Boundary System
hereunder specified:
G.R. No. 170181 June 26, 2008
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO.
LTD., HAK KON KIM and/or JHUNIE ADAJAR,petitioners,
vs.
FELICITO IBAÑEZ, ALIGWAS CAROLINO, ELMER GACULA,
ENRIQUE DAGOTDOT AND RUEL CALDA,respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, assailing the Decision,1 dated 28 July 2005,
rendered by the Court of Appeals, reversing the
Decision,2 promulgated by the National Labor Relations
Commission (NLRC) on 7 May 2004. The Court of Appeals, in its
assailed Decision, declared that respondents are regular
employees who were illegally dismissed by petitioner Hanjin
Heavy Industries and & Construction Company, Limited
(HANJIN).
Petitioner HANJIN is a foreign company duly registered with the
Securities and Exchange Commission to engage in the
construction business in the Philippines. Petitioners Hak Kon Kim
and Jhunie Adajar were employed as Project Director and
Supervisor, respectively, by HANJIN.
On 11 April 2002, respondents Felicito Ibañez, Aligwas Carolino,
Elmer Gacula, Enrique Dagotdot, Ruel Calda, and four other co-
workers filed a complaint before the NLRC, docketed as NLRC
Case No. RAB-IV-04-15515-02-RI, for illegal dismissal with
prayer for reinstatement and full backwages against petitioners.
In their Position Paper dated 29 July 2002, respondents alleged
that HANJIN hired them for various positions on different dates,
Position Date of
Employment
Felicito Ibañez Tireman 7 March 2000
Elmer Gacula Crane Operator 1992
Enrique Dagotdot Welder 1995
Aligwas Carolino Welder September 1994
Ruel Calda Warehouseman 26 January 19963
Respondents stated that their tasks were usual and necessary or
desirable in the usual business or trade of HANJIN. Respondents
additionally averred that they were employed as members of a
work pool from which HANJIN draws the workers to be
dispatched to its various construction projects; with the exception
of Ruel Calda, who as a warehouseman was required to work in
HANJIN's main office.4 Among the various construction projects
to which they were supposedly assigned, respondents named the
North Harbor project in 1992-1994; Manila International Port in
1994-1996; Batangas Port in 1996-1998; the Batangas Pier, and
La Mesa Dam.5
On 15 April 2002, Hanjin dismissed respondents from
employment. Respondents claimed that at the time of their
dismissal, HANJIN had several construction projects that were
still in progress, such as Metro Rail Transit (MRT) II and MRT III,
and continued to hire employees to fill the positions vacated by
the respondents.6
Petitioners denied the respondents' allegations. They maintained
that respondents were hired as project employees for the
construction of the LRT/MRT Line 2 Package 2 and 3 Project.
HANJIN and respondents purportedly executed contracts of
employment, in which it was clearly stipulated that the
respondents were to be hired as project employees for a period of
only three months, but that the contracts may be renewed, to wit:
 Article II
TERM OF AGREEMENT
This Agreement takes effect xxx for the duration of three
(3) months and shall be considered automatically
renewed in the absence of any Notice of Termination by
the EMPLOYER to the PROJECT EMPLOYEE.
This AGREEMENT automatically terminates at the
completion of the project or any particular phase
thereof, depending upon the progress of the project.7
However, petitioners failed to furnish the Labor Arbiter a copy of
said contracts of employment.
Petitioners asserted that respondents were duly informed of
HANJIN's policies, rules and regulations, as well as the terms of
their contracts. Copies of the employees' rules and regulations
were posted on the bulletin boards of all HANJIN campsite
offices.8
Petitioners further emphasized that prior to 15 April 2002, Hak
Kon Kim, HANJIN's Project Director, notified respondents of the
company's intention to reduce its manpower due to the
completion of the LRT/MRT Line 2 Package 2 and 3 Project.
Respondents were among the project employees who were
thereafter laid off, as shown in the Establishment Termination
Report filed by HANJIN before the Department of Labor and
Employment (DOLE) Regional Office (IV) in Cainta, Rizal on 11
April 2002.9
Finally, petitioners insist that in accordance with the usual
practice of the construction industry, a completion bonus was
paid to the respondents.10 To support this claim, they offered as
evidence payroll records for the period 4 April 2002 to 20 April
2002, with the words "completion bonus" written at the lower left
corner of each page.11
Petitioners attached copies of the Quitclaims, 12 executed by the
respondents, which uniformly stated that the latter received all
wages and benefits that were due them and released HANJIN
and its representatives from any claims in connection with their
employment. These Quitclaims also contained Clearance
Certificates which confirmed that the employees concerned were
cleared of all accountabilities at the close of the working hours on
15 April 2002.
In their Reply13 dated 27 August 2002, respondents vehemently
refuted having signed any written contract stating that they were
project employees.
The Labor Arbiter found merit in the respondents' complaint and
declared that they were regular employees who had been
dismissed without just and valid causes and without due process.
It ruled that HANJIN's allegation that respondents were project
employees was negated by its failure to present proof thereof. It
also noted that a termination report should be presented after the
completion of every project or a phase thereof and not just the
completion of one of these projects. The Labor Arbiter further
construed the number of years that respondents rendered their
services for HANJIN as an indication that respondents were
regular, not project, employees.14 The Labor Arbiter ordered in its
Decision, dated 30 April 2003, that:
WHEREFORE, premises considered, judgment is hereby
rendered as follows;
1) Declaring respondent HANJIN HEAVY INDUSTRIES &
CONSTRUCTION CO. LTD. guilty of illegal dismissal
>2) Ordering respondent to reinstate all the complainants
to positions previously occupied by them with full
backwages from the time compensation was withheld
from them up to date of actual reinstatement in the
following amount (as of date of this decision):
 1. Felicito Ibañez Petitioners filed an appeal before the NLRC. In their Notice of
P 88,020.83
2. Elmer A. Gacula Appeal/Memorandum Appeal16 dated 5 July 2003, petitioners
88,020.83
3. Rizalino De Vera discarded their earlier claim that respondents signed employment
88,020.83
4. Enrique Dagotdot contracts, unequivocally informing them of their status as project
88,020.83
employees. Nonetheless, they still contended that the absence of
5. Carolino Aligwas 88,020.83
respondents' contracts of employment does not vest the latter
6. Ruel Calda 88,020.83
with regular status.
7. Roldan Lanojan 88,020.83
8. Pascual Caranguian 88,020.83
The NLRC reversed the Labor Arbiter's Decision dated 30 April
9. Carmelito Dalumangcad 88,020.83
2003, and pronounced that the respondents were project
Total employees who were legally terminated from employment. 17 The
P792, 187.47
NLRC gave probative value to the Termination Report submitted
3) In lieu of reinstatement, respondent is ordered to pay by HANJIN to the DOLE, receipts signed by respondents for their
complainants their separation pay in the following sum: completion bonus upon phase completion, and the Quitclaims
executed by the respondents in favor of HANJIN. The NLRC also
observed that the records were devoid of any proof to support
Felicito Ibañez P 19,500.00
respondents' allegation that they were employed before 1997, the
Elmer A. Gacula 71,500.00
time when construction work on the MRT started. Lastly, it
Rizaliano De Vera 19,500.00
overruled the Labor Arbiter's award of moral and exemplary
Enrique Dagotdot 52,000.00
damages.18 The dispositive part of the Decision dated 7 May
Carolino Aligwas 58,500.00
2004 of the NLCR states that:
Ruel Calda 45,500.00
Roldan Lanojan 19,500.00 WHEREFORE, in view of the foregoing, the decision
Pascual Caranguian 26,000.00 subject of appeal is hereby REVERSED and SET ASIDE
Carmelito Dalumangcad 78,000.00 and a new one is entered DISMISSING complainants'
Total P390,000.00 complaint for lack of merit.19

On appeal, the Court of Appeals reversed the NLRC Decision,

4) Ordering respondent to pay each
complainant P50,000.00 for moral damages
and P30,000.00 as exemplary damages, or the total sum
of P450,000.00 and P270,000.00, respectively; and
5) Ordering respondent to pay complainants litigation
expenses in the sum of P30,000.00
All other claims are DISMISSED for lack of merit.15
dated 7 May 2004. The appellate court looked with disfavor at the
change in HANJIN's initial position before the Labor Arbiter-from
its initial argument that respondents executed employment
contracts; to its modified argument during its appeal before the
NLRC-that respondents could still be categorized as project
workers despite the absence of contracts of employment.
Additionally, it adjudged the Termination Report as inconclusive
proof that respondents were project employees. Emphasizing that
the employer had the burden of proving the legality of the
dismissal, the appellate court ruled that respondents were regular
employees and upheld the Labor Arbiter's finding that they were
illegally dismissed. The Court of Appeals, however, adopted the
NLRC's deletion of the award of damages.20 The decretal portion
of the Decision of the Court of Appeals reads:
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the
challenged decision and resolution of the NLRC must be,
as they hereby are, REVERSED and SET ASIDE. The
decision of the Labor Arbiter is
hereby REINSTATED relative to the award to petitioners
of full backwages, separation pay in lieu of reinstatement,
and litigation expenses, but not with respect to the awards
for moral damages or for exemplary damages, both of
which are hereby DELETED. Without costs in this
instance.21
Hence, the present Petition, in which the following issues are
raised:
I binding upon the Supreme Court. One exception to this rule is
WHETHER OR NOT THE FINDINGS OF THE
HONORABLE COURT OF APPEALS ARE MERE
CONCLUSIONS WITHOUT DELVING INTO THE
RECORDS OF THE CASE AND EXAMINE (sic) FOR
ITSELF THE QUESTIONED FINDINGS OF THE LABOR
ARBITER AND THE NATIONAL LABOR RELATIONS
COMMISSION CONTRARY TO THE RULING IN THE
CASE OF AGABON VS. NLRC, ET. AL. 442 SCRA 573.
II
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS MANIFESTLY OVERLOOKED CERTAIN
RELEVANT FACTS WHICH, IF PROPERLY
CONSIDERED, WOULD RESULT IN A DIFFERENT
CONCLUSION.
III
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN NOT APPLYING THE PERTINENT
PROVISIONS OF POLICY INSTRUCTIONS NO. 20, AS
AMENDED BY DEPARTMENT ORDER NO. 19 SERIES
OF 1993 IN RELATION TO ARTICLE 280 OF THE
LABOR CODE IN CONSIDERING WHETHER OR NOT
RESPONDENTS ARE PROJECT EMPLOYEES.
IV
THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT RESPONDENTS WERE ILLEGALLY
DISMISSED.22
The Petition is without merit.
As a general rule, the factual findings of the Court of Appeals are
when the factual findings of the former are contrary to those of
the trial court or the lower administrative body, as the case may
be. The main question that needs to be settled-whether
respondents were regular or project employees-is factual in
nature. Nevertheless, this Court is obliged to resolve it due to the
incongruent findings of the NLRC and those of the Labor Arbiter
and the Court of Appeals. 23
Article 280 of the Labor Code distinguishes a "project employee"
from a "regular employee" thus:
Article 280. Regular and Casual Employment-The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
 usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed
is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such activity exists. (Emphasis supplied.)
From the foregoing provision, the principal test for determining
whether particular employees are properly characterized as
"project employees" as distinguished from "regular employees" is
whether or not the project employees were assigned to carry out
a "specific project or undertaking," the duration and scope of
which were specified at the time the employees were engaged for
that project.24
In a number of cases, 25 the Court has held that the length of
service or the re-hiring of construction workers on a project-to-
project basis does not confer upon them regular employment
status, since their re-hiring is only a natural consequence of the
fact that experienced construction workers are preferred.
Employees who are hired for carrying out a separate job, distinct
from the other undertakings of the company, the scope and
duration of which has been determined and made known to the
employees at the time of the employment, are properly treated as
project employees and their services may be lawfully terminated
upon the completion of a project.26 Should the terms of their
employment fail to comply with this standard, they cannot be
considered project employees.
In Abesco Construction and Development Corporation v.
Ramirez,27 which also involved a construction company and its
workers, this Court considered it crucial that the employees were
informed of their status as project employees:
The principal test for determining whether employees are
"project employees" or "regular employees" is whether
they are assigned to carry out a specific project or
undertaking, the duration and scope of which are
specified at the time they are engaged for that project.
Such duration, as well as the particular work/service to be
performed, is defined in an employment agreement and is
made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of
agreement with respondents. Neither did they inform
respondents of the nature of the latters' work at the time
of hiring. Hence, for failure of petitioners to substantiate
their claim that respondents were project employees, we
are constrained to declare them as regular employees.
In Caramol v. National Labor Relations Commission,28 and later
reiterated in Salinas, Jr. v. National Labor Relations
Commission,29 the Court markedly stressed the importance of the
employees' knowing consent to being engaged as project
employees when it clarified that "there is no question that
stipulation on employment contract providing for a fixed period of
employment such as `project-to-project' contract is
valid provided the period was agreed upon knowingly and
voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent x x
x."
During the proceedings before the Labor Arbiter, the petitioners'
failure to produce respondents' contracts of employment was
already noted, especially after they alleged in their pleadings the
existence of such contracts stipulating that respondents'
employment would only be for the duration of three months,
automatically renewed in the absence of notice, and terminated at
the completion of the project. Respondents denied having
executed such contracts with HANJIN. In their appeal before the
NLRC until the present, petitioners now claim that due to a lapse
in management procedure, no such employment contracts were
executed; nonetheless, the absence of a written contract does not
remove respondents from the ambit of being project employees. 30
While the absence of a written contract does not automatically
confer regular status, it has been construed by this Court as a red
flag in cases involving the question of whether the workers
concerned are regular or project employees. In Grandspan
Development Corporation v. Bernardo31 and Audion Electric Co.,
Inc. v. National Labor Relations Commission,32 this Court took
note of the fact that the employer was unable to present
employment contracts signed by the workers, which stated the
duration of the project. In another case, Raycor v. Aircontrol
Systems, Inc. v. National Labor Relations Commission,33 this
Court refused to give any weight to the employment contracts
offered by the employers as evidence, which contained the
signature of the president and general manager, but not the
signatures of the employees. In cases where this Court ruled that
construction workers repeatedly rehired retained their status as
project employees, the employers were able to produce
employment contracts clearly stipulating that the workers'
employment was coterminous with the project to support their
claims that the employees were notified of the scope and duration
of the project.34
Hence, even though the absence of a written contract does not by
itself grant regular status to respondents, such a contract is
evidence that respondents were informed of the duration and
scope of their work and their status as project employees. In this
case, where no other evidence was offered, the absence of an
employment contract puts into serious question whether the
employees were properly informed at the onset of their
employment status as project employees. It is doctrinally
entrenched that in illegal dismissal cases, the employer has the
burden of proving with clear, accurate, consistent and convincing
evidence that a dismissal was valid.35 Absent any other proof that
the project employees were informed of their status as such, it will
be presumed that they are regular employees in accordance with
Clause 3.3(a) of Department Order No. 19, Series of 1993, which
states that:
a) Project employees whose aggregate period of
continuous employment in a construction company is
at least one year shall be considered regular
employees, in the absence of a "day certain" agreed
upon by the parties for the termination of their
relationship. Project employees who have become regular
shall be entitled to separation pay.
A "day" as used herein, is understood to be that which
must necessarily come, although it may not be known
exactly when. This means that where the final completion
of a project or phase thereof is in fact determinable and
the expected completion is made known to the employee,
such project employee may not be considered regular,
notwithstanding the one-year duration of employment in
the project or phase thereof or the one-year duration of
two or more employments in the same project or phase of
the project. (Emphasis provided.)
Petitioners call attention to the fact that they complied with two of
the indicators of project employment, as prescribed under Section
2.2(e) and (f) of Department Order No. 19, Series of 1993,
entitled Guidelines Governing the Employment of Workers in the
Construction Industry, issued by the DOLE:
2.2 Indicators of project employment. - Either one or more
of the following circumstances, among others, may be
considered as indicators that an employee is a project
employee.
 (a) The duration of the specific/identified undertaking for
which the worker is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to
be performed, is defined in an employment agreement
and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in
connection with the particular project/undertaking for
which he is engaged.
(d) The employee, while not employed and awaiting
engagement, is free to offer his services to any other
employer.
(e) The termination of his employment in the
particular project/undertaking is reported to the
Department of Labor and Employment (DOLE)
Regional Office having jurisdiction over the
workplace within 30 days following the date of his
separation from work, using the prescribed form on
employees' terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the
employer to pay completion bonus to the project
employee as practiced by most construction
companies. (Emphasis provided.)
Petitioners argue that the Termination Report filed before the
DOLE Regional Office (IV) in Cainta, Rizal on 11 April 2002
signifies that respondents' services were engaged merely for the
LRT/MRT Line 2 Package 2 and 3 Project.
Given the particular facts established in this case, petitioners'
argument fails to persuade this Court. Petitioners were not able to
offer evidence to refute or controvert the respondents' claim that
they were assigned to various construction projects, particularly
the North Harbor Project in 1992-1994; Manila International Port
in 1994-1996; Batangas Port in 1996-1998; the Batangas Pier;
and La Mesa Dam.36 Had respondents' allegations been false,
petitioners could simply present as evidence documents and
records in their custody to disprove the same, i.e., payroll for such
projects or termination reports, which do not bear respondents'
names. Petitioners, instead, chose to remain vague as to the
circumstances surrounding the hiring of the respondents. This
Court finds it unusual that petitioners cannot even categorically
state the exact year when HANJIN employed respondents.
It also bears to note that petitioners did not present other
Termination Reports apart from that filed on 11 April 2002. The
failure of an employer to file a Termination Report with the DOLE
every time a project or a phase thereof is completed indicates
that respondents were not project employees. 37 Employers
cannot mislead their employees, whose work is necessary and
desirable in the former's line of business, by treating them as
though they are part of a work pool from which workers could be
continually drawn and then assigned to various projects and
thereafter denied regular status at any time by the expedient act
of filing a Termination Report. This would constitute a practice in
which an employee is unjustly precluded from acquiring security
of tenure, contrary to public policy, morals, good customs and
public order.38
In this case, only the last and final termination of petitioners was
reported to the DOLE. If respondents were actually project
employees, petitioners should have filed as many Termination
Reports as there were construction projects actually finished and
for which respondents were employed. Thus, a lone Termination
Report filed by petitioners only upon the termination of the
respondents' final project, and after their previous continuous
employment for other projects, is not only unconvincing, but even
suspicious.
Petitioners insist that the payment to the respondents of a
completion bonus indicates that respondents were project
employees. To support their claim, petitioners presented payroll
records for the period 4 April 2002 to 20 April 2002, with the
words "completion bonus" written at the lower left corner of each
page.39 The amount paid to each employee was equivalent to his
fifteen-day salary. Respondents, however, deny receiving any
such amount.
Assuming that petitioners actually paid respondents a completion
bonus, petitioners failed to present evidence showing that they
undertook to pay respondents such a bonus upon the completion
of the project, as provided under Section 2.2(f) of Department
Order No. 19, Series of 1993.40 Petitioners did not even allege
how the "completion bonus" was to be computed or the
conditions that must be fulfilled before it was to be given. A
completion bonus, if paid as a mere afterthought, cannot be used
to determine whether or not the employment was regular or
merely for a project. Otherwise, an employer may defeat the
workers' security of tenure by paying them a completion bonus at
any time it is inclined to unjustly dismiss them.
Department Order No. 19, Series of 1993, provides that in the
absence of an undertaking that the completion bonus will be paid
to the employee, as in this case, the employee may be
considered a non-project employee, to wit:
3.4 Completion of the project. Project employees who
are separated from work as a result of the completion of
the project or any phase thereof in which they are
employed are entitled to the pro-rata completion bonus if
there is an undertaking by for the grant of such
bonus. An undertaking by the employer to pay a
completion bonus shall be an indicator that an
employee is a project employee. Where there is no
such undertaking, the employee may be considered a
non-project employee. The pro-rata completion bonus
may be based on the industry practice which is at least
the employee's one-half (1/2) month salary for every 12
months of service and may be put into effect for any
project bid (in case of bid projects) or tender submitted (in
case of negotiated projects) thirty (30) days from the date
of issuances of these Guidelines. (Emphasis supplied.)
Furthermore, after examining the payroll documents submitted by
petitioners, this Court finds that the payments termed as
"completion bonus" are not the completion bonus paid in
connection with the termination of the project. First of all, the
period from 4 April 2002 to 20 April 2002, as stated in the
payrolls, bears no relevance to a completion bonus. A completion
bonus is paid in connection with the completion of the project,
and is not based on a fifteen-day period. Secondly, the amount
paid to each employee as his completion bonus was uniformly
equivalent to his fifteen-day wages, without consideration of the
number of years of service rendered. Section 3.4 of Department
Order No. 19, Series of 1993, provides that based on industry
practice, the completion bonus is at least the employee's one-half
month salary for every twelve months of service.
Finally, the Quitclaims which the respondents signed cannot bar
them from demanding what is legally due them as regular
employees. As a rule, quitclaims and waivers or releases are
looked upon with disfavor and frowned upon as contrary to public
policy. They are thus ineffective to bar claims for the full measure
of a worker's legal rights, particularly when the following
conditions are applicable: 1) where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person, or
(2) where the terms of settlement are unconscionable on their
face.41 To determine whether the Quitclaims signed by
respondents are valid, one important factor that must be taken
into account is the consideration accepted by respondents; the
amount must constitute a reasonable settlement equivalent to the
full measure of their legal rights.42 In this case, the Quitclaims
signed by the respondents do not appear to have been made for
valuable consideration. Respondents, who are regular
employees, are entitled to backwages and separation pay and,
therefore, the Quitclaims which they signed cannot prevent them
from seeking claims to which they are entitled. 43
Due to petitioners' failure to adduce any evidence showing that
petitioners were project employees who had been informed of the
duration and scope of their employment, they were unable to
discharge the burden of proof required to establish that
respondents' dismissal was legal and valid. Furthermore, it is a
well-settled doctrine that if doubts exist between the evidence
presented by the employer and that by the employee, the scales
of justice must be tilted in favor of the latter. 44 For these reasons,
respondents are to be considered regular employees of HANJIN.
Finally, in the instant case, records failed to show that HANJIN
afforded respondents, as regular employees, due process prior to
their dismissal, through the twin requirements of notice and
hearing. Respondents were not served notices informing them of
the particular acts for which their dismissal was sought. Nor were
they required to give their side regarding the charges made
against them. Certainly, the respondents' dismissal was not
carried out in accordance with law and was, therefore, illegal. 45
IN VIEW OF THE FOREGOING, the instant Petition is DENIED.
This Court AFFIRMS the assailed Decision of the Court of
Appeals in CA-G.R. SP No. 87474, promulgated on 28 July 2005,
declaring that the respondents are regular employees who have
been illegally dismissed by Hanjin Heavy Industries &
Construction Company, Limited, and are, therefore, entitled to full
backwages, separation pay, and litigation expenses. Costs
against the petitioners.
SO ORDERED.
G.R. No. 142399 June 19, 2007
PHILIPPINE AIRLINES, INCORPORATED, petitioner,
vs.
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
(PALEA), respondent.
RESOLUTION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, as amended, seeking to set aside the 30 April
1999 Decision,1 and 10 March 2000 Resolution2 of the Court of
Appeals, in CA-G.R. SP No. 50161 entitled, "Philippine Airlines,
Inc. v. National Labor Relations Commission and Philippine
Airlines Employees Association (PALEA)." In the assailed
decision, the Court of Appeals dismissed the petition filed by
herein petitioner Philippine Airlines, Inc. (PAL); accordingly, the
appellate court affirmed the 28 January 1998 Decision3 and 23
June 1998Resolution,4 of the First Division of the National Labor
Relations Commission (NLRC), reversing and setting aside the
12 March 1990 Decision,5 of the Labor Arbiter in NLRC NCR No.
00-03-01134-89, and ordering the herein PAL to "pay the
13th month pay or mid-year bonus of the (concerned) members
(of PALEA) x x x."6
This case arose from a labor Complaint, 7 filed by herein PALEA
against herein PAL and one Mary Anne del Rosario, Director of
Personnel, PAL, on 1 March 1989, charging them with unfair
labor practice for the non-payment of 13thmonth pay of employees
who had not been regularized as of the 30th of April 1988, as
allegedly stipulated in the Collective Bargaining Agreement (CBA)
entered into by herein parties.
As culled from the records of the case, the facts are:
On 6 February 1987, herein parties, PAL and PALEA, the
collective bargaining agent of the rank and file employees of PAL,
entered into a CBA that was to cover the period of 1986 – 1989.
Part of said agreement required PAL to pay its rank and file
employees the following bonuses:
Section 4 – 13th Month Pay (Mid-year Bonus)
 A 13th month pay, equivalent to one month's current
basic pay, consistent with the existing practice shall be
paid in advance in May.
Section 5 – Christmas Bonus
The equivalent of one month's basic pay as of November
30, shall be paid in December as a Christmas bonus.
Payment may be staggered in two (2) stages. It is
distinctly understood that nothing herein contained shall
be construed to mean that the Company may not at its
sole discretion give an additional amount or increase the
Christmas bonus.8
Prior to the payment of the 13th month pay (mid – year bonus),
PAL released an implementing guideline9 on 22 April 1988. It
stated that:
1) Eligibility
a) Ground employees in the general payroll who
are regular as of April 30, 1988;
b) Other ground employees in the general payroll,
not falling within category a) above shall receive
their 13th Month Pay on or before December 24,
1988;
2) Amount
a) For category a) above, one month basic salary
as of April 30, 1988;
b) Employees covered under 1 b) above shall be
paid not less than 1/12 of their basic salary for
every month of service within the calendar year.
3) Payment Date: May 9, 1988 for category 1 a) above.10
PALEA assailed the implementation of the foregoing guideline. It
is of the view that all employees of PAL, whether regular or non-
regular, should be paid their 13th month pay. In response to the
above, PAL informed PALEA that rank and file employees who
were regularized after 30 April 1988 were not entitled to the
13th month pay as they were already given the Christmas bonus
in December of 1988, per the Implementing Rules of Presidential
Decree No. 851.11
PALEA, disagreeing with PAL, filed a Complaint12 for unfair labor
practice before the NLRC on 1 March 1989. The union argued
that "the cut-off period for regularization should not be used as
the parameter for granting [the] 13thmonth pay considering that
the law does not distinguish the status of employment but (sic)
the law covers all employees."
In its Position Paper submitted before the labor arbiter, PAL
countered that those rank and file employees who were not
regularized by 30 April of a particular year are, in principle, not
denied their 13th month pay, considering they receive said
mandatory bonus in the form of the Christmas Bonus; that
the Christmas Bonus given to all its employees is deemed a
compliance with Presidential Decree No. 851 and the latter's
implementing rules; and that the foregoing has been the practice
and has been formally adopted in the previous CBA's as early as
1970.
On 12 March 1990, the Labor Arbiter rendered his decision
dismissing the complaint for lack of merit. The dispositive reads:
WHEREFORE, decision is hereby issued ordering the
dismissal of the complaint.13
The Labor Arbiter ruled that PAL was not guilty of unfair labor
practice in withholding the grant of the 13th Month Pay or Mid-
Year Bonus, as set out in Section 4 of the CBA, to the concerned
employees. The giving of the particular bonus was said to be
merely an additional practice made in the past, "such being the
case, it violated no agreement or existing practice or committed
unfair labor practice, as charged."14
On appeal to the NLRC, the assailed decision of the Labor Arbiter
was reversed. The fallo of said decision is quoted hereunder:
WHEREFORE, finding the appeal well-impressed with
merit, the decision appealed from is REVERSED and
SET ASIDE and a new one ENTERED ordering
respondent PAL to pay the 13th month pay or mid-year
bonus of the members as discussed above.15
The subsequent motion for reconsideration filed by PAL was
denied in a Resolution dated 23 June 1998.
Undaunted, PAL went to this Court via a Petition for Review
on Certiorari. In view of this Court's decision in St. Martin Funeral
Homes v. NLRC,16 the petition was referred to the Court of
Appeals for proper resolution. The case was docketed as CA-
G.R. SP No. 50161.
On 30 April 1999, the Court of Appeals promulgated its Decision
dismissing the petition filed by PAL. It affirmed the 28 January
1998 NLRC Resolution, viz:
WHEREFORE, premises considered, the instant petition
is hereby DISMISSED for lack of merit.17
In said Decision, the Court of Appeals held that "from the x x x
provision of the said inter-office memo, employees who are
regular as of 30 April 1988 and those regularized thereafter, are
entitled for (sic) the payment of the non-regular employees as
provided for under letter (c) of the Guidelines issued." 18 It
reasoned that "if the intention is not to include employees
regularized beyond 30 April 1988, they would not have placed
letter (c)."19 The Court of Appeals further rationalized that "well-
settled is the rule that all doubts should be resolved in favor of
labor. To rule otherwise is a betrayal of our zealous commitment
to uphold the constitutional provision affording protection to
labor."20
PAL seasonably moved for the reconsideration of the aforequoted
Court of Appeals Decision.
On 10 March 2000, the Court of Appeals promulgated its
Resolution denying PAL's prayer for reconsideration.
Hence, this Petition for Review on Certiorari filed under Rule 45
of the Rules of Court, as amended. PAL raises only a single issue
for consideration by this Court, that is, "can a court or quasi-
judicial agency amend or alter a Collective Bargaining Agreement
by expanding its coverage to non-regular employees who are not
covered by the bargaining unit?"
We take note, however, that the Securities and Exchange
Commission (SEC) had mandated the rehabilitation of PAL. On
17 May 1999, the SEC approved the "Amended and Restated
Rehabilitation Plan" of PAL and appointed a "permanent
rehabilitation receiver for the latter."21 To date, PAL is still
undergoing rehabilitation.
The pertinent law concerning the suspension of actions for claims
against corporations is Presidential Decree No. 902-A,22 as
amended.23 Particularly, Section 5(d) provides:
SECTION 5. In addition to the regulatory adjudicative
functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of
associations registered with it as expressly granted under
existing laws and decrees, it shall have original and
exclusive jurisdiction to hear and decide cases involving:
 xxxx
d) Petitions of corporations, partnerships or associations
to be declared in the state of suspension of payments in
cases where the corporation, partnership or association
possesses property to cover all its debts but foresees the
impossibility of meeting them when they respectively fall
due or in cases where the corporation, partnership or
association has no sufficient assets to cover its liabilities,
but is under the [management of a rehabilitation receiver
or] management committee created pursuant to this
Decree.
Likewise, Section 6(c), to wit:
SECTION 6. In order to effectively exercise such
jurisdiction, the Commission shall possess the following:
xxxx
c) To appoint one or more receivers of the property, real
or personal, which is the subject of the action pending
before the Commission in accordance with the pertinent
provisions of the Rules of Court in such other cases
whenever necessary in order to preserve the rights of the
parties-litigants and/or protect the interest of the investing
public and creditors: x x x Provided, finally, That upon
appointment of a management committee, the
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. (Emphasis
supplied.)
The term "claim," as contemplated in Sec. 6(c) of Presidential
Decree No. 902-A, refers "to debts or demands of a pecuniary
nature. It means 'the assertion of a right to have money
paid.'"24 In the case at bar, in the event that the present petition is
found to be without merit, PAL will be obliged to satisfy the
pecuniary claims of PALEA – the payment of the 13th Month Pay
for the particular year to all rank and file employees whether or
not regularized by 30 April 1988.
The underlying principle behind the suspension of claims pending
rehabilitation proceedings was explained in the case of BF
Homes, Incorporated v. Court of Appeals.25 This Court clarified
that:
In light of these powers, the reason for suspending
actions for claims against the corporation should not be
difficult to discover. It is not really to enable the
management committee or the rehabilitation receiver to
substitute the defendant in any pending action against it
before any court, tribunal, board or body. Obviously, the
real justification is to enable the management committee
or rehabilitation receiver to effectively exercise its/his
powers free from any judicial or extra-judicial interference
that might unduly hinder or prevent the "rescue" of the
debtor company. To allow such other action to continue
would only add to the burden of the management
committee or rehabilitation receiver, whose time, effort
and resources would be wasted in defending claims
against the corporation instead of being directed toward
its restructuring and rehabilitation.26 (Emphasis supplied.)
This Court's adherence to the above-stated rule has been
resolute and steadfast as evidenced by its oft-repeated
application in a plethora of cases.27 If truth be told, there have
been several PAL cases to which said rule have been applied to.
In Philippine Airlines, Inc. v. National Labor Relations
Commission,28 PAL questioned, albeit via a Petition
for Certiorari under Rule 65 of the Rules of Court, before us, the
decision of the NLRC awarding separation pay to Quijano, an
employee of PAL. During the pendency of the petition, however,
PAL moved for the suspension of proceedings of the case by
virtue of the SEC order, which appointed an Interim Rehabilitation
Receiver for PAL. The employee, however, argued that the claim
for separation pay may be awarded despite PAL being under a
state of receivership since said claim was secured by
the supersedeas bond posted by the employer. The employee
maintained that the suspension of proceedings provided in
Section 6(c) of Presidential Decree No. 902-A refers to actions or
suits for claims against corporations placed under receivership
and not to Petitions for Certiorari initiated by the corporation
under receivership. In a Resolution dated 4 September 2000, this
Court granted PAL's motion elucidating that:
In Rubberworld (Phils.), Inc. v. NLRC, we held that
worker's claims before the NLRC and labor arbiters are
included among the actions suspended upon the placing
under receivership of the employer-corporations.
Although strictly speaking, the ruling in Rubberworld dealt
with actions for claims pending before the NLRC and
labor arbiters, we find that the rationale for the automatic
suspension therein set out would apply to the instant case
where the employee's claim was elevated on certiorari
before this Court, x x x.
xxxx
The Court holds that rendition of judgment while petitioner
is under a state of receivership could render violence to
the rationale for suspension of payments in Section 6 (c)
of P.D. 902-A, if the judgment would result in the granting
of private respondent's claim to separation pay, thus
defeating the basic purpose behind Section 6 (c) of P.D.
902-A which is to prevent dissipation of the distressed
company's resources. (Emphasis supplied.)
In another PAL case, specifically, Philippine Airlines, Inc. v. Court
of Appeals,29 this Court again resolved to grant PAL's Motion for
Suspension of Proceedings by reason of the SEC Orders dated
23 June 1998 and 1 July 1998, appointing an Interim
Rehabilitation Receiver and enjoining the suspension of all claims
for payment against PAL, respectively. Therein it was declared
that this Court is "not prepared to depart from the well-established
doctrines" essentially maintaining that all actions for claims
against a corporation pending before any court, tribunal or board
shall ipso jure be suspended in whatever stage such actions may
be found upon the appointment by the SEC of a management
committee or a rehabilitation receiver.
And, most recently, is the case of Philippine Airlines v.
Zamora,30 we held in simple terms that:
Otherwise stated, no other action may be taken in,
including the rendition of judgment during the state of
suspension – what are automatically stayed or suspended
are the proceedings of an action or suit and not just the
payment of claims during the execution stage after the
case had become final and executory.(Citation omitted)
The suspension of action for claims against a corporation
under rehabilitation receiver or management committee
embraces all phases of the suit, be it before the trial court
or any tribunal or before this Court. Furthermore, the
actions that are suspended cover all claims against a
distressed corporation whether for damages founded on a
breach of contract of carriage, labor cases, collection
suits or any other claims of a pecuniary nature.
In actual fact, allowing such actions to proceed would only
increase the work-load of the management committee or
the rehabilitation receiver, whose precious time and effort
would be dissipated and wasted in defending suits
against the corporation, instead of being channeled
toward restructuring and rehabilitation.
All told, this Court is constrained to suspend the progress,
development and other proceedings in the present petition.
IN CONCURRENCE WITH THE ABOVE, NOW, THEREFORE,
BE IT RESOLVED, as it is hereby resolved, that in view of the
ongoing rehabilitation of petitioner Philippine Airlines, Inc., herein
proceedings are heretofore SUSPENDED until further notice from
this Court. Accordingly, petitioner Philippine Airlines, Inc. is
hereby ORDERED to quarterly update the Court as to the status
of its ongoing rehabilitation within ten (10) days from the
beginning of every quarter, with a WARNING that non-
compliance therewith will merit disciplinary sanctions. No costs.
SO ORDERED.
Burden of Proof
G.R. No. 160905 July 4, 2008
BIENVENIDO D. GOMA, petitioner,
vs.
PAMPLONA PLANTATION INCORPORATED, respondent.
DECISION
NACHURA, J.:
For review is the Decision1 of the Court of Appeals (CA) dated
August 27, 2003 granting respondent Pamplona Plantation, Inc.’s
petition for certiorari and its Resolution2 dated November 11,
2003 denying petitioner Bienvenido Goma’s motion for
reconsideration, in CA-G.R. SP No. 74892.
Petitioner commenced3 the instant suit by filing a complaint for
illegal dismissal, underpayment of wages, non-payment of
premium pay for holiday and rest day, five (5) days incentive
leave pay, damages and attorney’s fees, against the respondent.
The case was filed with the Sub-Regional Arbitration Branch No.
VII of Dumaguete City. Petitioner claimed that he worked as a
carpenter at the Hacienda Pamplona since 1995; that he worked
from 7:30 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m.
daily with a salary rate of P90.00 a day paid weekly; and that he
worked continuously until 1997 when he was not given any work
assignment.4 On a claim that he was a regular employee,
petitioner alleged to have been illegally dismissed when the
respondent refused without just cause to give him work
assignment. Thus, he prayed for backwages, salary differential,
service incentive leave pay, damages and attorney’s fees. 5
On the other hand, respondent denied having hired the petitioner
as its regular employee. It instead argued that petitioner was
hired by a certain Antoy Cañaveral, the manager of the hacienda
at the time it was owned by Mr. Bower and leased by Manuel
Gonzales, a jai-alai pelotari known as "Ybarra."6 Respondent
added that it was not obliged to absorb the employees of the
former owner.
In 1995, Pamplona Plantation Leisure Corporation (PPLC) was
created for the operation of tourist resorts, hotels and bars.
Petitioner, thus, rendered service in the construction of the
facilities of PPLC. If at all, petitioner was a project but not a
regular employee.7
On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa
dismissed the case for lack of merit.8 The Labor Arbiter concluded
that petitioner was hired by the former owner, hence, was not an
employee of the respondent. Consequently, his money claims
were denied.9
On appeal to the National Labor Relations Commission (NLRC),
the petitioner obtained favorable judgment when the tribunal
reversed and set aside the Labor Arbiter’s decision. The
dispositive portion of the NLRC decision reads:
 WHEREFORE, the Decision of the Labor Arbiter is
hereby SET ASIDE and a new one is hereby issued
ORDERING the respondent, Pamplona Plantation
Incorporated, the following:
1) to reinstate the complainant, BIENVENIDO D. GOMA
to his former position immediately without loss of seniority
rights and other privileges;
2) to pay the same complainant TWELVE THOUSAND
THREE HUNDRED FIFTY-NINE PESOS (P12,359.00) in
salary differentials;
3) to pay to the same complainant ONE HUNDRED ONE
THOUSAND SIX HUNDRED SIXTY PESOS
(P101,660.00) in backwages to be updated until actual
reinstatement; and
4) to pay attorney’s fee in the amount of ELEVEN
THOUSAND FOUR HUNDRED TWO PESOS
(P11,402.00) which is equivalent to ten percent (10%) of
the total judgment award. 1avvphi1
The respondent is further ordered to pay the aggregate
amount of ONE HUNDRED FOURTEEN THOUSAND
AND NINETEEN PESOS (P114,019.00) to the
complainant through the cashier of this Commission
within ten (10) days from receipt hereof.
SO ORDERED.10
Respondent’s motion for reconsideration was denied by the
NLRC on September 9, 2002.11
The NLRC upheld the existence of an employer-employee
relationship, ratiocinating that it was difficult to believe that a
simple carpenter from far away Pamplona would go to
Dumaguete City to hire a competent lawyer to help him secure
justice if he did not believe that his right as a laborer had been
violated.12 It added that the creation of the PPLC required the
tremendous task of constructing hotels, inns, restaurants, bars,
boutiques and service shops, thus involving extensive carpentry
work. As an old carpentry hand in the old corporation, the
possibility of petitioner’s employment was great.13 The NLRC
likewise held that the respondent should have presented its
employment records if only to show that petitioner was not
included in its list of employees; its failure to do so was
fatal.14 Considering that petitioner worked for the respondent for a
period of two years, he was a regular employee.15
Aggrieved, respondent instituted a special civil action
for certiorari under Rule 65 before the Court of Appeals which
granted the same; and consequently annulled and set aside the
NLRC decision. The CA disposed, as follows:
WHEREFORE, premises considered, the instant petition
is GRANTED. The assailed decision of the NLRC dated
October 24, 2000, as well as the Resolution dated
September 9, 2002 in NLRC Case No. V-000882-99, RAB
VII-0088-98-D are hereby ANNULLED and SET ASIDE.
The complaint is ordered DISMISSED.
SO ORDERED.16
Contrary to the NLRC’s finding, the CA concluded that there was
no employer-employee relationship. The CA stressed that
petitioner having raised a positive averment, had the burden of
proving the existence of an employer-employee relationship.
Respondent, therefore, had no obligation to prove its negative
averment.17 The appellate court further held that while the
respondent’s business required the performance of occasional
repairs and carpentry work, the retention of a carpenter in its
payroll was not necessary or desirable in the conduct of its usual
business.18Lastly, although the petitioner was an employee of the
former owner of the hacienda, the respondent was not required to
absorb such employees because employment contracts are in
personam and binding only between the parties. 19
Petitioner now comes before this Court raising the sole issue:
WHETHER OR NOT THE DECISION OF [THE] COURT
OF APPEALS DATED AUGUST 27, 2003, REVERSING
AND SETTING ASIDE THE NLRC (Fourth Division, Cebu
City) RULING THAT THE "PETITIONER WAS NOT
ILLEGALLY DISMISSED AS HE WAS NOT AN
EMPLOYEE OF RESPONDENT", IS CONTRARY TO
LAW AND JURISPRUDENCE ON WHICH IT WAS
BASED, AND NOT IN CONSONANCE WITH THE
EVIDENCE ON RECORD.20
The disposition of this petition rests on the resolution of the
following questions: 1) Is the petitioner a regular employee of the
respondent? 2) If so, was he illegally dismissed from
employment? and 3) Is he entitled to his monetary claims?
Petitioner insists that he was a regular employee of the
respondent corporation. The respondent, on the other hand,
counters that it did not hire the petitioner, hence, he was never an
employee, much less a regular one.
Both the Labor Arbiter and the CA concluded that there was no
employer-employee relationship between the petitioner and
respondent. They based their conclusion on the alleged
admission of the petitioner that he was previously hired by the
former owner of the hacienda. Thus, they rationalized that since
the respondent was not obliged to absorb all the employees of
the former owner, petitioner’s claim of employment could not be
sustained. The NLRC, on the other hand, upheld petitioner’s
claim of regular employment because of the respondent’s failure
to present its employment records.
The existence of an employer-employee relationship involves a
question of fact which is well within the province of the CA to
determine. Nonetheless, given the reality that the CA’s findings
are at odds with those of the NLRC, the Court is constrained to
probe into the attendant circumstances as appearing on record. 21
A thorough examination of the records compels this Court to
reach a conclusion different from that of the CA. It is true that
petitioner admitted having been employed by the former owner
prior to 1993 or before the respondent took over the ownership
and management of the plantation, however, he likewise alleged
having been hired by the respondent as a carpenter in 1995 and
having worked as such for two years until 1997. Notably, at the
outset, respondent categorically denied that it hired the petitioner.
Yet, in its petition filed before the CA, respondent made this
admission:
Private respondent [petitioner herein] cannot be
considered a regular employee since the nature of his
work is merely project in character in relation to the
construction of the facilities of the Pamplona
Plantation LeisureCorporation.
He is a project employee as he was hired – 1) for a
specific project or undertaking, and 2) the completion or
termination of such project or undertaking has been
determined at the time of engagement of the employee. x
x x.
xxxx
In other words, as regards those workers who worked in
1995 specifically in connection with the construction of the
facilities of Pamplona Plantation Leisure Corporation,
their employment was definitely "temporary" in character
and not regular employment. Their employment was
deemed terminated by operation of law the moment they
 had finished the job or activity under which they were
employed.22
Thus, departing from its initial stand that it never hired petitioner,
the respondent eventually admitted the existence of employer-
employee relationship before the CA. It, however, qualified such
admission by claiming that it was PPLC that hired the petitioner
and that the nature of his employment therein was that of a
"project" and not "regular" employee.
Parenthetically, this Court in Pamplona Plantation Company, Inc.
v. Tinghil23 and Pamplona Plantation Company v. Acosta24 had
pierced the veil of corporate fiction and declared that the two
corporations,25 PPLC and the herein respondent, are one and the
same.
By setting forth these defenses, respondent, in effect, admitted
that petitioner worked for it, albeit in a different capacity. Such an
allegation is in the nature of a negative pregnant, a denial
pregnant with the admission of the substantial facts in the
pleadings responded to which are not squarely denied, and
amounts to an acknowledgment that petitioner was indeed
employed by respondent.26
The employment relationship having been established, the next
question we must answer is: Is the petitioner a regular or project
employee?
We find the petitioner to be a regular employee.
Article 280 of the Labor Code, as amended, provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. -
The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking, the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such activity exists.
As can be gleaned from this provision, there are two kinds of
regular employees, namely: (1) those who are engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and (2) those who have
rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are
employed.27 Simply stated, regular employees are classified into:
regular employees by nature of work; and regular employees by
years of service. The former refers to those employees who
perform a particular activity which is necessary or desirable in the
usual business or trade of the employer, regardless of their length
of service; while the latter refers to those employees who have
been performing the job, regardless of the nature thereof, for at
least a year.28 If the employee has been performing the job for at
least one year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity, if
not indispensability, of that activity to the business. 29
Respondent is engaged in the management of the Pamplona
Plantation as well as in the operation of tourist resorts, hotels,
inns, restaurants, etc. Petitioner, on the other hand, was engaged
to perform carpentry work. His services were needed for a period
of two years until such time that the respondent decided not to
give him work assignment anymore. Owing to his length of
service, petitioner became a regular employee, by operation of
law.
Respondent argues that, even assuming that petitioner can be
considered an employee, he cannot be classified as a regular
employee, but merely as a project employee whose services
were hired only with respect to a specific job and only while that
specific job existed.
A project employee is assigned to carry out a specific project or
undertaking the duration and scope of which are specified at the
time the employee is engaged in the project. A project is a job or
undertaking which is distinct, separate and identifiable from the
usual or regular undertakings of the company. A project
employee is assigned to a project which begins and ends at
determined or determinable times.30
The principal test used to determine whether employees are
project employees as distinguished from regular employees, is
whether or not the employees were assigned to carry out a
specific project or undertaking, the duration or scope of which
was specified at the time the employees were engaged for that
project.31 In this case, apart from respondent’s bare allegation
that petitioner was a project employee, it had not shown that
petitioner was informed that he would be assigned to a specific
project or undertaking. Neither was it established that he was
informed of the duration and scope of such project or undertaking
at the time of his engagement.
Most important of all, based on the records, respondent did not
report the termination of petitioner’s supposed project
employment to the Department of Labor and Employment
(DOLE). Department Order No. 19 (as well as the old Policy
Instructions No. 20) requires employers to submit a report of an
employee’s termination to the nearest public employment office
every time the employment is terminated due to a completion of a
project. Respondent’s failure to file termination reports,
particularly on the cessation of petitioner’s employment, was an
indication that the petitioner was not a project but a regular
employee.32
We stress herein that the law overrides such conditions which are
prejudicial to the interest of the worker whose weak bargaining
position necessitates the succor of the State. What determines
whether a certain employment is regular or otherwise is not the
will or word of the employer, to which the worker oftentimes
acquiesces. Neither is it the procedure of hiring the employee nor
the manner of paying the salary or the actual time spent at work.
It is the character of the activities performed by the employer in
relation to the particular trade or business of the employer, taking
into account all the circumstances, including the length of time of
its performance and its continued existence. Given the attendant
circumstances in the case at bar, it is obvious that one year after
he was employed by the respondent, petitioner became a regular
employee by operation of law.33
As to the question of whether petitioner was illegally dismissed,
we answer in the affirmative.
Well-established is the rule that regular employees enjoy security
of tenure and they can only be dismissed for just cause and with
due process, i.e., after notice and hearing. In cases involving an
employee’s dismissal, the burden is on the employer to prove that
the dismissal was legal. This burden was not amply discharged
by the respondent in this case.
Obviously, petitioner’s dismissal was not based on any of the just
or authorized causes enumerated under Articles 282, 34 28335 and
28436 of the Labor Code, as amended. After working for the
respondent for a period of two years, petitioner was shocked to
find out that he was not given any work assignment anymore.
Hence, the requirement of substantive due process was not
complied with.
Apart from the requirement that the dismissal of an employee be
based on any of the just or authorized causes, the procedure laid
down in Book VI, Rule I, Section 2 (d) of the Omnibus Rules
Implementing the Labor Code, must be followed.37 Failure to
observe the rules is a violation of the employee’s right to
procedural due process.
In view of the non-observance of both substantive and procedural
due process, in accordance with the guidelines outlined by this
Court in Agabon v. National Labor Relations Commission,38 we
declare that petitioner’s dismissal from employment is illegal.39
Having shown that petitioner is a regular employee and that his
dismissal was illegal, we now discuss the propriety of the
monetary claims of the petitioner. An illegally dismissed employee
is entitled to: (1) either reinstatement, if viable, or separation pay
if reinstatement is no longer viable, and (2) backwages. 40
In the instant case, we are prepared to concede the impossibility
of the reinstatement of petitioner considering that his position or
any equivalent position may no longer be available in view of the
length of time that this case has been pending. Moreover, the
protracted litigation may have seriously abraded the relationship
of the parties so as to render reinstatement impractical.
Accordingly, petitioner may be awarded separation pay in lieu of
reinstatement.41
Petitioner’s separation pay is pegged at the amount equivalent to
petitioner’s one (1) month pay, or one-half (1/2) month pay for
every year of service, whichever is higher, reckoned from his first
day of employment up to finality of this decision. Full backwages,
on the other hand, should be computed from the date of his illegal
dismissal until the finality of this decision.
On petitioner’s entitlement to attorney’s fees, we must take into
account the fact that petitioner was illegally dismissed from his
employment and that his wages and other benefits were withheld
from him without any valid and legal basis. As a consequence, he
was compelled to file an action for the recovery of his lawful
wages and other benefits and, in the process, incurred expenses.
On these bases, the Court finds that he is entitled to attorney’s
fees equivalent to ten percent (10%) of the monetary award. 42
Lastly, we affirm the NLRC’s award of salary differential. In light
of our foregoing disquisition on the illegality of petitioner’s
dismissal, and our adoption of the NLRC’s findings, suffice it to
state that such issue is a question of fact, and we find no cogent
reason to disturb the findings of the labor tribunal.
WHEREFORE, premises considered, the petition is GRANTED.
The Decision of the Court of Appeals dated August 27, 2003 and
its Resolution dated November 11, 2003 in CA-G.R. SP No.
74892 are REVERSED and SET ASIDE. Petitioner is found to
have been illegally dismissed from employment and thus,
is ENTITLED to: 1) Salary Differential embodied in the NLRC
decision dated October 24, 2000 in NLRC Case No. V-000882-
99; 2) Separation Pay; 3) Backwages; and 4) Attorney’s fees
equivalent to ten percent (10%) of the monetary awards. Upon
finality of this judgment, let the records of the case be remanded
to the NLRC for the computation of the exact amounts due the
petitioner.
SO ORDERED.
G.R. No. 162089 July 9, 2008
SILVESTRE P. ILAGAN doing business under the name and
style "Infantry Surveillance Investigation Security
Agency," Petitioner,
vs.
HON. COURT OF APPEALS (12th Division), NATIONAL
LABOR RELATIONS COMMISSION (3rd Division), and PETER
B. ORIAS, DOLORES PEREGRINO AND ROMELITO PUEBLO,
SR., Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari are the January 27, 2003 Decision and
1 complainants Peter B. Orias, Dolores Peregrino and Romelito
the February 4, 2004 Resolution2 of the Court of Appeals in CA-
G.R. SP No. 69878, which had affirmed the Decision3 dated
November 29, 2001, of the National Labor Relations Commission
(NLRC) in NLRC NCR CA No. 025192-2000. The NLRC decision
upheld the Labor Arbiter’s finding of illegal dismissal against
herein petitioner.
The facts are uncomplicated.
Petitioner Silvestre P. Ilagan is the president and proprietor of
Infantry Surveillance Investigation Security Agency. The agency
hired as security guards private respondents Peter B. Orias and
Romelito Pueblo, Sr. on November 6, 1992 and October 4, 1995,
respectively; and as head guard, private respondent Dolores
Peregrino in December 1996. On separate occasions in 1998,
they were orally informed by petitioner not to report for work
anymore.
Private respondents filed with the Labor Arbiter separate
complaints against petitioner for illegal dismissal. They claimed
that they reported for work at their assigned workplaces for
twelve-hour shifts; however, their salaries were below the
minimum wage, they were not given 13th month pay, overtime
pay, holiday pay, night shift differential, and the monthly ₱50 cash
bond petitioner promised at the start of their employment.
In the course of the mandatory conciliation and mediation
conference, the parties agreed that the only issue left was the
payment of money claims. However, the parties later moved for
the submission of their respective position papers, thereby
terminating the conciliation and mediation conference.
Acting on the complaint for illegal dismissal and money claims, on
April 28, 2000, the Labor Arbiter ruled against petitioner, thus:
WHEREFORE, … judgment is hereby rendered in favor of
Pueblo, Sr., and against respondent Infantry Surveillance
Investigation Security Agency and/or Silvestre P. Ilagan, thus:
a. Ordering respondent to immediately reinstate
complainants to their former position without loss of
seniority rights and other privileges, or at the option of
respondent, payroll reinstatement;
b. Ordering respondent to pay complainants their
respective full backwages, inclusive of allowances and …
other benefits or their monetary equivalent computed from
the time complainants were separated from service up to
the date of this decision;
c. Ordering respondent to pay complainants their
respective 13th month pays subject to the three (3) years
prescriptive period.
xxxx
SO ORDERED.4
The NLRC affirmed the ruling of the Labor Arbiter, to wit:
WHEREFORE, the appeal filed by respondents is hereby
DENIED for lack of merit. The [D]ecision dated 28 April 2000 is
AFFIRMED.
SO ORDERED.5
Petitioner’s motion for reconsideration was denied for lack of
merit. Undaunted, petitioner filed in the Court of Appeals a
petition for certiorari, which was likewise dismissed, thus:
WHEREFORE, in view of all the foregoing, the instant petition
is DENIED. The November 29, 2001 Decision of the NLRC, Third
Division, as well as its January 31, 2002 Resolution denying the
Motion for Reconsideration of the petitioner are
hereby AFFIRMED.
SO ORDERED.6
Petitioner’s motion for reconsideration was denied. Hence, the
instant petition raising the following issues:
I.
WHETHER OR NOT THE PUBLIC RESPONDENT
COMMITTED GRAVE ABUSE OF DISCRETION AND
THEREFORE A REVERSIBLE ERROR IN AFFIRMING
THE INCLUSION OF THE ISSUE OF ILLEGAL
DISMISSAL IN THIS CASE;
II.
WHETHER OR NOT PUBLIC RESPONDENT
COMMITTED GRAVE ABUSE OF DISCRETION, AND
THEREFORE A REVERSIBLE ERROR IN AFFIRMING
THAT PRIVATE RESPONDENTS WERE ILLEGALLY
DISMISSED; [AND]
III.
WHETHER OR NOT THE PUBLIC RESPONDENT
COMMITTED GRAVE ABUSE OF DISCRETION IN
AWARDING SERVICE INCENTIVE LEAVE PAY AND
13TH MONTH PAY TO PRIVATE RESPONDENTS.7
Petitioner contends the issue of illegal dismissal was already
mooted by the parties’ agreement, limiting the issue to money
claims, allegedly arrived at during the conciliation and mediation
conference. Petitioner insists absent proof of a positive act of
dismissal, a complaint for illegal dismissal could not prosper.
Petitioner claims private respondents simply resigned from their
jobs, but he no longer presented the resignation letters to the
Labor Arbiter simply because he thought the issue of illegal
dismissal was already moot. Petitioner further avers that the
awards of service incentive leave pay and 13th month pay are
without basis.
Private respondents, for their part, counter that the issue of illegal
dismissal was not amicably resolved. They stress that no
compromise agreement or any actual settlement of the case ever
materialized before the Labor Arbiter. They aver that they have
substantially proven the fact of their illegal dismissal. Private
respondents point out that it is now too late for petitioner to allege
their supposed resignation.
The petition lacks merit.
Section 2, Rule V of the then New Rules of Procedure of the
NLRC provides:
Section 2. Mandatory Conciliation/Mediation Conference. – ….
Should the parties arrive at any agreement as to the whole or any
part of the dispute, the same shall be reduced to writing and
signed by the parties and their respective counsels, if any[,]
before the Labor Arbiter.
In order to be valid, any agreement arrived at in the course of the
mandatory conciliation and mediation conference should be in
writing and signed by the parties, or their counsel, before the
Labor Arbiter.
In this case, no such written and duly signed evidence of any
amicable settlement of the dispute, whether in whole or in part,
was ever adduced. Thus, petitioner has no basis for claiming that
the issue of illegal dismissal has been amicably settled.
It may be true that in the course of the mandatory conciliation and
mediation conference, the parties agreed that the only issue left
was the payment of money claims. However, the parties later
moved for the submission of their respective position papers on
the issues of both illegal dismissal and money claims, thereby
terminating the conciliation and mediation conference. Clearly
then, no amicable settlement at all was reached by the parties.
Anent the second issue, petitioner’s belated submission that
private respondents voluntarily resigned deserves no
consideration. It should have been raised in the hearing before
the Labor Arbiter. We are not prepared to indulge petitioner’s
defense that he thought illegal dismissal was no longer an issue.
He could not have been unaware that during the conciliation and
mediation conference, no agreement on either of the two issues
was ever forged.
Concededly, employers have the right to terminate the services of
an employee for a just or authorized cause. However, the
dismissal of employees must be made in accordance with law.
The burden of proof is always on the employer to prove that the
dismissal was for a just or authorized cause. 8
In this case, petitioner failed to prove (1) that the dismissal of
private respondents was for a valid cause and (2) that he
complied with the two- notice requirement of procedural due
process. Hence, we are constrained to agree that this case is a
matter of illegal dismissal.
As for the third issue, Article 279 of the Labor Code, as amended
by Section 34 of Republic Act No. 6715, 9 states that:
ART. 279. Security of Tenure. – In cases of regular
employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
(Emphasis supplied.)
Thus, having been illegally dismissed, private respondents should
be reinstated to their former positions without loss of seniority
rights and other privileges. They should also be paid their full
backwages, inclusive of allowances, and the monetary equivalent
of other benefits, computed from the time their compensation was
withheld from them up to the time of their actual reinstatement.
WHEREFORE, the petition is DENIED. The assailed January 27,
2003 Decision and the February 4, 2004 Resolution of the Court
of Appeals in CA-G.R. SP No. 69878, are AFFIRMED. The
Decision dated April 28, 2000 of the Labor Arbiter
is REINSTATED with MODIFICATION. Petitioner SILVESTRE P.
ILAGAN, doing business under the name and style "Infantry
Surveillance Investigation Security Agency" is ORDERED to:
1. REINSTATE private respondents PETER B. ORIAS,
ROMELITO PUEBLO, SR., and DOLORES PEREGRINO
to their former positions without loss of seniority rights
and other privileges; and
2. PAY private respondents their respective full
backwages, inclusive of allowances, and the monetary
equivalent of other benefits, computed from the time
 compensation was withheld up to the time of their actual
reinstatement.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 151227 July 14, 2008
GREGORIO S. SABEROLA, Petitioner,
vs.
RONALD SUAREZ and RAYMUNDO LIRASAN,
JR., Respondents.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule
45 of the Rules of Court assailing the Decision1dated March 30,
2001 and the Resolution2 dated November 23, 2001 of the Court
of Appeals (CA) in CA-G.R. SP No. 56503.
The Facts
The case stemmed from a Complaint3 for illegal dismissal with
money claims filed on November 10, 1997 by respondents
against petitioner before the Regional Arbitration Branch of
Davao City. Petitioner is the owner and manager of G.S.
Saberola Electrical Services, a firm engaged in the construction
business specializing in installing electrical devices in subdivision
homes and in commercial and non-commercial buildings.
Respondents were employed by petitioner as electricians. They
worked from Monday to Saturday and, occasionally, on Sundays,
with a daily wage of ₱110.00.
Respondent Ronald Suarez (Suarez) was employed by petitioner
from February 1995 until October 1997; while respondent
Raymundo Lirasan, Jr. (Lirasan) worked from February 1995 until
September 1997.4 Respondent Lirasan alleged that he was
dismissed without cause and due process. He was merely
informed by petitioner that his services were no longer needed
without any explanation why he was terminated. Both
respondents claimed that they received compensation below the
minimum wage. They were given a fixed rate of ₱110.00 while
the mandated minimum wage was ₱135.00, per Wage Order No.
5 issued by the Regional Tripartite and Productivity Board of
Region XI. They also alleged that they did not receive 13th month
pay for the entire period of their employment. 5Both likewise
claimed payment of overtime and service incentive leave.
In his defense, petitioner averred that respondents were part-time
project employees and were employed only when there were
electrical jobs to be done in a particular housing unit contracted
by petitioner. He maintained that the services of respondents as
project employees were coterminous with each project. As project
employees, the time of rendition of their services was not fixed.
Thus, there was no practical way of determining the appropriate
compensation of the value of respondents’ accomplishment, as
their work assignment varied depending on the needs of a
specific project.6
On September 24, 1998, the Labor Arbiter rendered a
Decision7 dismissing the complaint for lack of merit. The Labor
Arbiter ruled that respondents were project employees and were
not entitled to their monetary claims.
On appeal, the National Labor Relations Commission (NLRC)
affirmed with modification the findings of the Labor Arbiter in a
Resolution8 dated July 9, 1999. It maintained that respondents
were project employees of petitioner. However, it declared that
respondent Suarez was illegally dismissed from employment. It
also awarded the monetary claims of respondents. The
dispositive portion of the Resolution reads:
WHEREFORE, foregoing considered, the decision on appeal is 2. Wage Differential = ₱ 8,268.00
hereby MODIFIED declaring complainant RONALD SUAREZ
illegally dismissed and directing respondent to pay the following 3. 13th Month Pay = ₱ 8,790.16
4. SILP = ₱ 1,350.00
A. RONALD SUAREZ

1. Separation Pay TOTAL = ₱28,938.16

2. Wage Differential
2) Raymundo Lirasan, Jr.
3. 13th Month pay
1. Wage Differential = ₱ 7,878.00
4. Service Incentive Leave Pay
2. 13th Month Pay = ₱ 8,497.66
B. RAYMUNDO LIRASAN, JR. 3. SILP = ₱ 1,350.00

1. Wage Differential
4. TOTAL = ₱17,725.66
2. 13th Month Pay

3. Service Incentive Leave Pay

C. Attorney’s fees equivalent to 10% of the total award.
SO ORDERED.9
Petitioner filed a motion for reconsideration. On October 29,
1999, the NLRC issued a Resolution10 denying the same. A
detailed computation of the money claims awarded to
respondents was incorporated in the Resolution, summarized as
follows:
1) Ronald Suarez:
Attorney’s fees = ₱ 4,666.3811
Petitioner filed a petition for certiorari under Rule 65 of the Rules
of Court before the CA. Petitioner asserted that the NLRC
committed grave abuse of discretion when it declared him guilty
of illegally terminating respondent Suarez and in awarding both
respondents their monetary claims.
On March 30, 2001, the CA rendered a Decision12 dismissing the
petition for lack of merit. Petitioner filed a motion for
reconsideration which, however, was denied in a
Resolution13 dated November 23, 2001. Hence, this petition.

The Issues
1. Separation Pay = ₱10,530.00
Petitioner submits the following issues for resolution: (1) whether
respondent Suarez was illegally terminated, and (2) whether
respondents are entitled to their monetary claims.
The Ruling of the Court
Petitioner’s business, specializing in installing electrical devices,
needs electricians only when there are electrical devices to be
installed in subdivision homes or buildings covered by an
appropriate contract. Petitioner, as an electrical contractor,
depends for his business on the contracts that he is able to obtain
from real estate developers and builders of buildings. Thus, the
work provided by petitioner depends on the availability of such
contracts or projects. The duration of the employment of his work
force is not permanent but coterminous with the projects to which
the workers are assigned. Viewed in this context, the respondents
are considered as project employees of petitioner. Indeed, the
status of respondents as project employees was upheld by the
Court of Appeals based on the findings of facts of the Labor
Arbiter and the NLRC.
A project employee is one whose "employment has been fixed for
a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the
season."14
However, respondents, even if working as project employees,
enjoy security of tenure. Section 3, Article XIII, of the Constitution
guarantees the right of workers to security of tenure, and because
of this, an employee may only be terminated for just 15 or
authorized16 causes that must comply with the due process
requirements17 mandated by law.
In Archbuild Masters and Construction, Inc. v. NLRC, 18 we held
that the employment of a project worker hired for a specific phase
of a construction project is understood to be coterminous with the
completion of such phase and not upon the accomplishment of
the whole project. A worker hired for a particular phase of a
construction project can be dismissed upon the completion of
such phase. Project workers in the construction industry may also
be terminated as the phase of a construction project draws nearer
to completion when their services are no longer needed, provided
they are not replaced.19
Nonetheless, when a project employee is dismissed, such
dismissal must still comply with the substantive and procedural
requirements of due process. Termination of his employment
must be for a lawful cause and must be done in a manner which
affords him the proper notice and hearing. 20
In this regard, we hold that respondent Suarez was illegally
terminated by petitioner. A project employee must be furnished a
written notice of his impending dismissal and must be given the
opportunity to dispute the legality of his removal. 21 In termination
cases, the burden of proof rests on the employer to show that the
dismissal was for a just or authorized cause. Employers who hire
project employees are mandated to state and prove the actual
basis for the employee’s dismissal once its veracity is
challenged.22
Petitioner failed to present any evidence to disprove the claim of
illegal dismissal. It was uncontested that the last work of the
respondents with petitioner’s company was the electrical
installation in some housing units at the Ciudad Esperanza
Housing Project. No evidence was presented by petitioner to
show the termination of the project which would justify the
cessation of the work of respondents. Neither was there proof
that petitioner complied with the substantive and procedural
requirements of due process.
As to respondents’ monetary claims, we uphold the findings of the
NLRC. As employer, the petitioner has the burden of proving that
the rate of pay given to the respondents is in accordance with the
minimum fixed by the law and that he paid thirteenth month pay, vs.
service incentive leave pay and other monetary claims. EMMANUEL V. SANTOS, respondent.

We have consistently held that as a rule, one who pleads DECISION

payment has the burden of proving it. Even when the plaintiff
alleges non-payment, still the general rule is that the burden rests QUISUMBING, J.:
on the defendant to prove payment, rather than on the plaintiff to
prove non-payment. The debtor has the burden of showing with For review under Rule 45 is the Decision1 dated October 25, 2004
legal certainty that the obligation has been discharged by of the Court of Appeals in CA-G.R. SP No. 71648, which affirmed
payment. When the existence of a debt is fully established by the the Decision2 dated January 31, 2002 of the National Labor
evidence contained in the record, the burden of proving that it has Relations Commission (NLRC) in NLRC NCR CA No. 015665-98.
been extinguished by payment devolves upon the debtor who The NLRC had affirmed the Decision3 dated January 26, 2000 of
invokes such a defense against the claim of the creditor. When the Labor Arbiter which ordered petitioners to pay respondent
the debtor introduces some evidence of payment, the burden of separation pay of P165,000, backwages of P180,000, and 10%
going forward with the evidence — as distinct from the general attorney’s fees, but deleted the award of moral and exemplary
burden of proof — shifts to the creditor, who is then under a duty damages.
of producing some evidence to show non-payment.23
The pertinent facts are as follows:
In the instant case, the burden of proving payment of the
monetary claims rests on petitioner, being the employer of
Respondent Emmanuel V. Santos was employed by petitioner
respondents. This is because the pertinent personnel files,
Pepsi Cola Products Phils., Inc. sometime in July 1989. In March
payrolls, records, remittances and other similar documents that
1996, he was promoted as Acting Regional Sales Manager at the
would show that the claims have been paid are not in the
Libis Sales Office.
possession of the worker but in the custody and absolute control
of the employer.24 Sadly, the petitioner failed to do so.
On February 14, 1997, respondent received from petitioner
Ernesto F. Gochuico a memorandum 4 charging him with violation
WHEREFORE, in lieu of the foregoing, the instant petition is
of company rules and regulations and Article 282(a) 5 of the Labor
DENIED. The assailed Decision and Resolution of the Court of
Code, as follows:
Appeals in CA-G.R. SP No. 56503 are hereby AFFIRMED.
Group III FRAUD AND ACTS OF DISHONESTY
SO ORDERED.
NO. 12 Falsifying company records or documents
G.R. No. 165968 April 14, 2008
or knowingly using falsified records or documents.
PEPSI COLA PRODUCTS PHILIPPINES, INC. AND ERNESTO
NO. 8 Breach of trust and confidence.
F. GOCHUICO, petitioners,
 NO. 4 Engaging in fictitious transactions, fake
invoicing, deals padding and other sales
malpractices.
NO. 5 Misappropriation or embezzlement of
company funds or property and other acts of
dishonesty.
Article 282 (a) Serious misconduct or willful
disobedience to the lawful orders of his employer. 6
The charges arose out of alleged artificial sales by the sales
personnel of the Libis Sales Office in March 1996 allegedly upon
the instruction of respondent. The alleged artificial sales resulted
in damage to petitioners amounting to P795,454.54.
The memorandum also apprised respondent of his preventive
suspension and the scheduled hearings of the administrative
investigation.
After the termination of the hearings, petitioners found respondent
guilty of the aforesaid charges with the exception of falsifying
company records. As a result, respondent was dismissed on June
27, 1997.7
Respondent filed a case for illegal dismissal which the Labor
Arbiter dismissed on April 30, 1998.8 On appeal, the NLRC
remanded the case to the Labor Arbiter for further proceedings.
In a Decision9 dated January 26, 2000, the Labor Arbiter ruled
that petitioners failed to satisfactorily prove the serious charges
against respondent. The only relevant evidence adduced by
petitioners was the notice of termination which narrated what
happened during the administrative investigation. The decretal
portion of the decision reads:
WHEREFORE, premises above considered, a decision is
hereby issued declaring the suspension and dismissal of
complainant illegal. However, in view of the already
impaired relationship between complainant and
respondent, and the non-feasibility of the relief of
reinstatement, respondent Pepsi Cola Products, Phil.[,]
Inc. and/or Ernesto F. Gochuico is hereby ordered to pay
complainant separation pay of P165,000.00 based on his
eleven (11) years of service at one-month salary for every
year of service, plus one (1) year backwages in the
amount of P180,000.00, all in the aggregate amount of
Three Hundred Forty Five Thousand [(]P345,000.00)
pesos, and attorney’s fees equivalent to ten (10) percent
of the above monetary award.
In addition, as his suspension and dismissal is illegal, and
apparently tainted with malice and bad faith, an award of
P100,000.00 as moral damages and P50,000.00 as
exemplary damages is hereby granted.
SO ORDERED.10
Petitioners appealed to the NLRC which affirmed the Labor
Arbiter’s finding of illegal dismissal. It observed that after the case
was remanded, the Labor Arbiter immediately conducted
hearings. Moreover, in the hearing dated September 7,
1999,11 petitioners agreed to submit the case for resolution based
on the additional pleadings submitted by the parties.
Nevertheless, the NLRC deleted the award of moral and
exemplary damages in the absence of evidence that respondent’s
suspension and eventual dismissal were tainted with bad faith
and malice. Thus, it ruled:
WHEREFORE, premises considered, the Decision dated
January 26, 2000 is hereby MODIFIED by deleting the
award of moral damages in the amount of P100,000.00
and exemplary damages in the amount of P50,000.00.
 The rest of the decision is hereby AFFIRMED.
SO ORDERED.12
Aggrieved, petitioners elevated the matter to the Court of
Appeals. On October 25, 2004, the appellate court affirmed the
NLRC decision. It agreed with the Labor Arbiter and the NLRC
that the charges in the memorandum of suspension and the
notice of termination were not satisfactorily proven. The only
evidence submitted by petitioners was the notice of termination
which narrated what happened during the administrative
investigation. It also observed that while petitioners discovered
the alleged fictitious sales in April 1996, it was only on February
14, 1997 that petitioners placed respondent on preventive
suspension and commenced administrative investigation. It
further ruled that the holding of a trial was discretionary on the
Labor Arbiter especially where the parties had already presented
their documentary evidence, as in this case.
Petitioners now submit the following issues for our consideration:
I.
THE HONORABLE COURT OF APPEALS COMMITTED
MANIFEST AND REVERSIBLE ERROR IN HOLDING
AND AFFIRMING THAT PETITIONERS FAILED TO
PROVE THAT RESPONDENT’S DISMISSAL WAS
VALID.
II.
THE HONORABLE COURT OF APPEALS COMMITTED
MANIFEST AND REVERSIBLE ERROR IN HOLDING
THAT THE LABOR ARBITER BELOW NEED NOT
CONDUCT A TRIAL ON THE MERITS.
III.
THE HONORABLE COURT OF APPEALS COMMITTED
MANIFEST ERROR WHEN IT AFFIRMED THE AWARD
OF ATTORNEY’S FEES.13
In essence, the issues are: (1) whether respondent was validly
dismissed; (2) whether a trial on the merits was necessary; and
(3) whether the award of attorney’s fees was proper.
Petitioners contend that the charges arose out of artificial sales
by the sales personnel of the Libis Sales Office in March 1996
upon the direction of respondent. The alleged artificial sales
resulted in damage to petitioners amounting to P795,454.54. It is
petitioners’ view that since respondent never denied these
allegations, he is deemed to have admitted the same. Petitioners
also aver that the Labor Arbiter should have conducted a trial on
the merits since the case involved vital factual issues. Petitioners
finally dispute the award of attorney’s fees since it is only allowed
in case of unlawful withholding of wages.
Respondent counters that petitioners can no longer raise before
the Court questions of fact that have already been passed upon
by the Labor Arbiter, the NLRC, and the Court of Appeals.
The first issue involves a question of fact which the Court is not at
liberty to review. Our jurisdiction is generally limited to reviewing
errors of law that may have been committed by the Court of
Appeals.14 Not being a trier of facts, the Court cannot re-examine
and re-evaluate the probative value of evidence presented to the
Labor Arbiter, the NLRC, and the Court of Appeals, which formed
the basis of the questioned decision. Indeed, when their findings
are in absolute agreement, the same are accorded not only
respect but even finality as long as they are supported by
substantial evidence.15
In any event, we have carefully reviewed the records of this case
and found no compelling reason to disturb the uniform findings
and conclusions of the Labor Arbiter, the NLRC, and the Court of
Appeals. In an illegal dismissal case, the onus probandi rests on with the policy that no premium should be placed on the right to
the employer to prove that its dismissal of an employee is for a litigate. For these reasons, we believe and so rule that the award
valid cause.16 In the instant case, petitioners failed to present of attorney’s fees should be deleted.20
evidence to justify respondent’s dismissal. Save for the notice of
termination, we could not find any evidence which would clearly WHEREFORE, the instant petition is PARTIALLY GRANTED.
and convincingly show that respondent was guilty of the charges The Decision dated October 25, 2004 of the Court of Appeals in
imputed against him. There appears to be no compelling reason CA-G.R. SP No. 71648, which affirmed the Decision dated
why petitioners would rather present their witnesses on direct January 31, 2002 of the National Labor Relations Commission in
testimony rather than reduce their testimonies into affidavits. The NLRC NCR CA No. 015665-98, is MODIFIED. The award of 10%
submission of these affidavits appears to be the more prudent attorney’s fees made by the Labor Arbiter in his Decision dated
course of action particularly when the Labor Arbiter informed the January 26, 2000 is DELETED.
parties that no further trial will be conducted in the case.
SO ORDERED.
Anent the second issue, we reiterate that it is not legally
objectionable, for being violative of due process, for the Labor
Arbiter to resolve a case based solely on the position papers,
affidavits or documentary evidence submitted by the
parties.17 The holding of a formal hearing or trial is discretionary Republic of the Philippines
with the Labor Arbiter and is something that the parties cannot SUPREME COURT
demand as a matter of right. The requirements of due process Manila
are satisfied when the parties are given the opportunity to submit
position papers wherein they are supposed to attach all the FIRST DIVISION
documents that would prove their claim in case it be decided that
no hearing should be conducted or was necessary. 18
G.R. No. 172038 April 14, 2008
Finally, on the matter of attorney’s fees, we have ruled that
attorney’s fees may be awarded only when the employee is DANTE D. DE LA CRUZ, petitioner,
illegally dismissed in bad faith and is compelled to litigate or incur vs.
expenses to protect his rights by reason of the unjustified acts of MAERSK FILIPINAS CREWING, INC. and ELITE
his employer.19 In this case, the NLRC deleted the award of moral SHIPPING A.S., respondents.
and exemplary damages precisely because of the absence of
evidence that respondent’s suspension and eventual dismissal
DECISION
were tainted with bad faith and malice.

We note that although the Labor Arbiter awarded attorney’s fees, CORONA, J.:
the basis for the same was not discussed in the decision nor
borne out by the records of this case. There must always be a
factual basis for the award of attorney’s fees. This is consistent
This petition for review on certiorari1 seeks to set aside the
November 26, 2004 decision2 and March 9, 2006 resolution3 of
the Court of Appeals (CA) in CA-G.R. SP No. 74097.
Respondent Elite Shipping A.S. hired petitioner Dante D. de la
Cruz as third engineer for the vessel M/S Arktis Morning
through its local agency in the Philippines, co-respondent
Maersk Filipinas Crewing Inc. The contract of employment
was for a period of nine months, starting April 19, 1999, with a
monthly basic salary of US$1,004.00 plus other benefits.
Petitioner was deployed to Jebel Ali, United Arab Emirates and
boarded M/S Arktis Morning on May 14, 1999.
In a logbook entry dated June 18, 1999, chief engineer
Normann Per Nielsen expressed his dissatisfaction over
petitioner's performance:
3rd Eng. Dante D. de la Cruz has[,] since he signed on[,]
not been able to live up to the company's SMS job
describtion (sic) for 3rd Engineer[.] Today he has been
informed that if he do[es] not improve his Job/Working
performance within [a] short time he will be signed off
according to CBA Article 1 (7).
Said Article 1 (7) of the collective bargaining agreement
(CBA) between respondent Elite Shipping A.S. and its
employees reads:
(7) The first sixty (60) days of service is to be
considered a probationary period which entitles a
shipowner or his representative, i.e.[,] the master of the
vessel[,] to terminate the contract by giving fourteen
(14) days of written notice.
This entry was followed by another one dated June 26, 1999
which was similar in content.
On June 27, 1999, petitioner was informed of his discharge
through a notice captioned "Notice according to CBA Article 1
(7)," to wit:
To: 3rd engineer Dante D. de la Cruz
Pls. be informed that you will be discharged according
to CBA article 1 (7) in first possible port. Reason for
the decision is, as you have been informed by chief
engineer Per Nielsen on several occasions, he [does]
not find you qualified for the position as 3rd engineer
onboard this vessel. The chief engineer has also made 2
entries in the engine logbook, regarding your
insufficient job/working, which you are well aware of.
Petitioner was then made to disembark at the port of Houston,
Texas and was repatriated to Manila on July 17, 1999.
Petitioner thereafter filed a complaint for illegal dismissal with
claims for the monetary equivalent of the unexpired portion of
his contract, damages and attorney's fees in the National Labor
Relations Commission (NLRC) on September 21, 1999.
The labor arbiter (LA) ruled that petitioner was dismissed
without just cause and due process as the logbook entry (which
respondents claimed to be the first notice to petitioner) was
vague. It failed to expound on or state the details of petitioner's
shortcomings or infractions. As such, petitioner was deprived
of a real or meaningful opportunity to explain his side. Hence,
the LA ruled that petitioner was entitled to a monetary
equivalent of salaries for three months, moral and exemplary
damages and attorney's fees.
On appeal, the NLRC upheld the LA's finding of illegal
dismissal but deleted the award of moral and exemplary
damages. Respondents moved for reconsideration. It was
denied.
Thereafter, respondents filed a petition for certiorari (under
Rule 65) with the CA. It granted the petition. It held that,
although the findings of fact of the LA and NLRC were
entitled to great respect, this rule was inapplicable because the
NLRC committed grave abuse of discretion in upholding the
LA's decision. The findings were not only unsupported by
substantial evidence but were also based solely on the ground
that the logbook entries were vague and without concrete
standards.
The CA deemed the logbook entries to be sufficient
compliance with the first notice requirement of the law. It was
a written appraisal of petitioner's poor job performance coupled
with a warning that should he fail to improve his performance,
he would be signed off in accordance with the provisions of the
CBA. It reasoned that a probationary employee may be
dismissed at anytime during the probationary period for failure
to live up to the expectations of the employer.
Petitioner filed a motion for reconsideration of the CA
decision. It was denied. Hence, this petition.
The main issue raised before us is whether or not petitioner
was illegally dismissed by respondents.
Before addressing the merits of the controversy, we need to
settle two preliminary issues. First, respondents interposed in
their comment that the present petition should be dismissed
outright as the motion for extension of time to file this petition
for review was filed late.
In his petition, petitioner indicated that he received a copy of
the CA resolution (dated March 9, 2006) denying his motion
for reconsideration on March 24, 2006. He, therefore, had until
April 8, 2006 to appeal said resolution to this Court or to file a
motion for extension of time to file the petition. However, as
April 8, 2006 fell on a Saturday, petitioner deemed it sufficient
compliance to file his motion for extension on April 10, 2006,
in accordance with Section 1, Rule 22 of the Rules of Court:
SECTION 1. How to compute time. - xxx If the last day
of the period, as thus computed, falls on a Saturday, a
Sunday, or a legal holiday in the place where the court
sits, the time shall not run until the next working day.
Respondents countered that A.M. No. 00-2-14-SC dated
February 29, 2000 (Re: Computation of Time When the Last
Day Falls on Saturday, Sunday or Legal Holiday and a Motion
for Extension on Next Working Day is Granted) clarified that
the aforementioned rule is applicable only to the filing of
pleadings other than motions for extension of time, such that
when a party seeks an extension to file a desired pleading, the
provision no longer applies and the motion should be filed on
the due date itself, regardless of the fact that it falls on a
Saturday, Sunday or legal holiday.
Respondents' contention is incorrect.
A.M. No. 00-2-14-SC provides:
xxx
Whereas, the aforecited provision [Section 1, Rule 22
of the Rules of Court] applies in the matter of filing of
pleadings in courts when the due date falls on a
Saturday, Sunday or legal holiday, in which case, the
filing of the said pleading on the next working day is
deemed on time;
Whereas, the question has been raised if the period is
extended ipso jure to the next working day immediately
following where the last day of the period is a Saturday,
Sunday or legal holiday so that when a motion for
extension of time is filed, the period of extension is to
be reckoned from the next working day and not from
the original expiration of the period.
NOW THEREFORE, the Court Resolves, for the
guidance of the Bench and the Bar, to declare that
Section 1, Rule 22 speaks only of "the last day of the
period" so that when a party seeks an extension and the
same is granted, the due date ceases to be the last day
and hence, the provision no longer applies. Any
extension of time to file the required pleading should
therefore be counted from the expiration of the
period regardless of the fact that said due date is a
Saturday, Sunday or legal holiday. (emphasis
supplied)
Section 1, Rule 22, as clarified by the circular, is clear. Should
a party desire to file any pleading, even a motion for extension
of time to file a pleading, and the last day falls on a Saturday,
Sunday or a legal holiday, he may do so on the next working
day. This is what petitioner did in the case at bar.
However, according to the same circular, the petition for
review on certiorari was indeed filed out of time. The provision
states that in case a motion for extension is granted, the due
date for the extended period shall be counted from the original
due date, not from the next working day on which the motion
for extension was filed. In Luz v. National Amnesty
Commission,4we had occasion to expound on the matter. In that
case, we held that the extension granted by the court should be
tacked to the original period and commences immediately after
the expiration of such period.
In the case at bar, although petitioner's filing of the motion for
extension was within the period provided by law, the filing of
the petition itself was not on time. Petitioner was granted an
additional period of 30 days within which to file the petition.
Reckoned from the original period, he should have filed it on
May 8, 2006. Instead, he did so only on May 11, 2006, that is,
3 days late.
Nevertheless, we will gloss over this technicality and resolve
the case on its merits in the exercise of this Court's equity
jurisdiction as we have done in a number of cases.5
Well settled is the rule that litigations should, as much as
possible, be decided on their merits and not on
technicalities.6 In accordance with this legal precept, this Court
has ruled that being a few days late in the filing of the petition
for review does not automatically warrant the dismissal
thereof,7 specially where strong considerations of substantial
justice are manifest in the petition.8 Such is the case here.
The second preliminary issue we need to address is the matter
of this Court's jurisdiction in petitions for review on certiorari
under Rule 45. It should be noted that our jurisdiction in such
cases is limited only to questions of law. It does not extend to
questions of fact. This doctrine applies with greater force in
labor cases.9 As such, the findings of fact of the CA are binding
and conclusive upon this Court. However, this rule is not
absolute but admits of certain exceptions. Factual findings may
be reviewed in a case when the findings of fact of the LA and
the NLRC are in conflict with those of the CA.10 In this case,
the LA and the NLRC held that respondents did not comply
with the notice requirement; the CA found otherwise. Thus,
although the instant petition involves a question of fact, that is,
whether or not the notice requirement was met, we can still rule
on it.
Now, the merits of the instant controversy.
The CA committed an error in holding that petitioner was not
illegally dismissed. The contrary findings and conclusions
made by the LA and the NLRC were supported by
jurisprudence and the evidence on record.
An employer has the burden of proving that an employee's
dismissal was for a just cause. Failure to show this necessarily
means that the dismissal was unjustified and therefore
illegal.11Furthermore, not only must the dismissal be for a
cause provided by law, it should also comply with the
rudimentary requirements of due process, that is, the
opportunity to be heard and to defend oneself.12
These requirements are of equal application to cases of Filipino
seamen recruited to work on board foreign vessels. Procedural
due process requires that a seaman must be given a written
notice of the charges against him and afforded a formal
investigation where he can defend himself personally or
through a representative before he can be dismissed and
disembarked from the vessel.13 The employer is bound to
furnish him two notices: (1) the written charge and (2) the
written notice of dismissal (in case that is the penalty
imposed).14 This is in accordance with the POEA Revised
Standard Employment Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going
Vessels (POEA Revised Standard Employment Terms and
Conditions).
Section 17 of the POEA Revised Standard Employment Terms
and Conditions laid down the disciplinary procedures to be
taken against erring seafarers:
Section 17. DISCIPLINARY PROCEDURES
The Master shall comply with the following
disciplinary procedures against an erring seafarer:
A. The Master shall furnish the seafarer with a written
notice containing the following:
1. Grounds for the charges as listed in Section
31 of this Contract.
 2. Date, time and place for a formal
investigation of the charges against the seafarer
concerned.
B. The Master or his authorized representative shall
conduct the investigation or hearing, giving the seafarer
the opportunity to explain or defend himself against the
charges. An entry on the investigation shall be entered
into the ship's logbook.
C. If, after the investigation or hearing, the Master is
convinced that imposition of a penalty is justified, the
Master shall issue a written notice of penalty and the
reasons for it to the seafarer, with copies furnished to
the Philippine agent.
xxx xxx xxx
Furthermore, the notice must state with particularity the acts or
omissions for which his dismissal is being sought.15
Contrary to respondents' claim, the logbook entries did not
substantially comply with the first notice, or the written notice
of charge(s). It did not state the particular acts or omissions for
which petitioner was charged. The statement therein that
petitioner had "not been able to live up to the company's SMS
job description for 3rd Engineer" and that he had "been
informed that if he [does] not improve his job/working
performance within [a] short time he will have to be signed off
according to CBA Article 1 (7)" was couched in terms too
general for legal comfort.
The CA held that the logbook entries were sufficient to enable
petitioner to explain his side or to contest the negative
assessment of his performance and were clearly intended to
inform him to improve the same. We cannot fathom how the
CA arrived at such a conclusion. The entries did not contain
any information at all as to why he was even being warned of
discharge in the first place. Even we were left to speculate as to
what really transpired, calling for such an extreme course of
action from the chief engineer. The entries raised more
questions than answers.
How exactly was he unable to live up to the company's SMS
job description of a third engineer? Respondents should have
indicated the grounds for the threatened termination, the
specific acts or omissions illustrating the same, along with the
date and the approximate time of their occurrence. For how
else could petitioner be expected to meet the charges against
him if all he was given as reason for his discharge was a vague
and general accusation such as that handed down by the chief
engineer? Even if the chief engineer verbally informed him of
what his specific shortcomings were, as insisted upon by
respondents, the POEA Revised Standard Employment Terms
and Conditions and jurisprudence require that the charges be
put in writing.
The same thing may be said of the written notice of dismissal.
It sorely lacked the necessary details that should accompany it.
Instead of delving into the grounds for petitioner's discharge, it
merely echoed the logbook entries by nebulously justifying his
dismissal on the ground that the chief engineer "[did] not find
[petitioner] qualified for the position as 3rdengineer." Much like
the first notice, it barely made mention of the grounds for his
discharge. Again, we were left in the dark as to the nature of
the acts or omissions relied upon as basis for the termination of
petitioner's employment.
These ambiguities, attributable solely to respondents, should be
resolved against them.
Moreover, we observed that the records were devoid of any
proof indicating that petitioner was ever given an opportunity
to present his side. In their comment, respondents in fact
admitted not having conducted any formal investigation:
A formal investigation in this case was not necessary
because the findings against petitioner were not in the
form of infractions that ought to be investigated. The
issue against petitioner was the quality of his work as
3rd Engineer. Having been duly notified of his
shortcomings, it devolved upon the petitioner to
improve the quality of his work in order to pass his
probationary period and be a regular employee. But
petitioner did not.
They also insisted that as petitioner was served notice of his
termination, the same constituted sufficient compliance with
the requirement of notice and due process as the notice gave
him an opportunity to defend himself.16
Clearly, respondents were unmindful of the requirements
explicitly laid down by law and jurisprudence. Anything short
of complying with the same amounts to a dismissal. Thus, no
amount of justification from respondents can move us now to
declare the dismissal as being in accordance with the
procedural requirements provided for by law. It cannot be
overemphasized that sufficient notice should be given as part
of due process because a worker's employment is his property
in the constitutional sense.17
As to the substantive aspect of the requirement, suffice it to say
that respondents dismally failed to prove that petitioner's
termination from employment was for cause. As the logbook
entries were too general and vague, we cannot even reach any
conclusion on whether or not respondents had a valid cause to
discharge petitioner. Not only was petitioner's dismissal
procedurally flawed, it was also without just cause.
Lastly, petitioner and respondents were at odds over the
former's employment status when he was discharged from the
vessel. It was petitioner's position that he was already a regular
employee when his services were terminated; respondents, on
the other hand, insisted that he was then still on probationary
status. This, according to respondents, entitled them to dismiss
him in accordance with the provisions of Article 1 (7) of the
CBA (which allows the master to terminate the contract of one
under probation by merely serving a written notice 14 days
prior to the contemplated discharge) and the requirements on
the termination of a probationary employee's employment as
laid down in Manila Hotel Corporation v. NLRC.18
It is well to remind both parties that, as early as Brent School,
Inc. v. Zamora,19 we already held that seafarers are not covered
by the term regular employment, as defined under Article 280
of the Labor Code. This was reiterated in Coyoca v. National
Labor Relations Commission.20 Instead, they are considered
contractual employees whose rights and obligations are
governed primarily by the POEA Standard Employment
Contract for Filipino Seamen (POEA Standard Employment
Contract), the Rules and Regulations Governing Overseas
Employment, and, more importantly, by Republic Act No. appurtenant thereto. The Court quoted with favor the NLRC's
8042, otherwise known as The Migrant Workers and Overseas explanation that the reference to permanent and probationary
Filipinos Act of 1995.21 Even the POEA Standard Employment masters and employees was a misnomer. It did not change the
Contract itself mandates that in no case shall a contract of fact that the contract for employment was for a definite period
employment concerning seamen exceed 12 months. of time. In using the terms "probationary" and
"permanent" vis-à-vis seafarers, what was really meant
It is an accepted maritime industry practice that the was "eligible for re-hire."
employment of seafarers is for a fixed period only. The Court
acknowledges this to be for the mutual interest of both the This is the only logical explanation possible as the parties
seafarer and the employer. Seafarers cannot stay for a long and cannot and should not violate the POEA's directive that a
indefinite period of time at sea as limited access to shore contract of enlistment must not exceed 12 months.
activity during their employment has been shown to adversely
affect them. Furthermore, the diversity in nationality, culture WHEREFORE, the petition is hereby GRANTED. The
and language among the crew necessitates the limitation of the November 26, 2004 decision and March 9, 2006 resolution of
period of employment.22 the Court of Appeals in CA-G.R. SP No. 74097
are REVERSED and SET ASIDE. The March 22, 2002
While we recognize that petitioner was a registered member of resolution of the National Labor Relations Commission in
the Associated Marine Officers and Seamen's Union of the NLRC NCR CA No. 029139-01 is REINSTATED.
Philippines which had a CBA with respondent Elite Shipping
A.S. providing for a probationary period of employment, the SO ORDERED.
CBA cannot override the provisions of the POEA Standard
Employment Contract. The law is read into, and forms part of,
contracts. And provisions in a contract are valid only if they are
not contrary to law, morals, good customs, public order or
public policy.23
Republic of the Philippines
SUPREME COURT
In Millares v. NLRC,24 this Court had occasion to rule on the
Manila
use of the terms "permanent and probationary masters and
employees" vis-à-vis contracts of enlistment of seafarers. In
SECOND DIVISION
that case, petitioners made much of the fact that they were
continually re-hired for 20 years by private respondent Esso
G.R. No. 170734 May 14, 2008
International. By such circumstances, they claimed to have
acquired regular status with all the rights and benefits
ARCO METAL PRODUCTS, CO., INC., and MRS.
SALVADOR UY, petitioners,
vs.
SAMAHAN NG MGA MANGGAGAWA SA ARCO
METAL-NAFLU (SAMARM-NAFLU), respondent.
DECISION
TINGA, J.:
This treats of the Petition for Review1 of the Resolution2 and
Decision3 of the Court of Appeals dated 9 December 2005 and
29 September 2005, respectively in CA-G.R. SP No. 85089
entitled
Samahan ng mga Manggagawa sa Arco Metal-NAFLU
(SAMARM-NAFLU) v. Arco Metal Products Co., Inc. and/or
Mr. Salvador Uy/Accredited Voluntary Arbitrator Apron M.
Mangabat,4 which ruled that the 13th month pay, vacation
leave and sick leave conversion to cash shall be paid in full to
the employees of petitioner regardless of the actual service
they rendered within a year.
Petitioner is a company engaged in the manufacture of metal
products, whereas respondent is the labor union of petitioner’s
rank and file employees. Sometime in December 2003,
petitioner paid the 13th month pay, bonus, and leave
encashment of three union members in amounts proportional
to the service they actually rendered in a year, which is less
than a full twelve (12) months. The employees were:
1. Rante Lamadrid Sickness
27 August 2003 to 27 February
2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003
3. Rodelio Collantes Sickness August 2003 to February 2004
Respondent protested the prorated scheme, claiming that on
several occasions petitioner did not prorate the payment of the
same benefits to seven (7) employees who had not served for
the full 12 months. The payments were made in 1992, 1993,
1994, 1996, 1999, 2003, and 2004. According to respondent,
the prorated payment violates the rule against diminution of
benefits under Article 100 of the Labor Code. Thus, they filed
a complaint before the National Conciliation and Mediation
Board (NCMB). The parties submitted the case for voluntary
arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor
of petitioner and found that the giving of the contested
benefits in full, irrespective of the actual service rendered
within one year has not ripened into a practice. He noted the
affidavit of Joselito Baingan, manufacturing group head of
petitioner, which states that the giving in full of the benefit
was a mere error. He also interpreted the phrase "for each year
of service" found in the pertinent CBA provisions to mean
that an employee must have rendered one year of service in
order to be entitled to the full benefits provided in the CBA. 5
Unsatisfied, respondent filed a Petition for Review6 under
Rule 43 before the Court of Appeals, imputing serious error to
Mangabat’s conclusion. The Court of Appeals ruled that the
CBA did not intend to foreclose the application of prorated
payments of leave benefits to covered employees. The
appellate
court found that petitioner, however, had an existing
2004
voluntary practice of paying the aforesaid benefits in full to its
employees, thereby rejecting the claim that petitioner erred in
paying full benefits to its seven employees. The appellate
court noted that aside from the affidavit of petitioner’s officer,
it has not presented any evidence in support of its position that
it has no voluntary practice of granting the contested benefits
in full and without regard to the service actually rendered
within the year. It also questioned why it took petitioner
eleven (11) years before it was able to discover the alleged
error. The dispositive portion of the court’s decision reads:
WHEREFORE, premises considered, the instant
petition is hereby GRANTED and the Decision of
Accredited Voluntary Arbiter Apron M. Mangabat in
NCMB-NCR Case No. PM-12-345-03, dated June 18,
2004 is hereby AFFIRMED WITH
MODIFICATION in that the 13th month pay, bonus,
vacation leave and sick leave conversions to cash shall
be paid to the employees in full, irrespective of the
actual service rendered within a year.7
Petitioner moved for the reconsideration of the decision but its
motion was denied, hence this petition.
Petitioner submits that the Court of Appeals erred when it
ruled that the grant of 13th month pay, bonus, and leave
encashment in full regardless of actual service rendered
constitutes voluntary employer practice and, consequently, the
prorated payment of the said benefits does not constitute
diminution of benefits under Article 100 of the Labor Code.8
The petition ultimately fails.
First, we determine whether the intent of the CBA provisions
is to grant full benefits regardless of service actually rendered
by an employee to the company. According to petitioner, there
is a one-year cutoff in the entitlement to the benefits provided
in the CBA which is evident from the wording of its pertinent
provisions as well as of the existing law.
We agree with petitioner on the first issue. The applicable
CBA provisions read:
ARTICLE XIV-VACATION LEAVE
Section 1. Employees/workers covered by this
agreement who have rendered at least one (1) year of
service shall be entitled to sixteen (16) days vacation
leave with pay for each year of service. Unused leaves
shall not be cumulative but shall be converted into its
cash equivalent and shall become due and payable
every 1st Saturday of December of each year.
However, if the 1st Saturday of December falls in
December 1, November 30 (Friday) being a holiday,
the management will give the cash conversion of
leaves in November 29.
Section 2. In case of resignation or retirement of an
employee, his vacation leave shall be paid
proportionately to his days of service rendered during
the year.
ARTICLE XV-SICK LEAVE
Section 1. Employees/workers covered by this
agreement who have rendered at least one (1) year of
service shall be entitled to sixteen (16) days of sick
leave with pay for each year of service. Unused sick
leave shall not be cumulative but shall be converted
into its cash equivalent and shall become due and
payable every 1st Saturday of December of each year.
Section 2. Sick Leave will only be granted to actual
sickness duly certified by the Company physician or
by a licensed physician.
Section 3. All commutable earned leaves will be paid
proportionately upon retirement or separation.
ARTICLE XVI – EMERGENCY LEAVE, ETC.
Section 1. The Company shall grant six (6) days
emergency leave to employees covered by this
agreement and if unused shall be converted into cash
and become due and payable on the 1st Saturday of
December each year.
Section 2. Employees/workers covered by this
agreement who have rendered at least one (1) year of
service shall be entitled to seven (7) days of Paternity
Leave with pay in case the married employee’s
legitimate spouse gave birth. Said benefit shall be non-
cumulative and non-commutative and shall be deemed
in compliance with the law on the same.
Section 3. Maternity leaves for married female
employees shall be in accordance with the SSS Law
plus a cash grant of P1,500.00 per month.
xxx
ARTICLE XVIII- 13TH MONTH PAY & BONUS
Section 1. The Company shall grant 13th Month Pay to
all employees covered by this agreement. The basis of
computing such pay shall be the basic salary per day of
the employee multiplied by 30 and shall become due
and payable every 1st Saturday of December.
Section 2. The Company shall grant a bonus to all
employees as practiced which shall be distributed on
the 2nd Saturday of December.
Section 3. That the Company further grants the amount
of Two Thousand Five Hundred Pesos (P2,500.00) as
signing bonus plus a free CBA
Booklet.9 (Underscoring ours)
There is no doubt that in order to be entitled to the full
monetization of sixteen (16) days of vacation and sick leave,
one must have rendered at least one year of service. The clear
wording of the provisions does not allow any other
interpretation. Anent the 13th month pay and bonus, we agree
with the findings of Mangabat that the CBA provisions did not
give any meaning different from that given by the law, thus it
should be computed at 1/12 of the total compensation which
an employee receives for the whole calendar year. The bonus
is also equivalent to the amount of the 13th month pay given,
or in proportion to the actual service rendered by an employee voluntary employer practice. It points out that the payments
within the year. had been erroneously made and they occurred in isolated
cases in the years 1992, 1993, 1994, 1999, 2002 and 2003.
On the second issue, however, petitioner founders. According to petitioner, it was only in 2003 that the
accounting department discovered the error "when there were
As a general rule, in petitions for review under Rule 45, the already three (3) employees involved with prolonged absences
Court, not being a trier of facts, does not normally embark on and the error was corrected by implementing the pro-rata
a re-examination of the evidence presented by the contending payment of benefits pursuant to law and their existing
parties during the trial of the case considering that the findings CBA."12 It adds that the seven earlier cases of full payment of
of facts of the Court of Appeals are conclusive and binding on benefits went unnoticed considering the proportion of one
the Court.10 The rule, however, admits of several exceptions, employee concerned (per year) vis à vis the 170 employees of
one of which is when the findings of the Court of Appeals are the company. Petitioner describes the situation as a "clear
contrary to that of the lower tribunals. Such is the case here, as oversight" which should not be taken against it.13 To further
the factual conclusions of the Court of Appeals differ from bolster its case, petitioner argues that for a grant of a benefit to
that of the voluntary arbitrator. be considered a practice, it should have been practiced over a
long period of time and must be shown to be consistent,
Petitioner granted, in several instances, full benefits to deliberate and intentional, which is not what happened in this
employees who have not served a full year, thus: case. Petitioner tries to make a case out of the fact that the
CBA has not been modified to incorporate the giving of full
Name Reason Duration benefits regardless of the length of service, proof that the
grant has not ripened into company practice.
1. Percival Bernas Sickness July 1992 to November 1992
2. Cezar Montero Sickness 21 Dec. 1992 to FebruaryWe disagree.
1993
3. Wilson Sayod Sickness May 1994 to July 1994
Any benefit and supplement being enjoyed by employees
4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct. 1996
cannot be reduced, diminished, discontinued or eliminated by
5. Ronnie Licuan Sickness the employer.14 The principle of non-diminution of benefits is
8 Nov. 1999 to 9 Dec. 1999
founded on the Constitutional mandate to "protect the rights of
6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003
workers and promote their welfare,"15 and "to afford labor full
16
7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. protection."
200311 Said mandate in turn is the basis of Article 4 of
the Labor Code which states that "all doubts in the
implementation and interpretation of this Code, including its
Petitioner claims that its full payment of benefits regardless of
implementing rules and regulations shall be rendered in favor
the length of service to the company does not constitute
of labor." Jurisprudence is replete with cases which recognize
the right of employees to benefits which were voluntarily
given by the employer and which ripened into company
practice. Thus in Davao Fruits Corporation v. Associated
Labor Unions, et al.17 where an employer had freely and
continuously included in the computation of the 13th month
pay those items that were expressly excluded by the law, we
held that the act which was favorable to the employees though
not conforming to law had thus ripened into a practice and
could not be withdrawn, reduced, diminished, discontinued or
eliminated. In Sevilla Trading Company v. Semana,18 we ruled
that the employer’s act of including non-basic benefits in the
computation of the 13th month pay was a voluntary act and
had ripened into a company practice which cannot be
peremptorily withdrawn. Meanwhile in Davao Integrated Port
Stevedoring Services v. Abarquez,19 the Court ordered the
payment of the cash equivalent of the unenjoyed sick leave
benefits to its intermittent workers after finding that said
workers had received these benefits for almost four years until
the grant was stopped due to a different interpretation of the
CBA provisions. We held that the employer cannot
unilaterally withdraw the existing privilege of commutation or
conversion to cash given to said workers, and as also noted
that the employer had in fact granted and paid said cash
equivalent of the unenjoyed portion of the sick leave benefits
to some intermittent workers.
In the years 1992, 1993, 1994, 1999, 2002 and 2003,
petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees regardless
of the length of service rendered. True, there were only a total
of seven employees who benefited from such a practice, but it
was an established practice nonetheless. Jurisprudence has not
laid down any rule specifying a minimum number of years
within which a company practice must be exercised in order to
constitute voluntary company practice.20 Thus, it can be six
(6) years,21three (3) years,22 or even as short as two (2)
years.23 Petitioner cannot shirk away from its responsibility by
merely claiming that it was a mistake or an error, supported
only by an affidavit of its manufacturing group head portions
of which read:
5. 13th month pay, bonus, and cash conversion of
unused/earned vacation leave, sick leave and
emergency leave are computed and paid in full to
employees who rendered services to the company for
the entire year and proportionately to those employees
who rendered service to the company for a period less
than one (1) year or twelve (12) months in accordance
with the CBA provision relative thereto.
6. It was never the intention much less the policy of
the management to grant the aforesaid benefits to the
employees in full regardless of whether or not the
employee has rendered services to the company for the
entire year, otherwise, it would be unjust and
inequitable not only to the company but to other
employees as well.24
In cases involving money claims of employees, the employer
has the burden of proving that the employees did receive the
wages and benefits and that the same were paid in accordance
with law.25
Indeed, if petitioner wants to prove that it merely erred in
giving full benefits, it could have easily presented other
proofs, such as the names of other employees who did not
fully serve for one year and thus were given prorated benefits.
Experientially, a perfect attendance in the workplace is always
the goal but it is seldom achieved. There must have been other
employees who had reported for work less than a full year and
who, as a consequence received only prorated benefits. This
could have easily bolstered petitioner’s theory of
mistake/error, but sadly, no evidence to that effect was
presented.
IN VIEW HEREOF, the petition is DENIED. The Decision
of the Court of Appeals in CA-G.R. SP No. 85089 dated 29
September 2005 is and its Resolution dated 9 December 2005
are hereby AFFIRMED.
SO ORDERED.
G.R. No. 153983 May 26, 2009
SAN MIGUEL CORPORATION, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND WILLIAM
L. FRIEND, JR., Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before us is a petition for review on certiorari under Rule 45 of the
1997 Rules of Court assailing the Decision1 of the Court of
Appeals (CA) in CA-G.R. SP No. 65528 dated March 15, 2002,
and its Resolution2 dated June 11, 2002.
Respondent William L. Friend, Jr. was a route salesman of
petitioner San Miguel Corporation Bacoor Sales Office for ten
(10) years with a monthly salary of ₱30,000.00.
On April 3, 1995, Rene de Jesus, respondent’s supervisor,
conducted an audit of his route on account of complaints of the
following customers:
1. Perla Tibayan, Salitan, Dasmariñas, Cavite;
2. Estelita Galay-de Leon, Dara Subd., Salitran,
Dasmariñas, Cavite;
3. Clarita Javier/Helena Abay, Topacio, Imus, Cavite;
4. Ester Saguilayan, Malagasan, Imus, Cavite;
5. Generoso Bayot, Anober II, Imus, Cavite;
6. Cynthia Zapanta, Anober II, Imus, Cavite.
These customers complained to the supervisor that respondent
padded their accounts in the total amount of ₱20,540.00.
After the audit, the supervisor found reasonable ground to hold
respondent liable for misappropriation of company funds through
falsification of private documents. On April 19, 1995, respondent
was summoned to petitioner’s Canlubang Bottling Plant for
investigation.
Petitioner found the following:3
(1) Case of Perla Tibayan
Mr. William Friend issued TCI No. 677539 on March 31,
1995, for the account of Perla Tibayan (Annex’1’). The
TCI was for 148 empties and 32 bottles valued at
₱17,568.00. Perla Tibayan only confirmed that the
outstanding account was 82 cases empties in the amount
of ₱9,840.00 (Confirmation Slip of Perla Tibayan dated
April 4, 1995 is hereby attached as Annex ‘1-A’). On April
10, 1995, Perla Tibayan executed an affidavit before
notary public Bernard R. Paredes, denying her signature
appearing in Invoice No. 677539 and that she received
partial only of the products stated in Invoice No. 677539
in the amount of ₱9,840.00 or 82 complete empties of
PP-320. The affidavit also includes statement that the 40
complete empties PP-320 plus 32 empties bottles were
for the account of William Friend and 24 complete
empties PP320 were borrowed by Generoso Bayot
(Annex ‘1-B’).
(2) Case of Estelita Galay (de Leon)
TCI #677540 was issued by complainant on March 31,
1995, supposedly to cover 116 empties valued at
₱13,920.00 for the account of Ms. Estelita Galay (Annex
‘2’). When audited by DSS Rene de Jesus on April 4,
1995, the outlet, Ms. Estelita Galay only confirmed her
outstanding account of ₱6,240.00 for 52 empties cases
PP320 (Annex ‘A’). In support of her claim, she executed
an affidavit on April 10, 1995, before Notary Public
Bernard Paredes stating that PP52 complete empties was
her account while PP40 complete empties were for
William Friend and PP24 complete empties were
borrowed by Generoso Bayot (Annex ‘B’).
(3) Case of Clarita Javier/Helena Abay
Helena Abay, the caretaker of Clarita Javier, claimed that
Mr. William Friend only delivered 25 cases full goods and
her container loan was only for 19 cases empties with a
total value of ₱6,530.00 (Confirmation Slip Annex ‘3’) as
against the 25 full goods and 29 cases empties reflected
in the Temporary Credit Invoice #677531 issued by
complainant, William Friend to Clarita Javier in the total
amount of ₱7,730.00 on March 31, 1995 (annex ‘3-A’).
On April 10, 1995, Helena Abay executed an affidavit
before Notary Public Bernard R. Paredes, stating among
others the fact, that I only receive partial of the products
stated in Invoice No. 677531 in the amount of ₱6,530.00
the breakdown of which is 25 PP-320 content only and 19
cases PP empties (annex’3-B’).
(4) Case of Cynthia Zapanta
Temporary Credit Invoice (TCI) #677542 was issued by
Mr. William Friend on March 31, 1995, supposedly to
cover 99 cases of full goods and 69 cases empties
(Annex ‘4’). However, upon audit, customer confirmed
that her outstanding account is only 79 cases full goods
and 50 cases empties valued at ₱19,430.00
(Confirmation Slip, Annex ‘4-A).
On April 10, 1995, Cynthia B. Zapanta, executed an
affidavit before Notary Public Bernard R. Paredes, stating
among others:
a) The signature appearing in Invoice No. 677542
is not my signature;
b) That I only receive partial of the products stated
in Invoice No. 677542 in the amount of
₱19,430.00 – breakdown, 70PP content only and
50 cases PP empties; and
c) The discount appearing on TCI #677542
amounting to ₱140 was not given to me (Annex
‘4-B’)."
(5) Case of Generoso Bayot
Outlet confirmed that his total outstanding account was in
the amount of ₱29,406.50 which was covered by TCI
#667668 issued on March 2, 1995 by complainant, Mr.
William Friend for 103 cases full goods, valued at
₱17,510.00 and 103 empties valued at ₱12,360.00 or a
total value of ₱29,406.50 (Annex ‘5’). Mr. William Friend
issued on March 31, 1995 TCI #677541 in the name of
Generoso Bayot for 245 empties valued at ₱29,400.00
(Annex ‘5-A’). In the audit, Mr. Generoso Bayot confirmed
his temporary sales account in the amount of ₱29,400.00
but disclaimed ownership of the signature appearing in
TCI #677541 (Annex ‘5-B’). Allegation of Mr. Bayot was
again reiterated, when he executed an affidavit (Annex ‘5-
C’) before Notary Public Bernard R. Paredes on April 10,
1995, wherein he stated that, ‘the signature appearing on
Invoice No. 677541 is not my signature’. This particular
transaction was a ‘paper renewal’ wherein complainant
changed the original goods ordered by the outlet from 103
cases full goods and 103 cases empties to 245 empties
for the same amount of ₱29,406.50.
(6) Case of Ester Sacquilayan
Temporary Credit Invoice No. 677537 was issued by
com[plainant Mr. William Friend for 29 cases empties,
valued at ₱3,480.00 for a total amount of ₱8,400.00
(Annex ‘6’). Upon audit, customer said that TCI #677537
was a paper renewal of her outstanding account of 15
cases full goods and 15 cases empties with a total value
of ₱4,350.00 only (Confirmation Slip, Annex ‘6-A’). she
also executed an affidavit wherein she confirmed that, ‘I
only received partial of the products stated in Invoice No.
677537 in the amount of P4,350.00 representing 15
cases PP full goods (Annex ‘6-B’).
On October 3, 1995, respondent received a notice of
termination4 from petitioner which states as follows:
Mr. William L. Friend, Jr.
314 Molave St., Andres Village 2
Bacoor. Cavite
Mr. Friend, Jr.,
After a thorough evaluation of the results of the
investigation, please be informed that your
services with the company is being terminated
effective at the close of business hours of October
5, 1995 for misappropriation of company funds
through falsification of company documents.
Company rules and regulations states that
misappropriation of company funds is punishable
by discharge for the offense.
Also, you are being given thirty (30) days in which
to pay back the company the amount of
₱20,540.00 which you have misappropriated or
corresponding criminal case as well as civil case
will be filed against you.
(SGD) DOMINGO C. MISA, JR.
Manager Sales Operation
Southeastern Tagalog Beer Region.
(emphasis ours)
Hence, respondent filed a complaint for illegal suspension and
illegal dismissal docketed as NLRC Case No. RAB-IV-10-7644-
95-C. On November 11, 1997, after both parties submitted their
respective position paper, the Labor Arbiter rendered a
Decision5 ordering petitioner to reinstate respondent, thus:
In a case of illegal dismissal, the burden of proving the legality or
illegality of the dismissal, once the prior employment was
admitted, rests upon the employer. In the case at bar since
respondent admits having employed complainant and terminated
his employment later, respondents has to prove with convincing
evidence that there was valid cause to dismiss him and that he
was afforded due process.
It is an established fact that complainant was afforded the
opportunity to explain his side anent the charge against him thru
question-and-answer form of formal investigation during which,
he was even represented by a lawyer of his own choice. This is
due process.
On the existence of valid, just or authorized cause, we have these
to say:
There is no doubt that complainant committed the acts
complained against him.
Admittedly by the complainant, what he committed were acts of
paper renewal, resorted to by the salesman to make it appear
that the account of a customer is moving. This is done by the
salesman so that his customer’s account will not "slide" for if it
happens, the customer’s credit line would be cut-off. In fine, it
gives the customer more time to pay his/her account to SMC.
The acts of paper renewal described above, in legal parlance,
constitute falsification of private documents.
Under company rule No. 15, falsification of company records or
documents is punishable with dismissal (discharge, if the offender
or somebody benefits from the falsification.
In the case at bar, certainly the customers benefits from such
falsification as it prolonged the time for them to pay their account
to SMC.
Respondent failed to prove that complainant misappropriated
company funds though. The padding was merely for the purpose
of maintaining the line account of complainant’s clients.
We find the penalty of dismissal too severe a penalty for the
offense committed. Firstly, there is no showing that complainant’s
service record was replete with offenses. It appears that this is
the first time he was charged of violation of company rule.
Secondly, there is no convincing evidence that he materially
benefited from the acts committed. Thirdly, SMC did not suffer
from any damage or losses by reason thereof.
Suspension of two years and two months would be more
appropriate a penalty and would serve complainant a lesson not
to repeat the same acts in the future, which penalty is deemed
served from October 5, 1995 to December 5, 1997.
WHEREFORE, respondent is hereby directed to reinstate the
complainant effective December 6, 1997 to his former position.
SO ORDERED. (emphasis supplied)
Both parties appealed to the NLRC. In a Decision6 dated
February 23, 2001, the NLRC reversed the decision of the Labor
Arbiter, to wit:
We find merit in the appeal.
Paper renewal is falsification of private document because the
author makes it appear that the accounts of his customers were
moving otherwise the customers’ credit line would be severed.
When the time frame within which the customers should settle
their obligations is extended through "paper renewal" the rule of
respondent collection of credit within one (1) week is
circumvented to the prejudice of the company.
A high degree of confidence is reposed in salesman as they are
entrusted with funds or properties of their employer (CCBPI vs.
NLRC, 172 SCRA 751). By his own wrongdoing, it would be an
act of oppression to compel his employer to welcome him anew
to its fold.
The paper renewal is also beneficial to the salesman because the
good credit standing of his customers is a boost to his
performance level and continuous employment. This is the
moving force for the salesman to resort to paper renewal. And we
cannot countenance the salesman’s self-interest to the prejudice
of the company. We cannot lose sight that under Article 282 © of
the Labor Code, an employer is allowed to terminate an
employee for willful breach of trust reposed in him.
lawphi1.z w+
In short, we sustain respondent’s prerogative to dismiss
complainant.
However, we find complainant to have been illegally suspended.
Complainant was placed under suspension on April 3, 1995
which should end thirty (30) days thereafter. Since he was not
allowed to return to his position nor given an assignment after
May 3, 1995 complainant is entitled to his wages from May 3 to
October 3, 1995 when he was terminated.
WHEREFORE, premises considered, the appeal of San Miguel
Corporation is hereby Granted. Accordingly, the Decision of the
Labor Arbiter dated 11 November 1997 directing the
reinstatement of William L. Friend is SET ASIDE. Respondent is
however directed to pay complainant his wages from May 3 to
October 3, 1995, the period for which he was illegally suspended.
SO ORDERED.
Respondent filed a motion for partial reconsideration but the
NLRC denied the same for lack of merit.
Respondent elevated the case to the CA through a petition for
certiorari. On March 15, 2002, the CA rendered the assailed
Decision7 , granting the petition, reversing and setting aside the
Decision of the NLRC and reinstating the Decision of the Labor
Arbiter. The CA ratiocinated as follows:
The issue in this case is whether petitioner’s act of "paper
renewal" warrants his termination.
This Court agrees with the Labor Arbiter that petitioner did in fact
violate company rules by his act of "paper renewal" but this
should not warrant his dismissal.
The Labor Arbiter noted as follows:
"Under company rule No. 15, falsification of company records or
documents is punishable with dismissal (discharge) if the offender
or somebody benefits from the falsification."
In the case of Sanchez vs. National Labor Relations Commission,
(G.R. No. 124348, 312 SCRA727) the Supreme Court said:
"In Coca-Cola Bottlers Philippines, Inc. vs. NLRC, we said that
the life of a softdrinks company depends not so much on the
bottling or production of the product since this is primarily done by
automatic machines and personnel who are easily supervised,
but upon mobile and far-ranging salesman who go from store to
store all over the country or region. Salesmen are highly
individualistic personnel who have to be trusted and left
essentially on their own. A high degree of confidence is reposed
in them when they are entrusted with funds or properties of their
employer. Such is petitioner Dominador Sanchez who was then a
salesman of respondent Pepsi-Cola Products Philippines, Inc.
(PEPSI-COLA), until he was terminated after twenty-three (23)
years of service for loss of trust and confidence for violation of
company rules."
The effect of petitioner’s "paper renewal" was determined by the
Labor Arbiter when he stated the following:
"In the case at bar, certainly the customers benefited from such
falsification as it prolonged the time for them to pay their account
to SMC.
Respondent failed to prove that complainant misappropriated
company funds though. The padding was merely for the purpose
of maintaining the line account of complainant’s clients."
For its part, the NLRC found as follows:
"Paper renewal is falsification of private document because the
author makes it appear that the accounts of his customers were
moving otherwise the customers’ credit line would be severed.
When the time frame within which the customers should settle
their obligations is extended through ‘paper renewal’ the rule of
respondent collection of credit within one (1) week is
circumvented to the prejudice of the company.
xxx
The paper renewal is also beneficial to the salesman because the
good credit standing of his customers is a boost to his
performance level and continuous employment. This is the
moving force for the salesman to resort to proper (sic) renewal.
And we cannot countenance the salesman’s self-interest to the
prejudice of the company. We cannot lose sight that under Article
282 © of the Labor Code, an employer is allowed to terminate an
employee for willful breach trust (sic) reposed in him."
It is therefore clear that petitioner did in fact violate company Rule
No. 15 by falsifying company records and documents. However,
there is a qualification. Such falsification must benefit the offender
(herein petitioner) or somebody else.
According to the NLRC, the benefit to petitioner was "a boost to
his performance level and continuing employment"’ while
according to the Labor Arbiter, the benefit to the customers was
"it prolonged the time for them to pay their account to SMC".
Such are hardly the benefits obtained that would warrant the
supreme penalty of dismissal for the first offense. This is unlike
the aforecited Sanchez case wherein petitioner Sanchez was not
only caught "padding", but he also converted 200 cases of
empties to cash to defray the medical expenses of his ailing wife,
an act of gross dishonesty, resulting in his termination which he
richly deserved.
This Court thus agrees with the Labor Arbiter when she ruled as
follows:
"We find the penalty of dismissal too severe a penalty for the
offense committed. Firstly, there is no showing that complainant’s
service record was replete with offenses. It appears that this is
the first time he was charged of violation of company rule.
Secondly, there is no convincing evidence that he materially
benefited from the acts committed. Thirdly, SMC did not suffer
from any damage or losses by reason thereof."
This is not to say however that petitioner should be completely
absolved from his acts of "paper renewal". Petitioner did not help
matters when he failed to cite the specific company rule or its
number which penalizes the offense of "paper renewal" which,
according to him, warrants only the suspension for two (2) days,
in contrast to private respondent’s submission of the specific
company rule allegedly violated by petitioner, No. 15. This Court
therefore also agrees with the Labor Arbiter when she considered
suspension of two (2) years and four (4) months as an
appropriate penalty, as follows:
"Suspension of two years and two months would be more
appropriate a penalty and would serve complainant a lesson not
to repeat the same acts in the future, which penalty is deemed
served from October 4, 1995 to December 5, 1997."
Should petitioner be caught again in the act of "paper renewal",
he should no longer expect the sympathy of this Court, or of the
Labor arbiter and the NLRC for that matter, for this is clear
recidivism which is an absolute ground for his termination due to
loss of trust and confidence in him by his employer, private
respondent SMC, considering his position as a salesman.
In view of the foregoing, the NLRC committed grave abuse of
discretion in reversing the decision of Labor Arbiter Nieves V. De
Castro.
WHEREFORE, the instant petition is GRANTED. The decision of
the National Relations Commission Third Division in NLRC NCR
CA No. 014383-98 (NLRC RAB IV 10-7644-95-C) is REVERSED
and SET ASIDE, and the decision of Labor Arbiter Nieves V. De
Castro is hereby REINSTATED.
SO ORDERED.
Petitioner filed a motion for reconsideration but the CA denied the
same in the assailed Resolution8 dated June 11, 2002. Hence,
the present petition raising the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN SETTING ASIDE THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION DESPITE THE
COURT’S FINDING THAT RESPONDENT INDEED FALSIFIED
NUMEROUS COMPANY RECORDS.
II.
THE HONORABLE COURT OF APPEALS’ DECISION IS NOT IN
ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF
THE SUPREME COURT IN SIMILAR CASES.
Petitioner argues that even on the assumption that respondent
did not benefit from the misdeeds, still, the mere act of falsifying
company records and documents is already sufficient to warrant
respondent’s termination from employment. Moreover, such an
act is pure and simple dishonesty and reflects on the moral
character of the employee and his fitness to continue in
employment as a salesman. Citing the cases of Filipro, Inc. v.
NLRC,9Bernardo v. NLRC,10 Mirano et al v. NLRC,11 and;
Gonzales v. NLRC,12 petitioner maintains that the right of
management to terminate the services of employees found to
have falsified company records or documents has been
repeatedly upheld by this Court.
Lastly, petitioner submits that the position of respondent as a
salesman is imbued with trust and confidence, hence, he may be
validly dismissed from employment on the ground of loss of trust
and confidence pursuant to Article 282 of the Labor Code.
Respondent admits having committed paper renewals, but he
vehemently denies having materially benefited therefrom by
misappropriating company funds amounting to ₱20,540.00. 13 He
directs the Court’s attention to the pronouncement of the Labor
Arbiter, concurred in by the CA, that no evidence exists to support
petitioner’s claim of misappropriation.14 Hence, since, he neither
incurred any actual damages nor enjoyed any correlative benefit
that can be considered as a material gain, his dismissal is illegal.
Respondent added that even assuming arguendo that he padded
the customers’ accounts, he could not have misappropriated a
single centavo therefrom simply because said padded accounts
were mere collectibles. Thus, it was impossible for him to
misappropriate the same.
He further submits that it could not have been possible for him to
misappropriate or steal company funds amounting to about
₱20,540.00. He claims that he will not destroy or tarnish his name
for such an insignificant amount. Respondent was receiving a
monthly salary of ₱30,000.00, affording him a comfortable life. If
he wanted to steal from petitioner, he would have done so when
he was entrusted with petitioner’s money amounting to millions as
bodegero or warehouseman during the absence of the latter. He
also points out that in 1994, he was named Outstanding
Salesman and was twice honored as a grand slam awardee in
1988 when he was given an Award of Excellence and in 1994
when he topped the year’s quarterly sales.
We rule for the respondent.
In termination cases, the employer bears the burden of proving
that the dismissal of the employee is for a just or an authorized
cause.15 Failure to dispose of the burden would imply that the
dismissal is not lawful, and that the employee is entitled to
reinstatement, back wages and accruing benefits.16 Moreover,
dismissed employees are not required to prove their innocence of
the employer’s accusations against them. 17
Petitioner cites Article 28218 of the Labor Code, specifically loss of
trust and confidence as the ground for validly dismissing
respondent. Under the law, loss of confidence must be based on
"fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative." In this
regard, the Court has ruled that ordinary breach does not
suffice.19 A breach of trust is willful if it is done intentionally,
knowingly and purposely, without any justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.20
Here, respondent was investigated on and dismissed for
misappropriation of company funds through falsification of
company documents, as shown in the termination letter. 21
Company Rule No. 16 of petitioner’s Disciplinary Actions for
Violations of Company Rules22 specifically provides that
"Misappropriation of Company Funds/Withholding Funds Due to
the Company" is punishable with discharge even for the first
offense.
Records, nevertheless, neither showed nor convinced us that
there was misappropriation of funds that benefited anybody which
warranted the dismissal of respondent for the first offense.
Respondent admittedly committed padding of accounts and/or
paper renewal, which respondent claims to be a practice among
salesmen and such claim was not disputed by petitioner.
Company Rule No. 15 of the same Disciplinary Actions for
Violations of Company Rules23 provides that Falsification of
Company Records or Documents is classified into two (2) types,
thus:
Violations 1st offense 2nd offen
A. If no one benefits or would have benefited 6 days 15 days
from falsification suspension suspensi
B. If offender or somebody benefits from
falsification or would have benefited, if Discharge
falsification is not found on time
The paper renewal committed by respondent may be considered
as falsification, but we agree with the Labor Arbiter and the CA
that such paper renewal did not amount to misappropriation that
could justify outright dismissal for the first offense, as what
petitioner did to respondent. Otherwise, the company rules would
not have separated these two offenses under Rule Nos. 15 and
16. Besides, we agree with the CA that although petitioner did in
fact violate company Rule No. 15 by falsifying company records
and documents through paper renewal, such falsification has to
be qualified, thus:
It is therefore clear that petitioner did in fact violate company Rule
No. 15 by falsifying company records and documents. However,
there is a qualification. Such falsification must benefit the offender
(herein petitioner) or somebody else.
According to the NLRC, the benefit to petitioner was "a boost to
his performance level and continuing employment"’ while
according to the Labor Arbiter, the benefit to the customers was
"it prolonged the time for them to pay their account to SMC."
Such are hardly the benefits obtained that would warrant the
supreme penalty of dismissal for the first offense.
Petitioner utterly failed to establish that respondent or somebody
pecuniarily or materially benefited from the falsification through
paper renewal committed by respondent that could have
warranted his dismissal for the first offense. Neither was there
clear and convincing evidence that petitioner suffered any
material loss by the respondent’s act of paper renewal. Regarding
petitioner’s sweeping charge of misappropriation of company
funds against respondent, we quote with approval the disquisition
of the Labor Arbiter as cited by the CA:
Respondent failed to prove that complainant misappropriated
company funds though. The padding was merely for the purpose
of maintaining the line account of complainant’s clients.
We find the penalty of dismissal too severe a penalty for the
offense committed. Firstly, there is no showing that complainant’s
service record was replete with offenses. It appears that this is
the first time he was charged of violation of company rule.
Secondly, there is no convincing evidence that he materially
benefited from the acts committed. Thirdly, SMC did not suffer
from any damage or losses by reason thereof.
We find no reversible error committed by the CA in reinstating the
decision of the Labor Arbiter which held that respondent should
have been suspended rather than dismissed outright.
To recapitulate, the right of an employer to dismiss an employee
on account of loss of trust and confidence must not be exercised
whimsically. To countenance an arbitrary exercise of that
prerogative is to negate the employee’s constitutional right to
security of tenure. In other words, the employer must clearly and
convincingly prove by substantial evidence the facts and incidents
upon which loss of confidence in the employee may be fairly
made to rest; otherwise, the latter’s dismissal will be rendered
illegal.24
WHEREFORE, the petition is DENIED. The assailed Decision of
the Court of Appeals dated March 15, 2002 and its assailed
Resolution dated June 11, 2002, both in CA-G.R. SP No. 65528,
are AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 166705 July 28, 2009
MANTLE TRADING SERVICES, INCORPORATED AND/OR
BOBBY DEL ROSARIO, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PABLO S.
MADRIAGA, Respondents.
DECISION
PUNO, C.J.:
This petition for review seeks to reverse the Decision1 of the
Court of Appeals in C.A.-G.R. SP No. 84796 which nullified and
set aside the Decision2 and Resolution of the National Labor
Relations Commission (NLRC) in NLRC NCR CA No. 034291-03
which modified an earlier decision by the Labor Arbiter holding
that respondent Pablo S. Madriaga (Madriaga) was illegally
dismissed.
Petitioner company, Mantle Trading Services, Inc., is engaged in
the fishing business.3 Sometime in June 1989, Madriaga was
hired by petitioner company as a "batilyo" or fish hauler.
Subsequently, he became a "tagapuno" (someone who filled up
tubs with fish). He worked from 6:00 p.m. up to 6:00 a.m. the
following day with a daily pay of ₱150.00.
On August 10, 1999, Madriaga was reported by one Henry
Gallos, a fish broker, to have received money from a fish trader,
Mr. Edwin Alfaro. As consideration, Madriaga would put more fish
in Alfaro’s tubs. On August 25, 1999, Madriaga was again
reported to have received money from Alfaro for the same illicit
purpose. In both incidents, formal incident reports were submitted
to the petitioner company.4
On September 11, 1999, Madriaga was allegedly barred by the
payroll master, Mr. Charlie Baqued, from reporting for work.
Petitioner company, on the other hand, alleged that Madriaga
abandoned his work when he was about to be investigated for the
two incident reports.
On February 7, 2001, Madriaga filed a complaint with the
Regional Office of the Department of Labor and Employment
(DOLE)—National Capital Region (NCR) against petitioners, for
illegal dismissal, underpayment of wages and nonpayment of
holiday pay, 13th month pay, overtime pay, service incentive
leave pay and night shift differential pay.
On June 20, 2001, the DOLE-NCR Regional Office endorsed the
complaint to the NCR Arbitration Branch. Petitioner company
alleged, among others, that Madriaga was a seasonal employee
and he was not dismissed. In a decision rendered on August 26,
2002, Labor Arbiter Melquiades Sol D. Del Rosario found
Madriaga to be a regular employee who was illegally dismissed.
The dispositive portion states, viz.:
CONFORMABLY WITH THE FOREGOING, judgment is hereby
rendered finding complainant to have been illegally dismissed.
Respondent Mantle Trading Services, Inc. is hereby ordered to
pay complainant the sums computed in the body of this decision,
which dispositions are made a part hereof.
SO ORDERED.5
The Labor Arbiter ruled that Madriaga was a regular employee
because "the nature of [Madriaga’s] work is filling tubs with fish
everytime the fishing vessel would come to port, and that the
business of respondent is the disposition of fish catch." 6 He found
that since the signing of the employment agreement with
petitioner company on August 1, 1996, Madriaga had been
working as "tagapuno" continuously. 7 He held that Madriaga’s
work was necessary or desirable in the usual business or trade of
the petitioner company.8 The Labor Arbiter concluded that
Madriaga could not have been a project worker as alleged by the
petitioner company because there is no specific project that
appeared on the contract and neither was there a statement as to
the specific period of time when that the project will be completed.
The Labor Arbiter also faulted the petitioner company in failing to
comply with the requirement of notice before dismissing an
employee. He held that the employer must furnish the employee,
sought to be dismissed, with two (2) written notices before
termination can be legally effected: first, there must be a notice
which apprises the employee of the particular acts or omissions
for which the dismissal is sought; and second, a subsequent
notice which informs the employee of the employer’s decision to
dismiss him.9 The Labor Arbiter held that even if the ground of
dismissal is abandonment of work, there must still be a notice to
be served at the employee’s last known address.10
The Labor Arbiter awarded Madriaga with backwages to be paid
not from the date he was dismissed, on September 11, 1999, but
on February 7, 2001 "as a matter of penalty for dilly-dallying in
the filing of the case."11As of June 11, 2002, respondent’s
backwages amounted to ₱82,368.00. In addition, the Labor
Arbiter awarded Madriaga ₱15,444.00 as separation pay,
₱24,240.00 for underpayment of wages, ₱1,980.00 for unpaid
holiday pay, or the total amount of ₱124,032.00. 12
Petitioner company appealed to the NLRC. It charged that the
Labor Arbiter committed grave abuse of discretion in holding that:
(1) Madriaga was a regular and not a contractual employee; (2)
he was illegally dismissed; and (3) his money claims were
granted.1avvphi1
On January 30, 2004, the NLRC modified the decision of the
Labor Arbiter. It affirmed the Labor Arbiter’s ruling that Madriaga
was a regular employee but it held that Madriaga was not illegally
dismissed, viz.:
As regards the second issue, respondent [Mantle] contends that
[Madriaga] was not illegally dismissed because being a
contractual/seasonal/project employee, his employment was
terminated at the end of the undertaking or at the latest, at the
end of the fishing season for 1999, hence, there was no need to
comply with the two-notice requirement under the law. It claims
that when the incidents of August 10 and August 25, 1999 were
about to be investigated, complainant [Madriaga] disappeared
from the fish port and abandoned his work, only to surface again
when this complaint was heard. It avers that complainant
committed serious misconduct since by the account of his co-
workers, he received money from a fish trader to intentionally
injure the interest of the respondent.
We find that complainant was neither dismissed by the
respondent nor did he abandon his work. Based on the records,
no notice of termination was sent to the complainant by the
respondent company, much less was complainant verbally told by
any officer of the respondent not to report for work. Complainant’s
allegation that he was barred by the payroll master from reporting
for work has not been substantiated. In any case, even if it were
true, the act of the payroll master in preventing the complainant
from reporting for work cannot be deemed respondent’s act in the
absence of evidence that said payroll master had the authority to
dismiss employees. What appears to have happened here is that
complainant was not dismissed by the respondent company but
the complainant without ascertaining the authority of the payroll
master, heeded the latter’s order for him not to report for work. 13
The NLRC rejected petitioner company’s contention that
Madriaga abandoned his work. It ruled that mere absence is not
sufficient. There must be proof that there was deliberate and
unjustified refusal on the part of the employee to resume his
employment without any intention of returning.
Thus, the dispositive portion of the NLRC decision held:
Wherefore, the Decision dated August 26, 2002 is MODIFIED.
Complainant is declared not illegally dismissed and directed to
report for work. Respondent is directed to accept complainant
back to work and to pay complainant the amount of twenty four
thousand two hundred forty pesos (P24,240.00) as salary
differentials, five thousand one hundred forty eight pesos
(P5,148.00) as 13th month pay and one thousand nine hunded
eighty pesos (P1,980.00) as holiday pay, or the aggregate sum of
thirty one thousand three hundred twenty eight pesos
(P31,328.00).
SO ORDERED.14
Both petitioner company and respondent filed their respective
motions for reconsideration. Petitioner company contended that
the NLRC erred when it found Madriaga to have been employed
since 1989 and not 1999. It reiterated its argument that Madriaga
was not a regular employee and that he abandoned his work.
Respondent, on the other hand, insisted he was illegally
dismissed. On March 31, 2004, their motions for reconsideration
were denied for lack of merit.
Petitioner company sought recourse with the Court of Appeals
through a Petition for Certiorari. It alleged that the NLRC
committed grave abuse of discretion amounting to lack or excess
of jurisdiction in ruling that: (1) Madriaga was a regular employee;
(2) his employment commenced in 1989 as testified to by the
employee and not 1999 as stated in their employment contract;
and (3) he did not abandon his work.
On August 31, 2004, the Court of Appeals affirmed the finding of
the Labor Arbiter and the NLRC that Madriaga was a regular
employee. It held that Madriaga’s work as tagapuno may be
likened to the work of a cargador which is directly related,
necessary and vital to the operations of the employer’s
business.15 It ruled that the distribution of the day’s catch to the
tubs of different fish traders has a reasonable connection to the
fishing business of petitioner company.
The Court of Appeals also sustained the ruling that Madriaga
began work in 1989 and not in 1999. It affirmed the joint finding of
the Labor Arbiter and the NLRC based on the testimony of the
employee that he began work in 1989 as opposed to the
questionable employee contract dated 1999.
The Court of Appeals, however, reversed the Labor Arbiter and
the NLRC on the issue of abandonment of work. It held that there
was a causal connection between the charge against Madriaga of
having received money from a fish trader and his failure to seek
his immediate reinstatement. It ruled that Madriaga abandoned
his work as it was only invoked two years after his alleged
dismissal. However, despite the finding that Madriaga abandoned
his work, the Court of Appeals held that "[c]onsidering that
petitioner has not established the compliance with due process in
terminating respondent’s employment, it is still considered to
have committed illegal dismissal."16 The dispositive portion of its
Decision held:
Wherefore, the Decision dated January 30, 2004 of the National
Labor Relations Commission is ANNULLED and SET ASIDE.
Accordingly, the Decision dated August 26, 2002 of the Labor
Arbiter finding private respondent to have been illegally dismissed
is REINSTATED.
SO ORDERED.17
Petitioner company filed a Motion for Reconsideration and a
Supplemental Motion for Reconsideration, which were both
denied in a Resolution dated January 13, 2004.18
It now comes before this Court raising the following issues:
I.
Whether or not the Honorable Court of Appeals erred
when it went beyond the scope of a writ of certiorari in
resolving that private respondent was illegally dismissed
although such issue was not raised [in] the petition for
certiorari.
II.
Whether or not the Honorable Court of Appeals erred
when it held that private respondent was illegally
dismissed because petitioner did not comply with the
notice requirement despite its finding of abandonment of
work.
The first ground patently lacks merit. Petitioner company raised
three (3) assignment of errors before the Court of Appeals, i.e.,
whether the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction: (1) in ruling that
Madriaga is a regular employee; (2) in holding that Madriaga’s
employment commenced in 1989; and (3) in concluding that
respondent did not abandon his work. All these issues cannot be
divorced from the question of whether Madriaga was illegally
dismissed by the petitioner company. More specifically, the issue
of abandonment is inextricably linked with the issue of the validity
of the dismissal.19 Indeed, the illegal dismissal of Madriaga was
the subject of his complaint that was resolved by the Labor
Arbiter, the NLRC and the Court of Appeals. It is the heart of the
case at bar.
We now come to the ruling of the Court of Appeals that Madriaga
who abandoned his work was nevertheless illegally dismissed for
non-compliance by the petitioner company with the notice
requirement. It is settled that to effect a valid dismissal, the law
requires that a) there be just and valid cause as provided under
Article 282 of the Labor Code; and b) the employee be afforded
an opportunity to be heard and to defend himself. The two-notice
requirement must be complied with, to wit: a) a written notice
containing a statement of the cause for the termination to afford
the employee ample opportunity to be heard and defend himself
with the assistance of his representative, if he so desires; and b)
if the employer decides to terminate the services of the employee,
the employer must notify him in writing of the decision to dismiss
him, stating clearly the reason therefore.20
The case of Agabon v. NLRC, et al.21 applies to the case at bar.
In Agabon, the dismissal was found by the Court to be based on
a just cause because the employee abandoned his work. But it
also found that the employer did not follow the notice requirement
demanded by due process. It ruled that this violation of due
process on the part of the employer did not nullify the dismissal,
or render it illegal, or ineffectual. Nonetheless, the employer was
ordered to indemnify the employee for the violation of his right to
due process. It further held that the penalty should be in the
nature of indemnification, in the form of nominal damages and
should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the
employer.22 The amount of such damages is addressed to the
sound discretion of the court, considering the relevant
circumstances.23 Thus, in Agabon, the Court ordered the
employer to pay the employee nominal damages in the amount of
₱30,000.00.
Again, we stress that though the Court is given the latitude to
determine the amount of nominal damages to be awarded to an
employee who was validly dismissed but whose due process
rights were violated, a distinction should be made between a valid
dismissal due to just causes under Article 282 of the Labor Code
and those based on authorized causes, under Article 283. The
two causes for a valid dismissal were differentiated in the case of
JAKA Food Processing Corporation v. Pacot 24 where the Court
held that:
A dismissal for just cause under Article 282 implies that the
employee concerned has committed, or is guilty of, some
violation against the employer, i.e. the employee has committed
some serious misconduct, is guilty of some fraud against the
employer, or, as in Agabon, he has neglected his duties. Thus, it
can be said that the employee himself initiated the dismissal
process.
On another breath, a dismissal for an authorized cause under
Article 283 does not necessarily imply delinquency or culpability
on the part of the employee. Instead, the dismissal process is
initiated by the employer's exercise of his management
prerogative, i.e. when the employer opts to install labor saving
devices, when he decides to cease business operations or when,
as in this case, he undertakes to implement a retrenchment
program.
xxxx
Accordingly, it is wise to hold that: (1) if the dismissal is based on
a just cause under Article 282 but the employer failed to comply
with the notice requirement, the sanction to be imposed upon him
should be tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee; and (2) if the
dismissal is based on an authorized cause under Article 283 but
the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was
initiated by the employer's exercise of his management
prerogative.25
Since in the case of JAKA, the employee was terminated for
authorized causes as the employer was suffering from serious
business losses, the Court fixed the indemnity at a higher amount
of ₱50,000.00. In the case at bar, the cause for termination was
abandonment, thus it is due to the employee’s fault. It is equitable
under these circumstances to order the petitioner company to pay
nominal damages in the amount of ₱30,000.00, similar to the
case of Agabon.
We affirm the award of salary differentials, 13th month pay and
holiday pay, awarded by the NLRC and the Court of Appeals. We
note that although petitioner company had cause to terminate
Madriaga, this has no bearing on the issue of award of salary
differentials, holiday pay and 13th month pay because prior to his
valid dismissal, he performed work as a regular employee of
petitioner company, and he is entitled to the benefits provided
under the law. Thus, in the case of Agabon, even while the Court
found that the dismissal was for a just cause, the employee was
still awarded his monetary claims.
An employee should be compensated for the work he has
rendered in accordance with the minimum wage, and must be
appropriately remunerated when he was suffered to work on a
regular holiday during the time he was employed by the petitioner
company. As regards the 13th month pay, an employee who was
terminated at any time before the time for payment of the 13th
month pay is entitled to this monetary benefit in proportion to the
length of time he worked during the year, reckoned from the time
he started working during the calendar year up to the time of his
termination from the service.26
As a general rule, one who pleads payment has the burden of
proving it. Even where the employee must allege nonpayment,
the general rule is that the burden rests on the employer to prove
payment, rather than on the employee to prove nonpayment. The
reason for the rule is that the pertinent personnel files, payrolls,
records, remittances and other similar documents — which will
show that overtime, differentials, service incentive leave and
other claims of workers have been paid — are not in the
possession of the employee but in the custody and absolute
control of the employer. 27 Since in the case at bar petitioner
company has not shown any proof of payment of the correct
amount of salary, holiday pay and 13th month pay, we affirm the
award of Madriaga’s monetary claims.
IN VIEW WHEREOF, the petition is DENIED. The decision of the
Court of Appeals in C.A.-G.R. SP No. 84796, dated August 31,
2004, annulling and setting aside the Decision of the NLRC dated
January 30, 2004 and reinstating the Decision dated August 26,
2002 of the Labor Arbiter finding respondent Pablo S. Madriaga a
regular employee and ordering the petitioner company to pay the
amount of twenty-four thousand, two hundred forty pesos
(₱24,240.00) as salary differentials, five thousand, one hundred
forty-eight pesos (₱5,148.00) as 13th month pay, and one
thousand, nine hundred eighty pesos (₱1,980.00) as holiday pay,
is hereby AFFIRMED. In accordance with the ruling in Agabon,
the award for backwages is deleted, but in addition, the amount of
thirty thousand pesos as nominal damages (₱30,000.00) is
awarded to the respondent. The aggregate sum of the award to
Madriaga shall be the total of sixty-one thousand, three hundred
twenty-eight pesos (₱61,328.00).
No costs.
SO ORDERED.