as the authority of respondent to investigate, hear and decide the
administrative case against him.[5]

On June 18, 1999, the Labor Arbiter rendered a decision, the dispositive portion of which
reads:

Wherefore, premises considered, the thirty day preventive suspension of

complainant is hereby declared to be illegal. Accordingly, respondents are directed to
pay his wages during the period of his preventive suspension.
 The rest of complainants claims are dismissed.

SO ORDERED.[6]

Both respondents and petitioner filed their appeal from the Labor Arbiters Decision, with
petitioner questioning the dismissal of his claim for damages. In a Decision dated September 30,
1999, the NLRC granted respondents appeal and set aside the Labor Arbiters decision. His motion
for reconsideration having been denied by the NLRC on December 13, 1999, petitioner filed a
special civil action for certiorari with the CA.

On November 10, 2000, the CA promulgated the assailed decision affirming the NLRC
decision, the dispositive portion of which reads:

WHEREFORE, foregoing premises considered, the petition is hereby

DENIED DUE COURSE and ORDERED DISMISSED, and the challenged decision
and order of public respondent NLRC AFFIRMED.

SO ORDERED.[7]

Petitioner filed a motion for reconsideration which the CA denied in its Resolution dated January 16,
2001.

Hence, the present petition based on the following grounds:

THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE NLRC WAS
NOT GUILTY OF GRAVE ABUSE OF DISCRETION IN RENDERING BOTH THE
APPEAL DECISION AND THE NLRC RESOLUTION.

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS

DISMISSAL OF PETITIONERS CLAIM FOR DAMAGES.[8]
Petitioner finds fault in the CAs decision, arguing that his preventive suspension does not find any
justification in the Mapua Rules and Regulations considering that at the time of his preventive
suspension on January 11, 1999, the rules have not been promulgated yet as it was published only
on February 23, 1999. Petitioner also contests the lack of award of damages in his favor.[9]

The petition is partly meritorious.

Preventive suspension is a disciplinary measure for the protection of the companys property
pending investigation of any alleged malfeasance or misfeasance committed by the employee. The
employer may place the worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or property of the employer or of his co-
workers.[10] However, when it is determined that there is no sufficient basis to justify an employees
preventive suspension, the latter is entitled to the payment of salaries during the time of preventive
suspension.[11]
R.A. No. 7877 imposed the duty on educational or training institutions to promulgate rules
and regulations in consultation with and jointly approved by the employees or students or trainees,
through their duly designated representatives, prescribing the procedures for the investigation of
sexual harassment cases and the administrative sanctions therefor.[12] Petitioners preventive
suspension was based on respondent MITs Rules and Regulations for the Implemention of the Anti-
Sexual Harassment Act of 1995, or R.A. No. 7877. Rule II, Section 1 of the MIT Rules and
Regulations provides:

Section 1. Preventive Suspension of Accused in Sexual Harassment Cases.

Any member of the educational community may be placed immediately under
preventive suspension during the pendency of the hearing of the charges of grave
sexual harassment against him if the evidence of his guilt is strong and the school
head is morally convinced that the continued stay of the accused during the period of
investigation constitutes a distraction to the normal operations of the institution or
poses a risk or danger to the life or property of the other members of the educational
community.
 It must be noted however, that respondent published said rules and regulations only on
February 23, 1999. In Taada vs. Tuvera,[13] it was ruled that:

all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after
publication unless a different effectivity is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders

promulgated by the President in the exercise of legislative powers whenever the
same are validly delegated by the legislature or, at present, directly conferred by the
Constitution. Administrative rules and regulations must also be published if
their purpose is to enforce or implement existing law pursuant also to a valid
delegation.

Interpretative regulations and those merely internal in nature, that is,

regulating only the personnel of the administrative agency and not the public, need
not be published. Neither is publication required of the so-called letters of instructions
issued by administrative superiors concerning the rules or guidelines to be followed
by their subordinates in the performance of their duties.

We agree that the publication must be in full or it is no publication at all since

its purpose is to inform the public of the contents of the laws. (Emphasis supplied)

The Mapua Rules is one of those issuances that should be published for its effectivity, since its
purpose is to enforce and implement R.A. No. 7877, which is a law of general application. [14] In fact,
the Mapua Rules itself explicitly required publication of the rules for its effectivity, as provided in
Section 3, Rule IV (Administrative Provisions), which states that [T]hese Rules and Regulations to
implement the Anti-Sexual Harassment Act of 1995 shall take effect fifteen (15) days after
publication by the Committee. Thus, at the time of the imposition of petitioners preventive
suspension on January 11, 1999, the Mapua Rules were not yet legally effective, and therefore the
suspension had no legal basis.

Moreover, even assuming that the Mapua Rules are applicable, the Court finds that there is no
sufficient basis to justify his preventive suspension. Under the Mapua Rules, an accused may be
placed under preventive suspension during pendency of the hearing under any of the following
circumstances:
 (a) if the evidence of his guilt is strong and the school head is morally convinced that
the continued stay of the accused during the period of investigation
constitutes a distraction to the normal operations of the institution; or

(b) the accused poses a risk or danger to the life or property of the other members of
the educational community.

In petitioners case, there is no indication that petitioners preventive suspension may be

based on the foregoing circumstances. Committee Resolution No. 1 (Re: Preventive Suspension of
Engr. Renato Gatbonton) passed by the Committee on Decorum and Investigation states the
reasons for petitioners preventive suspension, to wit:

Whereas, the committee believe[s] that the continued stay of the respondent
during the period of investigation,

1. Affects the respondents performance as a faculty member and laboratory

head considering the psychological effects depression and/or emotional
stress during investigation;

2. Affects the student[s] learning and other members of the Mapua Institute of
Technology community.

Whereas, the committee believe[s] that this preventive suspension will allow
the respondent to prepare himself for the investigation and will prevent his influences
to other members of the community.[15]

Said resolution does not show that evidence of petitioners guilt is strong and that the school
head is morally convinced that petitioners continued stay during the period of investigation
constitutes a distraction to the normal operations of the institution; or that petitioner poses a risk or
danger to the life or property of the other members of the educational community.

Even under the Labor Code, petitioners preventive suspension finds no valid justification. As
provided in Section 8, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code:

Sec. 8. Preventive Suspension. The employer may place the worker

concerned under preventive suspension if his continued employment poses a serious
threat to the life or property of the employer or of his co-workers.
 As previously stated, there is nothing on record which shows that respondent MIT imposed
the preventive suspension on petitioner as his continued employment poses a serious threat to the
life or property of the employer or of his co-workers; therefore, his preventive suspension is not
justified.[16] Consequently, the payment of wages during his 30-day preventive suspension, i.e., from
January 11, 1999 to February 10, 1999, is in order.

With regard to petitioners claim for damages, the Court finds the same to be without basis.
While petitioners preventive suspension may have been unjustified, this does not automatically
mean that he is entitled to moral or other damages. In Cocoland Development Corp. vs.
NLRC,[17] the Court ruled:

In Primero vs. Intermediate Appellate Court, this Court held that " an award
(of moral damages) cannot be justified solely upon the premise (otherwise sufficient
for redress under the Labor Code) that the employer fired his employee without just
cause or due process. Additional facts must be pleaded and proven to warrant the
grant of moral damages under the Civil Code, these being, to repeat, that the act of
dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy; and of course, that social
humiliation, wounded feelings, grave anxiety, etc., resulted therefrom." This was
reiterated in Garcia vs. NLRC, where the Court added that exemplary damages may
be awarded only if the dismissal was shown to have been effected in a wanton,
oppressive or malevolent manner.

This the private respondent failed to do. Because no evidence was adduced
to show that petitioner company acted in bad faith or in a wanton or fraudulent
manner in dismissing the private respondent, the labor arbiter did not award any
moral and exemplary damages in his decision. Respondent NLRC therefore had no
factual or legal basis to award such damages in the exercise of its appellate
jurisdiction.

The records of this case are bereft of any evidence showing that respondent MIT acted in bad faith
or in a wanton or fraudulent manner in preventively suspending petitioner, thus, the Labor Arbiter
was correct in not awarding any damages in favor of petitioner.

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated November 10,
2000 and Resolution dated January 16, 2001 of the Court of Appeals in CA-G.R. SP No. 57470 as
well as the NLRC Decision dated September 30, 1999 together with its Resolution dated December
13, 1999, are hereby SET ASIDE and the Labor Arbiters Decision dated June 18, 1999
is REINSTATED.

SO ORDERED.