G.R. No.

169999

July 26, 2010

NEW
PUERTO
COMMERCIAL
AND
vs.
RODEL LOPEZ AND FELIX GAVAN, Respondents.

In due time, the parties submitted their respective position papers.

RICHARD

LIM,

Petitioners,

Labor Arbiters Ruling

On August 29, 2002, Labor Arbiter Cresencio G. Ramos, Jr. rendered a Decision 5 dismissing the
complaint for illegal dismissal but ordering petitioners to pay respondents proportionate 13th month pay:

DECISION
DEL CASTILLO, J.:
In order to validly dismiss an employee, he must be accorded both substantive and procedural due
process by the employer. Procedural due process requires that the employee be given a notice of the
charge against him, an ample opportunity to be heard, and a notice of termination. Even if the aforesaid
procedure is conducted after the filing of the illegal dismissal case, the legality of the dismissal, as to its
procedural aspect, will be upheld provided that the employer is able to show that compliance with these
requirements was not a mere afterthought.

WHEREFORE, in the light of the foregoing premises, the above case for illegal dismissal is hereby
DISMISSED for being devoid of legal merit. Respondents, however, are directed to pay herein
complainants their proportionate 13th month pay for the year 20026 [sic] as follows:
(1.) Rodel Lopez - P2,998.67
(2.) Felix Gavan - P2,998.67
SO ORDERED.7

This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeals (CAs) June 2,
2005 Decision1 in CA-G.R. SP. No. 83577, which affirmed with modification the October 28, 2003
Decision2 of the National Labor Relations Commission (NLRC) in NCR CA No. 034421-03, and the
September 23, 2005 Resolution3 denying petitioners motion for partial reconsideration.
Factual Antecedents
Petitioner New Puerto Commercial hired respondent Felix Gavan (Gavan) as a delivery panel driver on
February 1, 1999 and respondent Rodel Lopez (Lopez) as roving salesman on October 12, 1999.
Petitioner Richard Lim is the operations manager of New Puerto Commercial.
Under a rolling store scheme, petitioners assigned respondents to sell goods stocked in a van on cash or
credit to the sari-sari stores of far-flung barangays and municipalities outside Puerto Princesa City,
Palawan. Respondents were duty-bound to collect the accounts receivables and remit the same upon
their return to petitioners store on a weekly basis.
On November 3, 2000, respondents filed a Complaint 4 for illegal dismissal and non-payment of monetary
benefits against petitioners with the Regional Office of the Department of Labor and Employment in
Puerto Princesa City. On November 20, 2000, a conciliation conference was held but the parties failed to
reach an amicable settlement. As a result, the complaint was endorsed for compulsory arbitration at the
Regional Arbitration Branch of the NLRC on February 13, 2001.
Previously or on November 28, 2000, petitioners sent respondents notices to explain why they should not
be dismissed for gross misconduct based on (1) the alleged misappropriation of their sales collections,
and (2) their absence without leave for more than a month. The notice also required respondents to
appear before petitioners lawyer on December 2, 2000 to give their side with regard to the foregoing
charges. Respondents refused to attend said hearing.
On December 6, 2000, petitioners filed a complaint for three counts of estafa before the prosecutors
office against respondents in connection with the alleged misappropriation of sales collections.
Thereafter, petitioners sent another set of notices to respondents on December 7, 2000 to attend a
hearing on December 15, 2000 but respondents again refused to attend. On December 18, 2000,
petitioners served notices of termination on respondents on the grounds of gross misconduct and
absence without leave for more than one month.
On February 5, 2001, an information for the crime of estafa was filed by the city prosecutor against
respondents with the Municipal Trial Court in Puerto Princesa City.

The Labor Arbiter ruled that there is substantial evidence tending to establish that respondents
committed the misappropriation of their sales collections from the rolling store business. These acts
constituted serious misconduct and formed sufficient bases for loss of confidence which are just causes
for termination. The records also showed that respondents were given opportunities to explain their side.
Both substantive and procedural due processes were complied with, hence, the dismissal is valid.
Petitioners, however, failed to prove that they paid the proportionate amount of 13th month pay due to
respondents at the time of their dismissal. Thus, the Labor Arbiter ordered petitioners to pay respondents
the same.
National Labor Relations Commissions Ruling
On October 28, 2003, the NLRC rendered a Decision affirming the ruling of the Labor Arbiter, viz:
WHEREFORE, the appeal is DENIED. The Decision of the Labor Arbiter dated August 29, 2002 is
AFFIRMED en toto.
SO ORDERED.8
The NLRC agreed with the Labor Arbiter that respondents act of misappropriating company funds
constitutes gross misconduct resulting in loss of confidence. It noted that respondents never denied that
(1) they failed to surrender their collections to petitioners, and (2) they stopped reporting for work during
the last week of October 2000. Further, respondents admitted misappropriating the subject collections
before the hearing officer of the Palawan labor office during the
conciliation conference on November 20, 2000. The NLRC also observed that the investigation on the
misappropriation of company funds was not a mere afterthought and complied with the twin-notice rule.
Last, it ruled that damages cannot be awarded in favor of respondents because their dismissal was for
just causes.
Court of Appeals Ruling
The CA, in its June 2, 2005 Decision, affirmed with modification the ruling of the NLRC, viz:
WHEREFORE, in view of the foregoing, the Decision of the NLRC dated 29 August 2002 9 is hereby
MODIFIED in that private respondents are ordered to pay petitioners nominal damages of P30,000.00
each. The decision is affirmed in all other respect.

SO ORDERED.10
The appellate court held that it was bound by the factual findings of the NLRC because a petition for
certiorari is limited to issues of want or excess of jurisdiction, or grave abuse of discretion. Thus, the
failure of respondents to report for work and their misappropriation of company funds have become
settled. These acts constitute grave misconduct which is a valid cause for termination under Article 282 of
the Labor Code.
While the dismissal was for just cause, the appellate court found, however, that respondents were denied
procedural due process. It held that the formal investigation of respondents for misappropriation of
company funds was a mere afterthought because it was conducted after petitioners had notice of the
complaint filed before the labor office in Palawan. In consonance with the ruling in Agabon v. National
Labor Relations Commission,11 respondents are entitled to an award of
P30,000.00 each as nominal damages for failure of petitioners to comply with the twin requirements of
notice and hearing before dismissing the respondents.

was presented that petitioners served a notice of abandonment at respondents last known addresses as
required by Section 2, Rule XVI, Book V of the Omnibus Rules Implementing the Labor Code. According
to respondents, on November 3, 2000, petitioners verbally advised them to look for another job because
the company was allegedly suffering from heavy losses. For this reason, they sought help from the
Palawan labor office which recommended that they file a labor complaint.
Respondents also contest the finding that they misappropriated company funds. They claim that the
evidence is insufficient to prove that they did not remit their sales collections to petitioners. Neither were
the minutes of the proceedings before the labor officer presented to prove that they admitted
misappropriating the company funds. Respondents add that they did not hold a position of trust and
confidence. They claim that the criminal cases for estafa against respondents were belatedly filed in
order to further justify their dismissal from employment and act as leverage relative to the subject labor
case they filed against petitioners.
Our Ruling
The petition is meritorious.

From this decision, only petitioners appealed.

When the requirements of procedural due process are satisfied, the award of nominal damages is
improper.

Issues
Petitioners raise the following issues for our resolution:
1. Whether x x x the Court of Appeals erred in construing that the investigation held by
petitioners is an afterthought; and
2. Whether x x x the Court of Appeals erred in awarding the sum of P30,000.00 each to the
respondents as nominal damages.12
Petitioners Arguments
Petitioners contend that the investigation of respondents was not an afterthought. They stress the
following peculiar circumstances of this case: First, when the labor complaint was filed on November 3,
2000, respondents had not yet been dismissed by petitioners. Rather, it was respondents who were guilty
of not reporting for work; Lopez starting on October 23, 2000 and Gavan on October 28, 2000. Second,
at this time also, petitioners were still in the process of collecting evidence on the alleged
misappropriation of company funds after they received reports of respondents fraudulent acts.
Considering the distance between the towns serviced by respondents and Puerto Princesa City, it took a
couple of weeks for petitioners representative, Armel Bagasala (Bagasala), to unearth the anomalies
committed by respondents. Thus, it was only on November 18, 2000 when Bagasala finished the
investigation and submitted to petitioners the evidence establishing that respondents indeed
misappropriated company funds. Naturally, this was the only time when they could begin the formal
investigation of respondents wherein they followed the twin-notice rule and which led to the termination of
respondents on December 18, 2000 for gross misconduct and absence without leave for more than a
month.
Petitioners lament that the filing of the labor complaint on November 3, 2000 was purposely sought by
respondents to pre-empt the results of the then ongoing investigation after respondents got wind that
petitioners were conducting said investigation because respondents were reassigned to a different sales
area during the period of investigation.
Respondents Arguments
Respondents counter that their abandonment of employment was a concocted story. No evidence was
presented, like the daily time record, to establish this claim. Further, the filing of the illegal dismissal
complaint negates abandonment. Assuming arguendo that respondents abandoned their work, no proof

At the outset, we note that respondents did not appeal from the decision of the CA which found that, as to
the issue of substantive due process, the dismissal was valid because it was based on just causes (i.e.,
grave misconduct and loss of trust and confidence) due to respondents misappropriation of their sales
collections. Thus, the only proper issue for our determination, as raised in the instant petition, is whether
respondents were denied procedural due process justifying the award of nominal damages in
accordance with the ruling in Agabon v. National Labor Relations Commission.13
In termination proceedings of employees, procedural due process consists of the twin requirements of
notice and hearing. The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second informs the employee of the employers
decision to dismiss him. The requirement of a hearing is complied with as long as there was an
opportunity to be heard, and not necessarily that an actual hearing was conducted. 14 As we explained in
Perez v. Philippine Telegraph and Telephone Company:151avvphi1
An employees right to be heard in termination cases under Article 277 (b) as implemented by Section 2
(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad
strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to
controvert the charges against him and to submit evidence in support thereof.
A hearing means that a party should be given a chance to adduce his evidence to support his side of the
case and that the evidence should be taken into account in the adjudication of the controversy. "To be
heard" does not mean verbal argumentation alone inasmuch as one may be heard just as effectively
through written explanations, submissions or pleadings. Therefore, while the phrase "ample opportunity
to be heard" [in Article 277 of the Labor Code] may in fact include an actual hearing, it is not limited to a
formal hearing only. In other words, the existence of an actual, formal "trial-type" hearing, although
preferred, is not absolutely necessary to satisfy the employee's right to be heard.16
In the instant case, the appellate court ruled that there are two conflicting versions of the events and that,
in a petition for certiorari under Rule 65 of the Rules of Court, the courts are precluded from resolving
factual issues. Consequently, the factual findings of the Labor Arbiter, as affirmed by the NLRC, that
petitioners stopped reporting from work and misappropriated their sales collection are binding on the
courts. However, the CA found that respondents were denied their right to procedural due process
because the investigation held by petitioners was an afterthought considering that it was called after they
had notice of the complaint filed before the labor office in Palawan.17

Indeed, appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect
but also finality when supported by substantial evidence.18 The Court does not substitute its own
judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is
credible. It is not for the Court to re-examine conflicting evidence, re-evaluate the credibility of the
witnesses nor substitute the findings of fact of an administrative tribunal which has gained expertise in its
specialized field.19
However, while we agree with the CA that the labor tribunals factual determinations can no longer be
disturbed for failure of respondents to show grave abuse of discretion on the part of the Labor Arbiter and
NLRC, as in fact respondents effectively accepted these findings by their failure to appeal from the
decision of the CA, we find that the appellate court misapprehended the import of these factual findings.
For if it was duly established, as affirmed by the appellate court itself, that respondents failed to report for
work starting from October 22, 2000 for respondent Lopez and October 28, 2000 for respondent Gavan, 20
then at the time of the filing of the complaint with the labor office on November 3, 2000, respondents
were not yet dismissed from employment. Prior to this point in time, there was, thus, no necessity to
comply with the twin requirements of notice and hearing.
The mere fact that the notices were sent to respondents after the filing of the labor complaint does not,
by itself, establish that the same was a mere afterthought. The surrounding circumstances of this case
adequately explain why the requirements of procedural due process were satisfied only after the filing of
the labor complaint. Sometime in the third week of October 2000, petitioners received information that
respondents were not remitting their sales collections to the company. Thereafter, petitioners initiated an
investigation by sending one of their trusted salesmen, Bagasala, in the route being serviced by
respondents. To prevent a possible cover up, respondents were temporarily reassigned to a new route to
service. Subsequently, respondents stopped reporting for work (i.e., starting from October 22, 2000 for
respondent Lopez and October 28, 2000 for respondent Gavan) after they got wind of the fact that they
were being investigated for misappropriation of their sales collection, and, on November 3, 2000,
respondents filed the subject illegal dismissal case to pre-empt the outcome of the ongoing investigation.
On November 18, 2000, Bagasala returned from his month-long investigation in the far-flung areas
previously serviced by respondents and reported that respondents indeed failed to remit P2,257.03 in
sales collections. As a result, on November 28, 2000, termination proceedings were commenced against
respondents by sending notices to explain with a notice of hearing scheduled on December 2, 2000. As
narrated earlier, respondents failed to give their side despite receipt of said notices. Petitioners sent
another set of notices to respondents on December 7, 2000 to attend a hearing on December 15, 2000
but respondents again refused to attend. Thus, on December 18, 2000, petitioners served notices of
termination on respondents for gross misconduct in misappropriating their sales collections and absence
without leave for more than a month.
As can be seen, under the peculiar circumstances of this case, it cannot be concluded that the sending of
the notices and setting of hearings were a mere afterthought because petitioners were still awaiting the
report from Bagasala when respondents pre-empted the results of the ongoing investigation by filing the
subject labor complaint. For this reason, there was sufficient compliance with the twin requirements of
notice and hearing even if the notices were sent and the hearing conducted after the filing of the labor
complaint. Thus, the award of nominal damages by the appellate court is improper.
WHEREFORE, the petition is GRANTED. The June 2, 2005 Decision and September 23, 2005
Resolution in CA-G.R. SP. No. 83577 are REVERSED and SET ASIDE. The October 28, 2003 Decision
of the National Labor Relations Commission in NCR CA No. 034421-03 is REINSTATED and
AFFIRMED.

In a letter dated 15 April 2002,7 Unilab denied respondents claims, pointing out that:
G.R. No. 186209

September 21, 2011

UNITED
LABORATORIES,
INC.,
Petitioner,
vs.
JAIME DOMINGO substituted by his spouse CARMENCITA PUNZALAN DOMINGO, ANONUEVO
REMIGIO, RODOLFO MARCELO, RAUL NORICO AND EUGENIO OZARAGA, Respondents.
DECISION

1. The PDMP is not a retirement program but a cost restructuring measure which resulted in
the redundancy of the job functions of the employees working in the provincial depots;
2. Unilab has no Bagong Sibol Program, and "independent of the PDMP, there is no
redundancy program or other severance scheme open [for] application by any employee;"
3. The only existing and official early retirement program of Unilab is provided for in Article IV,
Section 2, in relation to Article V, Section 2, of the United Retirement Plan (URP);

PEREZ, J.:
We are confronted with a curious case of employees demanding the severance of their employment,
insisting on the redundancy of their work and thereafter, when the demands went unheeded, crying
constructive dismissal by the employer.
Assailed in this petition for review on certiorari1 is the Decision2 of the Court of Appeals (CA) in CA-G.R.
SP No. 87502 which granted the petition for certiorari 3 filed by respondents Jaime Domingo, Anonuevo
Remigio, Rodolfo Marcelo, Raul Norico and Eugenio Ozaraga and reversed the National Labor Relations
Commissions (NLRCs) finding that there was no constructive dismissal in three (3) consolidated cases
respectively docketed as NLRC NCR CASE NO. 00-08-06034-2002, NLRC NCR CASE NO. 00-1008397-2002, and NLRC CASE NO. 00-10-08407-2002. The NLRC decision was an affirmance of the
Labor Arbiters dismissal of respondents complaints for constructive dismissal against petitioner United
Laboratories, Inc. (Unilab).4
The dispute, which resulted in the unusual resort by the employees to the principle of constructive
dismissal, arose from the following facts:
Unilab is a prominent domestic corporation engaged in the manufacture, sale, marketing and distribution
of pharmaceutical products.
Respondents Jaime Domingo, Anonuevo Remigio, Rodolfo Marcelo, Raul Norico and Eugenio Ozaraga
were former employees of Unilab assigned to the Distribution Accounting Department (DAD) servicing all
the accounting requirements of Unilabs sixteen (16) provincial depotsfourteen (14) distribution centers
and two (2) area officesspread nationwide.

4. "At the time of the PDMP implementation, [respondents] were not assigned to the provincial
depot centers performing provincial, [decentralized], distribution functions;" and
5. "At present, [respondents] positions are not redundant, i.e., superfluous, or in excess of
what is reasonably demanded by the actual requirements of the business."
Quite relevantly, in the first half of 2002, Unilab implemented a Shared Services Policy (SSP) which
consolidated and centralized all accounting functions of the UNILAB Group of Companies, its affiliates
and subsidiaries, under the Finance Division of Unilab. Essentially, accounting services and requirements
of the UNILAB Group of Companies, were merged into a single pool, and performed in Unilabs main
office. After the closure of the provincial depots, respondents were transferred and re-assigned to the
accounting work pool pursuant to the SSP.
Respondents, along with four (4) other co-employees, Rosemarie F. Cortez, Exequiel B. Sioson, Wilfredo
M. Tumalad, and William C. Obedencia, filed three complaints for constructive dismissal,
nonpayment/underpayment of separation pay, damages and attorneys fees against Unilab, which were
eventually consolidated. As it turned out, the denial of their request for retirement covered by a higher
retirement package rankled on respondents.
Interestingly, while their cases were pending before the NLRC, and thereafter while on petition for
certiorari before the CA, Cortez and respondents Domingo and Remigio remained working at UNILAB. In
fact, the three remained employed at UNILAB until their actual separation therefrom: they received
monies as full retirement benefits and as settlement of all their claims against Unilab.
On 14 July 2003, the Executive Labor Arbiter dismissed respondents complaints for lack of merit:

Sometime in 2001, under a Physical Distribution Master Plan (PDMP), Unilab consolidated its finished
goods inventories and logistics activities (warehousing, order processing and shipping) into one
distribution center located in Metro Manila. As a result, Unilab closed down its sixteen (16) provincial
depots. The job functions of the employees working thereat were declared redundant and their positions
were abolished. Unilab gave the redundant employees a separation package of two and a half (2)
months pay for every year of service.
In the succeeding year, on 7 January 2002, respondents wrote Unilab requesting for their separation or
retirement from service under a separation package similar or equivalent to that of the redundant
employees in the provincial depots. Respondents referred to this separation package as the Bagong
Sibol Program.5
On 9 April 2002, respondents counsel, on their behalf, wrote Unilab reiterating respondents previous
request to be separated from service under Unilabs purported Bagong Sibol Program. Particularly,
respondents were keen on retiring and receiving 2 months pay for every year of service, and all the
other benefits which Unilab had extended to the redundant employees in the provincial depots. The
message and sentiment were that "they should likewise be retired under the same redundancy plan or
retirement scheme [because] their positions are similarly situated [to] the retired employees of [Unilabs]
distribution centers under the principle that things that are alike should be treated alike since they also
hold the position of distribution personnel."6

WHEREFORE, judgment is hereby rendered dismissing the instant complaints for utter lack of merit.
[UNILAB], however, is directed to pay the Remaining Complainants, namely: Rosemarie F. Cortez, Jaime
A. Domingo, Anonuevo S. Remigio and William Obedencia their separation pay equivalent to one and
one-half (1&1/2) months salary for every year of service. 8
Dissatisfied, respondents, along with Cortez, appealed to the NLRC. However, on March 30, 2004, the
NLRC denied the appeal and affirmed the Labor Arbiters dismissal of the complaints.
Posthaste, respondents filed a petition for certiorari before the CA alleging grave abuse of discretion in
the decision of the NLRC. Meanwhile, after respondents petition was submitted for resolution, Unilab,
with respondents Remigio and Cortez, separately, arrived at an amicable settlement. Remigio, in
particular, received the amount of Four Million Seventy Seven Thousand Eight Hundred Ninety Seven
Pesos and Eighty Seven Centavos (P4,077,897.87) from Unilab as full settlement and payment of all his
claims; he signed a Quitclaim9 in favor of Unilab.
Not surprisingly, Unilab received a Motion for Leave of Court to Withdraw as Petitioner separately filed by
Cortez and Remigio. The motions were similarly worded and filed by the same counsel on Cortezs and
Remigios behalf.

The reversal by the CA of the NLRC resulted in the ruling that respondents were constructively
dismissed. The CA disposed of the case, thus:
WHEREFORE, the PETITION FOR CERTIORARI is GRANTED.
The assailed RESOLUTIONS DATED MARCH 30, 2004 AND AUGUST 31, 2004 of [the] NATIONAL
LABOR RELATIONS COMMISSION are NULLIFIED AND SET ASIDE.

I.
THE COURT OF APPEALS DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS
WHEN IT INCLUDED REMIGIO IN THE DECISION EVEN IF HIS MOTION TO WITHDRAW AS A
PARTY (WITH ABANDONMENT OF CLAIMS AGAINST PETITIONER) AND HIS QUITCLAIM HAVE
BEEN PRESENTED BEFORE IT.
II.

[Petitioner] UNITED LABORATORIES, INC. is ORDERED:

1. To cause the immediate reinstatement of [respondents] JAIME A. DOMINGO, EUGENIO P.
OZARAGA, RODOLFO R. MARCELO, RAUL C. NORICO, and ANONUEVO S. REMIGIO to
their former positions or to substantially equivalent positions without loss of seniority rights and
other benefits;

THE COURT OF APPEALS REVERSAL OF THE DECISION OF BOTH THE NLRC AND THE LABOR
ARBITER ON THE MATTER OF RESPONDENTS ALLEGED CONSTRUCTIVE DISMISSAL WAS
ARBITRARY AND RUNS COUNTER TO WELL-SETTLED JURISPRUDENCE.
III.

2. If reinstatement is no longer possible, to pay JAIME A. DOMINGO, EUGENIO P. OZARAGA,

RODOLFO R. MARCELO, RAUL C. NORICO and ANONUEVO S. REMIGIO their separation
pay, the amount of which shall be computed on the basis of the United Laboratories, Inc.
Computation of Separation Benefit;

THE COURT OF APPEALS REVERSAL OF THE DECISION OF BOTH THE NLRC AND THE LABOR
ARBITER ON THE MATTER OF WHETHER RESPONDENTS NORICO, MARCELO AND OZARAGA
WERE FORCED TO RESIGN WAS HIGHLY SPECULATIVE AND RUNS COUNTER TO WELLSETTLED JURISPRUDENCE.

3. To pay full backwages to JAIME A. DOMINGO, EUGENIO P. OZARAGA, RODOLFO R.

MARCELO, RAUL C. NORICO and ANONUEVO S. REMIGIO, computed from the time of the
abolition of [Unilabs] Distribution Accounting Department up to the finality of this Decision
without qualification or deduction;

IV.

4. To pay 10% of the total award as attorneys fees.

Costs of suit to be paid the [petitioner] (sic).10
Oddly, despite a motion to withdraw as petitioner signed by Remigios counsel, the CA did not drop him
as petitioner.
Unilab filed separate motions: a Motion for Reconsideration dated July 2, 2008 and a Motion for Inhibition
dated July 7, 2008, both pointing out that Remigio should have been dropped as petitioner in CA-G.R.
SP No. 87502 given his motion to withdraw as petitioner. Naturally, Unilab likewise alleged that the CA
decision is contrary to law and not supported by the evidence.
In a Resolution dated 28 January 2009, the CA promptly dismissed Unilabs motions:
EXCEPT FOR THE FIRST GROUND, [PETITIONER] APPARENTLY REITERATE[S] MATTERS
ALREADY ADDRESSED AND PASSED UPON IN THE DECISION DATED JUNDE 16, 2008. AS SUCH,
WE REJECT THEM AND REITERATE THE DECISION.
ANENT THE FIRST GROUND, WE HAVE NO RECORD OF THE SO-CALLED MOTION FOR LEAVE
TO WITHDRAW AS PETITIONER SUPPOSEDLY FILED BY ANONUEVO S. REMIGIO. THE FIRST
TIME WE ARE INFORMED OF THE MOTION IS VIA THE MOTION FOR RECONSIDERATION. FOR
ALL INTENTS AND PURPOSES, THEREFORE, THE FIRST GROUND OF THE MOTION FOR
RECONSIDERATION IS UNWARRANTED AND SHOULD BE DENIED FOR THAT REASON.

THE COURT OF APPEALS DIRECTIVE FOR [UNILAB] TO PAY RESPONDENTS SEPARATION PAY IN
THE SAME WAY IT PAID ITS REDUNDATED EMPLOYEES HAS UTTERLY NO LEGAL BASIS.
V.
THE COURT OF APPEALS RULING THAT RESPONDENTS ARE ENTITLED TO BOTH SEPARATION
PAY AND RETIREMENT PAY NOTWITHSTANDING THE PROVISIONS OF [UNILIABS] RETIREMENT
PLAN TO THE CONTRARY IS A DIRECT VIOLATION OF WELL-SETTLED JURISPRUDENCE ON THE
MATTER. IRONICALLY, [UNILABS] RETIREMENT PLAN IS THE VERY SAME PLAN WHICH THIS
HONORABLE COURT EARLIER SUSTAINED AS VALID.12
Respondents filed two Comments dated 20 May 2009 13 and June 8, 2009,14 respectively, signed by two
different counsels. In the expanded Comment dated 8 June 2009, one of respondents counsel, Romulo
Macalintal, manifested that Remigio has executed an Affidavit declaring under oath that he did execute a
quitclaim in favor of Unilab and no longer intends to pursue his case against it. Albeit belatedly, Atty.
Macalintal clarified that the Comment he has filed is only for respondents Domingo, Marcelo, Norico and
Ozaraga.
On 13 August 2009, a different counsel for respondents filed a Manifestation with Motion to Substitute a
Party15 informing the Court of the death of respondent Domingo and the substitution of Domingos wife,
Carmencita Punzalan Domingo, as respondent in this case.
Preliminarily, regarding the CAs refusal to drop Remigio as petitioner and its categorical declaration of
the inexistence of a Motion for Leave to Withdraw as Petitioner filed by Remigios counsel, we have
checked the records and found that one of respondents counsels, Atty. Alexander Versoza, on behalf of
Remigio, indeed filed a Motion for Leave to Withdraw as Petitioner with the CA. 16 In fact, attached to the
motion in question is a Quitclaim executed by Remigio in favor of Unilab, which Remigio does not
disavow. Thus, the CA was mistaken in not dropping Remigio as petitioner contrary to his motion.

II
THE MOTION FOR INHIBITION, BEING APPARENTLY WITHOUT FACTUAL AND LEGAL BASES AS
NOW INDICATED, IS DENIED FOR LACK OF MERIT.11
Hence, this petition for review on certiorari positing the following issues:

The disingenuousness of Remigios counsel is not lost on this Court. We note that this peripheral issue
could have been easily settled if respondents counsel, Atty. Versoza, forthwith acknowledged the
existence of this Motion for Leave to Withdraw as Petitioner he had filed before the CA and had served
on Unilab. We likewise note that Atty. Macalintal who has been co-counsel from the time of the filing of

the complaints before the NLRC, only belatedly and reluctantly admitted that Remigio has signed a
Quitclaim in favor of Unilab. By that time, the issue had reached us, unnecessarily.
Respondents counsels ought to be reacquainted with Canon 10 of the Code of Professional
Responsibility: A lawyer owes candor, fairness and good faith to the Court. Specifically, Rule 10.01:
A lawyer shall not do any falsehood, nor consent to the doing of any in Court; nor shall he
mislead, or allow the Court to be misled by any artifice.
We will here review the factual conclusions of the CA which are contrary to those of the administrative
tribunal. The conflict in findings is a first signal that a further review may be needed. This is so because,
as we have long held in a number of cases, factual findings of administrative or quasi-judicial bodies,
which are deemed to have acquired expertise in matters within their respective jurisdictions, are
generally accorded not only respect but even finality, and bind the Court when supported by substantial
evidence.17 Such that, while our well-entrenched holding is that this Court is not a trier of facts, 18 we can
go to the rule exceptions culled from jurisprudence on rule application, among such exception being that
the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion.19
We so reach a conclusion in this case different from that of the appellate court.
Two facts relevant to the issues at hand were not given enough deserved importance by the CA:
1. The Physical Distribution Master Plan (PDMP) of Unilab whereby it consolidated the
warehousing and distribution of the finished goods of the sixteen (16) provincial centers into
one distribution center in Metro Manila; and
2. The Shared Services Policy (SSP) which centralized all accounting services of Unilab into
one pool at its main office.
These plan and policy had company wide application and effect. As earlier pointed out, the PDMP
resulted in the closure of sixteen (16) provincial depots while the SSP consolidated under the Financial
Division of Unilab all the accounting services in the UNILAB group of companies, affiliates and
subsidiaries. Quite plainly, while the plan and policy resulted in the personnel movement that included
respondents, they were not conceptualized and implemented by Unilab for the sole purpose of easing the
respondents out of the companys employ, or as the CA underscored, to decrease the "merit rating" of
respondents. The CA did not dispute the uniform findings of the Labor Arbiter and the NLRC that the
PDMP was a "cost restructuring strategy program" and that the SSP was a "recognized management
prerogative." Indeed, the legitimacy of Unilabs plan and policy was not questioned by the respondents. It
was the implementation of the management projects that respondents complained about. They wanted to
avail of the separation package for employees declared redundant because of the PDMP. They refused
their transfer to the centralized Financial Division as planned under the SSP. When they were not
included among those considered as redundant employees, they wanted their transfer to the Financial
Division declared as "constructive dismissal," and Unilab pronounced liable for damages and attorneys
fees, aside from non-payment of separation pay.
The primary facts of respondents employment are enough to support the submission of Unilab that the
CA was wrong in reversing the NLRCs conclusion that there was no "constructive dismissal."
Respondents were accountants or were performing accounting functions all assigned to the Distribution
Accounting Department (DAD) servicing the accounting requirements of distribution centers such as
Unilabs sixteen (16) provincial depots. The closing of the provincial depots did not result in the abolition
of respondents position as accountants. While they had assignments pertaining to the provincial depots,
they did not perform goods distribution or warehousing functions. They were accountants and their work
as such was appropriately covered by the SSP that transferred all accounting functions to the Finance
Division of Unilab.
The concept of constructive dismissal is inapplicable to respondents. Constructive dismissal is a
derivative of dismissal without cause; an involuntary resignation, nay, a dismissal in disguise. 20 It occurs
when there is cessation of work because continued employment is rendered impossible, unreasonable,

or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no
other option but to quit.21
In turn, dismissal without cause is prohibited because of the Constitutional security of tenure of workers.
Thus, it is stated in Article XIII, Section 3 of the Constitution that:
xxx [Workers] shall be entitled to security of tenure, humane conditions of work, and a living wage. xxx
The Labor Code describes as basic policy the workers security of tenure. Thus:
ART. 3. Declaration of basic policy The State shall afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between
worker and employers. The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and humane conditions of work.
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.
It should be remembered, however, that the entitlement of workers to security of tenure is correlative to
the right of enterprises to reasonable returns on investments. 22 The rights are measured each in relation
to the other.
In one section under the same title of Article XIII, the Constitution mandates that "all workers shall be
entitled to security of tenure" and commands at the same time in the same way, that the State shall
recognize the right of enterprises to reasonable returns on investments, and to expansion and growth.
Such that, in this jurisdiction, we recognize that management has a wide latitude to regulate, according to
his own discretion and judgment, all aspects of employment, including the freedom to transfer and
reassign employees according to the requirements of its business. The right of employees to security of
tenure does not give them vested rights to their positions to the extent of depriving management of its
prerogative to change their assignments or to transfer them. 23 Managerial prerogatives, on the other
hand, are subject to limitations provided by law, collective bargaining agreements, and general principles
of fair play and justice.24
Simply put, security of tenure from which springs the concept of constructive dismissal is not an absolute
right. It cannot be pleaded to avoid the transfer or assignment of employees according to the
requirements of the employers business. Such transfer or assignment becomes objectionable only when
it is not for "reasonable returns on investments," and for "expansion and growth" which are
constitutionally recognized employers rights, but is sought merely as a convenient cover for oppression.
No such thing transpired in the instant case. We cite with favor the uniform ruling of the NLRC and the
labor arbiter:
It is not disputed that Unilab instituted a cost restructuring strategy program called the Physical
Distribution Master Plan (PDMP) which resulted in the closure of [Unilabs] provincial depots nationwide
sometime in March 2002. As a necessary consequence of the closure of [Unilabs] provincial depots, the
positions affected were became redundant and were declared to be so. Thus, the personnel affected by
the redundancy were separated from the service and paid a generous separation pay, i.e., 2.5 months
pay for every year of service.
It is likewise not disputed that complainants Cortez, [respondents] Domingo, Marcelo, Norico, Ozaraga,
and Remigio were all accountants and/or performing accounting functions who, with the sole exception of
complainant Cortez and prior to the implementation of the PDMP, were all assigned to the Distribution

Division. Also not disputed is the fact that [Unilab] came up with its Shared Services Policy where
accounting services within the Unilab group of companies were pooled and consolidated under [Unilabs]
Finance Division.
According to [respondents] Domingo, Remigio, Norico, Marcelo and Ozaraga, they were in effect
constructively dismissed after the closure of [Unilabs] provincial depots. They claim that the job or work
subsequently assigned to them were either menial or servile or they were never given new assignments
at all. This Office is not convinced.
Records will reveal that [respondents] Domingo, Remigio, Norico, Marcelo and Ozaraga as accountants
or employees performing accounting functions were affected by the Shared Services Policy of the
Company. Thus, after the provincial depots were closed down, they were reassigned to [Unilabs]
Finance Division to service the accounting requirement of the Unilab group of companies. Thereafter,
[respondents] Norico, Marcelo and Ozaraga voluntarily resigned while respondentns Domingo and
Remigio remained with [Unilab].
This Office notes that [respondents] were transferred to the Finance Division on account of the Shared
Services Policy of [Unilab]. In San Miguel v. NLRC, it was held that the abolition of departments or
positions in the company is one of the recognized management prerogatives. Likewise, in Castillo v.
NLRC, the Supreme Court reiterated the long standing rule that it is the prerogative of the employer to
transfer and reassign employees for valid reasons and according to the requirements of its business.
There is therefore nothing irregular or illegal in the transfer of [respondents] to the Finance Division after
[Unilab] came up with its Shared Services Policy.25
That the respondents were indeed not constructively dismissed is supported by substantial evidence.
First. The CAs ruling easily unravels because three (3) of the complainants before the NLRC, including
herein respondents Domingo and Remigio, even while their petition for certiorari was pending before the
CA, remained employed at UNILAB. In those instances, there was actually no dismissal to speak of.
Most recently, The University of the Immaculate Concepcion v. National Labor Relations Commission 26
iterated that a crucial element in a finding of constructive dismissal is a cessation of employment
relations between the parties.
A claim of involuntary resignation or being left with no choice but to quit presupposes an employee
actually quitting or resigning. But not all respondents quit: Domingo stayed on with Unilab until his
retirement while Remigio, and even complainant Cortez, although they eventually settled with Unilab,
never resigned.
Plainly, respondents Domingo and Remigio, even Cortez, cannot claim that their employment
circumstances with Unilab were so unbearable and left them with no other option but to quit.
Second. As regards respondents Marcelo, Norico and Ozaraga, the ruling of the labor tribunals that the
three voluntarily resigned and were not constructively dismissed is again, and also, supported by
substantial evidence.
To substantiate its finding that Noricos, Marcelos and Ozaragas resignations were involuntary, the CA
pointed out that Marcelo and Ozaraga had children who were still studying, and, obviously had "great
need for continued employment." Moreover, the CA finds incredulous respondents reasons for resigning:
Marcelo to venture into business and Ozaraga to pay off his mounting debt. For the CA, their resignations
forego a steady income from continued employment and, therefore, inconsistent with a voluntary
resignation.
The reasoning of the CA is specious and pure conjecture.
It is not unheard of that employees who have opted for early retirement have used the windfall therefrom
to start their own business and to pay off their debts. The trade off with having a "steady income" and

"continued employment" is to be their own boss or to turn over a new leaf, free from debt. We can
likewise surmise, as the CA has so easily done, that Ozaraga would have been buried deeper in debt if
he expected to pay it off with only his "steady income." In any event, the CAs vaguely drawn theory as to
the impetus for respondents resignations can be easily debunked by similarly plausible reasons. It is
indeed apropos, to once more refer to the correlation between the workers right to security of tenure and
the right of enterprise to reasonable returns on investment. The right of enterprise in the case at bar was
exercised by Unilab through the PDMP which resulted in the abolition of the provincial depots but did not
erase the respondents accounting functions that, in the same manner that the logistic activities at the
provinces were centralized in Metro Manila, were consolidated under the Finance Division of Unilab
under its SSP. Absent a showing that the PDMP and the SSP were illegal or meant to defeat
respondents security of tenure, we cannot uphold their proposition that they must, like those in the
provincial distribution centers, also be considered redundant employees. Respondents, who are
accounting employees, cannot refuse their assignment to the Finance Division. As we have delared on
more than one occasion:
Certainly, the Court cannot accept the proposition that when an employee opposes his employers
decision to transfer him to another work place, there being no bad faith or underhanded motives on the
part of either party, it is the employees wishes that should be made to prevail. On the basis of the
qualifications, training and performance of the employee, the prerogative to determine the place or
station where he or she is best qualified to serve the interests of the company belongs to the employer.27
As a final point, the allegations of respondents and the factual findings of both the labor tribunals and the
appellate court bring to the fore respondents obvious position that they have the option to claim
redundancy as reason for severing their employment from Unilab.
From the start, respondents insisted that Unilab has unjustifiably refused to grant them the same
separation package granted to the redundant employees in the provincial depots. Respondents
demanded that this higher separation package be applied for their retirement as they are "similarly
situated" with the redundant employees. Respondents wished for the cessation of their employment,
specifying, however, their availment of retirement benefits equivalent to the separation package of the
redundant employees. Effectively, respondents were exercising their right to terminate their employment,
invoking a hodgepodge of provisions from the Unilab Retirement Plan, Unilabs purported Bagong Sibol
Program, and the Labor Code.
Respondents are laboring under a cloud of confusion. Retirement and redundancy, while both resulting in
the cessation of employment relations, are two entirely different things. Significantly, the Labor Code
divides Book 6 on Post Employment into two titles: Title 1 on Termination of Employment and Title II on
Retirement from the Service. Specifically, Article 283 of the Labor Code lists redundancy as an
authorized cause for the employer to terminate an employee, while Article 287 thereof provides for the
retirement from the service of an employee, thus:
ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of the operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Department of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one month pay or to at
least one month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month
pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
ART. 287. Retirement. Any employee retirement may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employees shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining, and other agreement: Provided, however, the

employees retirement benefits under any collective bargaining and other agreement shall not be less
than those provided herein.
In the absence of retirement plan or agreement providing for retirement benefits of employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in the said establishment,
may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for
every year of service , a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth of the 13th month pay and the cash equivalent of not more than five (5) days
of service incentive leaves.1wphi1
xxx
xxx
Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article
288 of this Code.
Petitioner has an elaborate Retirement Plan that lists all possible benefits for retiring and resigning
employees, and, significantly to this case, a separate article on involuntary separation due to
redundancy.28
The requirements for, and the benefits from, the several and different manners of termination of
employment are, naturally, also distinct and different. The employees cannot mix and match rights and
obligations which are set and settled by law or agreement of the parties. This is particularly evident in this
case where respondents demanded either the redundancy of their services in the face of the employees
continuing need for such services, or the benefits from redundancy upon their retirement or resignation.
The demand cannot be honored.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 87502
is SET ASIDE. The Resolution of the National Labor Relations Commission in NLRC NCR CASE NO. 0008-06034-2002, NLRC NCR CASE NO. 00-10-08397-2002, and NLRC CASE NO. 00-10-08407-2002 is
REINSTATED. No costs.

G.R. No. 186614

"By vigorously pursuing the litigation of his action against petitioner, private respondent clearly
manifested that he has no intention of relinquishing his employment which is, wholly incompatible [with]
petitioner[]s assertion, that he voluntarily resigned."

February 23, 2011

NATIONWIDE
SECURITY
AND
vs.
RONALD P. VALDERAMA, Respondent.

ALLIED

SERVICES,

INC.,

Petitioner,

In Great Southern Maritime Services Corp. vs. Acua, G.R. No. 140189, Feb. 28, 2005, it was ruled that
the execution of the alleged "resignation letters cum release and quitclaim" to support the employers
claim that respondents voluntarily resigned is unavailing as the filing of the complaint for illegal dismissal
is inconsistent with resignation.

RESOLUTION
NACHURA, J.:
Petitioner Nationwide Security and Allied Services, Inc. (petitioner) appeals by certiorari under Rule 45 of
the Rules of Court the December 9, 2008 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
104966, and the February 24, 2009 Resolution2 denying its reconsideration.
Respondent Ronald Valderama (Valderama) was hired by petitioner as security guard on April 18, 2002.
He was assigned at the Philippine Heart Center (PHC), Quezon City, until his relief on January 30, 2006.
Valderama was not given any assignment thereafter. Thus, on August 2, 2006, he filed a complaint for
constructive dismissal and nonpayment of 13th month pay, with prayer for damages against petitioner
and Romeo Nolasco.
Petitioner presented a different version. It alleged that respondent was not constructively or illegally
dismissed, but had voluntarily resigned. Its version of the facts was summarized by the National Labor
Relations Commission (NLRC) in this wise:
[Petitioner] x x x averred that [respondent] has committed serious violations of the security rules in the
workplace. On January 31, 2004, he was charged with conduct unbecoming for which he was required to
explain. Months after, he and four (4) other co-security guards failed to attend a mandatory seminar. For
this, he was suspended for seven (7) days. On June 5, 2004, [respondent] displayed his discourteous
and rude attitude upon his superior. He said to him in a high pitch of (sic) voice, "ano ba sir, personalan
ba ito, sabihin mo lang kung ano gusto mo." On June 8, 2004, [petitioner] required him to explain why no
disciplinary action should be meted against him.

Further it is significant to note that [respondent] was even required by [petitioner] to undergo a "ReTraining Course" conducted from February 20, 2006 to March 1, 2006 (Annex "F"). It is not only absurd
but unbelievable that [respondent] who according to [petitioner] voluntarily resigned on February 10,
2006 and yet participated in the said "Re-Training Course" after his alleged resignation.
In this case, [respondent] was not posted since he was relieved from his post on January 30, 2006 until
the filing of the instant complaint on August 2, 2006 or for a period of more than six (6) months. In Valdez
vs. NLRC, 286 SCRA 87, the Supreme Court held that, "However, it must be emphasized that such
temporary activity should continue for six months. Otherwise, the security agency concerned could be
held liable for constructive dismissal.
This office is in accord with [respondents] argument that the letter sent to the latter to report for work is
an absurdity considering [petitioners] claim that [respondent] voluntarily resigned. x x x.4
The LA disposed thus:
WHEREFORE, the foregoing considered, judgment is hereby rendered declaring [respondent] to have
been constructively dismissed. [Petitioner is] ordered to reinstate [respondent] to his former position
without loss of seniority rights and other benefits. Further, [petitioner] Nationwide Security & Allied
Services, Inc. is ordered to pay [respondent] the following monetary awards[:]
1. Backwages (see computation) 148, 125.00
2. Prop. 13th Month Pay

Again, on January 22, 2005, seven security guards, including [respondent], were made to explain their
failure to report for duty without informing the office despite the instruction during their formation day
which was held a day before. On January 31, 2006, Roy Datiles, Detachment Commander, reported that
[respondent] confronted and challenged him in a high pitch and on top of his voice rudely showing
discourtesy and rudeness. Being his superior, Datiles recommended the relief of [respondent] in the
detachment effective January 31, 2006. By order of the Operations Manager, he was relieved from his
post at the Philippine Heart Center. He was directed to report to the office. On February 10, 2006, he got
his cash bond and firearm deposit. Despite his voluntary resignation, [petitioner] sent him a letter through
registered mail to report for the office and give information on whether or not he was still interested for
report for duty or not. [Respondent] did not bother to reply. Neither did he report to the office.3
After due proceedings, the Labor Arbiter (LA) rendered a decision, viz.:
This office is of the view that [respondent] was constructively dismissed. [Petitioners] defense that
[respondent] voluntarily resigned on February 10, 2006 is unsubstantiated (Annex "G"). What appears on
record is the pro-forma resignation dated 04 October 2004 (Annex "D") long before this complaint was
filed. It is a basic rule in evidence that the burden of proof is on the part of the party who makes the
allegation. [Petitioner] failed to discharge the burden.

1/06 - 1/30/06 = 97 mo.

P450 x 30 x 1/12 x .97 1,091.25
TOTAL AWARD 149,216.25
xxxx
SO ORDERED.5
On appeal, the NLRC modified the LA decision. It declared that respondent was neither constructively
terminated nor did he voluntarily resign. As such, respondent remained an employee of petitioner. The
NLRC thus ordered respondent to immediately report to petitioner and assume his duty. It also deleted
the award of backwages and the order of reinstatement by the LA for lack of basis.6
The NLRC decreed that:

The general rule is that the filing of a complaint for illegal dismissal is inconsistent with resignation. The
Supreme Court in Shie Jie Corp. vs. National Federation of Labor, G.R. No. 153148, July 15, 2005, held:

WHEREFORE, the foregoing considered, the instant appeal is PARTIALLY GRANTED deleting the
award of backwages and order of reinstatement. [Respondent] is directed to report immediately and
[petitioner is] ordered to accept him. [Petitioner is] also ordered to pay his 13th month pay in the amount
of P1,091.25 as ordered in the Decision.

SO ORDERED.7
Respondent filed a motion for reconsideration, but the NLRC denied it on June 11, 2008.
Respondent went to the CA via certiorari. On December 9, 2008, the CA rendered a Decision 8 setting
aside the resolutions of the NLRC and reinstating that of the LA. In gist, the CA sustained respondents
claim of constructive dismissal. It pointed out that respondent remained on floating status for more than
six (6) months, and petitioner offered no credible explanation why it failed to provide a new assignment to
respondent after he was relieved from PHC. It likewise rejected petitioners claim that respondent
voluntarily resigned, holding that no convincing evidence was offered to prove it. The CA found it odd that
respondent attended the re-training course conducted by petitioner from February 20, 2006 to March 1,
2006, if respondent indeed resigned on February 10, 2006. The CA, therefore, ruled against the legality
of respondents dismissal and sustained the LAs award of backwages and order of reinstatement in favor
of respondent.
The CA decreed, thus:
WHEREFORE, premises considered, the Petition is GRANTED. The Resolutions dated 27 March 2008
and 11 June 2008 of the National Labor Relations Commission (Third Division) in NLRC NCR CASE NO.
00-08-06365-06; NLRC CA NO. 051626-07 are REVERSED and SET ASIDE. The Decision dated 29
November 2006 of Labor Arbiter Enrique L. Flores, Jr. is hereby REINSTATED. Costs against [petitioner].
SO ORDERED.

In this case, petitioner failed to establish clear evidence of respondents intention to abandon his
employment. Except for petitioners bare assertion that respondent did not report to the office for
reassignment, no proof was offered to prove that respondent intended to sever the employer-employee
relationship.
Besides, the fact that respondent filed the instant complaint negates any intention on his part to forsake
his work. It is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with the
charge of abandonment, for an employee who takes steps to protest his dismissal cannot by logic be
said to have abandoned his work.14
Similarly, we cannot accept petitioners argument that respondent voluntarily resigned.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal
reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a
formal pronouncement or relinquishment of an office, with the intention of relinquishing the office
accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must be considered in
determining whether, he or she, in fact, intended to sever his or her employment. 15
In Mobile Protective & Detective Agency v. Ompad16 and Mora v. Avesco Marketing Corporation,17 we
ruled that should the employer interpose the defense of resignation, it is incumbent upon the employer to
prove that the employee voluntarily resigned. On this point, petitioner failed to discharge the burden.

Petitioner filed a motion for reconsideration, but the CA denied it on February 24, 2009.10
Hence, this appeal by petitioner faulting the CA for sustaining respondents claim of constructive
dismissal.

Petitioner was also firm in asserting that respondent voluntarily resigned. Oddly, it failed to present the
alleged resignation letter of respondent. We also note that, in its March 24, 2006 letter, 18 petitioner
required respondent to report at its office for reassignment. It strains credulity that petitioner would
require respondent to report for reassignment if the latter already tendered his resignation effective
February 10, 2006.

The appeal lacks merit.

In cases involving security guards, a relief and transfer order in itself does not sever employment
relationship between a security guard and his agency. An employee has the right to security of tenure,
but this does not give him a vested right to his position as would deprive the company of its prerogative
to change his assignment or transfer him where his service, as security guard, will be most beneficial to
the client. Temporary "off-detail" or the period of time security guards are made to wait until they are
transferred or assigned to a new post or client does not constitute constructive dismissal, so long as such
status does not continue beyond six months.11
The onus of proving that there is no post available to which the security guard can be assigned rests on
the employer, viz.:
When a security guard is placed on a "floating status," he does not receive any salary or financial benefit
provided by law. Due to the grim economic consequences to the employee, the employer should bear the
burden of proving that there are no posts available to which the employee temporarily out of work can be
assigned.12
Respondent claims that he was relieved from PHC on January 30, 2006; thereafter, he was not given a
new assignment. Petitioner, on the other hand, asserts that respondent refused to report to petitioner for
his reassignment. Otherwise stated, petitioner claims that respondent abandoned his job.
The jurisprudential rule on abandonment is constant. It is a matter of intention and cannot lightly be
presumed from certain equivocal acts. To constitute abandonment, two elements must concur: (1) the
failure to report for work or absence without valid or justifiable reason; and (2) a clear intent, manifested
through overt acts, to sever the employer-employee relationship.13

Petitioner capitalizes on the withdrawal of the cash and firearm bonds by respondent. It contends that the
withdrawal of bonds sufficiently proved respondents intention to terminate his employment contract with
petitioner. In support of its argument, petitioner cited Roberta Gaa v. Nationwide Security and Allied
Services, Inc. and Romeo Nolasco,19 which declared that cash bond and firearm bond are never
withdrawable for as long as the security guard intends to remain an employee of the security agency.
Petitioners reliance on Gaa is misplaced. We note that the declaration that cash bond and firearm bond
are never withdrawable for as long as the security guard intends to remain an employee of the security
agency was made by the NLRC. 20 Although this Court affirmed the NLRC in a Minute Resolution dated
September 26, 2007,21 still, the said NLRC ruling cannot be considered a binding precedent that can be
invoked by petitioner in its favor.
As explained by this Court in Philippine Health Care Providers, Inc. v. Commissioner of Internal
Revenue:22
It is true that, although contained in a minute resolution, our dismissal of the petition was a disposition of
the merits of the case. When we dismissed the petition, we effectively affirmed the CA ruling being
questioned. As a result, our ruling in that case has already become final. When a minute resolution
denies or dismisses a petition for failure to comply with formal and substantive requirements, the
challenged decision, together with its findings of fact and legal conclusions, are deemed sustained. But
what is its effect on other cases?
With respect to the same subject matter and the same issues concerning the same parties, it constitutes
res judicata. However, if other parties or another subject matter (even with the same parties and issues)
is involved, the minute resolution is not binding precedent. Thus, in CIR v. Baier-Nickel, the Court noted
that a previous case, CIR v. Baier-Nickel involving the same parties and the same issues, was previously

disposed of by the Court thru a minute resolution dated February 17, 2003 sustaining the ruling of the
CA. Nonetheless, the Court ruled that the previous case "ha(d) no bearing" on the latter case because
the two cases involved different subject matters as they were concerned with the taxable income of
different taxable years.
Besides, there are substantial, not simply formal, distinctions between a minute resolution and a
decision. The constitutional requirement under the first paragraph of Section 14, Article VIII of the
Constitution that the facts and the law on which the judgment is based must be expressed clearly and
distinctly applies only to decisions, not to minute resolutions. A minute resolution is signed only by the
clerk of court by authority of the justices, unlike a decision. It does not require the certification of the Chief
Justice. Moreover, unlike decisions, minute resolutions are not published in the Philippine Reports.
Finally, the proviso of Section 4(3) of Article VIII speaks of a decision. Indeed, as a rule, this Court lays
down doctrines or principles of law which constitute binding precedent in a decision duly signed by the
members of the Court and certified by the Chief Justice.
Accordingly, since petitioner was not a party in G.R. No. 148680 and since petitioner's liability for DST on
its health care agreement was not the subject matter of G.R. No. 148680, petitioner cannot successfully
invoke the minute resolution in that case (which is not even binding precedent) in its favor.
Furthermore, the filing of the complaint belies petitioners claim that respondent voluntarily
resigned.lavvphil As held by this Court in Valdez v. NLRC:23
It would have been illogical for herein petitioner to resign and then file a complaint for illegal dismissal.
Resignation is inconsistent with the filing of the said complaint.
Indubitably, respondent remained on "floating status" for more than six months. He was relieved on
January 30, 2006, and was not given a new assignment at the time he filed the complaint on August 2,
2006. Jurisprudence is trite with pronouncements that the temporary inactivity or "floating status" of
security guards should continue only for six months. Otherwise, the security agency concerned could be
liable for constructive dismissal.24 The failure of petitioner to give respondent a work assignment beyond
the reasonable six-month period makes it liable for constructive dismissal. The CA was correct in
sustaining respondents claim.
If there is a surplus of security guards caused by lack of clients or projects, the security agency may
resort to retrenchment upon compliance with the requirements set forth in the Labor Code. In this way,
the security agency will not to be held liable for constructive dismissal and be burdened with the payment
of backwages.
Under Article 27925 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other privileges; to his full backwages, inclusive of
allowances; and to other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement. 26 Therefore, the CA committed no
reversible error in sustaining the LAs award of backwages and ordering respondents reinstatement.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R.
SP No. 104966 are AFFIRMED.

G.R. No. 161596

February 20, 2013

ROBERTO BORDOMEO, JAYME SARMIENTO and GREGORIO BARREDO, Petitioners,

vs.
COURT OF APPEALS, HON. SECRETARY OF LABOR, and INTERNATIONAL PHARMACEUTICALS,
INC., Respondents.

2. dismissing, for lack of merit, the charges of contempt filed by the Union against the IPI
officials and reiterating our strict directive for a restoration of the status quo ante the strike as
hereinbefore discussed;
3. dismissing the Unions complaint against the Company for unfair labor practice through
refusal to bargain;
4. dismissing the IPI petition to declare the strike of the Union as illegal; and

DECISION
BERSAMIN, J.:
As an extraordinary remedy, certiorari cannot replace or supplant an adequate remedy in the ordinary
course of law, like an appeal in due course. It is the inadequacy of a remedy in the ordinary course of law
that determines whether certiorari can be a proper alternative remedy.

5. directing the IPI Employees Union-ALU and the International Pharmaceuticals, Inc. to enter
into their new CBA, incorporating therein the dispositions hereinbefore stated. All other
provisions in the old CBA not otherwise touched upon in these proceedings are, likewise, to be
incorporated in the new CBA.
SO ORDERED.5
Resolving the parties ensuing respective motions for reconsideration or clarification, 6 Secretary Torres
rendered on December 5, 1991 another ruling,7 disposing thus:

The Case
The petitioners implore the Court to reverse and set aside the Decision 1 of the Court of Appeals (CA)
promulgated on May 30, 2003 in C.A.-G.R. SP No. 65970 entitled Roberto Bordomeo, Anecito Cupta,
Jaime Sarmiento and Virgilio Saragena v. Honorable Secretary of Labor and Employment and
International Pharmaceuticals, Inc., dismissing their petition for certiorari by which they had assailed the
Order2 issued on July 4, 2001 by Secretary Patricia A. Sto. Tomas of the Department of Labor and
Employment (DOLE), to wit:
WHEREFORE, the Order of this Office dated March 27, 1998 STANDS and having become final and
having been fully executed, completely CLOSED and TERMINATED this case.

WHEREFORE, in the light of the forgoing considerations, judgment is hereby rendered:

1. Dismissing the motions for reconsideration filed by the International Pharmaceutical, Inc.
and the Workers Trade Alliance Unions (WATU) for lack of merit;
2. Ordering the International Pharmaceutical Inc. to reinstate to their former positions with full
backwages reckoned from 8 December 1989 until actually reinstated without loss of seniority
rights and other benefits the "affected workers" herein-below listed:

No further motion shall be entertained.

1. Reynaldo C. Menor

SO ORDERED.3

2. Geronimo S. Banquirino

and the CAs resolution promulgated on October 30, 2003, denying their motion for reconsideration.

3. Rogelio Saberon

In effect, the Court is being called upon again to review the March 27, 1998 order issued by the DOLE
Secretary in response to the petitioners demand for the execution in full of the final orders of the DOLE
issued on December 26, 1990 and December 5, 1991 arising from the labor dispute in International
Pharmaceuticals, Inc. (IPI).

4. Estefanio G. Maderazo

Antecedents
In 1989, the IPI Employees Union-Associated Labor Union (Union), representing the workers, had a
bargaining deadlock with the IPI management. This deadlock resulted in the Union staging a strike and
IPI ordering a lockout.
On December 26, 1990, after assuming jurisdiction over the dispute, DOLE Secretary Ruben D. Torres
rendered the following Decision,4 to wit:
WHEREFORE, PREMISES CONSIDERED, decision is hereby rendered as follows:
1. finding the IPI Employees Union-ALU as the exclusive bargaining agent of all rank and file
employees of ALU including sales personnel;

5. Herbert G. Veloso
6. Rogelio G. Enricoso
7. Colito Virtudazo
8. Gilbert Encontro
9. Bebiano Pancho
10. Merlina Gomez
11. Lourdes Mergal
12. Anecito Cupta

13. Prescillano O. Naquines

38. Edgar Montecillo

14. Alejandro O. Rodriguez

39. Pompio Senador

15. Godofredo Delposo

40. Ernesto Palomar

16. Jovito Jayme

41. Reynante Germininano

17. Emma L. Lana

42. Pelagio Arnaiz

18. Koannia M. Tangub

43. Ireneo Russiana

19. Violeta Pancho

44. Benjamin Gellangco, Jr.

20. Roberto Bordomeo

45. Nestor Ouano (listed in paragraphs 1 & 9 of the IPI Employees Union- ALUs
Supplemental Memorandum dated 6 March 1991)

21. Mancera Vevincio

22. Caesar Sigfredo
23. Trazona Roldan
24. Carmelita Ygot
25. Gregorio Barredo
26. Dario Abella
27. Artemio Pepito
28. Anselmo Tareman
29. Merope Lozada
30. Agapito Mayorga
31. Narciso M. Leyson
32. Ananias Dinolan
33. Cristy L. Caybot

3. Ordering the International Pharmaceutical Inc. to reinstate to their former positions the
following employees, namely:
a. Alexander Aboganda
b. Pacifico Pestano
c. Carlito Torregano
d. Clemencia Pestano
e. Elisea Cabatingan
(listed in paragraph 3 of the IPI Employees Union-ALUs Supplemental Memorandum dated 6 March
1991).
No further motions of the same nature shall be entertained.8
IPI assailed the issuances of Secretary Torres directly in this Court through a petition for certiorari (G.R.
No. 103330), but the Court dismissed its petition on October 14, 1992 on the ground that no grave abuse
of discretion had attended the issuance of the assailed decisions.9 Considering that IPI did not seek the
reconsideration of the dismissal of its petition, the entry of judgment issued in due course on January 19,
1994.10
With the finality of the December 26, 1990 and December 5, 1991 orders of the DOLE Secretary, the
Union, represented by the Seno, Mendoza and Associates Law Office, moved in the National Conciliation
and Mediation Board in DOLE, Region VII on June 8, 1994 for their execution.11

34. Johnnelito S. Corilla

35. Noli Silo
36. Danilo Palioto
37. Winnie dela Cruz

On November 21, 1994, one Atty. Audie C. Arnado, who had meanwhile entered his appearance on
October 4, 1994 as the counsel of 15 out of the 50 employees named in the December 5, 1991 judgment
of Secretary Torres, likewise filed a so-called Urgent Motion for Execution. 12
After conducting conferences and requiring the parties to submit their position papers, Regional Director
Alan M. Macaraya of DOLE Region VII issued a Notice of Computation/Execution on April 12, 1995, 13 the
relevant portion of which stated:

To speed-up the settlement of the issue, the undersigned on 7 February 1995 issued an order directing
the parties to submit within ten (10) calendar days from receipt of the Order, their respective
Computations. To date, only the computation from complainants including those that were not specifically
mentioned in the Supreme Court decision were submitted and received by this office.
Upon verification of the Computation available at hand, management is hereby directed to pay the
employees including those that were not specifically mentioned in the decision but are similarly situated,
the aggregate amount of FORTY-THREE MILLION SIX HUNDRED FIFTY THOUSAND NINE HUNDRED
FIVE AND 87/100 PESOS (P43,650,905.87) involving NINE HUNDRED SIXTY-TWO (962) employees, in
the manner shown in the attached Computation forming part of this Order. This is without prejudice to the
final Order of the Court to reinstate those covered employees.1wphi1
This Order is to take effect immediately and failure to comply as instructed will cause the issuance of a
WRIT OF EXECUTION.14

9. Mergal, Lourdes P278,700.10

10. Pancho, Bebiano P278,700.10
11. Pancho, Violeta P278,700.10
12. Rodriguez, Alejandro P278,700.10
13. Russiana, Ireneo P263,685.10
14. Tangub, Joannis P278,700.10
15. Trazona, Rolsan P275,575.10

In effect, Regional Director Macaraya increased the number of the workers to be benefitted to 962
employees classified into six groups and allocated to each group a share in the P43,650,905.87
award,15 as follows:
GROUP

NO.
EMPLOYEES

OF TOTAL CLAIM

Those represented by Atty. Arnado

15

P4,162,361.50

Salesman

P6,241,535.44

For Union Members

179

P6,671,208.86

For Non-Union Members

33

P1,228,321.09

Employees who ratified the CBA

642

P23,982,340.14

Separated Employees

84

P1,365,136.84

TOTAL

962

P43,650,905.87

On May 24, 1995, Assistant Regional Director Jalilo dela Torre of DOLE Region VII issued a writ of
execution for the amount of P4,162,361.50 (which covered monetary claims corresponding to the period
from January 1, 1989 to March 15, 1995) in favor of the 15 employees represented by Atty. Arnado, 16 to
be distributed thusly:17
1. Barredo, Gregorio P278,700.10
2. Bordomeo, Roberto P278,700.10
3. Cupta, Anecito P278,700.10
4. Delposo, Godofredo P278,700.10
5. Dinolan, Ananias P278,700.10
6. Jayme, Jovito P278,700.10
7. Lozada, Merope P278,700.10
8. Mayorga, Agapito P278,700.10

TOTAL P4,162,361.50
On June 5, 1995, Assistant Regional Director dela Torre issued another Writ of Execution for the amount
of P1,200,378.92 in favor of the second group of employees. Objecting to the reduced computation for
them, however, the second group of employees filed a Motion Declaring the Writ of Execution dated June
5, 1995 null and void.
On July 11, 1995, IPI challenged the May 24, 1995 writ of execution issued in favor of the 15 employees
by filing its Appeal and Prohibition with Prayer for Temporary Restraining Order in the Office of then
DOLE Undersecretary Cresenciano Trajano.18
On December 22, 1995,19 Acting DOLE Secretary Jose Brillantes, acting on IPIs appeal, recalled and
quashed the May 24, 1995 writ of execution, and declared and considered the case closed and
terminated.20
Aggrieved, the 15 employees sought the reconsideration of the December 22, 1995 Order of Acting
DOLE Secretary Brillantes.
On August 27, 1996, DOLE Secretary Leonardo A. Quisumbing granted the Motion for Reconsideration, 21
and reinstated the May 24, 1995 writ of execution, subject to the deduction of the sum of P745,959.39
already paid pursuant to quitclaims from the award of P4,162,361.50.22 Secretary Quisumbing declared
the quitclaims executed by the employees on December 2, 3, and 17, 1993 without the assistance of the
proper office of the DOLE unconscionable for having been entered into under circumstances showing
vitiation of consent; and ruled that the execution of the quitclaims should not prevent the employees from
recovering their monetary claims under the final and executory decisions dated December 26, 1990 and
December 5, 1991, less the amounts received under the quitclaims.
Aggrieved by the reinstatement of the May 24, 1995 writ of execution, IPI moved for a reconsideration. 23
On September 3, 1996, and pending resolution of IPIs motion for reconsideration, Regional Director
Macaraya issued a writ of execution in favor of the 15 employees represented by Atty. Arnado to recover
P3,416,402.10 pursuant to the order dated August 27, 1996 of Secretary Quisumbing. 24 Thereafter, the
sheriff garnished the amount of P3,416,402.10 out of the funds of IPI with China Banking Corporation,
which released the amount.25 Hence, on September 11, 1996, the 15 employees represented by Atty.
Arnado executed a Satisfaction of Judgment and Quitclaim/Release upon receipt of their respective
portions of the award, subject to the reservation of their right to claim "unsatisfied amounts of separation
pay as well as backwages reckoned from the date after 15 March 1995 and up to the present, or until
separation pay is fully paid."26
Notwithstanding the execution of the satisfaction of judgment and quitclaim/release, Atty. Arnado still filed
an omnibus motion not only in behalf of the 15 employees but also in behalf of other employees named

in the notice of computation/execution, with the exception of the second group, seeking another writ of
execution to recover the further sum of P58,546,767.83.27
Atty. Arnado filed a supplemental omnibus motion for the denial of IPIs Motion for Reconsideration on the
ground of mootness.28
In the meanwhile, the employees belonging to the second group reiterated their Motion Declaring the
Writ of Execution dated June 5, 1995 null and void, and filed on May 15, 1996 a Motion for Issuance of
Writ, praying for another writ of execution based on the computation by Regional Director Macaraya.
On December 24, 1997,29 Secretary Quisumbing, affirming his August 27, 1996 order, denied IPIs Motion
for Reconsideration for being rendered moot and academic by the full satisfaction of the May 24, 1995
writ of execution. He also denied Atty. Arnados omnibus motion for lack of merit; and dealt with the issue
involving the June 5, 1995 writ of execution issued in favor of the second group of employees, which the
Court eventually resolved in the decision promulgated in G.R. No. 164633.30
The employees represented by Atty. Arnado moved for the partial reconsideration of the December 24,
1997 order of Secretary Quisumbing. Resolving this motion on March 27, 1998, Acting DOLE Secretary
Jose M. Espaol, Jr. held as follow:31
WHEREFORE, Our Order dated December 24, 1997, is hereby AFFIRMED.
The Motion for Reconsideration/Amend/Clarificatory and Reiteration of Motion for Issuance of Writ of
Execution dated January 12, 1998, filed by six (6) salesmen, namely, Geronimo S. Banquirigo, Reynaldo
C. Menor, Rogelio Enricoso, Danilo Palioto, Herbert Veloso and Colito Virtudazo as well as the Motion for
Reconsideration and/or Clarification filed by Salesman Noli G. Silo, are hereby DISMISSED, for lack of
merit. The June 5, 1995 Writ of Execution is now considered fully executed and satisfied.
The Motion for Partial Reconsideration filed by Roberto Bordomeo and 231 others, is likewise DENIED,
for lack of merit
SO ORDERED.32
Records reveal, however, that Virgilio Saragena, et al. brought to this Court a petition for certiorari to
assail the December 24, 1997 and March 27, 1998 Orders of the Secretary of Labor (G.R. No. 134118).
As stated at the start, the Court dismissed the petition of Saragena, et al. on September 9, 1998 for
having been filed out of time and for the petitioners failure to comply with the requirements under Rule
13 and Rule 45 of the Rules of Court. 33 The entry of judgment was issued on December 7, 1998.
In the meanwhile, on July 27, 1998, Atty. Arnado filed a Motion for Execution with the DOLE Regional
Office,34 demanding the following amounts from IPI, to wit:
For Roberto Bordomeo and 14 others P4,990,401.00
The rest of complainants 33,824,820.41

Ultimately, on July 4, 2001, DOLE Secretary Patricia Sto. Tomas issued her Order 37 affirming the order
issued on March 27, 1998, and declaring that the full execution of the order of March 27, 1998
"completely CLOSED and TERMINATED this case."
Only herein petitioners Roberto Bordomeo, Anecito Cupta, Jaime Sarmiento and Virgilio Saragena
assailed the July 4, 2001 order of Secretary Sto. Tomas by petition for certiorari in the CA (C.A.-G.R. SP
No. 65970).38
On May 30, 2003, the CA rendered its decision in C.A.-G.R. SP No. 65970,39 to wit:
It is worthy to note that all the decisions and incidents concerning the case between petitioners and
private respondent IPI have long attained finality. The records show that petitioners have already been
granted a writ of execution. In fact, the decision has been executed. Thus, there is nothing for this Court
to modify. The granting of the instant petition calls for the amendment of the Court of a decision which
has been executed. In this light, it is worthy to note the rule that final and executory decisions, more so
with those already executed, may no longer be amended except only to correct errors which are clerical
in nature. Amendments or alterations which substantially affect such judgments as well as the entire
proceedings held for that purpose are null and void for lack of jurisdiction. (Pio Barreto Realty
Development Corporation v. Court of Appeals, 360 SCRA 127).
This Court in the case of CA GR No. 54041 dated February 28, 2001, has ruled that the Orders of the
Secretary of Labor and Employment dated December 24, 1997 and March 27, 1998 have become final
and executory. It may be noted that the said orders affirmed the earlier orders of the Secretary of Labor
and Employment dated December 22, 1995 and August 27, 1996 granting the execution of the decision
in the case between petitioners and IPI.
xxxx
WHEREFORE, based on the foregoing, the instant petition is hereby DENIED DUE COURSE and is
DISMISSED for lack of merit.
SO ORDERED.40
The petitioners filed a Motion for Reconsideration,41 but the CA denied the motion on October 30, 2003.42
Hence, they commenced this special civil action for certiorari.
The petitioners hereby contend that:
THE COURT OF APPEALS RULED CONTRARY TO SUPREME COURT DECISIONS AND GRAVELY
ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT:
A. HELD THAT GRANTING THE PETITION FOR MANDAMUS (WHICH MERELY
SEEKS FULL EXECUTION OF DOLE FINAL JUDGMENTS 26 DECEMBER 1990
AND 5 DECEMBER 1991 WOULD AMEND SAID FINAL AND EXECUTORY
JUDGMENTS.

Total P 38,815,221.41
Again, on September 22, 1998, Atty. Arnado filed a Motion for Execution with the Regional Office. 35 This
time, no monetary claims were demanded but the rest of the complainants sought to collect from IPI the
reduced amount of P6,268,818.47.
Another Motion for Execution was filed by Atty. Arnado on July 6, 1999, 36 seeking the execution of the
December 26, 1990 order issued by Secretary Torres and of the April 12, 1995 notice of
computation/execution issued by Regional Director Macaraya.

B. FAILED TO IMPLEMENT THE SUPREME COURT DOCTRINE SET IN PDCP

VS. GENILO, G.R. NO. 106705, THAT SIMILARLY SITUATED EMPLOYEES HAS
THE RIGHT TO PROVE THEIR ENTITLEMENT TO THE BENEFITS AWARDED
UNDER FINAL JUDGMENTS.
C. HELD THAT THE QUESTIONED JUDGMENTS HAD BEEN EXECUTED WHEN
THE RESPONDENTS THEMSELVES ADMIT THE CONTRARY.

D. HELD THAT DOLE SECRETARY DID NOT COMMIT GRAVE ABUSE OF

DISCRETION WHEN SHE REFUSED TO FULLY EXECUTE THE 1990 AND 1991
DOLE FINAL JUDGMENTS AND ISSUE CORRESPONDING WRITS OF
EXECUTION.
The petitioners submit that of the six groups of employees classified under the April 12, 1995 notice of
computation/execution issued by Regional Director Macaraya, only the first two groups, that is, the 15
employees initially represented by Atty. Arnado; and the nine salesmen led by Geronimo S. Banquirigo,
had been granted a writ of execution. They further submit that the May 24, 1995 writ of execution issued
in favor of the first group of employees, including themselves, had only been partially satisfied because
no backwages or separation pay from March 16, 1995 onwards had yet been paid to them; that the
reduced award granted to the second group of employees was in violation of the April 12, 1995 notice of
computation/execution; that no writ of execution had been issued in favor of the other groups of
employees; and that DOLE Secretary Sto. Tomas thus committed grave abuse of discretion in refusing to
fully execute the December 26, 1990 and December 5, 1991 orders.
In its comment, IPI counters that the petition for certiorari should be dismissed for being an improper
remedy, the more appropriate remedy being a petition for review on certiorari; that a petition for review on
certiorari should have been filed within 15 days from receipt of the denial of the motion for
reconsideration, as provided in Section 1 and Section 2 of Rule 45; and that the petition must also be
outrightly dismissed for being filed out of time.
IPI contends that the finality of the December 24, 1997 and March 27, 1998 orders of the DOLE
Secretary rendered them unalterable; that Atty. Arnado had already brought the December 24, 1997 and
March 27, 1998 orders to this Court for review (G.R. No. 134118); and that the Court had dismissed the
petition for having been filed out of time and for the petitioners failure to comply with Rule 13 and Rule
45 of the Rules of Court.
Ruling
We dismiss the petition for certiorari.
Firstly, an appeal by petition for review on certiorari under Rule 45 of the Rules of Court, to be taken to
this Court within 15 days from notice of the judgment or final order raising only questions of law, was the
proper remedy available to the petitioners. Hence, their filing of the petition for certiorari on January 9,
2004 to assail the CAs May 30, 2003 decision and October 30, 2003 resolution in C.A.-G.R. SP No.
65970 upon their allegation of grave abuse of discretion committed by the CA was improper. The
averment therein that the CA gravely abused its discretion did not warrant the filing of the petition for
certiorari, unless the petition further showed how an appeal in due course under Rule 45 was not an
adequate remedy for them. By virtue of its being an extraordinary remedy, certiorari cannot replace or
substitute an adequate remedy in the ordinary course of law, like an appeal in due course.43
We remind them that an appeal may also avail to review and correct any grave abuse of discretion
committed by an inferior court, provided it will be adequate for that purpose.
It is the adequacy of a remedy in the ordinary course of law that determines whether a special civil action
for certiorari can be a proper alternative remedy. We reiterate what the Court has discoursed thereon in
Heirs of Spouses Teofilo M. Reterta and Elisa Reterta v. Spouses Lorenzo Mores and Virginia Lopez,44
viz:
Specifically, the Court has held that the availability of appeal as a remedy does not constitute sufficient
ground to prevent or preclude a party from making use of certiorari if appeal is not an adequate remedy,
or an equally beneficial, or speedy remedy. It is inadequacy, not the mere absence of all other legal
remedies and the danger of failure of justice without the writ, that must usually determine the
propriety of certiorari. A remedy is plain, speedy and adequate if it will promptly relieve the
petitioner from the injurious effects of the judgment, order, or resolution of the lower court or
agency. It is understood, then, that a litigant need not mark time by resorting to the less speedy

remedy of appeal in order to have an order annulled and set aside for being patently void for
failure of the trial court to comply with the Rules of Court.
Nor should the petitioner be denied the recourse despite certiorari not being available as a proper
remedy against an assailed order, because it is better on balance to look beyond procedural
requirements and to overcome the ordinary disinclination to exercise supervisory powers in order that a
void order of a lower court may be controlled to make it conformable to law and justice. Verily, the
instances in which certiorari will issue cannot be defined, because to do so is to destroy the
comprehensiveness and usefulness of the extraordinary writ. The wide breadth and range of the
discretion of the court are such that authority is not wanting to show that certiorari is more discretionary
than either prohibition or mandamus, and that in the exercise of superintending control over inferior
courts, a superior court is to be guided by all the circumstances of each particular case "as the ends of
justice may require." Thus, the writ will be granted whenever necessary to prevent a substantial wrong or
to do substantial justice.45 (Emphasis supplied)
Even so, Rule 65 of the Rules of Court still requires the petition for certiorari to comply with the following
requisites, namely: (1) the writ of certiorari is directed against a tribunal, a board, or an officer exercising
judicial or quasi-judicial functions; (2) such tribunal, board, or officer has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is
no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.46
Jurisprudence recognizes certain situations when the extraordinary remedy of certiorari may be deemed
proper, such as: (a) when it is necessary to prevent irreparable damages and injury to a party; ( b) where
the trial judge capriciously and whimsically exercised his judgment; (c) where there may be danger of a
failure of justice; (d) where an appeal would be slow, inadequate, and insufficient; (e) where the issue
raised is one purely of law; (f) where public interest is involved; and (g) in case of urgency.47 Yet, a
reading of the petition for certiorari and its annexes reveals that the petition does not come under any of
the situations. Specifically, the petitioners have not shown that the grant of the writ of certiorari will be
necessary to prevent a substantial wrong or to do substantial justice to them.
In dismissing the petitioners petition for certiorari, the CA in effect upheld the Secretary of Labors
declaration in her assailed July 4, 2001 decision that the full satisfaction of the writs of execution had
completely closed and terminated the labor dispute.
Yet, the petitioners have ascribed grave abuse of discretion to the CA for doing so.
We do not agree. We find no just cause to now issue the writ of certiorari in order to set aside the CAs
assailed May 30, 2003 decision. Indeed, the following well stated justifications for the dismissal of the
petition show that the CA was correct, viz:
xxxx
It is worthy to note that all the decisions and incidents concerning the case between petitioners and
private respondent IPI have long attained finality. The records show that petitioners have already been
granted a writ of execution. In fact, the decision has been executed. Thus, there is nothing for this Court
to modify. The granting of the instant petition calls for the amendment of the Court of a decision which
has been executed. In this light, it is worthy to note the rule that final and executory decisions, more so
with those already executed, may no longer be amended except only to correct errors which are clerical
in nature. Amendments or alterations which substantially affect such judgments as well as the entire
proceedings held for that purpose are null and void for lack of jurisdiction (Pio Barretto Realty
Development Corporation v. Court of Appeals, 360 SCRA 127).
This Court in the case of CA GR No. 54041 dated February 28, 2001, has ruled that the Orders of the
Secretary of Labor and Employment dated December 24, 1997 and March 27, 1998 have become final
and executory. It may be noted that the said orders affirmed the earlier orders of the Secretary of Labor
and Employment dated December 22, 1995 and August 27, 1996 granting the execution of the decision
in the case between petitioners and IPI.

There is nothing on the records to support the allegation of petitioners that the Secretary of Labor and
Employment abused her discretion. The pertinent portion of the assailed order reads:
"Given that this office had already ruled on all incidents of the case in its March 27, 1998 order and the
Writ of Execution dated June 5, 1995 had already attained finality and had in fact been completely
satisfied through the deposit with the Regional Office of the amount covered by the Writ, the subsequent
Motions filed by Atty. Arnado can no longer be entertained, much less granted by this Office. Thus, at this
point, there is nothing more to grant nor to execute."48
xxxx
In a special civil action for certiorari brought against a court with jurisdiction over a case, the petitioner
carries the burden to prove that the respondent tribunal committed not a merely reversible error but a
grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the impugned order.49
Showing mere abuse of discretion is not enough, for the abuse must be shown to be grave. Grave abuse
of discretion means either that the judicial or quasi-judicial power was exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, or that the respondent judge, tribunal or
board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in contemplation
of law, such as when such judge, tribunal or board exercising judicial or quasi-judicial powers acted in a
capricious or whimsical manner as to be equivalent to lack of jurisdiction. 50 Under the circumstances, the
CA committed no abuse of discretion, least of all grave, because its justifications were supported by the
history of the dispute and borne out by the applicable laws and jurisprudence.
And, secondly, the records contradict the petitioners insistence that the two writs of execution to enforce
the December 26, 1990 and December 5, 1991 orders of the DOLE Secretary were only partially
satisfied. To recall, the two writs of execution issued were the one for P4,162,361.50, later reduced to
P3,416,402.10, in favor of the 15 employees represented by Atty. Arnado, and that for P1,200,378.92 in
favor of the second group of employees led by Banquerigo.
There is no question that the 15 employees represented by Atty. Arnado, inclusive of the petitioners,
received their portion of the award covered by the September 3, 1996 writ of execution for the amount of
P3,416,402.10 through the release of the garnished deposit of IPI at China Banking Corporation. That
was why they then executed the satisfaction of judgment and quitclaim/release, the basis for the DOLE
Secretary to expressly declare in her July 4, 2001 decision that the full satisfaction of the writ of
execution "completely CLOSED and TERMINATED this case."51
Still, the 15 employees demand payment of their separation pay and backwages from March 16, 1995
onwards pursuant to their reservation reflected in the satisfaction of judgment and quitclaim/release they
executed on September 11, 1996.
The demand lacked legal basis. Although the decision of the DOLE Secretary dated December 5, 1991
had required IPI to reinstate the affected workers to their former positions with full backwages reckoned
from December 8, 1989 until actually reinstated without loss of seniority rights and other benefits, the
reinstatement thus decreed was no longer possible. Hence, separation pay was instead paid to them.
This alternative was sustained in law and jurisprudence, for "separation pay may avail in lieu of
reinstatement if reinstatement is no longer practical or in the best interest of the parties. Separation pay
in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated." 52
Under the circumstances, the employment of the 15 employees or the possibility of their reinstatement
terminated by March 15, 1995. Thereafter, their claim for separation pay and backwages beyond March
15, 1995 would be unwarranted. The computation of separation pay and backwages due to illegally
dismissed employees should not go beyond the date when they were deemed to have been actually
separated from their employment, or beyond the date when their reinstatement was rendered impossible.
Anent this, the Court has observed in Golden Ace Builders v. Talde:53
The basis for the payment of backwages is different from that for the award of separation pay. Separation
pay is granted where reinstatement is no longer advisable because of strained relations between the
employee and the employer. Backwages represent compensation that should have been earned but

were not collected because of the unjust dismissal. The basis for computing backwages is usually the
length of the employees service while that for separation pay is the actual period when the employee
was unlawfully prevented from working.
As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines
instructs:
[T]he award of separation pay is inconsistent with a finding that there was no illegal dismissal, for under
Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without
just cause and without due process is entitled to backwages and reinstatement or payment of separation
pay in lieu thereof:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two
reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because
of strained relations between the employee and the employer, separation pay is granted. In effect, an
illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss
of seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in addition to payment of backwages.
(emphasis, italics and underscoring supplied)
xxxx
Clearly then, respondent is entitled to backwages and separation pay as his reinstatement has been
rendered impossible due to strained relations. As correctly held by the appellate court, the backwages
due respondent must be computed from the time he was unjustly dismissed until his actual
reinstatement, or from February 1999 until June 30, 2005 when his reinstatement was rendered
impossible without fault on his part.
The Court, however, does not find the appellate court's computation of separation pay in order. The
appellate court considered respondent to have served petitioner company for only eight years. Petitioner
was hired in 1990, however, and he must be considered to have been in the service not only until 1999,
when he was unjustly dismissed, but until June 30, 2005, the day he is deemed to have been actually
separated (his reinstatement having been rendered impossible) from petitioner company or for a total of
15 years. 54
As for the portions of the award pertaining to the rest of the employees listed in the April 12, 1995 notice
of execution/computation (i.e., those allegedly similarly situated as the employees listed in the December
5, 1991 order of the DOLE Secretary) still remaining unsatisfied, the petitioners are definitely not the
proper parties to ventilate such concern in this or any other forum. At any rate, the concern has already
been addressed and resolved by the Court in G.R. No. 164633.55
WHEREFORE, the Court DISMISSES the petition for certiorari for its lack of merit; AFFIRMS the
decision promulgated on May 30, 2003; and ORDERS the petitioners to pay the costs of suit.

G.R. No. 169510

between him and Atok. It was also agreed upon that his compensation, allowances and other expenses
will be paid through disbursement vouchers.

August 8, 2011

ATOK
BIG
WEDGE
vs.
JESUS P. GISON, Respondent.

COMPANY,

INC.,

Petitioner,

DECISION
PERALTA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the Decision 1 dated May 31,
2005 of the Court of Appeals (CA) in CA-G.R. SP No. 87846, and the Resolution 2 dated August 23, 2005
denying petitioners motion for reconsideration.
The procedural and factual antecedents are as follows:
Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant on retainer
basis by petitioner Atok Big Wedge Company, Inc. through its then Asst. Vice-President and Acting
Resident Manager, Rutillo A. Torres. As a consultant on retainer basis, respondent assisted petitioner's
retained legal counsel with matters pertaining to the prosecution of cases against illegal surface
occupants within the area covered by the company's mineral claims. Respondent was likewise tasked to
perform liaison work with several government agencies, which he said was his expertise.
Petitioner did not require respondent to report to its office on a regular basis, except when occasionally
requested by the management to discuss matters needing his expertise as a consultant. As payment for
his services, respondent received a retainer fee of P3,000.00 a month,3 which was delivered to him either
at his residence or in a local restaurant. The parties executed a retainer agreement, but such agreement
was misplaced and can no longer be found.
The said arrangement continued for the next eleven years.
Sometime thereafter, since respondent was getting old, he requested that petitioner cause his
registration with the Social Security System (SSS), but petitioner did not accede to his request. He later
reiterated his request but it was ignored by respondent considering that he was only a
retainer/consultant. On February 4, 2003, respondent filed a Complaint 4 with the SSS against petitioner
for the latter's refusal to cause his registration with the SSS.
On the same date, Mario D. Cera, in his capacity as resident manager of petitioner, issued a
Memorandum5 advising respondent that within 30 days from receipt thereof, petitioner is terminating his
retainer contract with the company since his services are no longer necessary.
On February 21, 2003, respondent filed a Complaint 6 for illegal dismissal, unfair labor practice,
underpayment of wages, non-payment of 13th month pay, vacation pay, and sick leave pay with the
National Labor Relations Commission (NLRC), Regional Arbitration Branch (RAB), Cordillera
Administrative Region, against petitioner, Mario D. Cera, and Teofilo R. Asuncion, Jr. The case was
docketed as NLRC Case No. RAB-CAR-02-0098-03.

On February 1, 1992 he joined Atok. One week thereafter, the aggrieved crop damage claimants
barricaded the only passage to and from the minesite. In the early morning of February 1, 1992, a
dialogue was made by Atok and the crop damage claimants. Unfortunately, Atoks representatives,
including him, were virtually held hostage by the irate claimants who demanded on the spot payment of
their claims. He was able to convince the claimants to release the company representatives pending
referral of the issue to higher management.
A case was filed in court for the lifting of the barricades and the court ordered the lifting of the barricade.
While Atok was prosecuting its case with the claimants, another case erupted involving its partner,
Benguet Corporation. After Atok parted ways with Benguet Corporation, some properties acquired by the
partnership and some receivables by Benguet Corporation was the problem. He was again entangled
with documentation, conferences, meetings, planning, execution and clerical works. After two years, the
controversy was resolved and Atok received its share of the properties of the partnership, which is about
5 million pesos worth of equipment and condonation of Atoks accountabilities with Benguet Corporation
in the amount of P900,000.00.
In the meantime, crop damage claimants lost interest in pursuing their claims against Atok and Atok was
relieved of the burden of paying 700 million pesos. In between attending the problems of the crop
damage issue, he was also assigned to do liaison works with the SEC, Bureau of Mines, municipal
government of Itogon, Benguet, the Courts and other government offices.
After the crop damage claims and the controversy were resolved, he was permanently assigned by Atok
to take charge of some liaison matters and public relations in Baguio and Benguet Province, and to
report regularly to Atoks office in Manila to attend meetings and so he had to stay in Manila at least one
week a month.
Because of his length of service, he invited the attention of the top officers of the company that he is
already entitled to the benefits due an employee under the law, but management ignored his requests.
However, he continued to avail of his representation expenses and reimbursement of company-related
expenses. He also enjoyed the privilege of securing interest free salary loans payable in one year
through salary deduction.
In the succeeding years of his employment, he was designated as liaison officer, public relation officer
and legal assistant, and to assist in the ejection of illegal occupants in the mining claims of Atok.
Since he was getting older, being already 56 years old, he reiterated his request to the company to cause
his registration with the SSS. His request was again ignored and so he filed a complaint with the SSS.
After filing his complaint with the SSS, respondents terminated his services.7
On September 26, 2003, after the parties have submitted their respective pleadings, Labor Arbiter
Rolando D. Gambito rendered a Decision 8 ruling in favor of the petitioner. Finding no employer-employee
relationship between petitioner and respondent, the Labor Arbiter dismissed the complaint for lack of
merit.
Respondent then appealed the decision to the NLRC.

Respondent alleged that:

On July 30, 2004, the NLRC, Second Division, issued a Resolution 9 affirming the decision of the Labor
Arbiter. Respondent filed a Motion for Reconsideration, but it was denied in the Resolution 10 dated
September 30, 2004.

x x x [S]ometime in January 1992, Rutillo A. Torres, then the resident manager of respondent Atok Big
Wedge Co., Inc., or Atok for brevity, approached him and asked him if he can help the companys
problem involving the 700 million pesos crop damage claims of the residents living at the minesite of
Atok. He participated in a series of dialogues conducted with the residents. Mr. Torres offered to pay him
P3,000.00 per month plus representation expenses. It was also agreed upon by him and Torres that his
participation in resolving the problem was temporary and there will be no employer-employee relationship

Aggrieved, respondent filed a petition for review under Rule 65 of the Rules of Court before the CA
questioning the decision and resolution of the NLRC, which was later docketed as CA-G.R. SP No.
87846. In support of his petition, respondent raised the following issues:

a) Whether or not the Decision of the Honorable Labor Arbiter and the subsequent Resolutions
of the Honorable Public Respondent affirming the same, are in harmony with the law and the
facts of the case;

ERRONEOUSLY DIRECTED RESPONDENT'S REINSTATEMENT DESPITE THE FACT THAT THE

NATURE OF THE SERVICES HE PROVIDED TO THE COMPANY WAS SENSITIVE AND
CONFIDENTIAL.14

b) Whether or not the Honorable Labor Arbiter Committed a Grave Abuse of Discretion in
Dismissing the Complaint of Petitioner and whether or not the Honorable Public Respondent
Committed a Grave Abuse of Discretion when it affirmed the said Decision.11

Petitioner argues that since the petition filed by the respondent before the CA was a petition for certiorari
under Rule 65 of the Rules of Court, the CA should have limited the issue on whether or not there was
grave abuse of discretion on the part of the NLRC in rendering the resolution affirming the decision of the
Labor Arbiter.

On May 31, 2005, the CA rendered the assailed Decision annulling and setting aside the decision of the
NLRC, the decretal portion of which reads:
WHEREFORE, the petition is GRANTED. The assailed Resolution of the National Labor Relations
Commission dismissing petitioner's complaint for illegal dismissal is ANNULLED and SET ASIDE.
Private respondent Atok Big Wedge Company Incorporated is ORDERED to reinstate petitioner Jesus P.
Gison to his former or equivalent position without loss of seniority rights and to pay him full backwages,
inclusive of allowances and other benefits or their monetary equivalent computed from the time these
were withheld from him up to the time of his actual and effective reinstatement. This case is ordered
REMANDED to the Labor Arbiter for the proper computation of backwages, allowances and other
benefits due to petitioner. Costs against private respondent Atok Big Wedge Company Incorporated.
SO ORDERED.12
In ruling in favor of the respondent, the CA opined, among other things, that both the Labor Arbiter and
the NLRC may have overlooked Article 280 of the Labor Code, 13 or the provision which distinguishes
between two kinds of employees, i.e., regular and casual employees. Applying the provision to the
respondent's case, he is deemed a regular employee of the petitioner after the lapse of one year from his
employment. Considering also that respondent had been performing services for the petitioner for eleven
years, respondent is entitled to the rights and privileges of a regular employee.
The CA added that although there was an agreement between the parties that respondent's employment
would only be temporary, it clearly appears that petitioner disregarded the same by repeatedly giving
petitioner several tasks to perform. Moreover, although respondent may have waived his right to attain a
regular status of employment when he agreed to perform these tasks on a temporary employment status,
still, it was the law that recognized and considered him a regular employee after his first year of rendering
service to petitioner. As such, the waiver was ineffective.

Petitioner also posits that the CA erred in applying Article 280 of the Labor Code in determining whether
there was an employer-employee relationship between the petitioner and the respondent. Petitioner
contends that where the existence of an employer-employee relationship is in dispute, Article 280 of the
Labor Code is inapplicable. The said article only set the distinction between a casual employee from a
regular employee for purposes of determining the rights of an employee to be entitled to certain benefits.
Petitioner insists that respondent is not a regular employee and not entitled to reinstatement.
On his part, respondent maintains that he is an employee of the petitioner and that the CA did not err in
ruling in his favor.
The petition is meritorious.
At the outset, respondent's recourse to the CA was the proper remedy to question the resolution of the
NLRC. It bears stressing that there is no appeal from the decision or resolution of the NLRC. As this
Court enunciated in the case of St. Martin Funeral Home v. NLRC,15 the special civil action of certiorari
under Rule 65 of the Rules of Civil Procedure, which is filed before the CA, is the proper vehicle for
judicial review of decisions of the NLRC. The petition should be initially filed before the Court of Appeals
in strict observance of the doctrine on hierarchy of courts as the appropriate forum for the relief desired. 16
This Court not being a trier of facts, the resolution of unclear or ambiguous factual findings should be left
to the CA as it is procedurally equipped for that purpose. From the decision of the Court of Appeals, an
ordinary appeal under Rule 45 of the Rules of Civil Procedure before the Supreme Court may be
resorted to by the parties. Hence, respondent's resort to the CA was appropriate under the
circumstances.
Anent the primordial issue of whether or not an employer-employee relationship exists between petitioner
and respondent.

Hence, the petition assigning the following errors:

I. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT GAVE
DUE COURSE TO THE PETITION FOR CERTIORARI DESPITE THE FACT THAT THERE WAS NO
SHOWING THAT THE NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE
OF DISCRETION.
II. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO THE LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT
BASED ITS FINDING THAT RESPONDENT IS ENTITLED TO REGULAR EMPLOYMENT ON A
PROVISION OF LAW THAT THIS HONORABLE COURT HAS DECLARED TO BE INAPPLICABLE IN
CASE THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP IS IN DISPUTE OR IS THE
FACT IN ISSUE.
III. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT
ERRONEOUSLY FOUND THAT RESPONDENT IS A REGULAR EMPLOYEE OF THE COMPANY.
IV. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT

Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a

question of fact and that the findings thereon by the Labor Arbiter and the NLRC shall be accorded not
only respect but even finality when supported by substantial evidence. 17 Being a question of fact, the
determination whether such a relationship exists between petitioner and respondent was well within the
province of the Labor Arbiter and the NLRC. Being supported by substantial evidence, such
determination should have been accorded great weight by the CA in resolving the issue.
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to
the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the power to control the employee's conduct, or the so-called "control
test."18 Of these four, the last one is the most important. 19 The so-called "control test" is commonly
regarded as the most crucial and determinative indicator of the presence or absence of an employeremployee relationship. Under the control test, an employer-employee relationship exists where the
person for whom the services are performed reserves the right to control not only the end achieved, but
also the manner and means to be used in reaching that end.20
Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at
bar. Among other things, respondent was not required to report everyday during regular office hours of
petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a local
restaurant. More importantly, petitioner did not prescribe the manner in which respondent would
accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent was left

alone and given the freedom to accomplish the tasks using his own means and method. Respondent was
assigned tasks to perform, but petitioner did not control the manner and methods by which respondent
performed these tasks. Verily, the absence of the element of control on the part of the petitioner
engenders a conclusion that he is not an employee of the petitioner.
Moreover, the absence of the parties' retainership agreement notwithstanding, respondent clearly
admitted that petitioner hired him in a limited capacity only and that there will be no employer-employee
relationship between them. As averred in respondent's Position Paper: 21
2. For the participation of complainant regarding this particular problem of Atok, Mr. Torres offered him a
pay in the amount of Php3,000.00 per month plus representation expenses. It was also agreed by Mr.
Torres and the complainant that his participation on this particular problem of Atok will be temporary
since the problem was then contemplated to be limited in nature, hence, there will be no employeremployee relationship between him and Atok. Complainant agreed on this arrangement. It was also
agreed that complainant's compensations, allowances, representation expenses and reimbursement of
company- related expenses will be processed and paid through disbursement vouchers;22
Respondent was well aware of the agreement that he was hired merely as a liaison or consultant of the
petitioner and he agreed to perform tasks for the petitioner on a temporary employment status only.
However, respondent anchors his claim that he became a regular employee of the petitioner based on
his contention that the "temporary" aspect of his job and its "limited" nature could not have lasted for
eleven years unless some time during that period, he became a regular employee of the petitioner by
continually performing services for the company.
Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee of
petitioner. The appellate court's premise that regular employees are those who perform activities which
are desirable and necessary for the business of the employer is not determinative in this case. In fact,
any agreement may provide that one party shall render services for and in behalf of another, no matter
how necessary for the latter's business, even without being hired as an employee. 23 Hence, respondent's
length of service and petitioner's repeated act of assigning respondent some tasks to be performed did
not result to respondent's entitlement to the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he
still cannot be considered as a regular employee of petitioner. Article 280 of the Labor Code, in which the
lower court used to buttress its findings that respondent became a regular employee of the petitioner, is
not applicable in the case at bar. Indeed, the Court has ruled that said provision is not the yardstick for
determining the existence of an employment relationship because it merely distinguishes between two
kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right
of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply
where the existence of an employment relationship is in dispute. 24 It is, therefore, erroneous on the part
of the Court of Appeals to rely on Article 280 in determining whether an employer-employee relationship
exists between respondent and the petitioner
Considering that there is no employer-employee relationship between the parties, the termination of
respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting his
reinstatement and the payment of full backwages, allowances and other benefits.
WHEREFORE, premises considered, the petition is GRANTED. The Decision and the Resolution of the
Court of Appeals in CA-G.R. SP No. 87846, are REVERSED and SET ASIDE. The Resolutions dated
July 30, 2004 and September 30, 2004 of the National Labor Relations Commission are REINSTATED.

G.R. No. 177937

January 19, 2011

ROBINSONS GALLERIA/ROBINSONS SUPERMARKET CORPORATION and/or JESS MANUEL,

Petitioners,
vs.
IRENE R. RANCHEZ, Respondent.

In dismissing the complaint for illegal dismissal, the Labor Arbiter ratiocinated that at the time respondent
filed the complaint for illegal dismissal, she was not yet dismissed by petitioners. When she was stripsearched by the security personnel of petitioner Supermarket, the guards were merely conducting an
investigation. The subsequent referral of the loss to the police authorities might be considered routine.
Respondents non-reporting for work after her release from detention could be taken against her in the
investigation that petitioner supermarket would conduct.12
On appeal, the National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter
in a decision13 dated October 20, 2003. The dispositive portion of the decision reads:

DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the
Decision1 dated August 29, 2006 and the Resolution2 dated May 16, 2007 of the Court of Appeals (CA) in
CA-G.R. SP No. 91631.
The Facts
The facts of the case are as follows.
Respondent was a probationary employee of petitioner Robinsons Galleria/Robinsons Supermarket
Corporation (petitioner Supermarket) for a period of five (5) months, or from October 15, 1997 until March
14, 1998.3 She underwent six (6) weeks of training as a cashier before she was hired as such on October
15, 1997.4
Two weeks after she was hired, or on October 30, 1997, respondent reported to her supervisor the loss
of cash amounting to Twenty Thousand Two Hundred Ninety-Nine Pesos (P20,299.00) which she had
placed inside the company locker. Petitioner Jess Manuel (petitioner Manuel), the Operations Manager of
petitioner Supermarket, ordered that respondent be strip-searched by the company guards. However, the
search on her and her personal belongings yielded nothing.5
Respondent acknowledged her responsibility and requested that she be allowed to settle and pay the lost
amount. However, petitioner Manuel did not heed her request and instead reported the matter to the
police. Petitioner Manuel likewise requested the Quezon City Prosecutors Office for an inquest. 6
On November 5, 1997, an information for Qualified Theft was filed with the Quezon City Regional Trial
Court. Respondent was constrained to spend two weeks in jail for failure to immediately post bail in the
amount of Forty Thousand Pesos (P40,000.00).7
On November 25, 1997, respondent filed a complaint for illegal dismissal and damages.

On March 12, 1998, petitioners sent to respondent by mail a notice of termination and/or notice of
expiration of probationary employment dated March 9, 1998.9
10

On August 10, 1998, the Labor Arbiter rendered a decision, the fallo of which reads:
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered dismissing the claim of illegal
dismissal for lack of merit.
Respondents are ordered to accept complainant to her former or equivalent work without prejudice to any
action they may take in the premises in connection with the missing money of P20,299.00.
SO ORDERED.11

WHEREFORE, the appealed decision is SET ASIDE. The respondents are hereby ordered to
immediately reinstate complainant to her former or equivalent position without loss of seniority rights and
privileges and to pay her full backwages computed from the time she was constructively dismissed on
October 30, 1997 up to the time she is actually reinstated.
SO ORDERED.14
In reversing the decision of the Labor Arbiter, the NLRC ruled that respondent was denied due process
by petitioners. Strip-searching respondent and sending her to jail for two weeks certainly amounted to
constructive dismissal because continued employment had been rendered impossible, unreasonable,
and unlikely. The wedge that had been driven between the parties was impossible to ignore. 15 Although
respondent was only a probationary employee, the subsequent lapse of her probationary contract of
employment did not have the effect of validly terminating her employment because constructive dismissal
had already been effected earlier by petitioners.16
Petitioners filed a motion for reconsideration, which was denied by the NLRC in a resolution 17 dated July
21, 2005.
Petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. On August 29,
2006, the CA rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the challenged Decision of the National Labor Relations
Commission is AFFIRMED with MODIFICATION in that should reinstatement be no longer possible in
view of the strained relation between the parties, Petitioners are ordered to pay Respondent separation
pay equivalent to one (1) month pay in addition to backwages from the date of dismissal until the finality
of the assailed decision.
SO ORDERED.18
Petitioners filed a motion for reconsideration. However, the CA denied the same in a Resolution dated
May 16, 2007.
Hence, this petition.
Petitioners assail the reinstatement of respondent, highlighting the fact that she was a probationary
employee and that her probationary contract of employment lapsed on March 14, 1998. Thus, her
reinstatement was rendered moot and academic. Furthermore, even if her probationary contract had not
yet expired, the offense that she committed would nonetheless militate against her regularization. 19
On the other hand, respondent insists that she was constructively dismissed by petitioner Supermarket
when she was strip-searched, divested of her dignity, and summarily thrown in jail. She could not have
been expected to go back to work after being allowed to post bail because her continued employment
had been rendered impossible, unreasonable, and unlikely. She stresses that, at the time the money was
discovered missing, it was not with her but locked in the company locker. The company failed to provide
its cashiers with strong locks and proper security in the work place. Respondent argues that she was not
caught in the act and even reported that the money was missing. She claims that she was denied due
process.20

The Issue
The sole issue for resolution is whether respondent was illegally terminated from employment by
petitioners.
The Ruling of the Court
We rule in the affirmative.
There is probationary employment when the employee upon his engagement is made to undergo a trial
period during which the employer determines his fitness to qualify for regular employment based on
reasonable standards made known to him at the time of engagement.21
A probationary employee, like a regular employee, enjoys security of tenure. 22 However, in cases of
probationary employment, aside from just or authorized causes of termination, an additional ground is
provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for
failure to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of the engagement. Thus, the services of an employee who has
been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an
authorized cause; and (3) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.23
Article 277(b) of the Labor Code mandates that subject to the constitutional right of workers to security of
tenure and their right to be protected against dismissal, except for just and authorized cause and without
prejudice to the requirement of notice under Article 283 of the same Code, the employer shall furnish the
worker, whose employment is sought to be terminated, a written notice containing a statement of the
causes of termination, and shall afford the latter ample opportunity to be heard and to defend himself with
the assistance of a representative if he so desires, in accordance with company rules and regulations
pursuant to the guidelines set by the Department of Labor and Employment.
In the instant case, based on the facts on record, petitioners failed to accord respondent substantive and
procedural due process. The haphazard manner in the investigation of the missing cash, which was left
to the determination of the police authorities and the Prosecutors Office, left respondent with no choice
but to cry foul. Administrative investigation was not conducted by petitioner Supermarket. On the same
day that the missing money was reported by respondent to her immediate superior, the company already
pre-judged her guilt without proper investigation, and instantly reported her to the police as the suspected
thief, which resulted in her languishing in jail for two weeks.
As correctly pointed out by the NLRC, the due process requirements under the Labor Code are
mandatory and may not be supplanted by police investigation or court proceedings. The criminal aspect
of the case is considered independent of the administrative aspect. Thus, employers should not rely
solely on the findings of the Prosecutors Office. They are mandated to conduct their own separate
investigation, and to accord the employee every opportunity to defend himself. Furthermore, respondent
was not represented by counsel when she was strip-searched inside the company premises or during the
police investigation, and in the preliminary investigation before the Prosecutors Office.
Respondent was constructively dismissed by petitioner Supermarket effective October 30, 1997. It was
unreasonable for petitioners to charge her with abandonment for not reporting for work upon her release
in jail. It would be the height of callousness to expect her to return to work after suffering in jail for two
weeks. Work had been rendered unreasonable, unlikely, and definitely impossible, considering the
treatment that was accorded respondent by petitioners.
As to respondents monetary claims, Article 279 of the Labor Code provides that an employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges, to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. However, due to the strained relations of the parties, the payment of separation pay has
been considered an acceptable alternative to reinstatement, when the latter option is no longer desirable

or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive
work environment. On the other, the payment releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer trust.24
Thus, as an illegally or constructively dismissed employee, respondent is entitled to: (1) either
reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These
two reliefs are separate and distinct from each other and are awarded conjunctively.25lavvphil
In this case, since respondent was a probationary employee at the time she was constructively dismissed
by petitioners, she is entitled to separation pay and backwages. Reinstatement of respondent is no
longer viable considering the circumstances.1avvphi1
However, the backwages that should be awarded to respondent shall be reckoned from the time of her
constructive dismissal until the date of the termination of her employment, i.e., from October 30, 1997 to
March 14, 1998. The computation should not cover the entire period from the time her compensation was
withheld up to the time of her actual reinstatement. This is because respondent was a probationary
employee, and the lapse of her probationary employment without her appointment as a regular employee
of petitioner Supermarket effectively severed the employer-employee relationship between the parties.
In all cases involving employees engaged on probationary basis, the employer shall make known to its
employees the standards under which they will qualify as regular employees at the time of their
engagement. Where no standards are made known to an employee at the time, he shall be deemed a
regular employee,26 unless the job is self-descriptive, like maid, cook, driver, or messenger. However, the
constitutional policy of providing full protection to labor is not intended to oppress or destroy
management.27 Naturally, petitioner Supermarket cannot be expected to retain respondent as a regular
employee considering that she lost P20,299.00 while acting as a cashier during the probationary period.
The rules on probationary employment should not be used to exculpate a probationary employee who
acts in a manner contrary to basic knowledge and common sense, in regard to which, there is no need to
spell out a policy or standard to be met.28
WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals in
CA-G.R. SP No. 91631 is hereby AFFIRMED with the MODIFICATION that petitioners are hereby
ordered to pay respondent Irene R. Ranchez separation pay equivalent to one (1) month pay and
backwages from October 30, 1997 to March 14, 1998.Costs against petitioners.

G.R. No. 149859

June 9, 2004

RADIN
C.
ALCIRA,
petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MIDDLEBY PHILIPPINES CORPORATION/FRANK
THOMAS, XAVIER G. PEA and TRIFONA F. MAMARADLO, respondents.
DECISION
CORONA, J.:

Even assuming, arguendo, that petitioner was not informed of the reasonable standards
required of him by Middleby, the same is not crucial because there is no termination to speak
of but rather expiration of contract. Petitioner loses sight of the fact that his employment was
probationary, contractual in nature, and one with a definite period. At the expiration of the
period stipulated in the contract, his appointment was deemed terminated and a notice or
termination letter informing him of the non-renewal of his contract was not necessary.
While probationary employees enjoy security of tenure such that they cannot be removed
except for just cause as provided by law, such protection extends only during the period of
probation. Once that period expired, the constitutional protection could no longer be invoked.
Legally speaking, petitioner was not illegally dismissed. His contract merely expired.8
Hence, this petition for review based on the following assignment of errors:

Before us on appeal is the decision of the Court of Appeals dated June 22, 2001 affirming the decision
of the National Labor Relations Commission4 dated March 23, 1999 which, in turn, affirmed the decision 5
of labor arbiter Pedro Ramos dated May 19, 1998 dismissing petitioner Radin Alciras complaint for illegal
dismissal with prayer for reinstatement, backwages, moral damages, exemplary damages and attorneys
fees.
The facts follow.
Respondent Middleby Philippines Corporation (Middleby) hired petitioner as engineering support services
supervisor on a probationary basis for six months. Apparently unhappy with petitioners performance,
respondent Middleby terminated petitioners services. The bone of contention centered on whether the
termination occurred before or after the six-month probationary period of employment.

I
The Court of Appeals gravely erred, blatantly disregarded the law and established
jurisprudence, in upholding the decision of the National Labor Relations Commission.
II
The Court of Appeals gravely erred and blatantly disregarded the law in holding that
probationary employment is employment for a definite period.
III

The parties, presenting their respective copies of Alciras appointment paper, claimed conflicting starting
dates of employment: May 20, 1996 according to petitioner and May 27, 1996 according to respondent.
Both documents indicated petitioners employment status as "probationary (6 mos.)" and a remark that
"after five months (petitioners) performance shall be evaluated and any adjustment in salary shall
depend on (his) work performance."6

The Court of Appeals gravely erred in holding that an employer can be presumed to have
complied with its duty to inform the probationary employee of the standards to make him a
regular employee.
IV

Petitioner asserts that, on November 20, 1996, in the presence of his co-workers and subordinates, a
senior officer of respondent Middleby in bad faith withheld his time card and did not allow him to work.
Considering this as a dismissal "after the lapse of his probationary employment," petitioner filed on
November 21, 1996 a complaint in the National Labor Relations Commission (NLRC) against respondent
Middleby contending that he had already become a regular employee as of the date he was illegally
dismissed. Included as respondents in the complaint were the following officers of respondent Middleby:
Frank Thomas (General Manager), Xavier Pea (Human Resources Manager) and Trifona Mamaradlo
(Engineering Manager).
In their defense, respondents claim that, during petitioners probationary employment, he showed poor
performance in his assigned tasks, incurred ten absences, was late several times and violated company
rules on the wearing of uniform. Since he failed to meet company standards, petitioners application to
become a regular employee was disapproved and his employment was terminated.
On May 19, 1998, the labor arbiter dismissed the complaint on the ground that: (1) respondents were
able to prove that petitioner was apprised of the standards for becoming a regular employee; (2)
respondent Mamaradlos affidavit showed that petitioner "did not perform well in his assigned work and
his attitude was below par compared to the companys standard required of him" and (3) petitioners
dismissal on November 20, 1996 was before his "regularization," considering that, counting from May 20,
1996, the six-month probationary period ended on November 20, 1996.7
On March 23, 1999, the NLRC affirmed the decision of the labor arbiter.
On June 22, 2001, the Court of Appeals affirmed the judgment of the NLRC. According to the appellate
court:

The Court of Appeals gravely erred and failed to afford protection to labor in not applying to the
instant case the doctrine laid down by this Honorable Court in Serrano vs. NLRC, et. al., G.R.
No. 117040, January 27, 2000.9
Central to the matter at hand is Article 281 of the Labor Code which provides that:
ART. 281. PROBATIONARY EMPLOYMENT. Probationary employment shall not exceed six
(6) months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee who has
been engaged on a probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work
after a probationary period shall be considered a regular employee.
The first issue we must resolve is whether petitioner was allowed to work beyond his
probationary period and was therefore already a regular employee at the time of his alleged
dismissal. We rule in the negative.
Petitioner claims that under the terms of his contract, his probationary employment was only
for five months as indicated by the remark "Please be informed that after five months, your
performance shall be evaluated and any adjustment in salary shall depend on your work
performance." The argument lacks merit. As correctly held by the labor arbiter, the appointment
contract also stated in another part thereof that petitioners employment status was
"probationary (6 mos.)." The five-month period referred to the evaluation of his work.10

Petitioner insists that he already attained the status of a regular employee when he was dismissed on
November 20, 1996 because, having started work on May 20, 1996, the six-month probationary period
ended on November 16, 1996. According to petitioners computation, since Article 13 of the Civil Code
provides that one month is composed of thirty days, six months total one hundred eighty days. As the
appointment provided that petitioners status was "probationary (6 mos.)" without any specific date of
termination, the 180th day fell on November 16, 1996. Thus, when he was dismissed on November 20,
1996, he was already a regular employee.

In the instant case, petitioner cannot successfully say that he was never informed by private
respondent of the standards that he must satisfy in order to be converted into regular status.
This rans (sic) counter to the agreement between the parties that after five months of service
the petitioners performance would be evaluated. It is only but natural that the evaluation
should be made vis--vis the performance standards for the job. Private respondent Trifona
Mamaradlo speaks of such standard in her affidavit referring to the fact that petitioner did not
perform well in his assigned work and his attitude was below par compared to the companys
standard required of him.13

Petitioners contention is incorrect. In CALS Poultry Supply Corporation, et. al. vs. Roco, et. al.,11 this
Court dealt with the same issue of whether an employment contract from May 16, 1995 to November 15,
1995 was within or outside the six-month probationary period. We ruled that November 15, 1995 was still
within the six-month probationary period. We reiterate our ruling in CALS Poultry Supply:

The third issue for resolution is whether petitioner was illegally dismissed when respondent Middleby
opted not to renew his contract on the last day of his probationary employment.

(O)ur computation of the 6-month probationary period is reckoned from the date of
appointment up to the same calendar date of the 6th month following.(italics supplied)

It is settled that even if probationary employees do not enjoy permanent status, they are accorded the
constitutional protection of security of tenure. This means they may only be terminated for just cause or
when they otherwise fail to qualify as regular employees in accordance with reasonable standards made
known to them by the employer at the time of their engagement.14

In short, since the number of days in each particular month was irrelevant, petitioner was still a
probationary employee when respondent Middleby opted not to "regularize" him on November 20, 1996.
The second issue is whether respondent Middleby informed petitioner of the standards for
"regularization" at the start of his employment.
Section 6 (d) of Rule 1 of the Implementing Rules of Book VI of the Labor Code (Department Order No.
10, Series of 1997) provides that:
xxx

xxx

xxx

(d) In all cases of probationary employment, the employer shall make known to the employee
the standards under which he will qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that time, he shall be deemed a
regular employee.
xxx

xxx

xxx

We hold that respondent Middleby substantially notified petitioner of the standards to qualify as
a regular employee when it apprised him, at the start of his employment, that it would evaluate
his supervisory skills after five months. In Orient Express Placement Philippines vs. National
Labor Relations Commission,12 we ruled that an employer failed to inform an employee of the
reasonable standards for becoming a regular employee:
Neither private respondent's Agency-Worker Agreement with ORIENT EXPRESS nor
his Employment Contract with NADRICO ever mentioned that he must first take and
pass a Crane Operator's License Examination in Saudi Arabia before he would be
allowed to even touch a crane. Neither did he know that he would be assigned as
floorman pending release of the results of the examination or in the event that he
failed; more importantly, that he would be subjected to a performance
evaluation by his superior one (1) month after his hiring to determine whether
the company was amenable to continuing with his employment. Hence,
respondent Flores could not be faulted for precisely harboring the impression that he
was hired as crane operator for a definite period of one (1) year to commence upon
his arrival at the work-site and to terminate at the end of one (1) year. No other
condition was laid out except that he was to be on probation for three (3)
months.(emphasis supplied)
Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he
apprises the employee that he will be subjected to a performance evaluation on a particular date after his
hiring. We agree with the labor arbiter when he ruled that:

But we have also ruled in Manlimos, et. al. vs. National Labor Relations Commission 15 that this
constitutional protection ends on the expiration of the probationary period. On that date, the parties are
free to either renew or terminate their contract of employment. Manlimos concluded that "(t)his
development has rendered moot the question of whether there was a just cause for the dismissal of the
petitioners xxx."16 In the case at bar, respondent Middleby exercised its option not to renew the contract
when it informed petitioner on the last day of his probationary employment that it did not intend to grant
him a regular status.
Although we can regard petitioners severance from work as dismissal, the same cannot be deemed
illegal. As found by the labor arbiter, the NLRC and the Court of Appeals, petitioner (1) incurred ten
absences (2) was tardy several times (3) failed to wear the proper uniform many times and (4) showed
inferior supervisory skills. Petitioner failed to satisfactorily refute these substantiated allegations. Taking
all this in its entirety, respondent Middleby was clearly justified to end its employment relationship with
petitioner.
WHEREFORE, the petition is hereby DENIED.

G.R. No. 150660

The National Labor Relations Commission (NLRC), in a decision promulgated on January 17, 2000,
affirmed the judgment of the Labor Arbiter.

July 30, 2002

CALS
POULTRY
SUPPLY
CORPORATION
and
vs.
ALFREDO ROCO and CANDELARIA ROCO, respondents.

DANILO

YAP,

petitioners,

On appeal by Alfredo, Candelaria and Edna Roco to the Court of Appeals, the appellate court set aside
the NLRC's decision and ordered reinstatement of Alfredo and Candelaria Roco to their former positions
without loss of seniority of rights and benefits, with full payment of backwages. However, in the case of
Edna Roco, the Court of Appeals found that her appeal cannot be favorably considered as she actually
abandoned her work without justification.

KAPUNAN, J.:
For our resolution is the motion for reconsideration of the Court's minute Resolution dated April 1, 2002,
denying the petition for review filed by CALS Poultry Supply Corporation (hereinafter referred to as
CALS) of the Court of Appeal's decision in favor of herein private respondents Alfredo Roco and
Candelaria Roco. The Court of Appeals reversed the decision of the National Labor Relations
Commission affirming the Labor Arbiter's decision which dismissed private respondents' complaint for
illegal dismissal against CALS. Private respondents filed a comment on the motion for reconsideration as
required by the Court.1wphi1.nt
CALS Poultry Supply Corporation is engaged in the business of selling dressed chicken and other related
products and managed by Danilo Yap.1
On March 15, 1984, CALS hired Alfredo Roco as its driver. On the same date, CALS hired Edna Roco,
Alfredo's sister, as a helper in the dressing room of CALS. 2 On May 16, 1995, it hired Candelaria Roco,
another sister, as helper,3 also at its chicken dressing plant on a probationary basis.
On March 5, 1996, Alfredo Roco and Candelaria Roco filed a complaint for illegal dismissal against CALS
and Danilo Yap alleging that Alfredo and Candelaria were illegally dismissed on January 20, 1996 and
November 5, 1996, respectively.4 Both also claimed that they were underpaid of their wages. 5 Edna
Roco, likewise, filed a complaint for illegal dismissal, alleging that on June 26, 1996, she was reassigned
to the task of washing dirty sacks and for this reason, in addition to her being transferred from night shift
to day time duties, which she considered as management act of harassment, she did not report for work. 6
According to Alfredo Roco, he was dismissed on January 20, 1996 when he refused to accept
P30,000.00 being offered to him by CALS' lawyer, Atty. Myra Cristela A. Yngcong, in exchange for his
executing a letter of voluntary resignation. On the part of Candelaria Roco, she averred that she was
terminated without cause from her job as helper after serving more than six (6) months as probationary
employee.
The Labor Arbiter on April 16, 1998, issued a decision dismissing the complaints for illegal dismissal for
lack of merit. The Labor Arbiter found that Alfredo Roco applied for and was granted a leave of absence
for the period from January 4 to 18, 1996. He did not report back for work after the expiration of his leave
of absence, prompting CALS, through its Chief Maintenance Officer to send him a letter on March 12,
1996 inquiring if he still had intentions of resuming his work. Alfredo Roco did not respond to the letter
despite receipt thereof, thus, Alfredo was not dismissed; it was he who unilaterally severed his relation
with his employer.7
In the case of Candelaria Roco, the Labor Arbiter upheld CALS' decision not to continue with her
probationary employment having been found her unsuited for the work for which her services were
engaged. She was hired on May 16, 1995 and her services were terminated on November 15, 1995.
Edna Roco, according to the Labor Arbiter, began absenting herself on June 25, 1996. She was sent a
memo on July 1, 1996 requiring her to report for work immediately, but she did not respond.8
In their position papers, the complainants claimed that they were not given their overtime pay, premium
pay for holidays, premium pay for rest days, 13 th month pay, allowances. They were also not given their
separation pay after their dismissal. The Labor Arbiter, however, denied their claims, stating that they had
not substantiated the same; on the other hand, CALS presented evidence showing that complainants
received the correct salaries and related benefits.

In holding that Alfredo Roco did not abandon his employment, but was illegally dismissed, the Court of
Appeals ratiocinated:
xxx (P)etitioner Alfredo can not be said to have abandoned his employment. The failure of
Alfredo to report for work was justified under the circumstances. The positive assertion of
petitioner that when he reported for work on January 20, 1996, he was told that his services
were already terminated is more convincing than the mere denial of respondent Danilo Yap.
Petitioner Alfredo's failure to inquire from private respondent as to the cause of his dismissal
should not be taken against him. It should be noted that when the secretary of respondent
Danilo Yap conveyed the order of dismissal, Alfredo took steps to verify the same from the
company's Chief Maintenance Officer Rolando Sibugan who confirmed said order. The filing of
the illegal dismissal case against CALS by petitioner Alfredo negates the charge of
abandonment. Private respondent failed to show that Alfredo clearly and unequivocably
performed overt acts to sever the employer-employee relationship.
xxx
In termination cases, the burden of proving just and valid cause for dismissing an employee
from his employment rests upon the employer, and the latter's failure to do so would result in a
finding that the dismissal is unjustified. Abandonment as a just and valid ground for termination
means the deliberate, unjustified refusal of the employee to resume his employment, and the
burden of proof is on the employer to show a clear, deliberate and unequivocal intent on the
part of the employee to discontinue employment without any intention of returning. Other than
its self-serving claim that petitioner Alfredo did not report for work, private respondent failed to
adduce other evidence of any overt act of Alfredo showing an intent to abandon his work. In
short, private respondent failed to discharge the burden.
Moreover, not only was there a lack of a valid cause for the dismissal of petitioner Alfredo; the
record of the case is devoid of any evidence that Alfredo was afforded his right to due process.
If Alfredo was dismissed because of his abandonment of work, CALS should have given him a
written notice of termination in accordance with Section 2, Rule XVI, Book V of the Omnibus
Rules Implementing the Labor Code which provides:
Section 2. Notice of Dismissal. Any employer who seeks to dismiss a worker shall
furnish him a written notice stating the particular acts or omission constituting the
grounds for his dismissal. In cases of abandonment of work, the notice shall be
served at the worker's last known address.
In the instant case, private respondent failed to present as evidence such notice despite every
company's standard policy to record and file every transaction including notices of termination.
CALS' contention that the letter of Rolando Sibugan inquiring from Alfredo whether he still had
intention of resuming work is a manifestation of its willingness to reinstate the latter to his
former position, thereby negating any intention on its part to dismiss Alfredo, is not well-taken.
The fact that the employer later made an offer to re-employ Alfredo did not cure the vice of his
earlier arbitrary dismissal. The wrong had been committed and the harm done. Notably, it was
only after the complaint had been filed that CALS, in a belated gesture of good will, sought to
invite Alfredo back to work. CALS' sincerity is suspect. Its offer of reinstatement is doubtful
since the same could not have been made if Alfredo had not complained against it. Whether

the offer was sincere or not, the same could not correct the earlier illegal dismissal of Alfredo. It
must be borne in mind that CALS' offer to reinstate Alfredo was obviously an attempt to escape
liability from having illegally terminated the latter's services. Hence, CALS incurred liability
under the Labor Code from the moment Alfredo was illegally dismissed, and the liability was
not abated as a result of CALS' offer to reinstate.9
In ruling in favor of Candelaria Roco, the appellate court held that when her employment was terminated
on November 15, 1995 (she was hired on May 16, 1995), it was four (4) days after she ceased to be a
probationary employee and became a regular employee within the ambit of Article 281 of the Labor
Code, which provides:
ART. 281. Probationary employment. - Probationary employment shall not exceed six months
from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on
a probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
Not satisfied with the decision of the Court of Appeals, CALS and Danilo Yap brought before us the
petition for review on certiorari claiming that said court erred in ruling that respondents Alfredo Roco and
Candelaria Roco were illegally dismissed and that they are entitled to any money claims.1wphi1.nt
In considering that Alfredo Roco was illegally dismissed, the Court of Appeals relied on his allegation that
on January 20, 1996 when he reported for work, following his leave of absence from January 10 to 18,
1996, he learned from Elvie Acantelado, a secretary of Danilo Yap that he was already separated from
his employment.
Yet, as observed in the decision of the NLRC, he did not even attempt to verify from Danilo Yap, the
owner and general manager of CALS, if his employment was being terminated and the cause of the
termination. Elvie Acantelado denied vehemently having told Alfredo that he was being dismissed.
Private respondents also stated in their position paper that Alfredo was told by CALS' lawyer to sign a
resignation letter in consideration of P30,000.00. Strangely, apart from this bare allegation, which finds
no corroboration, there is no explanation when, where and how was the offer made. Alfredo did not
advance any theory why CALS wanted him to resign. Atty. Myra Cristela Yngcong, counsel for CALS'
categorically denied having offered Alfredo Roco P30,000.00 in exchange for his resignation. She
explained that, in fact, she met Alfredo for the first time when he appeared before the Labor Arbiter on
April 23, 1996.
On Alfredo's assertion that CALS' letter dated March 12, 1996 asking him to report for duty was just an
afterthought because it was sent after Alfredo filed his complaint for illegal dismissal on March 5, 1996.
CALS maintains that it came to know of the complaint filed by the Rocos with the Labor Arbiter only on
April 4, 1996 when it received the Notification and Summons dated March 25, 1996 from the Labor
Arbiter.
On the other hand, CALS imputed an ulterior motive for the complaint filed by the Rocos against it. It said
it was manipulated by their relatives Domingo Roco against whom CALS filed several criminal cases for
violation of B.P. Blg. 22 on account of Domingo Roco's failure to fund the checks he issued as payment
for CALS products he had purchase.

In Chong Guan Trading v. NLRC, et al.,10 we held:

After a careful examination of the events that gave rise to the present controversy as shown by
the records, the Court is convinced that private respondent was never dismissed by the
petitioner. Even if it were true that Mariano Lim ordered private respondent to go and that at
that time he intended to dismiss private respondent, the record is bereft of evidence to show
that he carried out this intention. Private respondent was not even notified that he had been
dismissed. Nor was he prevented from returning to his work after the October 28 incident. The
only thing that is established from the record, and which is not disputed by the parties, is that
private respondent Chua did not return to his work after his heated argument with the Lim
brothers.
xxx
In this case, private respondent's failure to work was due to the misunderstanding between the
petitioner's management and private respondent. As correctly observed by the Labor Arbiter,
private respondent must have construed the October 28 incident as his dismissal so that he
opted not to work for many days thereafter and instead filed a complaint for illegal dismissal.
On the other hand, petitioner interpreted private respondent's failure to report for work as an
intentional abandonment. However, there was no intent to dismiss private respondent since the
petitioner is willing to reinstate him. Nor was there an intent to abandon on the part of private
respondent since he immediately filed a complaint for illegal dismissal soon after the October
28 incident. It would be illogical for private respondent to abandon his work and then
immediately file an action seeking his reinstatement xxx. Under these circumstances, it is but
fair that each party must bear his own loss, thus placing the parties on equal footing.
xxx.
With respect to Candelaria Roco, there is no dispute that she was employed on probationary basis. She
was hired on May 16, 1995 and her services were terminated on November 15, 1995 due to poor work
performance. She did not measure up to the work standards on the dressing of chicken. The Labor
Arbiter sustained CALS in terminating her employment. The NLRC affirmed the Labor Arbiter's ruling.
The Court of Appeals did not disagree with the NLRC's finding that Candelaria was dismissed because
she did not qualify as a regular employee in accordance with the reasonable standards made known by
the company to her at the time of her employment.11
The standards required by the National Meat Inspection Commission for dressing plants with Double
"AA" Rating to which CALS' employee were brief and with regard to which Candelaria failed to comply
are stated in part in the affidavit dated March 7, 1997 of Rolly Villaeba, Cold Storage Supervisor of CALS'
Dressing Plant:
xxx
2. As Cold Storage Supervisor of Cals; Dressing Plant, I am responsible among others, for
briefing the new employee on the workflow in the dressing plant, the nature of their respective
jobs pursuant to the said workflow, and the work standards required of them by Cals, as well
as seeing to it that Cals work standards are complied with/followed by the employees.
xxx

From the facts established, we are of the view that Alfredo Roco has not established convincingly that he
was dismissed. No notice of termination was given to him by CALS. There is no proof at all, except his
self-serving assertion, that he was prevented from working after the end of his leave of absence on
January 18, 1996. In fact, CALS notified him in a letter dated March 12, 1996 to resume his work. Both
the Labor Arbiter and the NLRC found that Alfredo, as well as Candelaria Roco, was not dismissed. Their
findings of fact are entitled to great weight.

4. It is the NMIC standard that the dressing of chickens and its parts must stricly (sic) observe
the chronological order of the following workflow, to wit:
1. Depinning

2. Detoing

Deputy Minister of Labor,13 our computation of the 6-month probationary period is reckoned from the date
of appointment up to the same calendar date of the 6th month following. Thus, we held:

3. Removals of entrails/cecum/liver/Gizzard/heart/ Bile

4. Removal of Lungs
5. First Wash
6. Second Wash
7. Third Wash
8. Carcass Quality Control
a. Selection of Carcass
b. Leg Bonding
c. Weighing
d. First Chilling
e. Final Chilling
xxx
9. For the duration of Candelaria Roco's probationary employment, she failed to comply with
Cals standards in the work assigned to her. First, she frequently failed to observe the allowable
inches to be cut, which must only be 1.5 inches, in performing the surgical incision of the
chicken butt, either she cuts it too long, thereby distorting the appearance of the chickens or
she cuts it too short, thereby making it difficult to remove the chicken parts without damaging
these parts; Second, she frequently mishandles the pull-out of chicken parts, such that, she
damaged said parts; Third, she frequently completes her assigned tasks in twenty (20) to even
twenty-five (25) seconds, over and above the required time limit, which is only eight (8) to ten
(10) seconds. Resultantly, the chickens/parts which passed through her hands frequently suffer
from premature decomposition/bacterial or salmonella contamination;
10. By reason of the foregoing, Cals' management deemed it best to terminate her
probationary employment.
xxx12
However, the Court of Appeals set aside the NLRC ruling on the ground that at the time Candelaria's
services were terminated, she had attained the status of a regular employee as the termination on
November 15, 1995 was effected four (4) days after the 6-month probationary period had expired, hence,
she is entitled to security of tenure in accordance with Article 281 of the Labor Code.
CALS argues that the Court of Appeals' computation of the 6-month probationary period is erroneous as
the termination of Candelaria's services on November 15, 1995 was exactly on the last day of the 6month period.
We agree with CALS' contention as upheld by both the Labor Arbiter and the NLRC that Candelaria's
services was terminated within and not beyond the 6-month probationary period. In Cebu Royal v.

The original findings were contained in a one-page order reciting simply that 'complainant was
employed on a probationary period of employment for six (6) months. After said period, he
underwent medical examination for qualification as regular employee but the results showed
that he is suffering from PTB minimal. Consequently, he was informed of the termination of his
employment by respondent.' The order then concluded that the termination was 'justified.' That
was all.1wphi1.nt
As there is no mention of the basis of the above order, we may assume it was the temporary
payroll authority submitted by the petitioner showing that the private respondent was employed
on probation on February 16, 1978. Even supposing that it is not self-serving, we find
nevertheless that it is self-defeating. The six-month period of probation started from the said
date of appointment and so ended on August 17, 1978, but it is not shown that the private
respondent's employment also ended then; on the contrary, he continued working as usual.
Under Article 282 of the Labor Code, 'an employee who is allowed to work after a probationary
period shall be considered a regular employee.'' Hence, Pilones was already on permanent
status when he was dismissed on August 21, 1978, or four days after he ceased to be a
probationer.
WHEREFORE, our Resolution of April 1, 2002 denying the petition is hereby SET ASIDE and another
one entered REVERSING the decision of the Court of Appeals insofar as it ruled in favor of herein
respondents and the decisions of the Labor Arbiter and the National Labor Relations Commission
REINSTATED.

G.R. No. 148738

Cecille Paras, the President of the Chrysler Philippines Salaried Employees Union (CPSU) and Paras
wife, on the other.

June 29, 2004

MITSUBISHI
MOTORS
PHILIPPINES
CORPORATION,
vs.
CHRYSLER PHILIPPINES LABOR UNION and NELSON PARAS, respondents.

petitioner,

On November 3, 1997, the Voluntary Arbitrator (VA) rendered a decision finding the dismissal of Paras
valid for his failure to pass the probationary standards of MMPC. The dispositive portion of the decision
reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered finding the termination
of Mr. Paras was valid for cause his failure to pass the probationary period.14

DECISION
CALLEJO, SR., J.:
1

This is a petition for review on certiorari of the Decision of the Court of Appeals in CA-GR SP No. 46030
and the Resolution denying the motion for reconsideration filed by petitioner Mitsubishi Motors
Philippines Corporation.
The Antecedents
Mitsubishi Motors Philippines Corporation (MMPC) is a domestic corporation engaged in the assembly
and distribution of Mitsubishi motor vehicles. Chrysler Philippines Labor Union (CPLU) is a legitimate
labor organization and the duly certified bargaining agent of the hourly-paid regular rank and file
employees of MMPC. Nelson Paras was a member of CPLU. His wife, Cecille Paras, was the President
of the Chrysler Philippines Salaried Employees Union (CPSU).

The VA declared that hiring an employee on a probationary basis to determine his or her fitness for
regular employment was in accord with the MMPCs exercise of its management prerogative. The VA
pointed out that MMPC had complied with the requirement of apprising Paras of the standards of
performance evaluation and regularization at the inception of his probationary employment. The VA
agreed with the MMPC that the termination of Paras employment was effected prior to the expiration of
the six-month probationary period. As to Paras contention that he was already a regular employee before
he was dismissed in 1994 considering that he had an accumulated service of eleven (11) months, the VA
ruled that Paras delay in filing a complaint for regularization only in 1996, for services rendered in
October 1994 to March 1995, militated against him. The VA stated that Paras dismissal was based on
the unsatisfactory performance rating given to him by his direct supervisors Lito Lacambacal and
Wilfredo Lopez. The VA also found that the alleged heated argument between Atty. Carlos S. Cao, the
Labor Relations Manager of MMPC, and Cecille Paras, the President of CPSU, was irrelevant in the
termination of Paras services.15
The Case Before the Court of Appeals

Nelson Paras was first employed by MMPC as a shuttle bus driver on March 19, 1976. He resigned on
June 16, 1982. He applied for and was hired as a diesel mechanic and heavy equipment operator in
Saudi Arabia from 1982 to 1993. When he returned to the Philippines, he was re-hired as a welderfabricator at the MMPC tooling shop from October 3, 1994 to October 31, 1994. 2 On October 29, 1994,
his contract was renewed from November 1, 1994 up to March 3, 1995.3
Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing trainee at the
Plant Engineering Maintenance Department. He and the new and re-hired employees were given an
orientation on May 15, 1996 4 by Emma P. Aninipot, respecting the companys history, corporate
philosophy, organizational structure, and company rules and regulations, including the company
standards for regularization, code of conduct and company-provided benefits.5
Paras started reporting for work on May 27, 1996. He was assigned at the paint ovens, air make-up and
conveyors. As part of the MMPCs policy, Paras was evaluated by his immediate supervisors Lito R.
Lacambacal6 and Wilfredo J. Lopez7 after six (6) months, and received an average rating. Later,
Lacambacal informed Paras that based on his performance rating, he would be regularized.8
However, the Department and Division Managers, A.C. Velando and H.T. Victoria, 9 including Mr. Dante
Ong,10 reviewed the performance evaluation made on Paras. They unanimously agreed, along with
Paras immediate supervisors, that the performance of Paras was unsatisfactory.11 As a consequence,
Paras was not considered for regularization. On November 26, 1996, he received a Notice of Termination
dated November 25, 1996, informing him that his services were terminated effective the said date since
he failed to meet the required company standards for regularization. 12
Utilizing the grievance machinery in the collective bargaining agreement, the CPLU demanded the
settlement of the dispute which arose from Paras termination. 13 The dispute was thereafter submitted for
voluntary arbitration, as the parties were unable to agree on a mutually acceptable solution. CPLU
posited that Paras was dismissed on his one hundred eighty third (183rd) day of employment, or three
(3) days after the expiration of the probationary period of six (6) months. It was contended that Paras was
already a regular employee on the date of the termination of his "probationary employment."
According to CPLU and Paras, the latters dismissal was an offshoot of the heated argument during the
CBA negotiations between MMPC Labor Relations Manager, Atty. Carlos S. Cao, on the one hand, and

Aggrieved, Paras and CPLU filed a petition for review under Rule 43 of the Rules of Court before the
Court of Appeals, docketed as C.A.-G.R. SP No. 46030. They assigned the following errors:
I
THE VOLUNTARY ARBITRATOR COMMITTED A SERIOUS ERROR OF LAW IN FAILING TO
HOLD THAT THE NOTICE OF TERMINATION WAS SERVED UPON PETITIONER NELSON
PARAS AFTER HE HAS ALREADY BECOME A REGULAR EMPLOYEE, HIS PERIOD FOR
PROBATION HAVING EXPIRED.
II
THE VOLUNTARY ARBITRATOR SERIOUSLY ERRED AND GRAVELY ABUSED HIS
DISCRETION IN HOLDING THAT PETITIONER NELSON PARAS SUPPOSED DELAY IN
FILING THE ILLEGAL DISMISSAL CASE WORKED AGAINST HIM.
III
THE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION AND
COMMITTED SERIOUS ERRORS OF FACT AND LAW IN NOT HOLDING THAT THE
PERFORMANCE OF NELSON PARAS WAS SATISFACTORY AND THAT HIS DISMISSAL
WAS POLITICALLY MOTIVATED.16
Therein, Paras and CPLU asserted that pursuant to Article 13 of the New Civil Code, the period of May
27, 1996 to November 26, 1996 consisted of one hundred eighty-three (183) days. They asserted that
the maximum of the probationary period is six (6) months, which is equivalent to 180 days; as such,
Paras, who continued to be employed even after the 180th day, had become a regular employee as
provided for in Article 282 of the Labor Code. They averred that as a regular employee, Paras
employment could be terminated only for just or authorized causes as provided for under the Labor
Code, and after due notice. They posited that in the Letter of Termination dated November 25, 1996, the

ground for Paras termination was not among those sanctioned by the Labor Code; hence, his dismissal
was illegal.
Paras and CPLU also stressed that he had already been in the employ of MMPC from October 3, 1994 to
March 3, 1995 as a welder-fabricator in the production of jigs and fixtures, a function necessary and
desirable to the usual business of MMPC. Such period, in addition to the six-month probationary period,
amounted to eleven (11) months of service, which is sufficient for him to be considered as a regular
employee.
Paras and CPLU averred that the filing of an illegal dismissal complaint only after his termination in 1996
did not make Paras claim for regularization specious, since an illegally dismissed employee, like him,
has four (4) years within which to file a complaint.17
They emphasized that Paras performance evaluation was changed to unsatisfactory as an off-shoot of
the arguments between the latters wife, the President of the CPSU, and Atty. Carlos S. Cao, one of
MMPCs negotiators, over the provisions in the CBA.18

allowed to work beyond the probationary period, Paras became a regular employee. Hence, his dismissal
must be based on the just and authorized causes under the Labor Code, and in accordance with the twonotice requirement provided for in the implementing rules. The appellate court concluded that for
MMPCs failure to show that Paras was duly notified of the cause of his dismissal, the latter was illegally
dismissed; hence, his actual reinstatement without loss of seniority rights and the payment of backwages
up to the time of his reinstatement were in order.
Dissatisfied, the MMPC filed a motion for reconsideration of the decision, alleging that the CA erred in
holding that the six-month probationary period which commenced on May 27, 1996, expired on
November 23, 1996.
The MMPC contended that the reinstatement of Paras to his former position had become moot and
academic because it had retrenched approximately seven hundred (700) employees as a result of its
financial losses in 1997. It posited that the payment of full backwages should only be computed up to
February 1998, the date when MMPC effected the first phase of its retrenchment program.
The CA denied the motion in a Resolution dated June 18, 2001.20

The MMPC, for its part, averred that under Article 13 of the New Civil Code, Paras probationary
employment which commenced on May 27, 1996 would expire on November 27, 1996. Since he
received the notice of termination of his employment on November 25, 1996, the same should be
considered to have been served within the six-month probationary period.
The MMPC asserted that the VA acted correctly in not considering the five-month period of Paras
contractual employment as a welder-fabricator to qualify him for regularization. It argued that his rating
showed that his immediate supervisors, in tandem with his department head, found his performance
unsatisfactory. Thus, his failure to meet a satisfactory performance rating justified the termination of his
probationary employment.
For its part, the Office of the Solicitor General (OSG), in representation of Voluntary Arbitrator Danilo
Lorredo, agreed that Parasand CPLUs allegation, that the notice of termination was served on Paras
183rd day, was erroneous. The OSG opined that the six-month probationary period was to expire on
November 27, 1996 and since Paras was served such notice on November 25, 1996, his employment
was deemed terminated within the six-month probationary period. It posited that the failure of Paras to
get a satisfactory performance rating justified the termination of his probationary employment, and that
the inclusion of his five-month contractual employment as welder-fabricator did not qualify him for regular
employment.
Finally, the OSG contended that the appointment of a probationary employee to a regular status is
voluntary and discretionary on the part of the employer.
In a Decision promulgated on September 13, 2000, the CA reversed the ruling of the Voluntary Arbitrator,
the dispositive portion of which is herein quoted:
WHEREFORE, the petition is GRANTED. The Decision of public respondent, dated November
3, 1997, is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby entered declaring
Mitsubishi Motors Phils. Corporations dismissal of Nelson Paras as ILLEGAL and ORDERING
the former to reinstate Paras to his former position without loss of seniority rights and other
privileges. Conformably with the latest pronouncement of the Supreme Court on backwages,
supra, Mitsubishi Motors Phils. Corporation is further ORDERED to pay Paras full backwages
(without qualifications or deductions), inclusive of allowances, and 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. Petitioners claims for attorneys fees, moral and
exemplary damages are, nevertheless, DENIED for lack of sufficient basis. No costs.19
The CA agreed with Paras and CPLUs interpretation that six (6) months is equivalent to one hundred
eighty (180 days) and that computed from May 27, 1996, such period expired on November 23, 1996.
Thus, when Paras received the letter of termination on November 26, 1996, the same was served on the
183rd day or after the expiration of the six-month probationary period. The CA stated that since he was

The Present Petition

Undaunted, the MMPC, now the petitioner, filed this instant petition, alleging as follows:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE 3
NOVEMBER 1997 DECISION OF THE HONORABLE VA DANILO LORREDO, AND IN
FINDING THAT RESPONDENT PARAS (WAS) ILLEGALLY DISMISSED AND ORDERING HIS
REINSTATEMENT.
B.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ORDERING THE
REINSTATEMENT OF PARAS WITH FULL BACKWAGES DESPITE THE CHANGE IN THE
FINANCIAL CIRCUMSTANCES OF THE COMPANY.
C.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE SIXMONTH PROBATIONARY PERIOD OF PARAS WHICH STARTED ON 27 MAY 1996 HAD
EXPIRED 23 NOVEMBER 1996.21
The petitioner asserts that the CA erred in ruling that respondent Paras was already a regular employee
when he was served the notice of termination. Citing Article 13 of the New Civil Code, the petitioner
argued that the six-month probationary period should be computed as follows:
May 27-31

4 days

Jun(e) 1-30

1 month (30 days)

July 1-31

1 month (30 days)

Aug(.) 1-31

1 month (30 days)

Sept(.) 1-30

1 month (30 days)

Oct(.) 1-31

1 month (30 days)

Nov(.) 1-26

26 days22

Hence, according to the petitioner, when the termination letter was served on November 26, 1996, Paras
was still a probationary employee. Considering that he did not qualify for regularization, his services were
legally terminated. As such, the CA erred in ordering his reinstatement and the payment of his
backwages.
According to the petitioner, even assuming that respondent Paras was a regular employee when he was
dismissed, his reinstatement had already become moot and academic because of the retrenchment
program effected as a result of the business losses it had suffered in the year 1997. Respondent Paras,
who was employed only in May 27, 1996, would have been included in the first batch of employees
retrenched in February of 1998, in accordance with the "last in first out policy" embedded in the CBA. The
petitioner further contends that Paras backwages should be computed only up to February of 1998.
In their comment on the petition, the respondents argue that the CA was correct in concluding that the
termination letter was served on respondent Paras one hundred eighty third (183rd) day of employment
with the petitioner, asserting that six (6) months is equivalent to one hundred eighty (180) days. Since
respondent Paras was employed on May 27, 1996, the 180th day fell on November 23, 1996. Thus,
respondent Paras was already a regular employee when the termination letter was served on him.
Consequently, his dismissal should be based on the just or authorized causes provided for by the Labor
Code, and after proper notice.
The respondents, likewise, contend that the petitioner cannot raise new and unsubstantiated allegations
in its petition at bar.
The Issues
The issues for resolution are the following: (a) whether or not respondent Paras was already a regular
employee on November 26, 1996; (b) whether or not he was legally dismissed; (c) if so, whether or not
his reinstatement had been rendered moot and academic; and, (d) whether or not his backwages should
be computed only up to February of 1998.
The Courts Ruling
The petition is partially granted.
At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for
review on certiorari of CA decisions.23 Questions of fact are not entertained.24 This Court is not a trier of
facts and, in labor cases, this doctrine applies with greater force. Factual questions are for labor tribunals
to resolve.25 The findings of fact of quasi-judicial bodies like the National Labor Relations Commission
(NLRC), are accorded with respect, even finality, if supported by substantial evidence.Particularly when
passed upon and upheld by the Court of Appeals, such findings are binding and conclusive upon the
Supreme Court and will not normally be disturbed.26
However, when the findings of the NLRC and the Court of Appeals are inconsistent with each other, there
is a need to review the records to determine which of them should be preferred as more conformable to
the evidentiary facts.27 Considering that the CAs findings of fact clash with those of the Voluntary
Arbitrator, this Court is compelled to go over the records of the case, as well as the submissions of the
parties.28

shall not exceed six (6) months from the date the employee started working. The employees services
may be terminated for just cause or for his failure to qualify as a regular employee based on reasonable
standards made known to him.30
Respondent Paras was employed as a management trainee on a probationary basis. During the
orientation conducted on May 15, 1996, he was apprised of the standards upon which his regularization
would be based. He reported for work on May 27, 1996. As per the companys policy, the probationary
period was from three (3) months to a maximum of six (6) months.
Applying Article 13 of the Civil Code, 31 the probationary period of six (6) months consists of one hundred
eighty (180) days.32 This is in conformity with paragraph one, Article 13 of the Civil Code, which provides
that the months which are not designated by their names shall be understood as consisting of thirty (30)
days each. The number of months in the probationary period, six (6), should then be multiplied by the
number of days within a month, thirty (30); hence, the period of one hundred eighty (180) days.
As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be
excluded and the last day included. Thus, the one hundred eighty (180) days commenced on May 27,
1996, and ended on November 23, 1996. The termination letter dated November 25, 1996 was served on
respondent Paras only at 3:00 a.m. of November 26, 1996. He was, by then, already a regular employee
of the petitioner under Article 281 of the Labor Code.
The Legality of The Dismissal
An employee cannot be dismissed except for just or authorized cause as found in the Labor Code and
after due process.33 The following grounds would justify the dismissal of an employee:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of the
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or of
any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.34
The basis for which respondent Paras services were terminated was his alleged unsatisfactory rating
arising from poor performance. It is a settled doctrine that the employer has the burden of proving the
lawfulness of his employees dismissal. The validity of the charge must be clearly established in a
manner consistent with due process.35
Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it
amounts to gross and habitual neglect of duties. Gross negligence has been defined to be the want or
absence of even slight care or diligence as to amount to a reckless disregard of the safety of person or
property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. 36
A careful perusal of the records of this case does not show that respondent Paras was grossly negligent
in the performance of his duties.

Regularization of Employment
The company policy provides the following rule in performance evaluation:
Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a
probationary basis in order to determine his fitness to perform work. 29 Under Article 281 of the Labor
Code, the employer must inform the employee of the standards for which his employment may be
considered for regularization. Such probationary period, unless covered by an apprenticeship agreement,

The performance rating sheet must be accomplished by the immediate supervisor, then
reviewed by the Department Head, and concurred by the Division Head. The Personnel
Manager likewise must note all submitted performance sheets.

Once the rating sheet has gone through this standard procedure, the immediate supervisor
shall discuss the results of the performance rating with the employee. The
discussion/conference may be done in the presence of the Department Head. This is to
emphasize the point that the employee is given due importance especially in matters pertaining
to his development as a person and employee.37
In the present case, the immediate supervisor of respondent Paras gave him an average performance
rating and found him fit for regularization.38 Thereafter, his immediate supervisor and the department
head reviewed the said rating, which was duly noted by the personnel manager. However, in a complete
turn around, the petitioner made it appear that after the performance evaluation of respondent Paras was
reviewed by the department and division heads, it was unanimously agreed that the respondents
performance rating was unsatisfactory, making him unfit for regularization.
There is no showing that respondent Paras was informed of the basis for the volte face of the
management group tasked to review his performance rating. His immediate supervisor even told him that
he had garnered a satisfactory rating and was qualified for regularization, only to later receive a letter
notifying him that his employment was being terminated.
Considering that respondent Paras was not dismissed for a just or authorized cause, his dismissal from
employment was illegal. Furthermore, the petitioners failure to inform him of any charges against him
deprived him of due process. Clearly, the termination of his employment based on his alleged
unsatisfactory performance rating was effected merely to cover up and "deodorize" the illegality of his
dismissal.

salaries and wages by laying off some employees. The purpose of retrenchment is to save a financially
ailing business establishment from eventually collapsing. 41
In this case, the petitioner submitted in the CA its financial statements for 1996, 1997 and 1998 42 as well
as its application for retrenchment. In its Statements of Income and Unappropriated Retained Earning, it
was shown that in 1996, the parent company of the petitioner had a net income of P467,744,285. In
1997, it had a net loss of P29,253,511.43 In 1998, its net loss, after effecting retrenchment and closing
several plants, was arrested and dropped to P8,156,585.44 This shows that even after the retrenchment,
the petitioner MMPC still suffered net losses.
In 1996, the petitioners current assets amounted to P5,381,743,576; it increased to P8,033,932,74545 in
1997, while in 1998, it was reduced to P5,053,874,359.46 This shows that the petitioners assets acquired
in 1997 diminished in 1998. The figures for Current Liabilities are consistent with the movement of current
assets for 1997 and 1998.
In 1996, the petitioner incurred current liabilities of P1,966,445,401 which increased to P5,088,990,11747
in 1997 and decreased to P2,880,259,81148 in 1998. To reduce its losses, the petitioner had to dispose of
some of its current assets to cover the increased liability incurred in 1997, and had to resort to
borrowings in 1998. The continuity of losses which started in 1997 is further illustrated in the figures on
retained earnings for 1996, 1997 and 1998. In 1996, retained earnings stood at P1,838,098,175,49 which
decreased to P994,942,62850 in 1997 and further decreased to P592,614,54851 in 1998.

Reinstatement and Backwages

The petitioners losses in 1997 and 1998 are not insignificant. It is beyond cavil then, that the serious and
actual business reverses suffered by the petitioner justified its resort to retrenchment of seven hundred
(700) of its employees.

The normal consequences of illegal dismissal are reinstatement without loss of seniority rights and the
payment of backwages computed from the time the employees compensation was withheld from him. 39
Since respondent Paras dismissal from employment is illegal, he is entitled tore instatement and to be
paid backwages from the time of his dismissal up to the time of his actual reinstatement.

The records show that the petitioner informed the Department of Labor and Employment of its plight and
intention to retrench employees as a result of the shutdown of its plants. 52 The termination of the five
hundred thirty-one (531) affected employees were made effective a month from receipt of the termination
letter mailed on February 25, 1998.53

The petitioner asserts that assuming respondent Paras was illegally dismissed, his reinstatement had
become moot and academic because of its retrenchment program which was effected beginning
February 1998. The petitioner posits that even if respondent Paras had become a regular employee by
November 26, 1996, he would have been included in the first phase of its retrenchment program,
pursuant to the "last in first out policy" embedded in the CBA. Hence, the petitioner concludes, the
payment of backwages should be computed up to February of 1998.

In accordance with the CBA between MMPC and CPLU, employees who were recently hired were the
ones retrenched. Considering that respondent Paras had just been regularized on November 24, 1996,
he would have been included among those who had been retrenched had he not been dismissed.

The respondents, for their part, aver that the petitioner is proscribed from alleging new circumstances
and allegations of fact, particularly on financial reverses, before the Court of Appeals and the Voluntary
Arbitrator.

The unfavorable financial conditions of the petitioner may not justify reinstatement. However, it is not a
sufficient ground to deny backwages to respondent Paras who was illegally dismissed. 54 Considering that
notices of retrenchment were mailed on February 25, 1998 and made effective one month therefrom,
respondent Paras should be paid full backwages from the date of his illegal dismissal up to March 25,
1998. Pursuant to Article 283 of the Labor Code, he should be paid separation pay equivalent to one (1)
month salary, or to at least one-half month pay for every year of service, whichever is higher, a fraction of
at least six months to be considered as one (1) year.55

We do not agree with the respondents.

A cursory examination of the records shows that the petitioner could not raise its retrenchment program
as an issue before the VA, because it was implemented only in February 1998, when the case was
already in the CA. However, we note that the petitioner did not raise the same in its comment to the
petition. The petitioner asserted the matter only in its October 20, 2000 motion for reconsideration of the
decision of the CA, where it alleged that the retrenchment program was effected to arrest the continuing
business losses resulting from the financial reverses it experienced in 1997.
Nevertheless, it is not denied that because of the petitioners losses, it retrenched seven hundred (700)
employees. Business reverses or losses are recognized by law as an authorized cause for termination of
employment. Still, it is an essential requirement that alleged losses in business operations must be
proven convincingly. Otherwise, such ground for termination would be susceptible to abuse by scheming
employers, who might be merely feigning business losses or reverses in their business ventures to ease
out employees.40 Retrenchment is an authorized cause for termination of employment which the law
accords an employer who is not making good in its operations in order to cut back on expenses for

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The September 13, 2000
Decision of the Court of Appeals in CAGR SP No. 46030 is hereby AFFIRMED WITH
MODIFICATIONS. The petitioner is ORDERED to pay respondent Nelson Paras separation pay
equivalent to one (1) month, or to at least one-half (1/2) month pay for every year of service, whichever is
higher, a fraction of at least six (6) months to be considered as one year; and to pay full backwages,
computed from the time of his dismissal up to March 25, 1998. That portion of the decision of the Court of
Appeals directing the reinstatement of the respondent Paras is DELETED.

G.R. No. 192416

March 23, 2011

GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC., ABELARDO GONZALES, 1 RONALD A. DE

LEON,2
NOEL
AGUIRRE,
FELIX
ARPIA,
and
NICK
EUGENIO,
Petitioners,
vs.
ANNALIZA M. ESTRELLA, Respondent.
DECISION
NACHURA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court assails the Decision 3 and the
Resolution4 of the Court of Appeals (CA), respectively dated November 26, 2009 and May 17, 2010.
The Facts
Petitioner Grandteq Industrial Steel Products, Inc. (Grandteq), a domestic corporation engaged in the
sale and distribution of welding electrodes, alloy steels, aluminum and copper alloys, 5 hired respondent
Annaliza Estrella (Estrella) on November 15, 2001, as a sales engineer.6
Abelardo M. Gonzales (Gonzales), Ronald A. de Leon (De Leon), Noel Aguirre (Aguirre), Felix Arpia
(Arpia), and Nick Eugenio (Eugenio) are officers of Grandteq.7
Sometime in January 2004, Grandteq and Estrella entered into a Purchase/Assignment of Car
Agreement,8 whereby the former undertook to purchase a car for Estrella, who would in turn refund the
purchase price to Grandteq in 100 monthly installments. The agreement likewise stated that the
"company shall retain the ownership of the car until the car loan is fully paid." To complement the terms of
the agreement, Estrella executed a Promissory Note.9
When Estrella defaulted in her payments, Grandteq instructed her on September 15, 2004 to leave the
car in the office premises.10 Estrella failed to abide by the companys directive;11 hence, on September 18,
2004, Grandteq sent her another memorandum requiring her to explain her "insubordination." 12
In her reply to the memorandum, Estrella asserted that she had already paid the P50,000.00
downpayment for the vehicle, and that Grandteq had no valid cause to demand its surrender.13

respondent again amended her complaint to include illegal dismissal as one of her causes of action. She
also demanded for the payment of moral damages and attorneys fees.21
Traversing the complaint, Grandteq averred that Estrella was validly dismissed because she abandoned
her job when she did not report for work for three weeks despite the disapproval of her leave application;
that she committed insubordination when she failed to obey an official order directing her to return a
company vehicle; that she violated the confidence and trust reposed in her by the company when she
negotiated in her personal capacity with a client, Philex Mining Corporation, at the time when she was
allegedly sick; and that she failed to attend the administrative hearing initiated by the company on
October 29, 2004; thus, Grandteq deemed her to have waived her right to be heard. Estrella was
furnished with a Notice of Termination 22 on November 12, 2004, indicating that she was being dismissed
for gross and habitual neglect of duty and fraud or willful breach of trust. Grandteq denied any
outstanding sales commissions or incentives due Estrella.23
The LA24 ruled in favor of Estrella and held that Grandteq had no justifiable cause to terminate her
employment. Abandonment could not be inferred from her absence sans any overt act showing that she
did not want to work anymore. Besides, she went on sick leave with a prior notice to Grandteq. The
immediate filing of a complaint for illegal dismissal also negated a finding of abandonment.
Lastly, the LA decreed that the notice of termination served to Estrella on November 12, 2004 was
evidently a mere afterthought to cast a
semblance of validity to her termination. As shown in the notice, as early as September 22, 2004,
Grandteq already decided to terminate her services even before she could present her side and refute
the charges against her.
Estrellas money claims were granted, but no specific computation was made as to her claim for sales
commissions and incentives. The decretal portion of the LAs decision25 reads:
WHEREFORE, the foregoing considered, judgment is hereby rendered declaring [respondent] Annaliza
M. Estrella to have been illegally dismissed. [Petitioners] are ordered to reinstate [respondent] to her
former position without loss of seniority rights and other benefits and to her full backwages from the time
her compensation was withheld up to the time of her actual reinstatement. Likewise[, petitioner] Grandteq
Industrial Steel Products[,] Inc. is ordered to pay the monetary awards pursuant to the computation of the
Computation Unit of this Commission forming part of the records of this case, as follows:
Basic Wage P 6,000.00
Allowance 5,000.00

Estrella also had claims against the company. On September 17, 2004, she filed a complaint for recovery
of sales commissions, allowances, and other benefits before the Labor Arbiter (LA). 14 The complaint
alleged that Grandteq refused to release her sales commissions and incentives. 15 She submitted a
computation of such claims to the LA on October 21, 2004.16
Meanwhile, on September 20, 2004, Estrella filed an application for leave of absence, and subsequently,
submitted a medical certificate recommending that she rest for three (3) weeks. Grandteq denied her
application; nonetheless, she went on leave of absence effective September 22, 2004 until October 14,
2004.17
On October 1, 2004, Estrella tried to withdraw her salary for the period September 15 to 30, 2004 from
an Automated Teller Machine. To her dismay, she discovered that her salary was not remitted by
Grandteq.18 Thus, on October 4, 2004, she amended her complaint to include nonpayment of salary. She
likewise imputed illegal deduction of expanded withholding tax against Grandteqs officers. 19
On October 15, 2004, Estrella went to the office of Grandteq to report for work, but the security guard
refused her entry, allegedly upon the behest of Grandteqs vice-president, De Leon. 20 Aggrieved,

P11,000.00
Backwages: 9/22/04 8/30/06
P11,000 x 23.30 mos. 256,300.00
13th Month Pay
of P256,300 21,358.33
SILP: P11,000/26 x 5/12 x 23.30.mos. 4,107.37
281,765.71
Moral Damages 10,000.00 10,000.00

Exemplary Damages 10,000.00 20,000.00

301,765.71
Atty.s Fees 28,176.57
TOTAL P329,942.28
Other claims are dismissed for lack of merit.
SO ORDERED.26
Both parties appealed to the National Labor Relations Commission (NLRC). Grandteq insisted that
Estrellas dismissal was based on valid grounds and was implemented with due process.27
Estrella, on the other hand, claimed that her unpaid sales commissions, incentives, and salary for the
period September 15 to 30, 2004 should be indicated in the dispositive portion of the LAs decision. She
further prayed that Grandteq officers Gonzales, De Leon, Aguirre, Arpia, and Eugenio be declared
solidarily liable with the company.28
The NLRC found that Grandteq had valid grounds to dismiss Estrella since her allegation of illegal
termination was not sufficiently substantiated by the security guards mere refusal to allow her entry into
Grandteqs premises. Estrellas act of going on leave without Grandteqs approval constituted gross and
habitual neglect of duty. The NLRC decreed that Grandteq merely failed to comply with procedural due
process. Hence, the LAs decision was modified as follows:
WHEREFORE, premises considered, the appeals are PARTLY GRANTED and the Decision dated July
31, 2006 is MODIFIED finding that respondents has (sic) valid ground to terminate complainant but for
failure to comply with the standards of due process, respondents shall indemnify complainant in the
amount of P20,000.00 and ordering that the records of this case be remanded to the office of origin for
the disposition of complainants money claims. The award of damages and attorneys fees were not
raised on appeal, hence, STANDS.
SO ORDERED.29
Grandteq sought recourse with the CA through a petition for certiorari. On November 26, 2009, the CA
reinstated the LAs Decision and
ordered the case remanded to the LA for the resolution of Estrellas claims for commissions and
allowances, viz.:
ACCORDINGLY, the assailed June 11, 2008 Resolution is SET ASIDE. The Labor Arbiters July 31, 2006
Decision is REINSTATED with the directive that it must further hear and decide on petitioners claims for
sales commission, allowances and other benefits, car incentive,

THE HONORABLE COURT OF APPEALS HAD DECIDED A QUESTION OF SUBSTANCE IN PATENT

DISREGARD OF THE PROVISIONS OF THE LABOR CODE, THE PHILIPPINE CONSTITUTION, THE
RULES OF COURT, AND PERTINENT DECISIONS OF THIS HONORABLE SUPREME COURT.33
We deny the petition.
The petition hinges on the question of whether the acts imputed to Estrella constitute gross and habitual
neglect of duty and loss of trust and confidence so as to provide just cause for her dismissal.
At the outset, we stress that these issues involve questions of fact, the determination of which entails an
evaluation of the evidence on record. As a general rule, purely factual questions are not passed upon in
petitions for review under Rule 45, for this Court does not try facts but merely relies on
the expert findings of labor tribunals whose statutory function is to determine the facts. In the present
case, however, in view of the conflicting factual findings of the LA and the CA on one hand, and the
NLRC on the other, the Court is constrained to resolve the factual question at hand.34
A judicious review of the records discloses that Grandteq failed to prove that Estrella was justifiably
dismissed due to lack of trust and confidence and gross and habitual neglect of duty.
Grandteq attributes loss of trust and confidence to the following acts: (1) insubordination when Estrella
disobeyed a company directive ordering her to return a company vehicle; and (2) transacting, in her
personal capacity, with a client of Grandteq.
Insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence of at
least two requisites: (1) the employee's assailed conduct must have been willful, that is, characterized by
a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made
known to the employee, and must pertain to the duties which he had been engaged to discharge. 35 The
facts of the case do not show the presence of the second requisite. The failure to return the vehicle and
the Purchase/Assignment of Car Agreement, from which Grandteq derives its claim of ownership over
the car, had no relation at all to the discharge of respondents duties as a sales engineer.
There is likewise no basis for a finding of legitimate loss of confidence because Grandteq failed to show
that Estrella held a position of trust and confidence. Firm is the rule that loss of confidence as a just
cause for termination of employment is premised on the fact that the employee concerned holds a
position of trust and confidence, where greater trust is placed by management and from whom greater
fidelity to duty is correspondingly expected. 36 The betrayal of this trust is the essence of the offense for
which an employee is penalized.37
The job description of Estrella dated February 19, 2004, signed by her and by Grandteqs Vice President
for Sales, Aguirre, and approved by De Leon, Vice-President for Administration, and Gonzales, President,
confirms these findings:
- Should report to office 8:00 a.m. regularly from Monday to Saturday.
- Submit itinerary/report of client visits.

S.A. (Salesman Advance) commission, and other incentives" as specified in her second amended
complaint.

- Will receive allowance of P5,000.00 monthly.

SO ORDERED.30

- 100Km radius, excess would be reimburse[d] to the office. (Gasoline Allowance)

Petitioners interposed the present recourse when the CA denied 31 their motion for reconsideration.32 They
proffer this sole argument:

- Allowed North visit at least one week/month allocation of P800.00. (This covers board, transportation
and meal allowance)
- Failure to report in office will be deducted to (sic) salary.38

Grandteq also imputes gross and habitual neglect of duty when Estrella was absent from work for three
(3) weeks without an approved application for leave.
Gross negligence connotes want of care in the performance of one's duties, while habitual neglect
implies repeated failure to perform one's duties for a period of time, depending on the circumstances.
The single or isolated act of negligence does not constitute a just cause for the dismissal of an
employee.39
We find no gross and habitual neglect in this case, and we quote with approval the following disquisition
of the CA:
Grandteq does not dispute receiving Estrellas Medical Certificate and worse, proffers no explanation why
it did not act on Estrellas application for sick leave. And even if, arguendo, such absences were
established, still, they would merit at best mere suspension from service. The penalty of dismissal would
be too harsh, considering that apparently, management had no complaint as regards Estrellas quality of
work.
Moreso that it is settled that an employees excusable and unavoidable absences does (sic) not amount
to an abandonment of his employment. Abandonment, as a just and valid ground for termination, means
the deliberate, unjustified refusal of an employee to resume his employment. For abandonment to be a
valid ground for dismissal, two (2) elements must be proved: the intention of an employee to abandon,
coupled with an overt act from which it may be inferred that the employee has no more intention to
resume his work. The burden of proof is on the employer to show a clear and deliberate intent on the part
of the employee to discontinue employment.
Here, these elements were not established. Estrellas actions after her absences negate an intent to
abandon her job. Estrellas application for sick leave, the Medical Certificate she secured, and the letter
from her lawyer that she was going on sick leave and more importantly, her going back to the company
premises on October 15, 2004 all indicate her intention to resume work after the lapse of the period of
her leave of absence. It would be the height of inequity and injustice to declare Estrella to have
abandoned her job on the mere pretext that her sick leave application was not approved. Especially so
that prior to her dismissal, she had no record of infraction of company rules for which she could have
been sanctioned by either warning, reprimand or suspension. Besides, her filing of an illegal dismissal
case clearly contradicts Grandteqs allegation that she abandoned her job. 40
We must stress anew that, in termination cases, the burden rests upon the employer to show that the
dismissal of an employee is for just cause, and failure to do so would mean that the dismissal is not
justified.41 Failure to discharge that burden would mean that the dismissal is not justified and, therefore,
illegal.42 Grandteq miserably failed to discharge this onus, and Estrellas termination from employment
was, thus, illegal.
Anent Estrellas claim for sales commissions and incentives, we agree with the uniform ruling of the
NLRC and the CA that the matter needs the further assessment of the LA, thus:
A review of the records shows that Estrellas money claims referred to unpaid sales commissions,
allowances and other incentives. And while the Labor Arbiter held:
"As regards the monetary claims, this office is in accord with the complainant that respondents have
failed to establish by sufficient with evidence (sic) that complainant is not entitled thereto. This is based
on the principle that each party must prove his affirmatives (sic) allegations. On the other hand,
complainant has adduced evidence of her entitlement thereto. (Annex B is B-10)."
The court notes, however, that he failed to assess and weigh the parties arguments on the matter. In
fact, the Labor Arbiters decision did not touch upon or rule on Grandteqs arguments and evidence
against Estrellas claims. As a result, the NLRC and this Court have admittedly no basis in affirming his
findings.

Verily, the resolution of Estrellas entitlement to her commissions and allowances requires conscientious
evaluation and assessment of the evidence adduced by the parties, which is best undertaken by the
Labor Arbiter. It thus is just proper that said money claims be remanded to the Labor Arbiter for proper
evaluation of the evidence of both parties.43
Lastly, we deem it imperative to resolve the question of whether Grandteqs officers, who are copetitioners herein, are solidarily liable with the company.
There is solidary liability when the obligation expressly so states, when the law so provides, or when the
nature of the obligation so requires.44 In MAM Realty Development Corporation v. NLRC, 45 the solidary
liability of corporate officers in labor disputes was discussed in this wise:
A corporation, being a juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent. True, solidary liabilities may at times be incurred but
only when exceptional circumstances warrant such as, generally, in the following cases:
1. When directors and trustees or, in appropriate cases, the officers of a corporation
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
xxxx
In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or in bad faith.
From the decisions of the LA, the NLRC, and the CA, there is no indication that Estrellas dismissal was
effected with malice or bad faith on the part of Grandteqs officers. Their liability for Estrellas illegal
dismissal, the consequential monetary award arising from such dismissal and the other money claims
awarded in the LAs decision, as correctly affirmed by the CA, could thus only be joint, not
solidary.1awphil This pronouncement does not extend to Estrellas claims for commissions, allowances,
and incentives, as the same are still subject to the LAs scrutiny.
WHEREFORE, foregoing considered, the petition is hereby DENIED, and the November 26, 2009
Decision and the May 17, 2010 Resolution of the Court of Appeals are AFFIRMED.

1. Ordering respondent corporation to pay complainant her:

G.R. No. 171189

March 9, 2011

LORES REALTY ENTERPRISES,

vs.
VIRGINIA E. PACIA, Respondent.

INC.,

LORENZO

Y.

SUMULONG

III,

Petitioners,

a. unpaid salary

P12,550.00

b. proportionate 13th month pay

20,916.66

Total

P33,466.66

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

MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioners Lores
Realty Enterprises, Inc. (LREI) and Lorenzo Y. Sumulong III (Sumulong) seeking to reverse and set aside
the November 25, 2005 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 59975, which affirmed
the Decision2 of the National Labor Relations Commission (NLRC), in NLRC NCR CA No. 019221-99
(RAB-IV-10-10492-98-RI).
The Facts
In 1982, respondent Virginia E. Pacia (Pacia) was hired by LREI. At the time of her dismissal, she was
the assistant manager and officer-in-charge of LREIs Accounting Department under the Finance
Administrative Division.
On October 28, 1998, LREIs acting general manager, petitioner Sumulong, through Ms. Julie Ontal,
directed Pacia to prepare Check Voucher No. 16477 worth P150,000.00 as partial payment for LREIs
outstanding obligation to the Bank of the Philippine Islands-Family Bank (BPI-FB). Pacia did not
immediately comply with the instruction. After two repeated directives, Pacia eventually prepared Check
No. 0000737526 in the amount of P150,000.00. Later, Sumulong again directed Pacia to prepare Check
Voucher No. 16478 in the amount of P175,000.00 to settle the balance of LREIs outstanding
indebtedness with BPI-FB. Pacia once again was slow in obeying the order. Due to the insistence of
Sumulong, however, Pacia eventually prepared Check No. 0000737527 in the amount of P175,000.00.
To explain her refusal to immediately follow the directive, Pacia reasoned out that the funds in LREIs
account were not sufficient to cover the amounts to be indicated in the checks.
The next day, October 29, 1998, Sumulong issued a memorandum 3 ordering Pacia to explain in writing
why she refused to follow a clear and lawful directive.

SO ORDERED.
On appeal, the NLRC in its March 31, 2000 Decision 9 reversed the LAs Decision and found LREI and
Sumulong guilty of illegal dismissal. Pertinent portions of the NLRC decision including the decretal
portion read:
A careful perusal of the records reveal[s] that complainants actuation herein cannot in any manner be
construed as an act of insubordination. Neither can we classify it as an example of wilful disobedience by
the employee of the lawful order of her employer in connection with her work.
Records show that Check No. 0000737527 in the amount of P175,000.000 bounced as shown by the
Return Checks Advice issued by the BPI family Bank on 3 November 1998.
xxx

xxx

xxx

The above evidence clearly reveal[s] that there were no sufficient funds to cover the check which the
acting Manager directed complainant to prepare. However, complainant nevertheless prepared Check
Nos. 737527 and 737526 on 28 October 1998 and also corrected Check Vouchers Nos. 16477 and
16478 on 28 October 1998.
We take note and give due merit to complainants explanation in her reluctance to issue checks against
insufficient funds which was to protect the company and its signatories from liabilities resulting from
issuance of bounced checks. Complainants initial refusal was good intentioned. Respondents also insist
that complainant refused to follow a lawful directive of her superior officer to make some corrections on
the vouchers. However, we cannot see how an order to prepare a check at the time when there was no
sufficient fund to cover the same can be classified as a lawful directive of the acting Manager.

On the same day, Pacia replied in writing and explained that her initial refusal to prepare the checks was
due to the unavailability of funds to cover the amounts and that she only wanted to protect LREI from
liability under the Bouncing Checks Law.4

xxx

On November 6, 1998, Pacia received a notice of termination 5 stating, among others, that she was being
dismissed because of her willful disobedience and their loss of trust and confidence in her.

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

Pacia then filed a Complaint for Unfair Labor Practice due to Harassment, Constructive Dismissal, Moral
and Exemplary Damages6 against LREI and Sumulong. Subsequently, Pacia filed an Amended
Complaint7 to include the charges of illegal dismissal and non-payment of salaries.
On March 11, 1999, the Labor Arbiter (LA) rendered a decision8 finding that the dismissal of Pacia was
for a just and valid cause but ordering payment of what was due her. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, judgment is hereby rendered, as follows:

xxx

xxx

WHEREFORE, the Decision dated 11 March 1999 is MODIFIED. Respondent Lores Realty Ent., Inc. is
held liable for illegally dismissing complainant and is directed to pay her, in addition to her unpaid salary
and proportionate 13th month pay for the year 1998, the following:
1.

Backwages
(6 November 1998 to 15 March 2000)
Basic Pay P25,100.00 x 16.3 mos. =
P409,130.00
13th Month Pay P409,130.00 / 12 =

34,094.17

P443,224.17
2.

Separation Pay (one month for every year of service)

(18
P25,100 x 18 =

years)
P451,800.00
P895,024.17
vvvvvvvvvvvvv

The other findings are AFFIRMED.

SO ORDERED.10
Dissatisfied, LREI and Sumulong elevated the case to the CA by way of a petition for certiorari under
Rule 65 of the Rules of Court asserting grave abuse of discretion on the part of the NLRC in reversing
the LAs finding that Pacia was guilty of wilful disobedience of a lawful order of her employer in
connection with her work.

administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness.
Moreover, when the findings of the NLRC contradict those of the LA, this Court, in the exercise of its
equity jurisdiction, may look into the records of the case and re-examine the questioned findings. 14
LREI and Sumulong argue that Pacias refusal to obey the directives of Sumulong was a "manifest intent
not to perform the function she was engaged to discharge." 15 They are of the position that Pacias claim
of "good intentions" in refusing to prepare the checks was a mere afterthought. They stress that the
instruction to prepare a check despite the absence of sufficient funds to cover the same was,
nevertheless, a lawful order.
On the other hand, Pacia counters that her initial reluctance to prepare the checks, which she knew were
not sufficiently funded, cannot "be characterized as wrongful or perverse attitude." 16 In her view, the
directive to prepare the checks at the time it was not sufficiently funded was not a lawful order
contemplated in Article 282 of the Labor Code. It was an unlawful directive because it asked for the
preparation of a check despite the fact that the account had no sufficient funds to cover the same. She
further explained that she did not comply with the directive in order to protect Sumulong and LREI from
any liability in the event that the checks would be dishonored upon presentment for payment for
insufficiency of funds.

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

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

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

ARTICLE 282. Termination by employer. An employer may terminate an employment for any of the
following causes:

SO ORDERED.

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

The CA held that LREI and Sumulong failed to establish with substantial evidence that the dismissal of
Pacia was for a just cause. It found that Pacias initial reluctance to obey the orders of her superiors was
for a good reason - to shield the company from liability in the event that the checks would be dishonored
for insufficiency of funds.
Hence, the petition.
THE ISSUES
1. WHETHER OR NOT THE INSTANT PETITION FOR REVIEW RAISES
QUESTIONS OF LAW.

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

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing. [Emphasis supplied]

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

RULING OF THE NLRC THAT THE ESTABLISHED FACTS JUSTIFY
RESPONDENTS TERMINATION FROM EMPLOYMENT.

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

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

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

Let it be noted at this point that the Court finds nothing unlawful in the directive of Sumulong to prepare
checks in payment of LREIs obligations. The availability or unavailability of sufficient funds to cover the
check is immaterial in the physical preparation of the checks.1avvphi1

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

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

The Court finds no merit in the petition.

At the outset, it must be emphasized that the issues raised in this petition are questions of fact which are
not proper subjects of an appeal by certiorari. Well-settled is the rule that under Rule 45 of the Rules of
Court, only questions of law may be raised before this Court. 13 A disharmony between the factual findings
of the LA and the NLRC, however, opens the door to a review by this Court. Factual findings of

The Court also finds it difficult to subscribe to LREI and Sumulongss contention that the reason for
Pacias initial reluctance to prepare the checks was a mere afterthought considering that "check no.
0000737527 under one of the check vouchers she reluctantly prepared, bounced when it was

deposited."19 Pacias apprehension was justified when the check was dishonored. This clearly affirms her
assertion that she was just being cautious and circumspect for the companys sake. Thus, her actuation
should not be construed as improper conduct.
In finding for Pacia, the Court is guided by the time-honored principle that if doubt exists between the
evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the
latter. The rule in controversies between a laborer and his master distinctly states that doubts reasonably
arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the
former's favor.20
WHEREFORE, the petition is DENIED.
G.R. No. 164939

June 6, 2011

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

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

a union representative before giving any statement to management. Caragdag also prayed that Moral be
investigated for harassing union officers and union members.

G.R. No. 172303

SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN),
vs.
HOTEL ENTERPRISES OF THE PHILIPPINES, INC., Respondent.

Petitioner,

On February 28, 2001, Moral found the explanations unsatisfactory. In a Memorandum 11 issued on the
same date, Moral held Caragdag liable for Offenses Subject to Disciplinary Action (OSDA) 3.01 of the
hotels Code of Discipline, i.e., "threatening, intimidating, coercing, and provoking to a fight your superior
for reasons directly connected with his discharge of official duty." Thus, Caragdag was imposed the
penalty of seven days suspension in accordance with the hotels Code of Discipline.

DECISION
VILLARAMA, JR., J.:
Before this Court are two consolidated petitions filed by petitioner Samahan ng mga Manggagawa sa
Hyatt-NUWHRAIN-APL under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The first
petition, docketed as G.R. No. 164939, assails the Resolutions dated October 3, 2003 1 and August 13,
20042 of the Court of Appeals (CA) in CA-G.R. SP No. 78364, which dismissed petitioners petition for
review at the CA for being the wrong remedy. The second petition, docketed as G.R. No. 172303, assails
the Decision3 dated December 16, 2005 and Resolution 4 dated April 12, 2006 of the CA in CA-G.R. SP
No. 77478, modifying the judgment of the Voluntary Arbitrator in NCMB-NCR-CRN-07-008-01.
The antecedent facts are as follows:
Petitioner Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL is a duly registered union and the
certified bargaining representative of the rank-and-file employees of Hyatt Regency Manila, a five-star
hotel owned and operated by respondent Hotel Enterprises of the Philippines, Inc. On January 31, 2001,
Hyatts General Manager, David C. Pacey, issued a Memorandum 5 informing all hotel employees that
hotel security have been instructed to conduct a thorough bag inspection and body frisking in every
entrance and exit of the hotel. He enjoined employees to comply therewith. Copies of the Memorandum
were furnished petitioner.
On February 3, 2001, Angelito Caragdag, a waiter at the hotels Cafe Al Fresco restaurant and a director
of the union, refused to be frisked by the security personnel. The incident was reported to the hotels
Human Resources Department (HRD), which issued a Memorandum 6 to Caragdag on February 5, 2001,
requiring him to explain in writing within forty-eight (48) hours from notice why no disciplinary action
should be taken against him. The following day, on February 6, 2001, Caragdag again refused to be
frisked by the security personnel. Thus, on February 8, 2001, the HRD issued another Memorandum 7
requiring him to explain.
On February 14, 2001, the HRD imposed on Caragdag the penalty of reprimand for the February 3, 2001
incident, which was considered a first offense, and suspended him for three days for the February 6,
2001 incident, which was considered as a second offense. 8 Both penalties were in accordance with the
hotels Code of Discipline.
Subsequently, on February 22, 2001, when Mike Moral, the manager of Hyatts Cafe Al Fresco and
Caragdags immediate superior, was about to counsel two staff members, Larry Lacambacal and Allan
Alvaro, at the training room, Caragdag suddenly opened the door and yelled at the two with an enraged
look. In a disturbing voice he said, "Ang titigas talaga ng ulo nyo. Sinabi ko na sa inyo na huwag kayong
makikipagusap sa management habang ongoing pa ang kaso!" (You are very stubborn. I told you not to
speak to management while the case is ongoing!) Moral asked Caragdag what the problem was and
informed him that he was simply talking to his staff. Moral also told Caragdag that he did not have the
right to interrupt and intimidate him during his counseling session with his staff.
On February 23, 2001, Moral issued a Memorandum 9 requiring Caragdag to explain his actions in the
training room. Caragdag submitted his written explanation on February 25, 2001 10 narrating that he was
informed by someone that Lacambacal and Alvaro were requesting for his assistance because Moral had
invited them to the training room. Believing that he should advise the two that they should be
accompanied by a union officer to any inquisition, he went to the training room. However, before he could
enter the door, Moral blocked him. Thus, he told Lacambacal and Alvaro that they should be assisted by

Still later, on March 2, 2001, Caragdag committed another infraction. At 9:35 a.m. on the said date,
Caragdag left his work assignment during official hours without prior permission from his Department
Head. He was required to submit an explanation, but the explanation 12 he submitted was found
unsatisfactory. On March 17, 2001, Moral found Caragdag liable for violating OSDA 3.07, i.e., "leaving
work assignment during official working hours without prior permission from the department head or
immediate superior," and suspended him for three days.13
Because of the succession of infractions he committed, the HRD also required Caragdag to explain on
May 11, 2001 why the hotels OSDA 4.32 (Committing offenses which are penalized with three [3]
suspensions during a 12-month period) should not be enforced against him. 14 An investigation board was
formed after receipt of Caragdags written explanation, and the matter was set for hearing on May 19,
2001. However, despite notice of the scheduled hearing, both Caragdag and the Union President failed
to attend. Thereafter, the investigating board resolved on the said date to dismiss Caragdag for violation
of OSDA 4.32.15 Caragdag appealed but the investigating board affirmed its resolution after hearing on
May 24, 2001.
On June 1, 2001, the hotel, through Atty. Juancho A. Baltazar, sent Caragdag a Notice of Dismissal, 16 the
pertinent portion of which reads:
Based on the findings of the Investigation Board dated May 19, 2001 which was approved by the General
Manager Mr. David Pacey on the same day and which did not merit any reversal or modification after the
hearing on your appeal on May 24, 2001, the penalty of DISMISSAL is therefore affirmed to take effect
on June 1, 2001.
Caragdags dismissal was questioned by petitioner, and the dispute was referred to voluntary arbitration
upon agreement of the parties. On May 6, 2002, the Voluntary Arbitrator rendered a decision, 17 the
dispositive portion of which reads:
WHEREFORE, premises considered, this Arbiter rules that the three separate suspensions of Mr.
Caragdag are valid, his dismissal is legal and OSDA 4.32 of Hyatts Code of Discipline is reasonable.
However, for humanitarian considerations, Hyatt is hereby ordered to grant financial assistance to Mr.
Caragdag in the amount of One Hundred Thousand Pesos (PhP100,000.00).
In finding the three separate suspensions of Caragdag valid, the Voluntary Arbitrator reasoned that the
union officers and members had no right to breach company rules and regulations on security and
employee discipline on the basis of certain suspicions against management and an ongoing CBA
negotiation standoff. The Voluntary Arbitrator also found that when Caragdag advised Lacambacal and
Alvaro not to give any statement, he threatened and intimidated his superior while the latter was
performing his duties. Moreover, there is no reason why he did not arrange his time-off with the
Department Head concerned. Thus, Caragdag was validly dismissed pursuant to OSDA 4.32 of Hyatts
Code of Discipline, which states that an employee who commits three different acts of misconduct within
a twelve (12)-month period commits serious misconduct.
Petitioner sought reconsideration of the decision while respondent filed a motion for partial
reconsideration. However, the Voluntary Arbitrator denied both motions on May 26, 2003.18

On August 1, 2003, petitioner assailed the decision of the Voluntary Arbitrator before the CA in a petition
for certiorari which was docketed as CA-G.R. SP No. 78364. 19 As mentioned at the outset, the CA
dismissed the petition outright for being the wrong remedy. The CA explained:
Rule 43, Section 5 of the 1997 Rules of Civil Procedure explicitly provides that the proper mode of appeal
from judgments, final orders or resolution of voluntary arbitrators is through a Petition for Review which
should be filed within fifteen (15) days from the receipt of notice of judgment, order or resolution of the
voluntary arbitrator.
Considering that petitioner intends this petition to be a Petition for Certiorari, the Court hereby resolves to
dismiss the petition outright for being an improper mode of appeal.
Even if this Court treats the instant petition as a Petition for Review, still the Court has no alternative but
to dismiss the same for having been filed out of time. As admitted by the petitioner it received the Order
dated 26 May 2003 denying their motion for reconsideration on 02 June 2003. The fifteen (15) day period
within which to appeal through a Petition for Review is until June 17, 2003. The petitioner filed the
present petition on August 1, 2003, way beyond the reglementary period provided for by the Rules. 20
Petitioner duly filed a motion for reconsideration of the dismissal, but the motion was denied by the CA.
Thus, petitioner filed before this Court a petition for review on certiorari which was docketed as G.R. No.
164939.
In the meantime, on June 30, 2003, respondent also filed a petition for review 21 with the CA on the
ground that the Voluntary Arbitrator committed a grievous error in awarding financial assistance to
Caragdag despite his finding that the dismissal due to serious misconduct was valid. On December 16,
2005, the CA promulgated a decision in CA-G.R. SP. No. 77478 as follows:

In G.R. No. 172303

THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF FINANCIAL ASSISTANCE IN THE
AMOUNT OF P100,000.00 TO ANGELITO CARAGDAG.25
The issues for our resolution are thus two-fold: first, whether the CA erred in dismissing outright the
petition for certiorari filed before it on the ground that the same is an improper mode of appeal; and
second, whether the CA erred in deleting the award of financial assistance in the amount of P100,000.00
to Caragdag.
On the first issue, petitioner argues that because decisions rendered by voluntary arbitrators are issued
under Title VII-A of the Labor Code, they are not covered by Rule 43 of the 1997 Rules of Civil
Procedure, as amended, by express provision of Section 2 thereof. Section 2, petitioner points out,
expressly provides that Rule 43 "shall not apply to judgments or final orders issued under the Labor Code
of the Philippines." Hence, a petition for certiorari under Rule 65 is the proper remedy for questioning the
decision of the Voluntary Arbitrator, and petitioner having availed of such remedy, the CA erred in
declaring that the petition was filed out of time since the petition was filed within the sixty (60)-day
reglementary period.
On the other hand, respondent maintains that the CA acted correctly in dismissing the petition for
certiorari for being the wrong mode of appeal. It stresses that Section 1 of Rule 43 clearly states that it is
the governing rule with regard to appeals from awards, judgments, final orders or resolutions of voluntary
arbitrators. Respondent contends that the voluntary arbitrators authorized by law include the voluntary
arbitrators appointed and accredited under the Labor Code, as they are considered as included in the
term "quasi-judicial instrumentalities."
Petitioners arguments fail to persuade.

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

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

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

SO ORDERED.22
In deleting the award of financial assistance to Caragdag, the CA cited the case of Philippine Commercial
International Bank v. Abad,23 which held that the grant of separation pay or other financial assistance to
an employee dismissed for just cause is based on equity and is a measure of social justice, awarded to
an employee who has been validly dismissed if the dismissal was not due to serious misconduct or
causes that reflected adversely on the moral character of the employee. In this case, the CA agreed with
the findings of the Voluntary Arbitrator that Caragdag was validly dismissed due to serious misconduct.
Accordingly, financial assistance should not have been awarded to Caragdag. The CA also noted that it is
the employers prerogative to prescribe reasonable rules and regulations necessary or proper for the
conduct of its business or concern, to provide certain disciplinary measures to implement said rules and
to ensure compliance therewith.
Petitioner sought reconsideration of the decision, but the CA denied the motion for lack of merit. Hence,
petitioner filed before us a petition for review on certiorari docketed as G.R. No. 172303.
Considering that G.R. Nos. 164939 and 172303 have the same origin, involve the same parties, and
raise interrelated issues, the petitions were consolidated.
Petitioner raises the following issues:
In G.R. No. 164939
THE COURT OF APPEALS ERRED IN DISMISSING OUTRIGHT THE PETITION FOR CERTIORARI
ON THE GROUND THAT THE SAME IS AN IMPROPER MODE OF APPEAL. 24

The question on the proper recourse to assail a decision of a voluntary arbitrator has already been
settled in Luzon Development Bank v. Association of Luzon Development Bank Employees, where the
Court held that the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular
No. 1-95 (now embodied in Rule 43 of the 1997 Rules of Civil Procedure), just like those of the quasijudicial agencies, boards and commissions enumerated therein, and consistent with the original purpose
to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities.
Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia v. Court of
Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the Court held that notwithstanding
Section 2 of Rule 43, the ruling in Luzon Development Bank still stands. The Court explained, thus:
"The provisions may be new to the Rules of Court but it is far from being a new law. Section 2, Rules 42
of the 1997 Rules of Civil Procedure, as presently worded, is nothing more but a reiteration of the
exception to the exclusive appellate jurisdiction of the Court of Appeals, as provided for in Section 9,
Batas Pambansa Blg. 129, as amended by Republic Act No. 7902:
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended,
the provisions of this Act and of subparagraph (1) of the third paragraph and subparagraph (4) of the
fourth paragraph of Section 17 of the Judiciary Act of 1948.

"The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the
decisions of voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit x x x"
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended, provide:
SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of Tax
Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial
agency in the exercise of its quasi-judicial functions. Among these agencies are the x x x, and voluntary
arbitrators authorized by law.
xxxx
SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals within the
period and in the manner therein provided, whether the appeal involves questions of fact, of law, or
mixed questions of fact and law.
SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award,
judgment, final order or resolution, or from the date of its last publication, if publication is required by law
for its effectivity, or of the denial of petitioners motion for new trial or reconsideration duly filed in
accordance with the governing law of the court or agency a quo. x x x. (Emphasis supplied.)
Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution denying petitioners motion
for reconsideration, petitioner should have filed with the CA, within the fifteen (15)-day reglementary
period, a petition for review, not a petition for certiorari.
Petitioner insists on a liberal interpretation of the rules but we find no cogent reason in this case to
deviate from the general rule. Verily, rules of procedure exist for a noble purpose, and to disregard such
rules in the guise of liberal construction would be to defeat such purpose. Procedural rules are not to be
disdained as mere technicalities. They may not be ignored to suit the convenience of a party. Adjective
law ensures the effective enforcement of substantive rights through the orderly and speedy
administration of justice. Rules are not intended to hamper litigants or complicate litigation. But they help
provide for a vital system of justice where suitors may be heard following judicial procedure and in the
correct forum. Public order and our system of justice are well served by a conscientious observance by
the parties of the procedural rules.27
On the second issue, petitioner argues that Caragdag is entitled to financial assistance in the amount of
P100,000 on humanitarian considerations. Petitioner stresses that Caragdags infractions were due to his
being a union officer and his acts did not show moral depravity. Petitioner also adds that, while it is true
that the award of financial assistance is given only for dismissals due to causes specified under Articles
283 and 284 of the Labor Code, as amended, this Court has, by way of exception, allowed the grant of
financial assistance to an employee dismissed for just causes based on equity.
Respondent on the other hand, asserts that the CA correctly deleted the award of financial assistance
erroneously granted to Caragdag considering that he was found guilty of serious misconduct and other
acts adversely reflecting on his moral character. Respondent stresses that Caragdags willful defiance of
the hotels security policy, disrespect and intimidation of a superior, and unjustifiable desertion of his work
assignment during working hours without permission, patently show his serious and gross misconduct as
well as amoral character.28
Again, petitioners arguments lack merit.
The grant of separation pay or some other financial assistance to an employee dismissed for just causes
is based on equity.29 In Phil. Long Distance Telephone Co. v. NLRC,30 we ruled that severance
compensation, or whatever name it is called, on the ground of social justice shall be allowed only when
the cause of the dismissal is other than serious misconduct or for causes which reflect adversely on the
employees moral character. The Court succinctly discussed the propriety of the grant of separation pay
in this wise:

We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker,
the employer may not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than
punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal
only and that the separation pay has nothing to do with the wrong he has committed. Of course it has.
Indeed, if the employee who steals from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in his next employment because he
thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not
going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not
deserve the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by
the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense.
Compassion for the poor is an imperative of every humane society but only when the recipient is not a
rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels
any more than can equity be an impediment to the punishment of the guilty. Those who invoke social
justice may do so only if their hands are clean and their motives blameless and not simply because they
happen to be poor. This great policy of our Constitution is not meant for the protection of those who have
proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes
of their own character.31
Here, Caragdags dismissal was due to several instances of willful disobedience to the reasonable rules
and regulations prescribed by his employer. The Voluntary Arbitrator pointed out that according to the
hotels Code of Discipline, an employee who commits three different acts of misconduct within a twelve
(12)-month period commits serious misconduct. He stressed that Caragdags infractions were not even
spread in a period of twelve (12) months, but rather in a period of a little over a month. Records show the
various violations of the hotels rules and regulations were committed by Caragdag. He was suspended
for violating the hotel policy on bag inspection and body frisking. He was likewise suspended for
threatening and intimidating a superior while the latter was counseling his staff. He was again suspended
for leaving his work assignment without permission. Evidently, Caragdags acts constitute serious
misconduct.1wphi1
In Piedad v. Lanao del Norte Electric Cooperative, Inc., 32 we ruled that a series of irregularities when put
together may constitute serious misconduct, which under Article 282 of the Labor Code, as amended, is
a just cause for dismissal.
Caragdags dismissal being due to serious misconduct, it follows that he should not be entitled to
financial assistance. To rule otherwise would be to reward him for the grave misconduct he committed.
We must emphasize that social justice is extended only to those who deserve its compassion.33
WHEREFORE, the petitions for review on certiorari are DENIED. The October 3, 2003 and August 13,
2004 Court of Appeals Resolutions in CA-G.R. SP No. 78364, as well as the Court of Appeals December
16, 2005 Decision and April 12, 2006 Resolution in CA-G.R. SP No. 77478, are AFFIRMED and
UPHELD. With costs against the petitioner.

G.R. No. 172506

July 27, 2011

JERRY
MAPILI,
Petitioner,
vs.
PHILIPPINE RABBIT BUS LINES, INC./NATIVIDAD NISCE, Respondents.
DECISION
DEL CASTILLO, J.:
An employees propensity to commit repetitious infractions evinces wrongful intent, making him
undeserving of the compassion accorded by law to labor.
This Petition for Review on Certiorari1 assails the Decision2 dated January 16, 2006 and Resolution 3
dated April 6, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 89733, which affirmed the Decision 4
dated November 25, 2004 and Resolution 5 dated February 28, 2005 of the National Labor Relations
Commission (NLRC) finding petitioner Jerry Mapili (petitioner) to have been dismissed for cause.
Factual Antecedents
Respondent Natividad P. Nisce (Nisce) is the President of respondent Philippine Rabbit Bus Lines, Inc.
(PRBLI), an entity engaged in the transportation business. On April 7, 1993, PRBLI hired petitioner as
bus conductor with a salary of P510.00 per trip. On October 7, 2001, while on duty en route from Manila
to Alaminos, Pangasinan, petitioner was caught by PRBLIs field inspector extending a free ride to a lady
passenger who boarded at Barangay Magtaking, Labrador, Pangasinan. Upon order of the field
inspector, the lady passenger, who happened to be the wife of Julio Ricardo, petitioners co-employee
and one of PRBLIs drivers, was immediately issued a passenger ticket for which she paid P50.00.6
On October 9, 2001, petitioner was preventively suspended and was directed to appear in an
administrative investigation.7 Thereafter, a formal hearing was conducted during which petitioner was
given an opportunity to present and explain his side. Consequently, through a memorandum 8 dated
November 9, 2001, petitioner was terminated from employment for committing a serious irregularity by
extending a free ride to a passenger in violation of company rules. Notably, that was already the third
time that petitioner committed said violation.
On February 19, 2002, petitioner filed with the NLRC a Complaint 9 for illegal dismissal against PRBLI,
Nisce, and Ricardo Paras (Paras), PRBLIs General Manager.
Parties Respective Arguments
Petitioner alleged that his employment was terminated without cause and due process. He argued that
the infraction was only trivial. It was done without malice and resulted from his honest belief that
immediate family members of PRBLIs employees are entitled to free ride. He argued that his two
previous violations of the same company regulation cannot be considered in the imposition of the penalty
of dismissal since those previous infractions were not too serious. The first involved a police officer
supposedly on official duty who refused to pay for a passenger ticket, while the second involved a former
employee of PRBLI who misrepresented himself to be a current employee by virtue of a company ID duly
presented. Moreover, he has already been penalized for these previous violations and to consider them
anew would be tantamount to penalizing him twice for the same offense. Under these circumstances and
considering further his length of service, petitioner advanced that his violations are not sufficient to merit
the penalty of dismissal. Petitioner thus prayed that his dismissal be declared illegal and that he be
awarded separation pay in lieu of reinstatement, backwages, 13th month pay, damages, attorneys fees
and refund of cash bond in the amount of P5,000.00.

Respondents argued that petitioners admissions during the investigation that he indeed offered a free
ride out of gratitude to the wife of his co-employee and that it was his third offense, justified his
termination considering that his position is imbued with trust and confidence. They claimed that
petitioners failure to collect fares from the riding public, coupled with his past record of serious offenses
ranging from non-issuance, improper passenger tickets to collecting fares without issuing tickets, and
allowing passengers to board without fare coupons, for which different penalties have been imposed
against him, are grounds for valid dismissal. Respondents also argued that due process was observed
when petitioner was accorded a chance to defend himself in an investigation conducted for that purpose.
Respondents further disclaimed bad faith, malice, and liability to petitioners money claims.
Ruling of the Labor Arbiter
In a Decision10 dated July 2, 2003, the Labor Arbiter held that petitioner had no intention to defraud the
company by his failure to issue a ticket to the wife of a co-employee as the same was done out of
gratitude and under the wrong impression that she is entitled to such privilege. Besides, the amount of
the fare was subsequently collected from and paid by the passenger. The Labor Arbiter opined that
petitioners actuations merited a less punitive penalty such as suspension of 30 days which he already
served during his preventive suspension. The Labor Arbiter also found that petitioner was not denied due
process since he was given the opportunity to present his side. As regards Nisce and Paras, the Labor
Arbiter held that they cannot be held personally liable for lack of bad faith on their part. The dispositive
portion of said Decision reads:
PREMISES CONSIDERED, judgment is hereby rendered declaring complainant Jerry B. Mapili to have
been illegally dismissed from employment. Respondent Philippine Rabbit Bus Lines, Inc. is hereby
ordered to reinstate complainant to his former position or to a similar one without loss of seniority rights
and pay him the following:
a.) Backwages amounting to Php271,320.00;
b.) 13th month pay of Php24,650.00;
c.) Php5,000.00 as refund of bond.
All in the total amount of Php300,970.00.
A detailed computation is attached as Annex A.
SO ORDERED.11
Ruling of the National Labor Relations Commission
The NLRC, in a Decision12 dated November 25, 2004 set aside the findings of the Labor Arbiter upon
appeal by respondents. It found that the non-issuance of a ticket to the lady passenger and failure to
collect money due to the company was a deliberate and intentional act of petitioner which prejudiced the
companys interests. In ruling that petitioners dismissal was for just cause, the NLRC opined that
petitioners past record of committing several acts of misconduct and his propensity to commit similar
infractions do not merit the compassion of law. Thus, the NLRC disposed of the case as follows:
WHEREFORE, premises considered, the decision under review is hereby, REVERSED and SET ASIDE,
and another entered in its stead, DISMISSING the complaint for lack of merit.
Respondents are, however, ordered to refund complainants cash bond in the amount of FIVE
THOUSAND PESOS (P5,000.00), and his proportionate 13th month pay for the year 2001 in the amount
of ELEVEN THOUSAND THREE HUNDRED NINETY Pesos (P11,390.00), or a total amount of SIXTEEN
THOUSAND THREE HUNDRED NINETY Pesos (P16,390.00).

SO ORDERED.13

We deny the petition.

Petitioner filed his Motion for Reconsideration 14 which was denied by the NLRC in a Resolution 15 dated
February 28, 2005.

Petitioners violation of company rules was intentional, willful, serious and a just cause for dismissal.

Ruling of the Court of Appeals

Petitioner filed with the CA a petition for certiorari. 16 The CA, in its Decision 17 dated January 16, 2006,
however, found no grave abuse of discretion on the part of the NLRC in ruling that petitioner was validly
dismissed. The CA agreed that petitioner has a history of committing violations of company rules, the last
one being a repeat violation against extending free rides to passengers. This infraction is considered as a
grave offense and serious misconduct which merits the penalty of dismissal. The CA also agreed that
there was intent to cheat the company of its funds.
Petitioners Motion for Reconsideration18 was likewise denied in the CA Resolution19 dated April 6, 2006.
Hence, the instant petition.
Issues

Petitioner assails the CAs finding that petitioners non-issuance of a passenger ticket to the lady
passenger is a grave offense, that it was committed with deliberate intent and a repeat violation of a
company rule which merits dismissal. Petitioner insists that his infraction was merely trivial because he
was under the impression that immediate family members of employees are entitled to free ride.
Petitioner cites Section 13, Article VIII21 of the Collective Bargaining Agreement which provides:
Section 13. Free Ride and Passes - All employees covered by this Agreement shall be provided a free
ride in all units of Philippine Rabbit Bus Line, Inc. as presently practiced. However, members of his/her
immediate family shall be given passes upon request to the COMPANY.
Petitioner insists that his act of extending a free ride is in accordance with the aforequoted provision and
the fact that he may have overlooked the requirement of passes with respect to immediate family
members is not so serious as to characterize the offense he committed to have been performed with
malicious intent.
We are not persuaded.

Petitioner raised the following grounds:

I.
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN NOT HOLDING
THAT DISMISSAL FROM EMPLOYMENT IS NOT [A COMMENSURATE] PENALTY [FOR]
THE INFRACTION COMMITTED AS A MERE ERROR IN JUDGMENT, SUCH AS
PETITIONERS ACT OF EXTENDING A FREE BUS RIDE TO THE CO-EMPLOYEE BUS
DRIVERS WIFE ON THE HONEST BELIEF THAT AN IMMEDIATE FAMILY MEMBER OF
AN EMPLOYEE IN THE COMPANY IS ENTITLED TO A FREE RIDE;

The above provision is clear and unequivocal that free rides are available only to employees of PRBLI.
The benefit is not automatically extended to members of the employees immediate family as passes
must first be requested for them. Petitioner should be conversant of this provision considering his
previous infractions of this same provision for which he was duly penalized. Besides, petitioners claim of
good faith is belied by his testimony to the effect that he extended a free ride out of gratitude to the wife
of a co-employee who assisted him in his financial troubles. During the administrative investigation
conducted on October 15, 2001, petitioner narrated thus:
Q-9 Why on October 07 you [gave] a free ride to the wife of Driver Ricardo?
A-9 I did this because I want to pay my gratitude to her, sir.

II.
Q-10 What are your gratitude/s to the woman?
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN EQUATING AS
PROOF RESPONDENTS MERE ALLEGATIONS OF VARIOUS PAST INFRACTIONS
AGAINST YOUR PETITIONER; and
III.
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN NOT HOLDING
THAT THE PAST TWO SIMILAR INFRACTIONS [FOR] WHICH AN EMPLOYEE HAS
ALREADY SUFFERED THE CORRESPONDING PENALTY OF WARNING AND
SUSPENSION, CANNOT BE USED AS X X X JUSTIFICATION[S] FOR THE EMPLOYEES
DISMISSAL FROM SERVICE.20
Petitioner asserts that the penalty of dismissal is grossly disproportionate to the infraction he committed
because his act of extending a free ride was not deliberate but was done on a wrong assumption that
immediate family members of company employees are entitled to free rides. He insists that his past
infractions, unsupported by proof, and his previous two offenses of not issuing fare tickets to a police
officer and former company employee cannot be used as bases for his termination considering that his
actuations for the latter offenses were justified under the circumstances and that he was already
penalized for all these past violations. It is petitioners view that his infraction merits only a 30-day
suspension, as imposed by the Labor Arbiter.
Our Ruling

A-10 Many times she [helped] me in my problem especially in financial, sir.

Q-11 Why [do] you need to pay your gratitude [at] the expense of the company?
A-11 For what I have done compel [sic] myself to do. Napasubo lang po ako. I admit this is a
grave offense against the company. Whatever suspension that you may impose to [sic] me I
am ready to accept, sir.22
Based on this testimony, it is quite apparent that petitioner was aware that the infraction he committed
constituted a grave offense but he still persisted in committing the same out of gratitude to the
passenger. Hence, as correctly found by the CA, there was deliberate intent on the part of the petitioner
to commit the violation in order to repay a personal debt at the expense of the company. Petitioner chose
to violate company rules for his benefit without regard to his responsibilities to the company. Also, if not
for the inspector who discovered the incident, the company would have been defrauded by the amount of
fare.
It bears stressing that petitioner has been in the employ of PRBLI for more
than eight years already and is a member of the companys labor union. As such, he ought to know the
specific company rules pertaining to his line of work as a bus conductor. For that matter, his length of

service has even aggravated the resulting consequences of his transgressions. In addition, on April 8,
1994 and May 3, 1995, he committed similar infractions of extending free ride to a police officer and a
former employee, respectively. These had been brought to the attention of the petitioner and for which
the penalties of relief from duty and suspension were meted out upon him. 23 Hence, he ought to have
known better than to repeat the same violation as he is presumed to be thoroughly acquainted with the
prohibitions and restrictions against extending free rides. We also cannot agree with petitioners
contention that his infraction was trivial. As a bus conductor whose duties primarily include the collection
of transportation fares, which is the lifeblood of the PRBLI, petitioner should have exercised the required
diligence in the performance thereof and his habitual failure to exercise the same cannot be taken for
granted. As correctly observed by the CA, petitioners position is imbued with trust and confidence
because it involves handling of money and failure to collect the proper fare from the riding public
constitutes a grave offense which justifies his dismissal. Moreover, petitioners "series of irregularities
when put together may constitute serious misconduct."24
Petitioners record of offenses of the same nature as his present infraction justifies his dismissal.
Petitioners past infractions can be gleaned from his employment record of offenses which was presented
by the respondents. This piece of evidence was not disputed by petitioner. Hence, petitioner cannot claim
that the finding of his past company infractions was based merely on allegations.
As petitioners employment record shows, this is not the first time that
petitioner refused to collect fares from passengers. In fact, this is already the third instance that he failed
to collect fares from the riding public. Although petitioner already suffered the corresponding penalties for
his past misconduct, those infractions are still relevant and may be considered in assessing his liability
for his present infraction.25 We thus held in Philippine Rabbit Bus Lines, Inc. v. National Labor Relations
Commission26that:
Nor can it be plausibly argued that because the offenses were already given the appropriate sanctions,
they cannot be taken against him. They are relevant in assessing private respondents liability for the
present violation for the purpose of determining the appropriate penalty. To sustain private respondents
argument that the past violation should not be considered is to disregard the warnings previously issued
to him.1avvphi1
As suspension may not anymore suffice as penalty for the violation done as shown by petitioners
disregard of previous warnings and propensity to commit the same infraction over the years of his
employment, and to deter other employees who may be wont to violate the same company policy,
petitioners termination from employment is only proper.
WHEREFORE, the petition is DENIED. The Decision dated January 16, 2006 and Resolution dated April
6, 2006 of the Court of Appeals in CA-G.R. SP No. 89733 are AFFIRMED.

DECISION

On appeal by Michelle, the NLRC referred the case to Executive LA Vito C. Bose for review, hearing and
report.10 Adopting LA Boses report, the NLRC rendered a decision 11 dated May 7, 2003 reversing LA
Ramos decision. The NLRC noted that for Michelles first three absences, she had already been
penalized ranging from a written warning to six days suspension. These, the NLRC declared, should
have precluded Cavite Apparel from using Michelles past absences as bases to impose on her the
penalty of dismissal, considering her six years of service with the company. It likewise considered the
penalty of dismissal too severe. The NLRC thus concluded that Michelle had been illegally dismissed and
ordered her reinstatement with backwages.12 When the NLRC denied Cavite Apparels motion for
reconsideration in a resolution13 dated March 30, 2005, Cavite Apparel filed a petition for certiorari with
the CA to assail the NLRC ruling.

BRION, J.:

The CA Ruling

G.R. No. 172044

February 06, 2013

CAVITE
APPAREL,
INCORPORATED
vs.
MICHELLE MARQUEZ, Respondent.

and

ADRIANO

TIMOTEO,

Petitioners,

We resolve the petition for review on certiorari1filed by petitioners Cavite Apparel, Incorporated ( Cavite
Apparel) and Adriano Timoteo to nullify the decision 2 dated January 23, 2006 and the resolution3 dated
March 23, 2006 of the Court of Appeals ( CA) in C.A.-G.R. SP No. 89819 insofar as it affirmed the
disposition4 of the National Labor Relations Commission (NLRC) in NLRC CA No. 029726-01. The NLRC
set aside the decision5 of Labor Arbiter (LA) Cresencio G. Ramos in NLRC NCR Case No. RAB-IV-712613-00-C dismissing the complaint for illegal dismissal filed by respondent Michelle Marquez against
the petitioners.
The Factual Antecedents
Cavite Apparel is a domestic corporation engaged in the manufacture of garments for export. On August
22, 1994, it hired Michelle as a regular employee in its Finishing Department. Michelle enjoyed, among
other benefits, vacation and sick leaves of seven (7) days each per annum. Prior to her dismissal on
June 8, 2000, Michelle committed the following infractions (with their corresponding penalties):
a. First Offense: Absence without leave (AWOL) on December 6, 1999 written warning
b. Second Offense: AWOL on January 12, 2000 stern warning with three (3) days suspension
c. Third Offense: AWOL on April 27, 2000 suspension for six (6) days. 6
On May 8, 2000, Michelle got sick and did not report for work. When she returned, she submitted a
medical certificate. Cavite Apparel, however, denied receipt of the certificate. 7 Michelle did not report for
work on May 15-27, 2000 due to illness. When she reported back to work, she submitted the necessary
medical certificates. Nonetheless, Cavite Apparel suspended Michelle for six (6) days (June 1-7, 2000).
When Michelle returned on June 8, 2000, Cavite Apparel terminated her employment for habitual
absenteeism.
On July 4, 2000, Michelle filed a complaint for illegal dismissal with prayer for reinstatement, backwages
and attorneys fees with the NLRC, Regional Arbitration Branch No. IV.

Cavite Apparel charged the NLRC with grave abuse of discretion when it set aside the LAs findings and
ordered Michelles reinstatement. It disagreed with the NLRCs opinion that Michells past infractions
could no longer be used to justify her dismissal since these infractions had already been penalized and
the corresponding penalties had been imposed.
The CA found no grave abuse of discretion on the part of the NLRC and accordingly dismissed Cavite
Apparels petition on January 23, 2006. 14 While it agreed that habitual absenteeism without official leave,
in violation of company rules, is sufficient reason to dismiss an employee, it nevertheless did not consider
Michelles four absences as habitual. It especially noted that Michelle submitted a medical certificate for
her May 8, 2000 absence, and thus disregarded Cavite Apparels contrary assertion. The CA explained
that Michelles failure to attach a copy of the medical certificate in her initiatory pleading did not disprove
her claim.
The CA agreed with the NLRC that since Cavite Apparel had already penalized Michelle for her three
prior absences, to dismiss her for the same infractions and for her May 8, 2000 absence was unjust.
Citing jurisprudence, The CA concluded that her dismissal was too harsh, considering her six years of
employment with Cavite Apparel; it was also a disproportionate penalty as her fourth infraction appeared
excusable.
In its March 23, 2006 resolution, 15 the CA denied Cavite Apparels motion for reconsideration; hence,
Cavite Apparels present recourse.
The Petition
Cavite Apparel imputes grave abuse of discretion against the CA when:
1. it did not find that the NLRC committed grave abuse of disretion in setting aside the decision
of the CA;
2. it failed to consider Michelles four (4) AWOLs over a period of six months, from December
1999 to May 2000, habitual; and

The LA Ruling
In a decision dated April 28, 2001, 8 LA Ramos dismissed the complaint. He noted that punctuality and
good attendance are required of employees in the companys Finishing Department. For this reason, LA
Ramos considered Michelles four absences without official leave as habitual and constitutive of gross
neglect of duty, a just ground for termination of employment. LA Ramos also declared that due process
had been observed in Michelles dismissal, noting that in each of her absences, Cavite Apparel afforded
Michelle an opportunity to explain her side and dismissed her only after her fourth absence. LA Ramos
concluded that Michelles dismissal was valid.9

3. it ruled that the series of violations of company rules committed by Michelle were already
meted with the corresponding penalties.16
Cavite Apparel argues that it is its prerogative to discipline its employees. It thus maintains that when
Michelle, in patent violation of the companys rules of discipline, deliberately, habitually, and without prior
authorization and despite warning did not report for work on May 8, 2000, she committed serious
misconduct and gross neglect of duty. It submits that dismissal for violation of company rules and
regulations is a dismissal for cause as the Court stressed in Northern Motors, Inc., v. National Labor
Union, et al.17

The NLRC Decision

The Case for the Respondent

Michelle asserts that her dismissal was arbitrary and unreasonable. For one, she had only four absences
in her six (6) years of employment with Cavite Apparel. She explains that her absence on May 8, 2000
was justified as she was sick and had sick leave benefits against which Cavite Apparel could have
charged her absences. Also, it had already sanctioned her for the three prior infractions. Under the
circumstances, the penalty of dismissal for her fourth infraction was very harsh. Finally, as the CA
correctly noted, Cavite Apparel terminated her services on the fourth infraction, without affording her prior
opportunity to explain.

Cavite Apparels position fails to convince us. Based on what we see in the records, there simply cannot
be a case of gross and habitual neglect of duty against Michelle. Even assuming that she failed to
present a medical certificate for her sick leave on May 8, 2000, the records are bereft of any indication
that apart from the four occasions when she did not report for work, Michelle had been cited for any
infraction since she started her employment with the company in 1994. Four absences in her six years of
service, to our mind, cannot be considered gross and habitual neglect of duty, especially so since the
absences were spread out over a six-month period.

The Courts Ruling

Michelles penalty of dismissal too harsh or not proportionate to the infractions she commited

The case poses for us the issue of whether the CA correctly found no grave abuse of discretion when the
NLRC ruled that Cavite Apparel illegally terminated Michelles employment.

Although Michelle was fully aware of the company rules regarding leaves of absence, and her dismissal
might have been in accordance with the rules, it is well to stress that we are not bound by such rules. In
Caltex Refinery Employees Association v. NLRC24 and in the subsequent case of Gutierrez v. Singer
Sewing Machine Company,25 we held that "[e]ven when there exist some rules agreed upon between the
employer and employee on the subject of dismissal, x x x the same cannot preclude the State from
inquiring on whether [their] rigid application would work too harshly on the employee." This Court will not
hesitate to disregard a penalty that is manifestly disproportionate to the infraction committed.

We stress at the outset that, as a rule, the Court does not review questions of fact, but only questions of
law in an appeal by certiorari under Rule 45 of the Rules of Court.18 The Court is not a trier of facts and
will not review the factual findings of the lower tribunals as these are generally binding and conclusive. 19
The rule though is not absolute as the Court may review the facts in labor cases where the findings of the
CA and of the labor tribunals are contradictory.20 Given the factual backdrop of this case, we find
sufficient basis for a review as the factual findings of the LA, on the one hand, and those of the CA and
the NLRC, on the other hand, are conflicting.
After a careful review of the merits of the case, particularly the evidence adduced, we find no reversible
error committed by the CA when it found no grave abuse of discretion in the NLRC ruling that Michelle
had been illegally dismissed.
Michelles four absences were not habitual; "totality of infractions" doctrine not applicable
Cavite Apparel argues that Michelles penchant for incurring unauthorized and unexcused absences
despite its warning constituted gross and habitual neglect of duty prejudicial to its business operations. It
insists that by going on absence without official leave four times, Michelle disregarded company rules
and regulations; if condoned, these violations would render the rules ineffectual and would erode
employee discipline.
Cavite Apparel disputes the CAs conclusion that Michelles four absences without official leave were not
habitual since she was able to submit a medical certificate for her May 8, 2000 absence. It asserts that,
on the contrary, no evidence exists on record to support this conclusion. It maintains that it was in the
exercise of its management prerogative that it dismissed Michelle; thus, it is not barred from dismissing
her for her fourth offense, although it may have previously punished her for the first three offenses. Citing
the Courts ruling in Mendoza v. NLRC,21 it contends that the totality of Michelles infractions justifies her
dismissal.
We disagree and accordingly consider the companys position unmeritorious.
Neglect of duty, to be a ground for dismissal under Article 282 of the Labor Code, must be both gross and
habitual.22 Gross negligence implies want of care in the performance of ones duties. Habitual neglect
imparts repeated failure to perform ones duties for a period of time, depending on the circumstances. 23
Under these standards and the circumstances obtaining in the case, we agree with the CA that Michelle
is not guilty of gross and habitual neglect of duties.
Cavite Apparel faults the CA for giving credit to Michelles argument that she submitted a medical
certificate to support her absence on May 8, 2000; there was in fact no such submission, except for her
bare allegations. It thus argues that the CA erred in holding that since doubt exists between the evidence
presented by the employee and that presented by the employer, the doubt should be resolved in favor of
the employee. The principle, it contends, finds no application in this case as Michelle never presented a
copy of the medical certificate. It insists that there was no evidence on record supporting Michelles claim,
thereby removing the doubt on her being on absence without official leave for the fourth time, an
infraction punishable with dismissal under the company rules and regulations.

Michelle might have been guilty of violating company rules on leaves of absence and employee
discipline, still we find the penalty of dismissal imposed on her unjustified under the circumstances. As
earlier mentioned, Michelle had been in Cavite Apparels employ for six years, with no derogatory record
other than the four absences without official leave in question, not to mention that she had already been
penalized for the first three absences, the most serious penalty being a six-day suspension for her third
absence on April 27, 2000.
While previous infractions may be used to support an employees dismissal from work in connection with
a subsequent similar offense,26 we cautioned employers in an earlier case that although they enjoy a
wide latitude of discretion in the formulation of work-related policies, rules and regulations, their directives
and the implemtation of their policies must be fair and reasonable; at the very least, penalties must be
commensurate to the offense involved and to the degree of the infraction.27
As we earlier expressed, we do not consider Michelles dismissal to be commensurate to the four
absences she incurred for her six years of service with the company, even granting that she failed to
submit on time a medical certificate for her May 8, 2000 absence. We note that she again did not report
for work on May 15 to 27, 2000 due to illness. When she reported back for work, she submitted the
necessary medical certificates. The reason for her absence on May 8, 2000 due to illness and not for
her personal convenience all the more rendered her dismissal unreasonable as it is clearly
disproportionate to the infraction she committed.
Finally, we find no evidence supporting Cavite Apparels claim that Michelles absences prejudiced its
operations; there is no indication in the records of any damage it sustained because of Michelles
absences. Also, we are not convinced that allowing Michelle to remain in employment even after her
fourth absence or the imposition of a lighter penalty would result in a breakdown of discipline in the
employee ranks. What the company fails to grasp is that, given the unreasonableness of Michelles
dismissal i.e., one made after she had already been penalized for her three previous absences, with
the fourth absence imputed to illness confirming the validity of her dismissal could possibly have the
opposite effect. It could give rise to belief that the company is heavy-handed and may only give rise to
sentiments against it.1wphi1
In fine, we hold that Cavite Apparel failed to discharge the burden of proving that Michelles dismissal
was for a lawful cause.28 We, therefore, find her to have been illegally dismissed.
As a final point, we reiterate that while we recognize managements prerogative to discipline its
employees, the exercise of this prerogative should at all times be reasonable and should be tempered
with compassion and understanding. 29 Dismissal is the ultimate penalty that can be imposed on an
employee. Where a penalty less punitive may suffice, whatever missteps may be committed by labor
ought not to be visited with a consequence so severe for what is at stake is not merely the employees
position but his very livelihood and perhaps the life and subsistence of his family.30

WHEREFORE, premises considered, the petition is DENIED. The assailed January 23, 2006 decision
and March 23, 2006 resolution of the Court of Appeals in CA-G.R. SP No. 89819 are AFFIRMED. Costs
against Cavite Apparel, Incorporated.

G.R. No. 182070

February 16, 2011

E.G
& I.
CONSTRUCTION
CORPORATION
and
EDSEL GALEOS,
Petitioners,
vs.
ANANIAS P. SATO, NILO BERDIN, ROMEO M. LACIDA, JR., and HEIRS OF ANECITO S.
PARANTAR, SR., namely: YVONNE, KIMBERLY MAE, MARYKRIS, ANECITO, JR., and JOHN
BRYAN, all surnamed PARANTAR, Respondents.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the
Decision1 dated October 24, 2007 and the Resolution 2 dated March 3, 2008 of the Court of Appeals (CA)
in CA-G.R. SP No. 02316.
The factual and procedural antecedents of the case are as follows:
Respondent Ananias P. Sato (Sato) was hired in October 1990 by petitioner E.G. & I. Construction
Corporation as a grader operator, which is considered as technical labor. He held the position for more
than thirteen (13) years. In April 2004, Sato discovered that petitioner corporation had not been remitting
his premium contributions to the Social Security System (SSS). When Sato kept on telling petitioners to
update his premium contributions, he was removed as a grader operator and made to perform manual
labor, such as tilling the land in a private cemetery and/or digging earthworks in petitioner corporations
construction projects.3 In July 2004, an inspection team from the SSS went to petitioner corporations
office to check its compliance with the SSS law. On July 22, 2004, petitioners told Sato that they could no
longer afford to pay his wages, and he was advised to look for employment in other construction
companies.4 Sato, however, found difficulty in finding a job because he had been blacklisted in other
construction companies and was prevented from entering the project sites of petitioners.5
Respondent Nilo Berdin (Berdin) was hired by petitioners in March 1991 as a steelman/laborer;
respondent Anecito S. Parantar, Sr.6 (Parantar) was hired in February 1997 as a steelman; and
respondent Romeo M. Lacida, Jr.7 (Lacida) was hired in March 2001 as a laborer.8 At the start of their
employment, they were required by petitioners to sign several documents purporting to be employment
contracts.9 They immediately signed the documents without verifying their contents for fear of forfeiting
their employment.10
Respondents were required to work from 7:00 a.m. until 5:00 p.m. While in the employ of petitioners, they
devoted their time exclusively in the service of petitioners and were assigned to various construction
projects of petitioners. They were tasked to set up steel bars used in the building foundation, to mix
cement, and to perform other tasks required of them by petitioners.11
On July 24, 2004, the project engineer of respondents Berdin, Parantar, and Lacida instructed them to
affix their signatures on various documents. They refused to sign the documents because they were
written in English, a language that they did not understand. Irked by their disobedience, the project
engineer terminated their employment. On the same date, they were given their weekly wages. However,
the wages that were paid to them were short of three (3) days worth of wages, as penalty for their refusal
to sign the documents. The following day, they were not allowed to enter the work premises.12
On July 26, 2004, respondents filed their respective complaints with the Regional Arbitration Branch of
Cebu City for illegal dismissal, underpayment of wages (wage differentials), holiday pay, thirteenth (13th)
month pay, and service incentive leave pay.13
Petitioners, on the other hand, admitted that respondents were employed by them and were assigned in
their various construction projects. However, they denied that they illegally terminated respondents
employment. According to petitioners, respondents abandoned their work when they failed to report for

work starting on July 22, 2004. Petitioner corporation sent letters advising respondents to report for work,
but they refused. Petitioner corporation maintained that respondents are still welcome, if they desire to
work.14
As to respondent Sato, petitioner corporation alleged that it admonished respondent for having an illicit
affair with another woman; that, in retaliation, Sato complained to the SSS for alleged non-remittance of
his premium contributions; that Satos work was substandard; and that he also incurred unexplained
absences and was constantly reprimanded for habitual tardiness.
On July 27, 2005, the Labor Arbiter rendered a decision 15 finding that respondents were illegally
dismissed from employment. In lieu of reinstatement, due to the strained relations of the parties and as
prayed for by respondents, each of them was granted separation pay equivalent to one (1) month pay for
every year of service. The Labor Arbiter likewise awarded respondents claim for wage differentials, 13th
month pay, holiday pay, and service incentive leave pay. The Labor Arbiter ruled in favor of granting the
monetary claims of respondents because of petitioner corporations failure to effectively controvert the
said claims by not presenting proof of payment, such as payrolls or vouchers. 16 The dispositive portion of
the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent [petitioner] E.G.
& I. Construction Corporation to pay [respondents] the following:
1. Ananias P. Sato

P 107,250.00

2. Anecito Parantar

120,944.00

3. Nilo Berdin

152,144.00

4. Romeo M. Lacida, Jr.

138,594.00

Total Award

P 518,932.00
==========

The other claims and the case against respondent Edsel Galeos are dismissed for lack of merit.
SO ORDERED.17
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the Labor Arbiter in a
decision18 dated July 31, 2006. The fallo of the NLRC decision reads:
WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and
VACATED and a new one entered Dismissing the case. Respondents are however ordered to pay
complainants proportionate 13th month [pay] for the year 2004 computed as follows:
1. Ananias Sato
2. Anecito Parantar
3. Nilo Berdin
4. Romeo Laceda

Total

P 3,180.00
2,520.00
2,700.00
2,520.00
P 10,920.00

SO ORDERED.19
In reversing the decision of the Labor Arbiter, the NLRC ratiocinated that, other than respondents bare
allegation that they were dismissed, they failed to present a written notice of dismissal, 20 and that
respondents individual complaints opted for the payment of separation pay instead of reinstatement. 21

The NLRC opined that illegal dismissal was inconsistent with the prayer for separation pay instead of
reinstatement. As for the monetary reliefs prayed for by respondents, the NLRC withdrew the grant of the
same because of petitioner corporations submission of the copies of payrolls, annexed to its
memorandum on appeal.22

employment must be shown by clear proof that it was deliberate and unjustified. 32 Petitioner corporation
failed to show overt acts committed by respondents from which it may be deduced that they had no more
intention to work. Respondents filing of the case for illegal dismissal barely four (4) days from their
alleged abandonment is totally inconsistent with our known concept of what constitutes abandonment.

Respondents filed a motion for reconsideration. However, the same was denied in a resolution 23 dated
October 9, 2006.

We sustain the ruling of the CA on respondents money claims. As a rule, one who pleads payment has
the burden of proving it. Even as the employee must allege non-payment, the general rule is that the
burden rests on the employer to prove payment, rather than on the employee to prove non-payment. 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 the
worker have been paid are not in the possession of the worker but in the custody and absolute control
of the employer.33

Aggrieved, respondents filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.
On October 24, 2007, the CA rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, this petition is GRANTED. The Decision and Resolution of the
NLRC, dated July 31, 2006 and October 9, 2006, respectively, are hereby REVERSED and SET ASIDE.
The Decision of the labor arbiter, dated July 27, 2005, is REINSTATED.
Costs against private respondents.
SO ORDERED.24
The CA ruled that respondents were illegally dismissed. A written notice of dismissal is not a pre-requisite
for a finding of illegal dismissal. 25 Respondents did not abandon their work. They were refused entry into
the companys project sites.26 As to the award of monetary claims, the CA decided in favor of the grant of
the same. Petitioner corporation belatedly submitted copies of the weekly time record, payroll, and
acknowledgement receipts of the 13th month pay. There was no explanation given why the said
documents were not submitted before the Labor Arbiter in order to establish their authenticity and
correctness, and to give respondents the opportunity to refute the entries therein.27
Hence, this petition.
The issue to be resolved in this case is whether the CA erred in reinstating the decision of the Labor
Arbiter, declaring that respondents were illegally terminated from employment by petitioner corporation,
and that respondents are entitled to their monetary claims.
We sustain the ruling of the CA. Petitioner corporation failed to prove that respondents were dismissed
for just or authorized cause. In an illegal dismissal case, the onus probandi rests on the employer to
prove that the dismissal of an employee is for a valid cause.28
For abandonment to exist, it is essential (a) that the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and (b) that there must have been a clear intention
to sever the employer-employee relationship manifested by some overt acts.29 The employer has the
burden of proof to show the employee's deliberate and unjustified refusal to resume his employment
without any intention of returning. Mere absence is not sufficient. There must be an unequivocal intent on
the part of the employee to discontinue his employment.30
In this case, petitioner corporation claims that respondent Sato committed unexplained absences on May
20, 24, and 25, 2004 and on June 7, 18, and 23, 2004. However, based on the findings of fact of the CA,
respondent Sato worked on May 20, June 18 and 23, 2004. This was based on the weekly time record
and payroll of respondent Sato that were presented by petitioner corporation in its appeal before the
NLRC. On respondent Satos alleged absences on May 24 and 25 and on June 7, 2004, no time record
and payroll documents were presented by petitioner corporation. With regard to respondents Berdin,
Lacida, and Parantar, petitioner corporation alleges that they failed to report for work starting on July 22,
2004, and that petitioner even sent them letters advising them to report for work, but to no avail.
Notwithstanding these assertions of petitioner corporation, we sustain the ruling of the CA.lawphi1 The
reason why respondents failed to report for work was because petitioner corporation barred them from
entering its construction sites. It is a settled rule that failure to report for work after a notice to return to
work has been served does not necessarily constitute abandonment. 31 The intent to discontinue the

In this case, the submission of petitioner corporation of the time records and payrolls of respondents only
on their appeal before the NLRC is contrary to elementary precepts of justice and fair play. Respondents
were not given the opportunity to check the authenticity and correctness of the same. Thus, we sustain
the ruling of the CA in the grant of the monetary claims of respondents. We are guided by the timehonored principle that if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter. It is the rule in controversies between a
laborer and his master that doubts reasonably arising from the evidence, or in the interpretation of
agreements and writing, should be resolved in the former's favor.34
WHEREFORE, in view of the foregoing, the Decision dated October 24, 2007 and the Resolution dated
March 3, 2008 of the Court of Appeals in CA-G.R. SP No. 02316 are hereby AFFIRMED. Costs against
the petitioners.

G.R. No. 176287

January 31, 2011

HOSPITAL MANAGEMENT SERVICES, INC. - MEDICAL CENTER MANILA, Petitioner,

vs.
HOSPITAL MANAGEMENT SERVICES, INC. - MEDICAL CENTER MANILA EMPLOYEES
ASSOCIATION-AFW and EDNA R. DE CASTRO, Respondents.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari seeking to set aside the Decision 1 dated May 24,
2006 and Resolution2 dated January 10, 2007 of the Court of Appeals (CA), Special First Division, in CAG.R. SP No. 73189, entitled Hospital Management Services, Inc.-Medical Center Manila Employees
Association-AFW and Edna R. De Castro v. National Labor Relations Commission, Hospital
Management Services, Inc.-Medical Center Manila and Asuncion Abaya-Morido, which reversed and set
aside the Decision3 dated February 28, 2002 of the National Labor Relations Commission (NLRC),
Second Division, in NLRC NCR No. 00-07-07716-99 (CA No. 027766-01), and its Resolution 4 dated May
31, 2002. The assailed CA decision ordered petitioner Hospital Management Services, Inc.-Medical
Center Manila to reinstate respondent Edna R. De Castro to her former position without loss of seniority
rights or by payroll reinstatement, pursuant to the Labor Arbiter's Decision dated January 18, 2001, but
with payment of full backwages and other benefits or their monetary equivalent, computed from the
expiration of the 14-day suspension period up to actual reinstatement.
The antecedent facts are as follows:
Respondent De Castro started working as a staff nurse at petitioner hospital since September 28, 1990,
until she was dismissed on July 20, 1999.
Between 2:00 a.m. to 3:00 a.m. of March 24, 1999, while respondent De Castro and ward-clerk orientee
Gina Guillergan were at the nurse station on night duty (from 10:00 p.m. of March 23, 1999 to 6:00 a.m.
of March 24, 1999), one Rufina Causaren, an 81-year-old patient confined at Room 724-1 of petitioner
hospital for "gangrenous wound on her right anterior leg and right forefoot" and scheduled for operation
on March 26, 1999, fell from the right side of the bed as she was trying to reach for the bedpan. Because
of what happened, the niece of patient Causaren staying in the room was awakened and she sought
assistance from the nurse station. Instead of personally seeing the patient, respondent De Castro
directed ward-clerk orientee Guillergan to check the patient. The vital signs of the patient were normal.
Later, the physician on duty and the nursing staff on duty for the next shift again attended to patient
Causaren.
Chief Nurse Josefina M. Villanueva informed Dr. Asuncion Abaya-Morido, president and hospital director,
about the incident and requested for a formal investigation. On May 11, 1999, the legal counsel of
petitioner hospital directed respondent De Castro and three other nurses on duty, Staff Nurse Janith V.
Paderes and Nursing Assistants Marilou Respicio and Bertilla T. Tatad, to appear before the Investigation
Committee on May 13, 1999, 2:00 p.m., at the conference room of petitioner hospital. During the
committee investigation, respondent De Castro explained that at around 2:30 a.m. to 3:00 a.m., she was
attending to a newly-admitted patient at Room 710 and, because of this, she instructed Nursing Assistant
Tatad to check the vital signs of patient Causaren, with ward-clerk orientee Guillergan accompanying the
latter. When the two arrived at the room, the patient was in a squatting position, with the right arm on the
bed and the left hand holding on to a chair.
In the Investigation Report5 dated May 20, 1999, the Investigation Committee found that the subject
incident happened between 11:00 a.m. to 11:30 a.m. of March 23, 1999. The three other nurses for the
shift were not at the nurse station. Staff Nurse Paderes was then in another nurse station encoding the
medicines for the current admissions of patients, while Nursing Assistant Respicio was making the door
name tags of admitted patients and Nursing Assistant Tatad delivered some specimens to the laboratory.
The committee recommended that despite her more than seven years of service, respondent De Castro

should be terminated from employment for her lapse in responding to the incident and for trying to
manipulate and influence her staff to cover-up the incident. As for Staff Nurse Paderes and Nursing
Assistants Respicio and Tatad, the committee recommended that they be issued warning notices for
failure to note the incident and endorse it to the next duty shift and, although they did not have any
knowledge of the incident, they should be reminded not to succumb to pressure from their superiors in
distorting the facts.
On July 5, 1999, Janette A. Calixijan, HRD Officer of petitioner hospital, issued a notice of termination,
duly noted by Dr. Abaya-Morido, upon respondent De Castro, effective at the close of office hours of July
20, 1999, for alleged violation of company rules and regulations, particularly paragraph 16 (a), Item 3,
Chapter XI of the Employee's Handbook and Policy Manual of 1996 (Employee's Handbook): 6 (1)
negligence to follow company policy on what to do with patient Rufina Causaren who fell from a hospital
bed; (2) failure to record and refer the incident to the physician-[on- duty and] allow[ing] a significant
lapse of time before reporting the incident; (3) deliberately instructing the staff to follow her version of the
incident in order to cover up the lapse; and (4) negligence and carelessness in carrying out her duty as
staff nurse-on-duty when the incident happened.
On July 21, 1999, respondent De Castro, with the assistance of respondent Hospital Management
Services Inc.-Medical Center Manila Employees Association-AFW, filed a Complaint 7 for illegal dismissal
against petitioners with prayer for reinstatement and payment of full backwages without loss of seniority
rights, P20,000.00 moral damages, P10,000.00 exemplary damages, and 10% of the total monetary
award as attorney's fees.
On January 18, 2001, the Labor Arbiter rendered a Decision, 8 ordering petitioner hospital to reinstate
respondent De Castro to her former position or by payroll reinstatement, at the option of the former,
without loss of seniority rights, but without backwages and, also, directing petitioners to notify her to
report to work. Her prayer for damages and attorney's fees was denied. The Labor Arbiter concluded that
although respondent De Castro committed the act complained of, being her first offense, the penalty to
be meted should not be dismissal from the service, but merely 7 to 14 days suspension as the same was
classified as a less serious offense under the Employees Handbook.
On appeal by respondent De Castro, the NLRC rendered a Decision dated February 28, 2002, reversing
the findings of the Labor Arbiter and dismissing the complaint against the petitioners. It observed that
respondent De Castro lacked diligence and prudence in carrying out her duty when, instead of personally
checking on the condition of patient Causaren after she fell from the bed, she merely sent ward-clerk
orientee Guillergan to do the same in her behalf and for influencing her staff to conceal the incident.
On May 31, 2002, the NLRC denied respondent De Castro's Motion for Reconsideration dated April 16,
2002.
On May 24, 2006, the CA reversed and set aside the Decision of the NLRC and reinstated the Decision
of the Labor Arbiter, with modification that respondent De Castro should be entitled to payment of full
backwages and other benefits, or their monetary equivalent, computed from the expiration of the 14-daysuspension period up to actual reinstatement. The CA ruled that while respondent De Castro's failure to
personally attend to patient Causeran amounted to misconduct, however, being her first offense, such
misconduct could not be categorized as serious or grave that would warrant the extreme penalty of
termination from the service after having been employed for almost 9 years. It added that the subject
infraction was a less serious offense classified under "commission of negligent or careless acts during
working time or on company property that resulted in the personal injury or property damage causing
expenses to be incurred by the company" stated in subparagraph 11, paragraph 3 (B), Chapter XI [on the
Rules on Discipline] of the Employee's Handbook 9 of petitioner hospital. The CA did not sustain the
NLRC's ruling that respondent De Castro's dismissal was proper on the ground that her offense was
aggravated to serious misconduct on account of her alleged act of asking her co-employees to lie for her
as this fact was not proven.
Petitioners' motion for reconsideration was denied by the CA in the Resolution dated January 10, 2007.
Hence, this present petition.

Petitioners allege that the deliberate refusal to attend to patient Causaren after the latter fell from the bed
justifies respondent De Castro's termination from employment due to serious misconduct. They claim that
respondent De Castro failed to: (a) personally assist the patient; (b) check her vital signs and examine if
she sustained any injury; (c) refer the matter to the patient's attending physician or any physician-onduty; and (d) note the incident in the report sheet for endorsement to the next shift for proper monitoring.
They also aver that respondent De Castro persuaded her co-nurses to follow her version of what
transpired so as to cover up her nonfeasance.
In her Comment, respondent De Castro counters that there was no serious misconduct or gross
negligence committed, but simple misconduct or minor negligence which would warrant the penalty of 7
to 14 days of suspension under the Employee's Handbook of petitioner hospital. She denies exerting
influence over the four nursing personnel, but points out that it was Chief Nurse Villanueva, a close friend
of patient Causaren's niece, who persuaded the four nursing staff to retract their statements appearing in
the incident reports as to the approximate time of occurrence, from 2:00 a.m. to 3:00 a.m. of March 24,
1999 to 11:00 p.m. to 11:30 p.m. of March 23, 1999, so as to pin her for negligence. She appeals for
leniency, considering that the subject infraction was her first offense in a span of almost nine years of
employment with petitioner hospital.
We affirm with modification the CA ruling which declared petitioners guilty of illegal dismissal.
Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross and
habitual neglect by the employee of his duties. The CA ruled that per the Employees Handbook of
petitioner hospital, respondent De Castros infraction is classified as a less serious offense for
"commission of negligent acts during working time" as set forth in subparagraph 11, paragraph 3 (B) of
Chapter XI10 thereof. Petitioners anchor respondent De Castros termination of employment on the
ground of serious misconduct for failure to personally attend to patient Causaren who fell from the bed as
she was trying to reach for the bedpan. Based on her evaluation of the situation, respondent De Castro
saw no necessity to record in the chart of patient Causaren the fact that she fell from the bed as the
patient did not suffer any injury and her vital signs were normal. She surmised that the incident was not of
a magnitude that would require medical intervention as even the patient and her niece did not press
charges against her by reason of the subject incident.
It is incumbent upon respondent De Castro to ensure that patients, covered by the nurse station to which
she was assigned, be accorded utmost health care at all times without any qualification or distinction.
Respondent De Castros failure to personally assist patient Causaren, check her vital signs and examine
if she sustained any injury, refer the matter to the patient's attending physician or any physician-on-duty,
and note the incident in the report sheet for endorsement to the next shift for proper monitoring constitute
serious misconduct that warrants her termination of employment. After attending to the toxic patients
under her area of responsibility, respondent De Castro should have immediately proceeded to check the
health condition of patient Causaren and, if necessary, request the physician-on-duty to diagnose her
further. More importantly, respondent De Castro should make everything of record in the patients chart
as there might be a possibility that while the patient may appear to be normal at the time she was initially
examined, an injury as a consequence of her fall may become manifest only in the succeeding days of
her confinement. The patients chart is a repository of ones medical history and, in this regard,
respondent De Castro should have recorded the subject incident in the chart of patient Causaren so that
any subsequent discomfort or injury of the patient arising from the incident may be accorded proper
medical treatment.
Neglect of duty, to be a ground for dismissal, must be both gross and habitual. 1wphi1 Gross negligence
connotes want of care in the performance of one's duties. Habitual neglect implies repeated failure to
perform one's duties for a period of time, depending upon the circumstances. A single or isolated act of
negligence does not constitute a just cause for the dismissal of the employee. 11 Despite our finding of
culpability against respondent De Castro; however, we do not see any wrongful intent, deliberate refusal,
or bad faith on her part when, instead of personally attending to patient Causaren, she requested Nursing
Assistant Tatad and ward-clerk orientee Guillergan to see the patient, as she was then attending to a
newly-admitted patient at Room 710. It was her judgment call, albeit an error of judgment, being the staff
nurse with presumably more work experience and better learning curve, to send Nursing Assistant Tatad
and ward-clerk orientee Guillergan to check on the health condition of the patient, as she deemed it best,
under the given situation, to attend to a newly-admitted patient who had more concerns that needed to
be addressed accordingly. Being her first offense, respondent De Castro cannot be said to be grossly

negligent so as to justify her termination of employment. Moreover, petitioners allegation, that

respondent De Castro exerted undue pressure upon her co-nurses to alter the actual time of the incident
so as to exculpate her from any liability, was not clearly substantiated.
Negligence is defined as the failure to exercise the standard of care that a reasonably prudent person
would have exercised in a similar situation. 12 The Court emphasizes that the nature of the business of a
hospital requires a higher degree of caution and exacting standard of diligence in patient management
and health care as what is involved are lives of patients who seek urgent medical assistance. An act or
omission that falls short of the required degree of care and diligence amounts to serious misconduct
which constitutes a sufficient ground for dismissal.
However, in some cases, the Court had ruled that sanctioning an erring employee with suspension would
suffice as the extreme penalty of dismissal would be too harsh. 13 Considering that this was the first
offense of respondent De Castro in her nine (9) years of employment with petitioner hospital as a staff
nurse without any previous derogatory record and, further, as her lapse was not characterized by any
wrongful motive or deceitful conduct, the Court deems it appropriate that, instead of the harsh penalty of
dismissal, she would be suspended for a period of six (6) months without pay, inclusive of the suspension
for a period of 14 days which she had earlier served. Thereafter, petitioner hospital should reinstate
respondent Edna R. De Castro to her former position without loss of seniority rights, full backwages,
inclusive of allowances and other benefits, or their monetary equivalent, computed from the expiration of
her suspension of six (6) months up to the time of actual reinstatement.
WHEREFORE, the petition is DENIED. The Decision dated May 24, 2006 and Resolution dated January
10, 2007 of the Court of Appeals, Special First Division, in CA-G.R. SP No. 73189, which reversed and
set aside the Decision dated February 28, 2002 and Resolution dated May 31, 2002 of the National
Labor Relations Commission, Second Division, are AFFIRMED WITH MODIFICATION insofar as
respondent Edna R. De Castro is found guilty of gross negligence and is SUSPENDED for a period of
SIX (6) MONTHS without pay, inclusive of the suspension for a period of 14 days which she had earlier
served. Petitioner Hospital Management Services, Inc.-Medical Center Manila is ORDERED to reinstate
respondent Edna R. De Castro to her former position without loss of seniority rights, full backwages,
inclusive of allowances and other benefits, or their monetary equivalent, computed from the expiration of
her suspension of six (6) months up to the time of actual reinstatement.

G.R. No. 164181

When you reported for work on Tuesday, April 18, we had a meeting and you were advised to transfer
your payroll task to your immediate superior, which you agreed. The time table agreement was 2 payroll
period, meaning April 30 and May 15 payroll.

September 14, 2011

NISSAN
MOTORS
vs.
VICTORINO ANGELO, Respondent.

PHILS.,

INC.,

Petitioner,

Still on April 18, Tuesday, you filed an application for vacation leave due to your son's graduation on April
27 and 28. Because it is again payroll time, we advised that your leave will be approved on the condition
that you will ensure that the payroll is finished on time and [you] will make a proper turn over to your
immediate superior before your leave. You agreed and your leave was approved.

DECISION
PERALTA, J.:
This is to resolve the Petition for Review 1 dated July 10, 2004 of petitioner Nissan Motors Phils., Inc.
(Nissan) assailing the Decision 2 dated March 24, 2004 of the Court of Appeals (CA) and the latter's
Resolution3 dated June 9, 2004.
The records contain the following antecedent facts:
Respondent Victorino Angelo was employed by Nissan on March 11, 1989 as one of its payroll staff. On
April 7 to 17, 2000, respondent was on sick leave, thus, he was not able to prepare the payroll for the
said period. Again, on April 27 and 28, 2000, respondent was on an approved vacation leave which again
resulted in the non-preparation of the payroll for that particular period.
On May 8, 2000, respondent received a Memorandum4 from the petitioner containing the following:
This is to inform you that the Company is considering your dismissal from employment on the grounds of
serious misconduct, willful disobedience and gross neglect of duties.

On April 24, Monday, you were reminded you should start on your payroll task because you will be on
leave starting April 27, Thursday, you said yes.
On April 25, Tuesday, you were again reminded on finishing the payroll and the turn over again and you
said yes.
On April 26, Wednesday, you were again reminded on the same matter and, in fact, Mr. AA del Rosario
reminded you also on the matter about 5:30 p.m. And you promised him that the task will be finished by
tomorrow (sic) and will just leave the diskette in your open drawer. You were left in the office until 6:00
p.m.
On April 27, Thursday, you were already on leave and your superior, Mr. M. Panela, found out that the
diskette only contained the amount and name of employees, but not the account number. Likewise, the
deductions from salaries was not finished, the salaries of contractuals, apprentices were also not
finished. Since the bank only reads account numbers of employees, we experienced delay in the payroll
processing. You even promised to call the office i.e., M Panela to give additional instructions not later
than 12:00 noon on the same day, but you did not do so. In fact, the direct phone line of Mr. AA del
Rosario was given to you by your officemate so you can call the office directly and not thru long distance.

It appears that on April 10, 2000, Monday, which was the supposed cut-off date for payroll purposes for
the April 15 payroll, you went home early without finishing your work and requested for a referral letter
from the company clinic to E. Delos Santos Hospital claiming that you are not feeling well.

On April 28, Friday, after exhaustive joint efforts done by Welfare Management Section and IT Division,
we were able to finally release the payroll thru the bank, but many employees got lower amount than
what they have expected, as in fact at least 43 employees out of 360 got salaries below P1,000.00,
among them about 10 people got no salary primarily due to wrong deduction and computation done by
you. Again, many people got angry to the management's inefficient handling of their payroll.

On April 11, Tuesday, you did not report for work, without any notice to the company or to any of your
immediate superior section head, department head and division head. A phone call was made to your
home, but the company could not make any contact.

On May 2, Tuesday, you did not report for work, again you said you are not feeling well, but the
information to us came very late at about noon time.

On April 12, Wednesday, you reported for work but went home early claiming that you were again not
feeling well. You were reminded of the coming payday on Friday, April 14, and you said you will be able to
finish it on time and that you will just continue/finish your work the following day.
On April 13, Thursday, you again did not report for work without any notice to the company just like what
you did last Tuesday. Your immediate superior, sensing that you did not finish your task, tried to contact
you but to no avail, as you were residing in Novaliches and your home phone was not in order. So we
decided to open your computer thru the help of our IT people to access the payroll program.
On April 14, Friday (payday), we were still doing the payroll thru IT because we could not contact you.
Later in the day, the Company decided to release the payroll of employees the following day as we
already ran out of time and the Company just based the net pay of the employees on their March 15
payroll. Naturally, the amount released to the employees were not accurate as some got more than (sic),
while some got less than what they were supposed to receive.
Consequently, many employees got angry, as the Company paid on a Saturday, (in practice we do not
release salary on a Saturday as it is always done in advance, i.e., Friday) and majority got lesser amount
than what they were supposed to receive. In addition, the employees were not given their payslip where
they can base the net pay they received.

On May 3, Wednesday, you reported for work, and was instructed to finish the payslips for the payroll
periods April 15 and April 30. You said yes, and you promised not to go home on that day without
finishing the payslips. Later, you decided on your own to just compute the payslip on a monthly basis
instead of the usual semi-monthly basis as is the customary thing to do. As a result thereof, an error in
the tax withholding happened and again resulted in another confusion and anger among employees, as
in fact for two (2) consecutive days, May 3 and May 4, the plant workers refused to render overtime.
As a consequence of all these, the manufacturing employees, numbering about 350 people or about 65%
of [Nissan's total population], since April 16, have started to decline rendering overtime work, saying after
their 15 days of work they received only less than P200 while some even received only P80.
The manufacturing operation was hampered completely in the month of April and the first week of May
because of these several incidents. In sum, the company has suffered massive loss of opportunity to sell
because of failure to produce in the production area due to non-availability of workers rendering
overtime, high absenteeism rate among plant direct workers primarily due to the payroll problem. It came
at a time when NMPI sales [are] just starting to pick up due to the introduction of the new model Sentra
Exalta. The loss is simply too overwhelming.
Accordingly, you are hereby given a period of three (3) days from receipt hereof to submit your written
answer.

In the meantime, you are hereby placed on preventive suspension effective immediately.
A hearing will be conducted by Mr. AA del Rosario, on May 13, 2000 at 9:00 a.m. at the Company's
conference room (Fairlady).
Respondent filed a Complaint5 for illegal suspension with the Department of Labor and Employment
(DOLE) on May 12, 2000.
Petitioner conducted an investigation on May 13, 2000, and concluded that respondent's explanation was
untrue and insufficient. Thus, on June 13, 2000, petitioner issued a Notice of Termination.6
Respondent amended his previous complaint against petitioner on June 22, 2000, to include the charge
of illegal dismissal.7 On September 29, 2000, the Labor Arbiter rendered a Decision 8 dismissing
respondent's complaint for lack of merit. Undaunted, respondent brought the case to the National Labor
Relations Commission (NLRC), which eventually rendered a Resolution 9 dated February 14, 2002
dismissing the appeal and affirming the Labor Arbiter's Decision. Respondent's motion for
reconsideration of the NLRC resolution was subsequently denied on May 13, 2002.10
Aggrieved, respondent filed a petition for certiorari11 under Rule 65 of the Rules of Court with the CA and
the latter granted the same petition in its Decision dated March 24, 2004, the dispositive portion of which
reads:
WHEREFORE, the petition is GRANTED. The assailed resolutions dated February 14, 2002 and May 13,
2002 are REVERSED and SET ASIDE. The petitioner is hereby reinstated and the private respondents
are ordered to pay him backwages from the time of his illegal dismissal.
SO ORDERED.
Unsatisfied with the decision of the CA, Nissan filed a motion for reconsideration, which was denied by
the same court in a Resolution dated June 9, 2004.
Thus, the present petition, to which the petitioner cites the following grounds:
A
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW WHEN IT
OVERTURNED THE FACTUAL FINDINGS OF BOTH THE LABOR ARBITER AND THE NLRC
WHICH ARE BASED ON SUBSTANTIAL EVIDENCE.
B
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW WHEN IT
DISREGARDED
PRIVATE
RESPONDENT'S
SERIOUS
MISCONDUCT
AND
INSUBORDINATION, AND DECIDED THE CASE ONLY ON THE CHARGE OF GROSS AND
HABITUAL NEGLIGENCE.
C
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN IGNORING
PRIVATE RESPONDENT'S MISCONDUCT WHICH, IF EVER IT DOES NOT JUSTIFY
DISMISSAL BECAUSE OF HIS 11-YEAR SERVICE NONETHELESS LIMITS THE AWARD OF
BACKWAGES.12
The petition is meritorious.

Petitioner argues that the factual findings of the Labor Arbiter and the NLRC should have been accorded
respect by the CA as they are based on substantial evidence. However, factual findings of administrative
agencies are not infallible and will be set aside if they fail the test of arbitrariness. 13 In the present case,
the findings of the CA differ from those of the Labor Arbiter and the NLRC. The Court, in the exercise of
its equity jurisdiction, may look into the records of the case and re-examine the questioned findings.14
The Labor Code provides that an employer may terminate the services of an employee for a just cause. 15
Petitioner, the employer in the present case, dismissed respondent based on allegations of serious
miscounduct, willful disobedience and gross neglect.
One of the just causes enumerated in the Labor Code is serious misconduct. Misconduct is improper or
wrong conduct.16 It is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. 17 Such
misconduct, however serious, must nevertheless be in connection with the employee's work to constitute
just cause for his separation.18 Thus, for misconduct or improper behavior to be a just cause for
dismissal, (a) it must be serious; (b) it must relate to the performance of the employees duties; and (c) it
must show that the employee has become unfit to continue working for the employer.19
Going through the records, this Court found evidence to support the allegation of serious misconduct or
insubordination. Petitioner claims that the language used by respondent in his Letter-Explanation is akin
to a manifest refusal to cooperate with company officers, and resorted to conduct which smacks of
outright disrespect and willful defiance of authority or insubordination. The misconduct to be serious
within the meaning of the Labor Code must be of such a grave and aggravated character and not merely
trivial or unimportant.20 The Letter-Explanation21 partly reads:
Again, it's not negligence on my part and I'm not alone to be blamed. It's negligence on your part [Perla
Go] and A.A. Del Rosario kasi, noong pang April 1999 ay alam ninyo na hindi ako ang dapat may
responsibilidad ng payroll kundi ang Section Head eh bakit hindi ninyo pinahawak sa Section Head noon
pa. Pati kaming dalawa sa payroll, kasama ko si Thelma. Tinanggal nyo si Thelma. Hindi nyo ba naisip
na kailangan dalawa ang tao sa payroll para pag absent ang isa ay may gagawa. Dapat noon nyo pa
naisip iyan. Ang tagal kong gumawa ng trabahong hindi ko naman dapat ginagawa.
This Court finds the above to be grossly discourteous in content and tenor. The most appropriate thing he
could have done was simply to state his facts without resorting to such strong language. Past decisions
of this Court have been one in ruling that accusatory and inflammatory language used by an employee to
the employer or superior can be a ground for dismissal or termination.22
Another just cause cited by the petitioner is willful disobedience. One of the fundamental duties of an
employee is to obey all reasonable rules, orders and instructions of the employer. Disobedience, to be a
just cause for termination, must be willful or intentional, willfulness being characterized by a wrongful and
perverse mental attitude rendering the employees act inconsistent with proper subordination. A willful or
intentional disobedience of such rule, order or instruction justifies dismissal only where such rule, order
or instruction is (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with
the duties which the employee has been engaged to discharge. 23 This allegation of willful disobedience
can still be adduced and proven from the same Letter-Explanation cited earlier.
Petitioner also dismissed respondent because of gross or habitual negligence. Neglect of duty, to be a
ground for dismissal, must be both gross and habitual. 24 In finding that petitioner was able to adduce
evidence that would justify its dismissal of respondent, the NLRC correctly ruled that the latter's failure to
turn over his functions to someone capable of performing the vital tasks which he could not effectively
perform or undertake because of his heart ailment or condition constitutes gross neglect. It stated that:
x x x Be it mentioned and emphasized that complainant cannot be faulted for his absences incurred on
10, 11, 13, 14, 17, 27 and 28 of April 2000 as he went on official leave on said dates. Except for the last
two dates mentioned (27 and 28 April 2000), health problem compelled complainant to be on sick leave
of absence on the foregoing dates. It is not the complainant's liking, in other words, to be afflicted with
any form of heart ailment which actually caused him to incur such leave of absences. Complainant's
pellucid fault, however, lies on his failure to effect the "much-needed" turn over of functions to someone
capable of performing the vital task(s) which he could not effectively perform or undertake because of his

heart ailment or condition. Indeed, the trouble(s) "felt" by management and the employees concerned on
the payday of 15 April 2000 may seem justified under the circumstances as complainant indeed has
gotten ill and in fact went on sick leave of absence prior to said payday. The same, however, certainly
does not hold true as to the trouble(s) and chaos felt and which occurred on the payday of 30 April 2000
as diligence and prudence logically and equitably required complainant to have effected the necessary
turn over of his functions to someone capable of taking over his assigned task(s) even perhaps on a
merely temporary basis. The preparation of payroll, especially that of a big business entity such as herein
respondent company, certainly involves serious, diligent, and meticulous attention of the employee
tasked of performing such function and a company definitely could not let either negligence or absence of
the employee concerned get in the way of the performance of the undertaking of such, otherwise, serious
repercussion(s) would be the logical and unavoidable consequences; such is what befell the
respondents. Be it mentioned at this juncture that under the circumstances herein then prevailing, it
would seem just logical and in keeping with the natural "reflexes," so to speak, of a business entity, to
require an incapable employee tasked to perform a vital function, to effect the necessary turn over of
functions of such employee to someone capable. Be it further emphasized, however, that even assuming
that no formal directive was given by the company to the employee concerned for the turn over of the
latter's functions, said employee should have taken the initiative of so doing considering the importance
of the task(s) he is performing. Hence, failure to do so would clearly be tantamount to serious neglect of
duty, a valid ground in terminating employment relations.25
Gross negligence connotes want of care in the performance of one's duties.1vvph!1 Habitual neglect
implies repeated failure to perform one's duties for a period of time, depending upon the circumstances.
On the other hand, fraud and willful neglect of duties imply bad faith on the part of the employee in failing
to perform his job to the detriment of the employer and the latter's business.26
It must be emphasized at this point that the onus probandi to prove the lawfulness of the dismissal rests
with the employer. In termination cases, the burden of proof rests upon the employer to show that the
dismissal is for just and valid cause. Failure to do so would necessarily mean that the dismissal was not
justified and, therefore, was illegal.27 In this case, both the Labor Arbiter and the NLRC were not amiss in
finding that the dismissal of respondent was legal or for a just cause based on substantial evidence
presented by petitioner. Substantial evidence, which is the quantum of proof required in labor cases, is
that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.28
However, although the dismissal was legal, respondent is still entitled to a separation pay as a measure
of financial assistance, considering his length of service and his poor physical condition which was one of
the reasons he filed a leave of absence. As a general rule, an employee who has been dismissed for any
of the just causes enumerated under Article 28229 of the Labor Code is not entitled to separation pay.30
Although by way of exception, the grant of separation pay or some other financial assistance may be
allowed to an employee dismissed for just causes on the basis of equity. 31 This concept has been
thoroughly discussed in Solidbank Corporation v. NLRC,32 thus:
The reason that the law does not statutorily grant separation pay or financial assistance in instances of
termination due to a just cause is precisely because the cause for termination is due to the acts of the
employee. In such instances, however, this Court, inspired by compassionate and social justice, has
in the past awarded financial assistance to dismissed employees when circumstances warranted
such an award.
In Central Philippines Bandag Retreaders, Inc. v. Diasnes,33 this Court discussed the parameters of
awarding separation pay to dismissed employees as a measure of financial assistance, viz:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of
separation pay based on social justice when an employee's dismissal is based on serious misconduct or
willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a
crime against the person of the employer or his immediate family - grounds under Art. 282 of the Labor
Code that sanction dismissals of employees. They must be most judicious and circumspect in awarding
separation pay or financial assistance as the constitutional policy to provide full protection to labor is not
meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor
should not embarrass us from sustaining the employers when they are right, as here. In fine, we should

be more cautious in awarding financial assistance to the undeserving and those who are unworthy of the
liberality of the law.34
Thus, in Philippine Commercial International Bank v. Abad, 35 this Court, having considered the
circumstances present therein and as a measure of social justice, awarded separation pay to a
dismissed employee for a just cause under Article 282. The same concession was given by this Court in
Aparente, Sr. v. National Labor Relations Commission 36 and Tanala v. National Labor Relations
Commission.37
WHEREFORE, the Petition for Review dated July 10, 2004 of petitioner Nissan Motors Phils., Inc. is
hereby GRANTED. Consequently, the Decision dated March 24, 2004 of the Court of Appeals and the
latter's Resolution dated June 9, 2004 are hereby REVERSED AND SET ASIDE and the Decision dated
September 29, 2000 of the Labor Arbiter and its Resolution dated February 14, 2002 are hereby
REINSTATED with the MODIFICATION that petitioner shall award respondent his separation pay, the
computation of which shall be based on the prevailing pertinent laws on the matter.

G.R. No. 176800

September 5, 2011

ELMER
LOPEZ,
Petitioner,
vs.
KEPPEL BANK PHILIPPINES, INC., MANUEL BOSANO III and STEFAN TONG WAI MUN,
Respondents.

In a decision dated April 28, 2004,9 Labor Arbiter Cesar D. Sideo ruled that Lopez was illegally
dismissed. Accordingly, the labor arbiter ordered Lopezs immediate reinstatement, and awarded him
backwages of P392,000.00, moral and exemplary damages of P8M, and P550,000.00 the purchase
price of a Toyota Revo which Lopez allegedly brought over from his stint with Global Bank (now
Metrobank). The labor arbiter found that contrary to the banks claim, the evidence showed that Lopez
had been issuing POs which the bank had paid, including the first of the two POs that led to his
dismissal.10

We resolve the present petition for review on certiorari 1 seeking the nullification of the decision 2 and the
resolution3 of the Court of Appeals (CA), dated December 19, 2006 and February 7, 2007, respectively,
rendered in CA-G.R. CEB-SP. No. 01754.

On appeal by the bank, the National Labor Relations Commission (NLRC) rendered a decision on
October 11, 200511 reversing the labor arbiters ruling. It dismissed the complaint for lack of merit. The
NLRC found merit in the banks submission that by issuing the questioned POs without authority and
against the banks express orders, Lopez thereby committed a willful disobedience against his superiors
a sufficient basis for the bank to lose its trust and confidence in him as branch manager. It thus found
that Lopez had been dismissed for cause after the observance of due process. Lopez moved for
reconsideration, but the NLRC denied the motion in its resolution of January 25, 2006. 12 Lopez sought
relief from the CA through a petition for certiorari, charging the NLRC with grave abuse of discretion for
setting aside the labor arbiters decision.

The Antecedents

The CA Decision

The facts, as set out in the assailed CA decision, are summarized below.

On December 19, 2006, the CA rendered its now assailed decision, 13 denying the petition and affirming
the October 11, 2005 decision of the NLRC. It fully agreed with the NLRC finding that Lopez had not
been illegally dismissed.

DECISION
BRION, J.:

Petitioner Elmer Lopez was the Branch Manager of the respondent Keppel Bank Philippines, Inc. (bank)
in Iloilo City. Allegedly, through his efforts, Hertz Exclusive Cars, Inc. (Hertz) became a client of the bank.
4

By notice dated August 12, 2003, the bank asked Lopez to explain in writing why he should not be
disciplined for issuing, without authority, two purchase orders (POs) for the Hertz account amounting to a
total of P6,493,000.00, representing the purchase price of 13 Suzuki Bravo and two Nissan Exalta
vehicles.
Lopez submitted his written explanation on the same day,5 but the bank refused to give it credit. Through
respondents Manuel Bosano III (Vice-President and Head of Retail Banking Division/Consumer Banking
Division) and Stefan Tong Wai Mun (Vice-President/Comptroller), the bank terminated Lopezs
employment effective immediately.6
Lopez asked the bank for reconsideration. 7 In response, the bank, through the respondent officers, met
with Lopez at its headquarters in Cubao, Quezon City on September 25, 2003. Lopez came with his
lawyer (Atty. Edmundo V. Buensuceso) and a military man (one Col. Flordeliza). After the meeting, the
bank found no reason to reconsider and reiterated its decision to dismiss Lopez. 8
Lopez filed a complaint for illegal dismissal and money claims against the bank, Bosano and Tong.
The Compulsory Arbitration Proceedings
Lopez alleged before the labor arbiter that he issued the POs as part of his strategy to enhance the
banks business, in line with his duty as branch manager to promote the growth of the bank. He claimed
that the bank honored the first PO for P1.8M from which the bank derived an income of P142,000.00. He
added that the second PO did not materialize because Mr. James Puyat Concepcion, a Hertz
incorporator and director who opened the Hertz account, stopped depositing with the bank because of
the negative credit rating he received from the banks credit committee. Allegedly, the committee
discovered that James Puyat Concepcion had several pending court cases.
For its part, the bank denied approving the first PO, arguing that Lopez did not have the authority to issue
the POs for the Hertz account as there was a standing advice that no Hertz loan application was to be
approved. It stressed that Lopez committed a serious violation of company rules when he issued the
POs.

Lopez moved for, but failed to obtain, a reconsideration of the CA decision. The CA denied the motion on
February 7, 2007.14
The Case for Lopez
Through the present petition,15 the reply to the banks comment dated February 11, 2008, 16 and the
memorandum dated September 22, 2008,17 Lopez entreats the Court to nullify the CA decision,
contending that the CA erred in: (1) not ruling that the banks appeal with the NLRC should have been
dismissed on the ground of non-perfection; and (2) affirming the decision of the NLRC that he was
dismissed for a just cause (loss of trust and confidence) and that he was afforded due process.
Lopez argues, with respect to the first assignment of error, that the bank failed to comply with Sections 4
and 6, Rule VI, of the 2002 Rules of Procedure of the NLRC.18 He points out that the bank did not file a
notice of appeal together with its memorandum of appeal, which in turn was not supported by a certificate
of non-forum shopping; and neither did the bank furnish him, as appellee, a certified copy of the appeal
bond.
On the substantive aspect of the case, Lopez posits that the bank failed to justify his dismissal on the
ground of loss of trust and confidence. He insists that, as branch manager, he had the authority to issue
POs as in fact he issued several of them in the past, which POs were honored and paid by the bank. The
labor arbiter properly relied on the past transactions in his decision. These included, he reiterates, the
first PO for the Hertz account which was paid by the bank on July 18, 2003, a transaction where the bank
even earned a substantial income (P142,000.00). He maintains that the bank failed to substantiate its
position that he was not authorized to issue the POs. He adds that the banks claim that his issuance of
the POs exposed the bank to financial loss is a lame excuse to justify the termination of his employment.
Lopez argues that his dismissal was a mere afterthought on the part of the bank management,
particularly Bosano, to cover up its embarrassment when he (Lopez) made inquiries and discovered that
Hertzs James Puyat Concepcion had no pending court cases and was therefore credit worthy. He adds
that assuming that he did not have the authority to issue POs, still, he cannot be held guilty of willful
disobedience; even if he had been guilty, dismissal was a very harsh penalty.
Finally, Lopez submits that the bank failed to accord him due process because the bank did not give him
the opportunity to prepare for his defense. He points out that his written explanation (dated August 12,

2003)19 preceded the banks letter (of the same date) 20 that required him to explain why he issued the
POs in question. Lopez contends in this regard that on August 12, 2003, he went to Bosanos office in
Quezon City all the way from Iloilo City and there, he was cornered by Bosano who verbally instructed
him to immediately write down his explanation even before he was served with the banks August 12,
2003 letter. He maintains that Bosanos preemptive move deprived him of the opportunity to secure the
services of a counsel.
While Lopez believes his dismissal to be illegal, he does not seek reinstatement due to the antagonism
that has developed between him, and the bank and its officers, due to the present case. He only asks for
separation pay of one month pay for every year of service, full backwages, allowances and other
benefits. Additionally, he prays for moral and exemplary damages, as well as attorneys fees, to
compensate him for a dismissal that was attended by bad faith and effected in a wanton, oppressive and
malevolent manner.
The Case for the Bank and its Officers
Through its comment to the petition21 and memorandum,22 the bank submits that the CA committed no
reversible error in denying Lopezs petition for certiorari, and in affirming the ruling of the NLRC that
Lopez was dismissed for a just cause and after due process.
The bank is puzzled why Lopez is standing firm on his position that he did nothing wrong when he issued
the questioned POs despite the express directive not to proceed with the Hertz loan application unless its
adverse credit investigation report is explained to the banks credit committee. It posits that no bank
would gamble to maintain as branch manager a person who dares to supplant a major decision of the
banks top leadership with his personal decision. It argues that in this situation, the law (Labor Code)
provides protection to the employer through its management prerogative rights and the right to dismiss
employees on just and valid grounds.
The bank refutes Lopezs contention that there was no willful disobedience that warranted his dismissal.
It points out that there was an order for him not to proceed with the Hertz loan application. The order was
very reasonable as it is the standard policy of every bank to conduct an investigation on the credit
worthiness of any loan applicant. Since it appeared from the investigation of its credit committee that
James Puyat Concepcion of Hertz had various court cases, it was only proper for the bank to put on hold
the loan application of Hertz until the adverse finding could be cleared. It insists that Lopez willfully and
knowingly disobeyed this order.
Further, the bank questions Lopezs submission, through a supplemental addendum to his position
paper, of evidence that it honored and paid POs issued by Lopez in the past. It maintains that it was not
furnished a copy of this submission; hence, it was unable to controvert this evidence.
On the procedural due process issue, the bank denies Lopezs allegation that he was not given the
opportunity to defend himself. It points out that both the NLRC and the CA confirmed that Lopez was not
deprived the opportunity to be heard; the opportunity commenced with: (1) the notice for him to explain
his side regarding his unauthorized issuance of POs; (2) the notice of his termination from employment;
and (3) the hearing called in response to his motion for reconsideration where he was assisted by his
lawyer and his soldier friend.
The Courts Ruling
The procedural issue
Lopez faults the CA for not ruling that the banks appeal to the NLRC should have been dismissed for
non-perfection. He argues that no notice of appeal accompanied the memorandum of appeal; neither
was there a certificate of non-forum shopping nor any copy furnished to him of the certified true copy of
the appeal bond.

The procedural question is a non-issue.1wphi1 Lopez did not raise it before the CA; in fact, he
challenged the NLRC decision of October 11, 2005 23 on its merits and not on its form. We, therefore, see
no need to further discuss this argument.
The merits of the case
On the substantive aspect of the case, we note that Lopez was dismissed from the service by reason of
loss of trust and confidence, a just cause for an employees dismissal under the law. 24 Lopez insists
though that the act which triggered the dismissal action does not justify his separation from the service.
Is Lopez liable for loss of trust and confidence for issuing the two disputed POs?
The right of an employer to freely select or discharge his employee is a recognized prerogative of
management; an employer cannot be compelled to continue employing one who has been guilty of acts
inimical to its interests. When this happens, the employer can dismiss the employee for loss of
confidence.25
At the same time, loss of confidence as a just cause of dismissal was never intended to provide
employers with a blank check for terminating employment. Loss of confidence should ideally apply only
(1) to cases involving employees occupying positions of trust and confidence, or (2) to situations where
the employee is routinely charged with the care and custody of the employers money or property. To the
first class belong managerial employees, i.e., those vested with the powers and prerogatives to lay down
management polices and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees, or effectively recommend such managerial actions. To the second class belong cashiers,
auditors, property custodians, or those who, in the normal and routine exercise of their functions,
regularly handle significant amounts of money or property.26
As branch manager, Lopez clearly occupies a "position of trust." His hold on his position and his stay in
the service depend on the employers trust and confidence in him and on his managerial services. 27
According to the bank, Lopez betrayed this trust and confidence when he issued the subject POs without
authority and despite the express directive to put the clients application on hold. In response, Lopez
insists that he had sufficient authority to act as he did, as this authority is inherent in his position as bank
manager. He points to his record in the past when he issued POs which were honored and paid by the
bank and which constituted the arbiters "overwhelming evidence" 28 in support of the finding that
"complainants dismissal from work was without just cause, hence, illegal."29
We disagree with Lopezs contention. Despite evidence of his past exercise of authority (as found by the
labor arbiter), we cannot disregard evidence showing that in August 2003, the bank specifically instructed
Lopez not to proceed with the Hertz loan application because of the negative credit rating issued by the
banks credit committee. We find it undisputed that Lopez processed the loan despite the adverse credit
rating. In fact, he admitted that he overlooked the "control aspects" of the transaction as far as the bank
was concerned because of his eagerness to get a bigger share of the market. 30
Lopezs good intentions, assuming them to be true, are beside the point for, ultimately, what comes out is
his defiance of a direct order of the bank on a matter of business judgment. He went over the heads of
the bank officers, including the credit committee, when, based on inquiries he made on his own regarding
the credit worthiness of James Puyat Concepcion, he simply proceeded to act on the basis of his own
judgment. Evident in his written explanation 31 was his failure to inform the credit committee of his own
efforts to check on the committees adverse findings against Hertz and his independent action based
solely on his own authority.
As a bank official, the petitioner must have been aware that it is basic in every sound management that
people under ones supervision and direction are bound to follow instructions or to inform their superior of
what is going on in their respective areas of concern, especially regarding matters of vital interest to the
enterprise. Under these facts, we find it undisputed that Lopez disobeyed the banks directive to put the
Hertz loan application on hold, and did not wait until its negative credit rating was cleared before
proceeding to act. That he might have been proven right is immaterial. Neither does the submission that
the bank honored and paid the first PO and even realized a profit from the transaction, mitigate the

gravity of Lopezs defiance of the directive of higher authority on a business judgment. What appears
clear is that the bank cannot in the future trust the petitioner as a manager who would follow directives
from higher authorities on business policy and directions. The bank can be placed at risk if this kind of
managerial attitude will be repeated, especially if it becomes an accepted rule among lower managers.
In Nokom v. NLRC,32 we reiterated the guidelines for the application of loss of confidence as follows: (1)
loss of confidence, should not be simulated; (2) it should not be used as a subterfuge for causes which
are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and (4) it must be genuine, not a mere afterthought to justify an earlier action
taken in bad faith.1avvphil
Under the circumstances of this case, we are convinced that the bank was justified in terminating Lopezs
employment by reason of loss of trust and confidence. He admitted issuing the two POs, claiming merely
that he had the requisite authority. He could not present any proof in this regard, however, except to say
that it was part of his inherent duty as bank manager. He also claimed that the bank acquiesced to the
issuance of the POs as it paid the first PO and the POs he issued in the past. This submission flies in the
face of the banks directive for him not to proceed unless matters are cleared with the banks credit
committee. The bank had a genuine concern over the issue as it found through its credit committee that
Hertz was a credit risk. Whether the credit committee was correct or not is immaterial as the banks direct
order left Lopez without any authority to clear the loan application on his own. After this defiance, we
cannot blame the bank for losing its confidence in Lopez and in separating him from the service.
The due process issue
As the NLRC and the CA did, we find Lopez to have been afforded due process when he was dismissed.
He was given the required notices. More importantly, he was actually given the opportunity to be heard;
when he moved for reconsideration of the banks decision to terminate his employment, it scheduled a
hearing where he appeared together with his lawyer and a military man. This was an opportunity to be
heard that the law recognizes.
In fine, we find no merit in the petition.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The assailed
decision and resolution of the Court of Appeals are AFFIRMED. Costs against petitioner Elmer Lopez.

G.R. No. 169260

2. We dont have an updated back up on the mentioned file which was the responsibility of the
Data Custodian, the last back up of the file was [conducted] on 10 of May 1997.

March 23, 2011

SANDEN
AIRCON
PHILIPPINES
vs.
LORESSA P. ROSALES, Respondent.

and

ANTONIO

ANG,

Petitioners,

3. The incident can only happen when only one user [was] using the file and after the incident
we immediately look[ed] into the Server Manager, a security auditing tool of the system, and
found out that Ms. Loressa Rosales was the only one log[ged] in on the system at 12:05 noon
to 12:21 noon with 16 minutes of usage time as witnesse[d] by many MIS personnel including
one audit officer.

DECISION
DEL CASTILLO, J.:

4. The Data Custodian [has] all the rights of Add, Edit, Delete on all the files found in the
system.

An employer has the discretion to dismiss an employee for loss of trust and confidence but the former
may not use the same to cloak an illegal dismissal.

5. So based on the facts that we have gathered it is highly probable that Ms. Loressa Rosales
was the culprit in the said incident.

This Petition for Review on Certiorari1 assails the Decision2 dated May 24, 2005 of the Court of Appeals
(CA) in CA-G.R. SP No. 85698, which granted the petition for certiorari and reversed and set aside the
Resolution3 dated November 28, 2003 of the National Labor Relations Commission (NLRC) in NLRC
CASE No. RAB-IV-9-9330-97-L (NLRC NCR CA No. 016826-98) and reinstated the Resolution 4 dated
November 29, 2000 of the NLRC.

On June 26, 1997, Atty. Reynaldo B. Destura (Atty. Reynaldo), the Personnel and Administrative Services
Manager sent a letter8 to Loressa charging her with data sabotage and absences without leave (AWOL).
She was given 24 hours to explain her side.

Also assailed is the Resolution5 dated August 1, 2005 denying the Motion for Reconsideration
Factual Antecedents
Sanden Aircon Philippines (Sanden) is a corporation engaged in the business of manufacturing,
assembling, and fabricating automotive air-conditioning systems.
In August 1992, Sanden employed Loressa P. Rosales (Loressa) as Management Information System
(MIS) Department Secretary. On December 26, 1996, she was promoted as Data Custodian and
Coordinator. As such, Loressa had access to all computer programs and marketing computer data,
including the Delivery Receipt Transaction files of Sanden. The Finance Department based its billing and
collection activities on the marketing delivery receipt transactions. Loressas functions and authority
include opening, editing and copying files in Sandens computers. She was also charged with the duty of
creating back-up copies of all files under her custody. For this purpose, she can request all computer
users at a particular time to log out or exit from the system.
On May 16, 1997, Sanden discovered that the marketing delivery receipt transactions computer files
were missing. The Internal Auditing Department, through its Audit Officer, Ernesto M. Bayubay (Ernesto),
immediately sent a memorandum6 dated May 17, 1997 to Garrick L. Ang (Garrick), the MIS Manager,
requesting that a technical investigation be conducted.
On May 19, 1997, Garrick issued a memorandum 7 enumerating the findings of the MIS Department, the
pertinent portions of which read:
This is in response on [sic] your request for a technical investigation regarding the missing Marketing
Delivery Receipt (DR) transactions filed inside our computer system. The incident happened at [sic] the
16 of May 1997 12:35 noon in which we discovered a data corruption in the Marketing DR transactions
file wherein all the data were missing. We immediately conducted an investigation of the incident and
found out the following:
1. Before the incident, [the] Marketing Staff are still using the said file until 12:00 noon [when
they] were instructed by the Data Custodian (Ms. Loressa Rosales) to log out from the system
because a back-up was to be conducted. The back-up activities never took place for [unknown
reasons];

On July 2, 1997, Loressa submitted her letter9 to Atty. Reynaldo where she vehemently denied the
allegations of data sabotage. According to her, only a computer programmer equipped with the
necessary expertise and not a mere data custodian like her would be capable of such an act. As to the
charge of incurring absences without leave, she challenged Sanden to specify the dates and
circumstances of her alleged AWOL.
In a memorandum10 dated July 3, 1997, Atty. Reynaldo scheduled the administrative investigation on the
charge of "data sabotage" in the afternoon of the next day. The investigation pushed through as
scheduled.
On July 17, 1997, the husband of Loressa received a Notice 11 of Disciplinary Action from Sanden
notifying Loressa that management is terminating Loressas employment effective upon receipt of the
said communication. The reason cited by Sanden was the loss of trust on her capability to continue as its
Coordinator and Data Custodian. Sanden indicated in the said letter that based on all the documents and
written testimonies gathered during the investigation, Loressa caused the deliberate sabotage of the
marketing data involving the Delivery Receipts.
On September 9, 1997, Loressa filed a complaint12 for illegal dismissal with a prayer for the payment of
13th month pay, attorneys fees and other benefits.
In her position paper,13 Loressa alleged that no evidence was presented during the investigation
conducted by Sanden to prove that she indeed committed "data sabotage." She claimed that she was
singled out as the culprit based on mere suspicion unsupported by any testimonial or documentary
evidence. The Delivery Receipts, which Sanden claims to have been deleted, were not presented during
the investigation process. Moreover, there were no witnesses presented who pointed to Loressa as the
one who actually committed the "data sabotage."
On the other hand, in Sandens position paper,14 it alleged that at around noon of May 16, 1997, Loressa
requested the Marketing Staff to log out or exit from the computer system because she would create a
backup of the Marketing Delivery Receipt Transaction files. At that time, some members of the Marketing
Staff were still using and encoding additional data but as requested, all of them logged out from the
network. The Server Manager showed that from 12:05 p.m. to 12:21 p.m., the only computer logged in
was that of Loressa. This is precisely the period when the deletion of the Marketing Delivery Receipt
Transaction files occurred.
Ruling of the Labor Arbiter

On May 28, 1998, Labor Arbiter Nieves De Castro rendered a Decision 15 finding that Sanden is guilty of
illegal dismissal. She ruled that there exists no justifiable basis for Sandens act of terminating the
services of Loressa. Nowhere in the records can be found evidence, documentary or otherwise (i) that
will directly point to Loressas having committed "data sabotage" or (ii) that she absented herself without
leave. The Labor Arbiter also ruled that since animosity between Sanden and Loressa already exists, the
award of separation pay in lieu of reinstatement is in order and in accord with industrial peace and
harmony. The dispositive portion of the Labor Arbiters Decision reads:

On May 24, 2005, the CA granted the petition and reversed and set aside the November 28, 2003
Resolution of the NLRC and reinstated the latters November 29, 2000 Resolution.
Petitioners moved for reconsideration,28 but to no avail. Hence, this appeal anchored on the following
grounds:
Issues

WHEREFORE, premises considered, judgment is hereby rendered, declaring the dismissal of the
complainant illegal and respondent Sanden Aircon Philippines, Inc. is ordered:
1. To pay complainant backwages from the time of [her] dismissal up to the date of
promulgation of this decision[;]
2. To pay complainant separation pay of one (1) month for every year of service [from] the date
of employment up to the date of promulgation of this decision[;]
3. To pay attorneys fees of 10% of the total award[; and]
4. [To have its] financial analyst x x x compute the monetary award[s which form] part of this
decision.
All other claims are dismissed for lack of merit.
SO ORDERED.16
Ruling of the National Labor Relations Commission
Sanden sought recourse to the NLRC by submitting its Notice 17 of Appeal and Memorandum on Appeal
on September 28, 1998.
On November 29, 2000, the NLRC issued a Resolution 18 affirming the May 28, 1998 Decision of the
Labor Arbiter with the modification that the computation of the amount of separation pay to be awarded
be reckoned from December 26, 1996 which was the date when Loressa was hired by Sanden as Data
Custodian and Coordinator. The NLRC found that Loressa was paid separation pay corresponding to the
period beginning August 1992 (the date she was hired) up to December 26, 1996.
Sanden filed a Motion for Reconsideration19 of the NLRC Resolution.
On November 28, 2003, the NLRC issued another Resolution 20 which reversed its November 29, 2000
Resolution and dismissed the complaint for lack of merit.
Ruling of the Court of Appeals
Aggrieved, Loressa filed with the CA a petition for certiorari.21 The CA through a Resolution 22 dated
August 19, 2004, directed her to submit within five days from receipt of said resolution copies of
Sandens appeal memorandum and motion for reconsideration of the November 29, 2000 resolution
which were mentioned in her petition but were not attached thereto. On September 8, 2004, Loressa
submitted the documents as directed by the CA. 23 On September 27, 2004, the CA issued its Resolution 24
noting the compliance of Loressa and also directing Sanden to file its comment.
On October 18, 2004, Sanden filed a Motion for Extension of Time to File Comment. 25 This was granted
by the CA through its Resolution 26 dated November 3, 2004. On November 5, 2004, Sanden filed its
comment.27

THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER SANDEN FAILED TO

SUBSTANTIATE RESPONDENT ROSALESS DISMISSAL, CONSIDERING THAT:
A. THE ASSERTION MADE BY THE COURT OF APPEALS AS TO THE POSSIBLE
EXISTENCE OF A PARALLEL SET OF DOCUMENTS CORRESPONDING TO THE DELETED
FILES, AS WELL AS THE POSSIBILITY OF A GLITCH IN THE COMPUTER SYSTEM WHICH
CAUSED THE DELETION OF THE SUBJECT FILES, ARE HIGHLY SPECULATIVE AND
CANNOT STAND AGAINST THE EVIDENCE ON RECORD.
B. SIMILARLY, THE CLAIM THAT THE DELETION OF THE SUBJECT FILES COULD HAVE
OCCURRED AT ANY POINT IN TIME IS PURELY SPECULATIVE AND CANNOT STAND
AGAINST THE EVIDENCE ON RECORD.
C. LIKEWISE, THE CLAIM THAT ANOTHER PERSON COULD HAVE CAUSED THE
DELETION OF THE SUBJECT FILES CONSIDERING THAT RESPONDENT ROSALES
COULD NOT POSSIBLY HAVE BEEN THE SOLE PERSON WITH ACCESS THERETO IS
PURELY SPECULATIVE AND CANNOT STAND AGAINST THE EVIDENCE ON RECORD.
D. HENCE, THERE IS MORE THAN SUFFICIENT SUBSTANTIAL EVIDENCE WARRANTING
THE VALID DISMISSAL OF RESPONDENT ROSALES.29
These matters boil down to a single issue of whether Sanden legally terminated Loressas employment
on the ground of willful breach of trust and confidence as Coordinator and Data Custodian.
Petitioners Arguments
Petitioners contend that Loressa was vested with the delicate position of safekeeping the records of
Sanden. She was charged with the duty of creating back up files so that Sanden may be fully protected in
any eventuality. Loressas act, therefore, of maliciously deleting the Marketing Delivery Receipt
Transaction files is a valid ground to dismiss her from her employment on the ground of loss of trust. It is
betrayal of the highest order when the very custodian of the records deleted the same.
According to petitioners, it was clearly shown by evidence that before the deletion of said files, the
Marketing Staff were still using the files until noon when they were instructed by Loressa to log out from
the system because a back up was to be conducted. The back up activities never took place and worse
the data were deleted from the system. Petitioners emphasized that as Data Custodian, Loressa has
capability to add, edit, or delete all the files in the system of Sanden.
Petitioners also aver that from the time the data sabotage occurred on May 16, 1997 to May 30, 1997,
Loressa went on AWOL for at least five times.
Respondents Arguments
Loressa insists that Sanden failed to provide sufficient evidence which would clearly point to her as the
one who erased the files. For loss of trust and confidence to be a valid ground for dismissal of an
employee, it must be founded on clearly established facts.

In this case, the fact that Loressas computer was the only one logged on during the period that the
alleged deletion of data occurred does not mean that she was the one who deleted the missing files.
Loressa maintains that Sanden failed to substantially prove her direct involvement in the alleged deletion
of the files except for a mere suspicion that it was she who deleted the data in question.

ground to believe if not to entertain the moral conviction that the concerned employee is responsible for
the misconduct and that the nature of his participation therein rendered him absolutely unworthy of trust
and confidence demanded by his position.34
Sanden failed to discharge the burden of proof that the dismissal of Loressa is for a just cause.

As to the charge of her absences without leave, Loressa claims that they were not substantiated by any
documentary evidence or testimony of a witness. As such, her dismissal from employment is without any
legal ground.
Our Ruling
The petition is bereft of merit.
Article 282 of the Labor Code states:
ART. 282. TERMINATION BY EMPLOYER. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
Article 282(c) of the Labor Code prescribes two separate and distinct grounds for termination of
employment, namely: (1) fraud or (2) willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative.
Settled is the rule that under Article 282(c), the breach of trust must be willful. Ordinary breach will not
suffice. "A breach is willful if it is done intentionally and knowingly without any justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly or inadvertently." 30
"As firmly entrenched in our jurisprudence, loss of trust and confidence as a just cause for termination of
employment is premised on the fact that an employee concerned holds a position where greater trust is
placed by management and from whom greater fidelity to duty is correspondingly expected." 31 "The
betrayal of this trust is the essence of the offense for which an employee is penalized."32
Sanden has the burden of proof to prove its allegations.
"Unlike in other cases where the complainant has the burden of proof to [prove] its allegations, the
burden of establishing facts as bases for an employers loss of confidence in an employee facts which
reasonably generate belief by the employer that the employee was connected with some misconduct and
the nature of his participation therein is such as to render him unworthy of trust and confidence
demanded of his position is on the employer."33
While it is true that loss of trust and confidence is one of the just causes for termination, such loss of trust
and confidence must, however, have some basis. Proof beyond reasonable doubt is not required. It is
sufficient that there must only be some basis for such loss of confidence or that there is reasonable

The first requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be holding a position of trust and confidence.
In this case, we agree that Loressa, who had immediate access to Sandens confidential files, papers
and documents, held a position of trust and confidence as Coordinator and Data Custodian of the MIS
Department.
"The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss
of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and
founded on clearly established facts. The basis for the dismissal must be clearly and convincingly
established but proof beyond reasonable doubt is not necessary." 35
Sandens evidence against Loressa fails to meet this standard.
Worth
noting
are
the
pertinent
portions
of
dated November 29, 2000 before it reversed itself, to wit:

the

Resolution

of

the

NLRC

As correctly found by the Labor Arbiter, nowhere in the records can be found evidence that directly point
to complainant as having committed acts of sabotage. Also, during the administrative investigation, the
guilt of complainant-appellee was based on mere allegations not supported by documentary evidence
nor any factual basis. Even appellants cannot directly pinpoint appellee as the culprit. They were only
thinking of her as the one probably responsible thereto, considering that when she used the computer,
she told the other users to log out and thereafter, used the computer for 16 minutes, with only 1 minute
as usage time. But these allegations would not suffice (sic) termination of employment of appellee. Note
that security of tenure is protected by constitutional mandate.
The same holds true with AWOL. Appellant failed to prove that complainant-appellee went on absence
without official leave. The appellant should have at least presented the daily time record of appellee to
prove that the latter was absent. Mere allegations again would not suffice.36
During the Administrative Investigation conducted by Sanden, there was no evidence presented to prove
that Loressa indeed committed "data sabotage." The Minutes 37 of the Discussion with respect to the May
16, 1997 data only made mention that "Bobots theory is that it was zapped, meaning permanently
deleted." It is therefore a mere theory with no apparent factual basis, testimonial or documentary
evidence, that would establish the guilt of Loressa for the charges of "data sabotage."
On the other hand, Loressa was able to provide documentary evidence to show that Sandens computer
system was experiencing some problems even before May 16, 1997. The March 22, 1996 Report38 of the
System Administrator, stated, viz:
Marketing could not use their system due to error encountered such as an abnormal program termination
(problem in pairing). Warehouse A is affected by this. o.e. in updating marketing inventory qty. (DR
Transaction)39
xxxx
Furthermore, in the entry dated March 27, 1996, it was indicated:
Restored Marketing Data from March 23 back-up.

Files restored:
1. DR HEAD
2. DR ITEM
Reindexed both.
*lacking data shall be reentered 3/25/95 & 3/26/95 transactions40
The following entries as reported by the System Administrator clearly show that the problem of missing
data already existed as early as 1995, when Loressa was still an MIS Secretary and was not yet tasked
to back up the Marketing Delivery Receipt Transaction files.1awphil
We also fully agree with the CA when it ruled that:
On the contrary, we find the records bereft of any substantial evidence to show that the petitioner was
indeed directly responsible for the deletion of the subject files or the alleged data sabotage. It is not
difficult to see that the imputed guilt of the petitioner was based on mere allegations and theories held by
private respondents as possible causes for the deletion of the subject files. In the first place, if the subject
delivery receipt files were as crucial to the operations of the company as what the private respondents
claimed them to be, then sound business judgment would dictate that it keep a record or paper trail of all
its delivery transactions which could still be made available to the Finance Department for its billing and
collection activities. It is common knowledge that no computer system is absolutely crash proof" or "bugfree" and that a total obliteration of a particular computer file could be attributed to so many other causes
other than the deliberate deletion of the same. In the second place, the deletion of the subject files could
have occurred at any one point or time and not necessarily during the time at which the petitioner was
the only registered user in the system. In this case, the private respondents failed to determine with
absolute certainty and to show proof of the exact date or time when it occurred. Third and last, while it
may be true that the petitioner had access to the subject files as well as the code to delete the same, it is
hardly believable that she would be the sole person in the company who could access the same. It is
noted that the petitioner worked under the supervision of an MIS Manager as well as other company
officers, who in all probability also had access to the same files and codes available to the petitioner. x x
x41
Having shown that Sanden failed in discharging the burden of proof that the dismissal of Loressa is for a
just cause, we have no other recourse but to declare that she was illegally dismissed based on the
ground of loss of trust and confidence. This is in consonance with the constitutional guarantee of security
of tenure.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 85698 dated May 24, 2005 and its Resolution dated August 1, 2005 are
AFFIRMED.

G.R. No. 164662

opportunity given her to explain her side prior to the termination of her employment; Supersonic even
filed a case for Estafa against her for her alleged failure to remit collections despite the fact that she had
completely remitted all her collections; and the termination was done in bad faith and in violation of due
process.

February 18, 2013

MARIA
LOURDES
C.
DE
JESUS,
Petitioner,
vs.
HON. RAUL T. AQUINO, PRESIDING COMMISSIONER, NATIONAL LABOR RELATIONS
COMMISSION, SECOND DIVISION, QUEZON CITY, and SUPERSONIC SERVICES, INC.,
Respondents.
x-----------------------x
G.R. No. 165787
SUPERSONIC
SERVICES,
vs.
MARIA LOURDES C. DE JESUS, Respondent.

INC.,

Petitioner

DECISION
BERSAMIN, J.:
The dismissal of an employee for a just or authorized cause is valid despite the employer's nonobservance of the due process of law the Labor Code has guaranteed to the employee. The dismissal is
effective against the employee subject to the payment by the employer of an indemnity.
Under review on certiorariis the July 23, 2004 Decision promulgated in C.A.-G.R. SP No. 81798 entitled
Maria Lourdes C. De Jesus v. Hon. Raul T. Aquino, Presiding Commissioner, NLRC, Second Division,
Quezon City, and Supersonic Services, Inc.,1whereby the Court of Appeals (CA) affirmed the validity of
the dismissal from her employment of Maria Lourdes C. De Jesus(petitionerin G.R. No. 164622), but
directedher employer, Supersonic Services, Inc. (Supersonic), to pay her full backwages from the time
her employment was terminated until the finality of the decision because of the failure of Supersonic to
comply with the two-written notice rule, citing the rulinginSerrano v. National Labor Relations
Commission.2
Antecedents
The antecedent facts, as summarized by the CA, follow:
On February 20, 2002, petitioner Ma. Lourdes De Jesus (De Jesus for brevity) filed with the Labor Arbiter
a complaint for illegal dismissal against private respondents Supersonic Services Inc., (Supersonic for
brevity), Pakistan Airlines, Gil Puyat, Jr. and Divina Abad Santos praying for the payment of separation
pay, full backwages, moral and exemplary damages, etc.
De Jesus alleged that: she was employed by Supersonic since February 1976 until her illegal dismissal
of March 15, 2001; from 1976 to 1992, she held the position of eservation staff, and from 1992 until her
illegal dismissal on March 15, 2001, she held the position of Sales Promotion Officer where she solicited
clients for Supersonic and sold plane tickets to various travel agencies on credit; on March 12, 2001, she
had an emergency hysterectomy operation preceded by continuous bleeding; she stayed at the Makati
Medical Center for three (3) days and applied for a sixty-(60) day leave in the meantime; on June 1,
2001, she went to Supersonic and found the drawers of her desk opened and her personal belongings
packed, without her knowledge and consent; while there, Divina Abad Santos (Santos for brevity), the
companys general manager, asked her to sign a promissory note and directed her secretary, Cora
Malubay (Malubay for brevity) not to allow her to leave unless she execute a promissory note; she was
later forced to execute a promissory note which she merely copied from the draft prepared by Santos and
Malubay; she was also forced to indorse to Supersonic her SSS check in the amount of P25,000.00
which represents her benefits from the hysterectomy operation; there was no notice and hearing nor any

Supersonic countered that: as Sales Promotion Officer, De Jesus was fully authorized to solicit clients
and receive payments for and in its behalf, and as such, she occupied a highly confidential and
financially sensitive position in the company; De Jesus was able to solicit several ticket purchases for
Pakistan International Airlines (PIA) routed from Manila to various destinations abroad and received all
payments for the PIA tickets in its behalf; for the period starting May 30, 2000 until September 28, 2000,
De Jesus issued PIA tickets to Monaliza Placement Agency, a client under her special solicitation and
account, in the amount of U.S.$15,085.00; on January 24, 2001, the companys general manager sent a
memorandum to De Jesus informing her of the official endorsement of collectibles from clients under her
account; in March 2001, another memorandum was issued to De Jesus reminding her to collect
payments of accounts guaranteed by her and which had been past due since the year 2000; based on
the company records, an outstanding balance of U.S.$36,168.39 accumulated under the account of De
Jesus; after verifications with its clients, it discovered that the amount of U.S.$36, 168.39 were already
paid to De Jesus but this was not turned over and duly accounted for by her; hence, another
memorandum was issued to De Jesus directing her to explain in writing why she should not be dismissed
for cause for failure to account for the total amount of U.S.$36, 168.39; De Jesus was informed that her
failure to explain in writing shall be construed that she misappropriated said amount for her own use and
benefit to the damage of the company; De Jesus was likewise verbally notified of the companys intention
to dismiss her for cause; after due investigation and confrontation, De Jesus admitted that she received
the U.S.$36,168.39 from their clients and even executed a promissory note in her own handwriting
acknowledging her obligation; she was fully aware of her dismissal and even obligated herself to offset
her obligation with any amount she would receive from her retirement; when De Jesus failed to comply
with her promise to settle her obligation, a demand letter was sent to her; because of her persistent
failure to settle the unremitted collections, it was constrained to suspend her as a precautionary measure
and to protect its interests; despite demands, De Jesus failed to fulfill her promise, hence, a criminal case
for estafa was filed against her; and in retaliation to the criminal case filed against her, she filed this
illegal dismissal case.3
After due proceedings, on October 30, 2002, the Labor Arbiterruled against De Jesus, 4 declaring her
dismissal to be for just cause and finding that she had been accorded due process of law.
Aggrieved, De Jesusappealed to the National Labor Relations Commission (NLRC), insisting that she
had not been afforded the opportunity to explain her side.
On July 31, 2003, however, the NLRC rendered its Resolution, 5 affirming the Labor Arbiters Decision and
dismissing De Jesus appeal for its lack of merit, stating:
Records show that pursuant to a Memorandum dated May 12, 2001, complainant was required to explain
in writing why she should not be dismissed from employment for her failure to account for the cash
collections in her custody (Records, p. 37). In a letter dated June 1, 2001, complainant acknowledged her
failure to effect a turn-over of the amount of US$36,168.39 to the respondent (Records, p. 40). More than
this, she offered no explanation for her failure to immediately account for her collections. Further, her
allegation of duress may not be accorded credence, there being no evidence as to the circumstances
under which her consent was allegedly vitiated. Having been given the opportunity to explain her side,
complainant may not successfully claim that she was denied due process. Further, her admission and
other related evidence, particularly the finding of a prima facie case for estafa against her, and
corroborative statements from respondents client, sufficiently controvert complainants assertion that no
just cause existed for the dismissal.
WHEREFORE, premises considered, the decision under review is AFFIRMED, and complainants
appeal, DISMISSED, for lack of merit.
SO ORDERED.
The NLRC denied the Motion for Reconsideration filed by De Jesus on October 30, 2003.6

De Jesusbrought a petition for certiorari to the CA, charging the NLRC with committing grave abuse of
discretion amounting to lack or excess of jurisdiction in finding that she had not been denied due
process; and in finding that her dismissal had been for just cause.

on October 21, 2004, Supersonic likewise appealed to the Court by petition for review on c ertiorari(G.R.
No. 165787).Theappeals were consolidated on October 5, 2005.8
In G.R. No. 164662, De Jesus avers that:

On July 23, 2004, the CA promulgated its assailed decision,7 relevantly stating as follows:
I. The Honorable Court of Appeals erred in finding that respondent Supersonic is liable only on
the backwages and not for the damages prayed for.

The petition is partly meritorious.

In termination of employment based on just cause , it is not enough that the employee is guilty of
misfeasance towards his employer, or that his continuance in service is patently inimical to the
employers interest. The law requires the employer to furnish the employee concerned with two written
notices one, specifying the ground or grounds for termination and giving said employee reasonable
opportunity within which to explain his side, and another, indicating that upon due consideration of all the
circumstances, rounds have been established to justify his termination. In addition to this, a hearing or
conference is also required, whereby the employee may present evidence to rebut the accusations
against him.

II. The Honorable Court of Appeals erred in finding that the dismissal was valid and at the
same time, declaring it ineffectual.9
In G.R. No. 165787,Supersonic ascribes the following errors to the CA, to wit:
I. Respondent Court of Appeals committed serious errors which are not in accordance with law
and applicable decisions of the Honorable Supreme Court when it concluded that the twonotice requirement has not been complied with when respondent De Jesus was terminated
from service.

There appears to be no dispute upon the fact that De Jesus failed to remit and account for some of her
collections. This she admitted and explained in her letters dated April 5, 2001 and May 15, 2001 to
Santos, the companys general manager. Without totally disregarding her allegations of duress in
executing the promissory note, the facts disclose therein also coincide with the fact that De Jesus was
somehow remiss in her duties. Considering that she occupied a confidential and sensitive position in the
company, the circumstances presented fairly justified her termination from employment based on just
cause. De Jesus failure to fully account her collections is sufficient justification for the company to lose
its trust and confidence in her. Loss of trust and confidence as a ground for dismissing an employee does
not require proof beyond reasonable doubt. It is sufficient if there is "some basis" for such loss of
confidence, or if the employer has reasonable grounds to believe that the employee concerned is
responsible for the misconduct, as to be unworthy of the trust and confidence demanded by his position.
Nonetheless, while this Court is inclined to rule that De Jesus dismissal was for just cause, the manner
by which the same was effected does not comply with the procedure outlined under the Labor Code and
as enunciated in the landmark case of Serrano vs. NLRC.
The evidence on record is bereft of any indicia that the two written notices were furnished to De Jesus
prior to her dismissal. The various memoranda given her were not the same notices required by law, as
they were mere internal correspondence intended to remind De Jesus of her outstanding accountabilities
to the company. Assuming for the sake of argument that the memoranda furnished to De Jesus may
have satisfied the minimum requirements of due process, still, the same did not satisfy the notice
requirement under the Labor Code because the intention to sever the employees services must be made
clear in the notice. Such was not apparent from the memoranda. As the Supreme Court held in Serrano,
the violation of the notice requirement is not strictly a denial of due process. This is because such notice
is precisely intended to enable the employee not only to prepare himself for the legal battle to protect his
tenure of employment, but also to find other means of employment and ease the impact of the loss of his
job and, necessarily, his income.
Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De Jesus should
therefore be struck as ineffectual.
WHEREFORE, premises considered, the Resolutions dated July 31, 2003 and October 30, 2003 of the
NLRC, Second Division in NLRC NCR 30-02-01058-02 (CA NO. 033714-02) are herebyMODIFIED, in
that while the dismissal is hereby held to be valid, the same must declaredineffectual. As a consequence
thereof, Supersonic is hereby required to pay petitioner Maria Lourdes De Jesus full backwages from the
time her employment was terminated up to the finality of this decision.
SO ORDERED.
De Jesusappealed by petition for review on certiorari to the Court (G.R. No. 164662), while Supersonic
first sought the reconsideration of the Decision in the CA.Upon the denial of its motion for reconsideration

II. Respondent Court of Appeals committed serious errors by concluding that the Serrano
Doctrine applies squarely to the facts and legal issues of the present case which are contrary
to the law and jurisprudence.
III. Serrano Doctrine has already been abandoned in the case of Agabon v. NLRC, which is
prevailing and landmark doctrine applicable in the resolution of the present case.
IV. Respondent Court of Appeals committed serious errors by disregarding the law and
jurisprudence when it awarded damages to private respondent which is excessive and unduly
penalized petitioner SSI. 10
Based on the foregoing, thedecisive issues to be passed upon are: (1) Whether or not Supersonic was
justified in terminating De Jesus employment; (2) Whether or not Supersonic complied with the twowritten notice rule; and (3) Whether or not De Jesus was entitled to full backwages and damages.
Ruling
We partially grant the petition for review of Supersonic in G.R. No. 165787.
Anent the first issue, Supersonic substantially proved that De Jesus had failed to remit and had
misappropriated the amounts she had collected in behalf of Supersonic. In that regard, the factual
findings of the Labor Arbiter and NLRC on the presence of the just cause for terminating her
employment, being already affirmed by the CA, are binding if not conclusive upon this Court. There being
no cogent reason to disturb such findings, the dismissal of De Jesus was valid.
Article 282 of the Labor Code enumerates the causes by which the employer may validly terminate the
employment of the employee, viz:
Article 282.Termination by employer. - An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;

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

be heard and to defend herself with the assistance of her representative, if she so desired. 17 The
requirement was mandatory.18

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

Did Supersonic observe due process before dismissing De Jesus?

(e) Other causes analogous to the foregoing.

The CA observed that De Jesus had not disputed her failure to remit and account for some of her
collections, for, in fact, she herself had expressly admitted her failure to do so through her letters dated
April 5, 2001 and May 15, 2001 sent to Supersonics general manager. Thereby, the CA concluded, she
defrauded her employer or willfully violated the trust reposed in her by Supersonic. In that regard, the CA
rightly observed that proof beyond reasonable doubt of her violation of the trust was not required, for it
was sufficient that the employer had "reasonable grounds to believe that the employee concerned is
responsible for the misconduct as to be unworthy of the trust and confidence demanded by [her]
position."11
Concerning the second issue, the NLRC and the CA differed from each other, with the CA concluding,
unlike the NLRC, that Supersonic did not comply with the two-written notice rule. In the exercise of its
equity jurisdiction, then, this Court should now re-evaluate and re-examine the relevant findings.12

Supersonic contends that it gave the two written notices to De Jesus in the form of the memoranda dated
March 26, 2001 and May 12, 2001, to wit:
Memorandum dated March 26, 2001
26 March 2001
MEMORANDUM
TO : MA LOURDES DE JESUS SALES PROMOTION OFFICER
FROM : DIVINA S. ABAD SANTOS
SUBJECT : PAST DUE ACCOUNTS

A careful consideration of the records persuades us to affirm the decision of the CA holding that
Supersonic had not complied with the twowritten notice rule.
It ought to be without dispute that the betrayal of the trust the employer reposed in De Jesus was the
essence of the offense for which she was to be validly penalized with the supreme penalty of dismissal. 13
Nevertheless, she was still entitled to due processin order to effectivelysafeguard her security of tenure.
The law affording to her due process as an employee imposed on Supersonic as the employer the
obligation to send to her two written notices before finally dismissing her. This requirement of two written
notices is enunciated in Article 277of the Labor Code, as amended, which relevantly states:
Article 277.Miscellaneous provisions.xxx

We have repeatedly reminded you to collect payment of accounts guaranteed by you and which have
been past due since last year. You have assured us that these will be settled by the end of February
2001.
Our books show, that as of today, March 26, 2001, the following accounts have outstanding balances:
Wafa

$6,585

Monaliza/Ragab

4,326.39

Salah

1,950

xxxx

Jerico

1,300

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminateda written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of
his representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and Employment. Any
decision taken by the employer shall be without prejudice to the right of the worker to contest the validity
or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on
the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie finding by the appropriate
official of the Department of Labor and Employment before whom such dispute is pending that the
termination may cause a serious labor dispute or is in implementation of a mass lay-off.14

Rafat

4,730

Mahmood/Alhirsh

3,205

Amina

2,000

MMML

1,653

RDRI

361

HMD

2,100

Amru

1,388

Iyad Ali

97

Ali

740

Maher

675

Sharikat

350

Imad

905

Rubies

2,678

xxxx
and in Section 215 and Section7,16 Rule I, Book VI of the Implementing Rules of the Labor Code. The
firstwritten notice would inform her of the particular acts or omissions for which her dismissal was being
sought. The second written notice would notify her of the employers decision to dismiss her. But the
second written notice must not be made until after she was given a reasonable period after receiving the
first written notice within which to answer the charge, and after she was given the ample opportunity to

Adel

1,125

Rubies

2,678

$36,168.39

Adel

1,125
$36,168.39

Please give us an updated report on your collection efforts and the status of each of the above accounts
to enable us to take necessary actions. This would be submitted on or before April 2, 2001
(SGD)
General Manager19

DIVINA

ABAD

SANTOS

Memorandum dated May 12, 2001

You are hereby directed to explain in writing within 72 hours from receipt of this memorandum, why you
should not be dismissed for cause for failure to account for above amounts.
By your failure to explain in writing the above accountabilities, within the set deadline, we shall assume
that you have misappropriated the same for your own use and benefit to the damage of the office.
(SGD.)DIVINA
General Manager20

12 May 2001
MEMORANDUM
TO : MA. LOURDES DE JESUS SALES PROMOTION OFFICER
FROM : DIVINA S. ABAD SANTOS GENERAL MANAGER
SUBJECT : PAST DUE ACCOUNTS
You are asked to refer to my memorandum dated 26 March 2001. We were informed that the following
accounts have been paid to you but not accounted/turned over to the office:
NAME

AMOUNTS

Wafa

$6,585

Monaliza/Ragab

4,326.39

Salah

1,950

Jerico

1,300

Rafat

4,730

Mahmood/Alhirsh

3,205

Amina

2,000

MMML

1,653

RDRI

361

HMD

2,100

Amru

1,388

Iyad Ali

97

Ali

740

Maher

675

Sharikat

350

Imad

905

S.

ABAD

SANTOS

Contrary to Supersonics contention, however, the aforequotedmemoranda did not satisfy the
requirement for the two written notices under the law. The March 26, 2001 memorandum did not specify
the grounds for which her dismissal would be sought, and for that reasonwas at best a mere reminder to
De Jesus to submit her report on the status of her accounts. The May 12, 2001 memorandumdid not
provide the notice of dismissal under the law because itonly directed her to explain why she should not
be dismissed for cause. The latter memorandum was apparently only the first written noticeunder the
requirement.The insufficiency of the two memoranda as compliance with the two-written notices
requirement of due process was, indeed, indubitable enough to impelthe CA to hold:
The evidence on record is bereft of any indicia that the two written notices were furnished to De Jesus
prior to her dismissal. The various memoranda given her were not the same notices required by law, as
they were mere internal correspondences intended to remind De Jesus of her outstanding
accountabilities to the company. Assuming for the sake of argument that the memoranda furnished to De
Jesus may have satisfied the minimum requirements of due process, still, the same did not satisfy the
notice requirement under the Labor Code because the intention to sever the employees services must
be made clear in the notice. Such was not apparent from the memoranda. As the Supreme Court held in
Serrano, the violation of the notice requirement is not strictly a denial of due process. This is because
such notice is precisely intended to enable the employee not only to prepare himself for the legal battle to
protect his tenure of employment, but also to find other means of employment and ease the impact of the
loss of his job and, necessarily, his income.
Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De Jesus should
therefore be struck (down) as ineffectual.21
On the third issue, Supersonicposits that the CA gravely erred in declaring the dismissal of De Jesus
ineffectual pursuant to the ruling inSerrano v. National Labor Relations Commission;andinsiststhat the CA
should have instead applied the ruling in Agabonv. National Labor Relations Commission,22 which
meanwhile abandoned Serrano.
InSerrano, the Court pronounced as follows:
x xx, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed
for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not
be reinstated. However, he must be paid backwages from the time his employment was terminated until it
is determined that the termination of employment is for a just cause because the failure to hear him
before he is dismissed renders the termination of his employment without legal effect.
WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission
is MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation
pay equivalent to one (1) month pay for every year of service, his unpaid salary, and his proportionate
13th month pay and, in addition, full backwages from the time his employment was terminated on
October 11, 1991 up to the time the decision herein becomes final. For this purpose, this case is

REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary
awards to petitioner.
SO ORDERED.23
The CA did not err. Relying on Serrano,the CA precisely ruled that the violation by Supersonic of the twowritten notice requirement renderedineffectual the dismissal of De Jesus for just cause under Article 282
of the Labor Code, and entitled her to be paid full backwages from the time of her dismissal until the
finality of its decision.The Court cannot ignore thatthe applicable case law when the CA promulgated its
decision on July 23, 2004, and when it denied Supersonics motion for reconsideration on October 21,
2004 was still Serrano. Considering that the Court determines in this appeal by petition for review on
certiorarionly whether or not the CA committed an error of law in promulgating its assailed decision of
July 23, 2004,the CA cannot be declared to have erred on the basis of Serrano being meanwhile
abandoned through Agabonif all thatthe CA did was to fully apply the law and jurisprudence applicable at
the time of its rendition of the judgment.As a rule, a judicial interpretation becomes a part of the law as of
the date that the law was originally passed, subject only to the qualification that when a doctrine of the
Court is overruled and the Court adoptsa different view, and more so when there is a reversal ofthe
doctrine, the new doctrine should be applied prospectively and should not apply to parties who relied on
the old doctrine and acted in good faith. 24 To hold otherwise would be to deprive the law of its quality of
fairness and justice, for, then, there is no recognition of what had transpired prior to such adjudication.25
Although Agabon,being promulgatedonly on November 17, 2004, ought to be prospective, not
retroactive, in its operation because its language did not expressly state that it would also operate
retroactively,26 the Court has already deemed it to be the wise judicial course to let its abandonment of
Serranobe retroactive as its means of giving effect to its recognition of the unfairness of declaring illegal
or ineffectual dismissals for valid or authorized causes but not complying with statutory due process. 27
Under Agabon, the new doctrine is that the failure of the employer to observe the requirements of due
process in favor of the dismissed employee (that is, the two-written notices rule) should not invalidate or
render ineffectual the dismissal for just or authorized cause. The Agabon Court plainly saw the likelihood
of Serrano producing unfair butfar-reaching consequences, such as, but not limited to, encouraging
frivolous suits where even the most notorious violators of company policies would be rewarded by
invoking due process; to having the constitutional policy of providing protection to labor be used as a
sword to oppress the employers; and to compelling the employers to continue employing persons who
were admittedly guilty of misfeasance or malfeasance and whose continued employment would be
patently inimical to the interest of employers.28
Even so, the Agabon Court still deplored the employer's violation of the employee's right to statutory due
process by directing the payment of indemnity in the form of nominal damages, the amount of which
would be addressed to the sound discretion of the labor tribunal upon taking into account the relevant
circumstances. Thus, the Agabon Court designed such form of damages as a deterrent to employers
from committing in the future violations of the statutory due process rights of employees, and, at the
same time, as at the very least a vindication or recognition of the fundamental right granted to the
employees under the Labor Code and its implementing rules.29 Accordingly, consistent with precedent30
the amount of P50,000.00 as nominal damages is hereby fixed for the purpose of indemnifying De Jesus
for the violation of her right to due process.1wphi1
WHEREFORE, the Court DENIES the petition for review on certiorari in G.R. No. 164662 entitled Maria
Lourdes C. De Jesus v. Han. Raul T Aquino, Presiding Commissioner, NLRC, Second Division, Quezon
City, and Supersonic Services, Inc.; PARTIALLY GRANTS the petition for review on certiorari in G.R. No.
165787 entitled Supersonic Services, Inc. v. Maria Lourdes C. De Jesus and, accordingly, DECLARES
the dismissal of Maria Lourdes C. De Jesus for just or authorized cause as valid and effectual; and
ORDERS Supersonic Services, Inc. to pay to Maria Lourdes C. De Jesus P50,000.00 as nominal
damages to indemnify her for the violation of her right to due process. No pronouncements on costs of
suit.

G.R. No. 187232

April 17, 2013

ZENAIDA
D.
MENDOZA,
Petitioner,
vs.
HMS CREDIT CORPORATION and/or FELIPE R. DIEGO, MA. LUISA B. DIEGO, HONDA MOTOR
SPORTS CORPORATION and/or FELIPE R. DIEGO, MA. LUISA B. DIEGO, BETA MOTOR TRADING
INCORPORATED and/or FELIPE DIEGO, MA. LUISA B. DIEGO, JIANSHE CYCLE WORLD IN
CORPORATED and/or JOSE B. DIEGO, Respondents.
DECISION
SERENO, CJ.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision dated 14 November 20081 issued by the Court of Appeals (CA) in CA G.R. SP No. 82653.
Petitioner Zenaida D. Mendoza (Mendoza) was the Chief Accountant of respondent HMS Credit
Corporation (HMS Credit) beginning 1 August 1999. 2 During her employment, she simultaneously
serviced three other respondent companies, all part of the Honda Motor Sports Group (HMS Group), 3
namely, Honda Motor Sports Corporation (Honda Motors), Beta Motor Trading Incorporated (Beta Motor)
and Jianshe Cycle World (Jianshe). 4 Respondent Luisa B. Diego (Luisa) was the Managing Director of
HMS Credit, while respondent Felipe R. Diego (Felipe) was the company officer to whom Mendoza
directly reported.5
Mendoza avers that on 11 April 2002, after she submitted to Luisa the audited financial statements of
Honda Motors, Beta Motor, and Jianshe, Felipe summoned Mendoza to advise her of her termination
from service.6
She claims that she was even told to leave the premises without being given the opportunity to collect
her personal belongings.7
Mendoza also contends that when she went back to the office building on 13 April 2012, the stationed
security guard stopped her and notified her of the instruction of Felipe and Luisa to prohibit her from
entering the premises.8 Later that month, she returned to the office to pick up her personal mail and to
settle her food bills at the canteen, but the guard on duty told her that respondents had issued a
memorandum barring her from entering the building.9
On the other hand, respondents maintain that Mendoza was hired on the basis of her qualification as a
Certified Public Accountant (CPA),10 which turned out to be a misrepresentation. 11 They likewise contend
that not only did she fail to disclose knowledge of the resignations of two HMS Group officers, Art
Labasan (Labasan) and Jojit de la Cruz (de la Cruz), and their subsequent transfer to a competitor
company, but she also had a hand in pirating them. Thus, on 12 April 2002, they supposedly confronted
her about these matters. In turn, she allegedly told them that if they had lost their trust in her, it would be
best for them to part ways. 12 Accordingly, they purportedly asked her to propose an amount representing
her entitlement to separation benefits. Before she left that night, they allegedly handed her P30,000 as
payment for the external auditor she had contracted to examine the books of the HMS Group.13
On 30 April 2002, Mendoza filed with the National Labor Relations Commission (NLRC) a Complaint for
Illegal Dismissal and Non-payment of Salaries/Wages, 13th Month Pay and Mid-Year Bonus. 14 The case
was docketed as NLRC-NCR North Sector Case No. 00-04-02576-2002.15
On 28 January 2003, the Labor Arbiter rendered a Decision ruling that Mendoza had been illegally
dismissed, and that the dismissal had been effected in violation of due process requirements. 16 Thus, the
Labor Arbiter held respondents jointly and severally liable for the payment of separation pay, backwages,
moral and exemplary damages, and attorneys fees in the total amount of P1,025,081.82.17

Respondents filed an Appeal dated 14 March 2003 18 and a Motion to Reduce Appeal Bond dated 21
March 2003 with the National Labor Relations Commission (NLRC), tendering the amount of only
P650,000 on the ground of purported business losses.19 In its Order dated 30 May 2003, the NLRC
denied the request for the reduction of the appeal bond, and directed respondents to put up the
additional amount of P122,801.66 representing the differential between the judgment award not
including the moral and exemplary damages and attorneys fees and the sum previously tendered by
them.20 Respondents complied with the Order.21
On 30 September 2008, the NLRC rendered a Decision reversing the ruling of the Labor Arbiter. 22 In
declaring that Mendoza had not been summarily dismissed, the NLRC held as follows: (a) her claim that
she was terminated was incompatible with respondents act of entrusting the amount of P30,000 to her
as payment for the external auditor; (b) the same act demonstrated that the parties parted amicably, and
that she had the intention to resign; and (c) her admission that respondents allowed her to take a leave of
absence subsequent to their confrontation also belied her claim that she was dismissed. 23 Further, it also
ruled that her misrepresentation as to her qualifications, her concealment of her meeting with a rival
motorcycle dealership, and her non-disclosure of her meeting with the officers and mechanics of HMS
Group amounted to a breach of trust, which constituted a just cause for termination, especially of
managerial employees like her.24 Nevertheless, it ordered respondents to pay her separation pay
equivalent to one month for every year of service.25
The NLRC denied the Motion for Reconsideration filed by Mendoza, 26 prompting her to file a Petition for
Certiorari with the CA, which rendered a Decision affirming that of the lower tribunal. 27 The CA ruled that
that there was no dismissal, as the parties had entered into a compromise agreement whereby
respondents offered to pay Mendoza separation benefits in exchange for her voluntary resignation. 28 It
further explained:
On the merits, this case involves neither dismissal on the part of the employer nor abandonment on the
part of the employee. On the evening of April 11, 2002, respondents and petitioner had already agreed
on an amicable settlement with petitioner voluntarily resigning her employment and respondents paying
her separation benefits. This is evident from the amiable manner with which the parties ended their
meeting, with respondents entrusting to petitioner the P30,000.00 payment for the external auditor and
the petitioner considering her absence the following day as a previously approved leave from work. It
appears, however, that respondents had a sudden change of heart while petitioner was away on leave on
April 12, 2002 because when the latter returned on April 13, 2002 she was already prevented from
entering the office premises per strict instructions from respondents. Clearly, this was an attempt on the
part of respondents to effectively renege on its commitment to pay separation benefits to petitioner.
While, generally, an employee who voluntarily resigns from employment is not entitled to separation pay,
an arrangement whereby the employee would receive separation pay despite having resigned voluntarily
constitutes a contract which is freely entered into and which must be performed in good faith. Thus, the
NLRC correctly sustained the prior commitment of respondents to pay separation benefits to petitioner.
For although loss of trust and confidence could have been a valid ground available to respondents, they
did not institute the appropriate dismissal procedures against petitioner. Instead, they opted to enter into
a compromise agreement with an offer to pay separation benefits in exchange for the latters voluntary
resignation. It is an accepted practice for parties to adjust their difficulties by mutual consent and, through
the execution of a compromise agreement, prevent or to put an end to a lawsuit. And, since there was no
dismissal, valid or otherwise, involved in this case, the non-observance of the notice requirements is of
no relevance.29
Mendoza consequently filed the present Petition for Review, raising the following grounds:
a. The CA erred in concluding that respondents had timely filed their appeal with the NLRC.
b. The CA erred in ruling that there was no illegal dismissal.30
Thus, in disposing of the instant case, the following issues must be discussed: (a) whether the appeal of
respondents to the NLRC was timely filed, and (b) whether Mendoza was illegally dismissed.

First
issue:
appeal before the NLRC

Timely

filing

of

the

xxx

xxx

xxx

Art. 285. Termination by employee.

The relevant portion of Article 223 of the Labor Code on appeals of decisions, awards or orders of the
Labor Arbiter as follows:
Art. 223. x x x In case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed
from.
In Pasig Cylinder v. Rollo, 31 this Court explained that the required posting of a bond equivalent to the
monetary award in the appealed judgment may be liberally interpreted as follows:
x x x. True, Article 223 of the Labor Code requires the filing of appeal bond "in the amount equivalent to
the monetary award in the judgment appealed from." However, both the Labor Code and this Courts
jurisprudence abhor rigid application of procedural rules at the expense of delivering just settlement of
labor cases. Petitioners reasons for their filing of the reduced appeal bond the downscaling of their
operations coupled with the amount of the monetary award appealed are not unreasonable. Thus, the
recourse petitioners adopted constitutes substantial compliance with Article 223 consistent with our ruling
in Rosewood Processing, Inc. v. NLRC, where we allowed the appellant to file a reduced bond of
P50,000 (accompanied by the corresponding motion) in its appeal of an arbiters ruling in an illegal
termination case awarding P789,154.39 to the private respondents.32
In the case at bar, respondents filed a Motion to Reduce Appeal Bond, tendering the sum of P650,000
instead of the P1,025,081.82 award stated in the Decision of the Labor Arbiter because it was allegedly
what respondents could afford, given the business losses they had suffered at that time. 33 Upon the
denial by the NLRC of this Motion, respondents promptly complied with its directive to post the differential
in the amount of P122,801.66, which had been computed without including the award of moral and
exemplary damages and attorneys fees.34 Following the pronouncement in Pasig Cylinder, the CA was
correct in holding that the appeal was timely filed on account of respondents substantial compliance with
the requirement under Article 223.
Second issue: Illegal dismissal of
Mendoza
The Labor Code provides for instances when employment may be legally terminated by either the
employer or the employee, to wit:
Art. 282. Termination by employer. An employer may terminate an employment for any of the following
causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
d. Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.

a. An employee may terminate without just cause the employee-employer relationship by

serving a written notice on the employer at least one (1) month in advance. The employer upon
whom no such notice was served may hold the employee liable for damages.
b. An employee may put an end to the relationship without serving any notice on the employer
for any of the following just causes:
1. Serious insult by the employer or his representative on the honor and person of
the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his
representative;
3. Commission of a crime or offense by the employer or his representative against
the person of the employee or any of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
In instances in which the termination of employment by the employer is based on breach of trust, a
distinction must be made between rank-and-file employees and managerial employees, thus:
The degree of proof required in labor cases is not as stringent as in other types of cases. It must be
noted, however, that recent decisions of this Court have distinguished the treatment of managerial
employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of trust
and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence
as ground for valid dismissal requires proof of involvement in the alleged events in question, and that
mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a
managerial employee, the mere existence of a basis for believing that such employee has breached the
trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of
confidence, such as when the employer has reasonable ground to believe that the employee concerned
is responsible for the purported misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded by his position.35 (Emphasis supplied)
Further, in the case of termination by the employer, it is not enough that there exists a just cause therefor,
as procedural due process dictates compliance with the two-notice rule in effecting a dismissal: (a) the
employer must inform the employee of the specific acts or omissions for which the dismissal is sought,
and (b) the employer must inform the employee of the decision to terminate employment after affording
the latter the opportunity to be heard.36
On the other hand, if the termination of employment is by the employee, the resignation must show the
concurrence of the intent to relinquish and the overt act of relinquishment, as held in San Miguel
Properties v. Gucaban:37
Resignation the formal pronouncement or relinquishment of a position or office is the voluntary act
of an employee who is in a situation where he believes that personal reasons cannot be sacrificed in
favor of the exigency of the service, and he has then no other choice but to disassociate himself from
employment. The intent to relinquish must concur with the overt act of relinquishment; hence, the acts of
the employee before and after the alleged resignation must be considered in determining whether he in
fact intended to terminate his employment. In illegal dismissal cases, fundamental is the rule that when
an employer interposes the defense of resignation, on him necessarily rests the burden to prove that the
employee indeed voluntarily resigned.38 (Emphases supplied)

In this case, the NLRC and the CA were in agreement that although Mendoza committed acts that
amounted to breach of trust, the termination of her employment was not on that basis. 39 Instead, both
tribunals held that the parties parted amicably, with Mendoza evincing her voluntary intention to resign
and respondents proposed settlement to pay her separation benefits. 40 This Court does not agree with
these findings in their entirety.
Whether Mendoza was a Chief Accountant of HMS Credit, as stated in her appointment letter, 41 or a
Finance Officer of all the corporations under the HMS Group, as claimed by respondents, 42 what is
certain is that she was a managerial employee. In securing this position, she fraudulently misrepresented
her professional qualifications by stating in her Personal Information Sheet that she was a CPA. Based
on the records, she never controverted this imputation of dishonesty or, at the very least, provided any
explanation therefor. Thus, this deceitful action alone was sufficient basis for respondents loss of
confidence in her as a managerial employee.
In addition, this Court finds no reason to deviate from the factual findings of the NLRC and the CA as
regards the existence of other circumstances that demonstrated Mendozas breach of trust. The NLRC
held in this wise:
In sum, the commission finds that Mendoza was not illegally dismissed.1wphi1 Respondents could have
validly dismissed her for just cause because she had forfeited her employment by having incurred breach
of trust that they had reposed in her. She had concealed from them the fact that she was going to visit a
rival motorcycle dealership in Tarlac, called Honda Mar, on the afternoon of April 5, 2002, in the company
of its owner; the notice she had given was that, on the morning of that date, she would get her childs
report card from her school. She also failed to disclose to them the fact that she saw in that store
Labasan and De la Cruz, and respondents mechanics, Gatus and Mejis, who cleaned and painted the
same. And she gave the appearance of giving aid and support to respondents competitor, to the
prejudice of their business standing and goodwill. These were acts of disloyalty for which [they] would
have been justified in terminating her service on the ground of loss of confidence.43
However, despite the existence of a just cause for termination, Mendoza was nevertheless dismissed
from service in violation of procedural due process, as respondents failed to observe the two-notice
requirement. Instead, respondents insisted that she voluntarily resigned, which argument the NLRC and
the CA sustained. This Court is not persuaded.
Respondents were unable to discharge their burden to prove the contemporaneous existence of an
intention on the part of Mendoza to resign and an overt act of resignation. Aside from their self-serving
allegation that she had offered to resign after they had expressed their loss of trust in her, there is
nothing in the records to show that she voluntarily resigned from her position in their company. In this
regard, it is worthy to underscore the established rule that the filing of a complaint for illegal dismissal is
inconsistent with resignation or abandonment.44
Moreover, the conclusion of the NLRC and the CA that Mendoza voluntarily resigned in consideration of
respondents supposed payment of a settlement is bereft of any basis. The lower tribunals merely
surmised that the parties forged a compromise agreement despite respondents own admission that they
never decided thereon.45 In fact, the records are clear that none of the parties claimed the existence of
any settlement in exchange for her resignation.
From the foregoing discussion, it is evident that although there was a just cause for terminating the
services of Mendoza, respondents were amiss in complying with the two-notice requirement. Following
the prevailing jurisprudence on the matter, if the dismissal is based on a just cause, then the noncompliance with procedural due process should not render the termination from employment illegal or
ineffectual.46 Instead, the employer must indemnify the employee in the form of nominal damages. 47
Therefore, the dismissal of Mendoza should be upheld, and respondents cannot be held liable for the
payment of either backwages or separation pay. Considering all the circumstances surrounding this case,
this Courts finds the award of nominal damages in the amount of P30,00048 to be in order.

WHEREFORE, the Petition for Review is DENIED. The Decision dated 14 November 2008 of the CA in
CA G.R. SP No. 82653 is AFFIRMED WITH MODIFICATION: the award of separation pay is deleted and
in lieu thereof, nominal damages in the amount of P30,000 is awarded in favor of petitioner.

G.R. No. 184520

March 13, 2013

ROLANDO
DS.TORRES,
Petitioner,
vs.
RURAL BANK OF SAN JUAN, INC., ANDRES CANO CHUA, JOBEL GO CHUA, JESUS CANO
CHUA, MEINRADO DALISAY, JOSE MANALANSAN III, OFELIA GINA BE and NATY ASTRERO,
Respondents.
DECISION
REYES, J.:
This Petition for Review on Certiorari, 1 under Rule 45 of the Rules of Court, seeks to reverse and set
aside the Decision2 dated February 21, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 94690
dismissing the complaint for illegal dismissal filed by petitioner Rolando OS. Torres (petitioner) against
respondent Rural Bank of San Juan, Inc. (RBSJT) and its officers who are the herein individual
respondents, namely: Andres Cano Chua (Andres), Jobel Go Chua (Jobel), Jesus Cano Chua (Jesus),
Meinrado Dalisay, Jose Manalansan III (Jose), Ofelia Ginabe (Ofelia) and Naty Astrero (collectively
referred to as respondents).3
Likewise assailed is the CA Resolution4 dated June 3, 2008 which denied reconsideration.
The antecedents
Culled from the rulings of the labor tribunals and the appellate court are the ensuing factual milieu: 5
The petitioner was initially hired by RBSJI as Personnel and Marketing Manager in 1991. After a sixmonth probationary period and finding his performance to be satisfactory, RBSJI renewed his
employment for the same post to a permanent/regular status. In June 1996, the petitioner was offered
the position of Vice-President for RBSJIs newly created department, Allied Business Ventures. He
accepted the offer and concomitantly relinquished his post. The vacancy created was filled by respondent
Jobel who temporarily held the position concurrently as a Corporate Planning and Human Resources
Development Head.
On September 24, 1996, the petitioner was temporarily assigned as the manager of RBSJIs N. Domingo
branch in view of the resignation of Jacinto Figueroa (Jacinto).

After conducting an investigation, RBSJIs Human Resources Department recommended the petitioners
termination from employment for the following reasons, to wit:
1. The issuance of clearance to Mr. Jacinto Figueroa by the petitioner have been prejudicial to
the Bank considering that damages [sic] found caused by Mr. Figueroa during his stay with the
bank;
2. The petitioner is not in any authority to issue said clearance which is a violation of the
Company Code of Conduct and Discipline under Category B Grave Offense No. 1 (falsifying or
misrepresenting persons or other company records, documents or papers) equivalent to
termination; and
3. The nature of his participation in the issuance of the said clearance could be a reasonable
ground for the Management to believe that he is unworthy of the trust and confidence
demanded by his position which is also a ground for termination under Article 282 of the Labor
Code.8
On May 19, 1997, RBSJIs Board of Directors adopted the above recommendation and issued Resolution
No. 97-102 terminating the petitioner from employment, the import of which was communicated to him in
a Memorandum dated May 30, 1997.9
Feeling aggrieved, the petitioner filed the herein complaint for illegal dismissal, illegal deduction, nonpayment of service incentive, leave pay and retirement benefits. 10 The petitioner averred that the
supposed loss of trust and confidence on him was a sham as it is in fact the calculated result of the
respondents dubious plot to conveniently oust him from RBSJI.
He claimed that he was deceived to accept a Vice-President position, which turned out to be a mere
clerical and menial work, so the respondents can install Jobel, the son of a major stockholder of RBSJI,
as Personnel and Marketing Manager. The plot to oust the petitioner allegedly began in 1996 when Jobel
annexed the Personnel and Marketing Departments to the Business Development and Corporate
Planning Department thus usurping the functions of and displacing the petitioner, who was put on a
floating status and stripped of managerial privileges and allowances.
The petitioner further alleged that he was cunningly assigned at N. Domingo branch so he can be
implicated in the anomalous transaction perpetrated by Jacinto. He narrated that on September 27, 1996,
the officers of RBSJI, namely: Jobel, Andres, Jose and Ofelia, were actually at the N. Domingo branch
but they all suspiciously left him to face the predicament caused by Jacinto.

On September 27, 1996, Jacinto requested the petitioner to sign a standard employment clearance
pertaining to his accountabilities with RBSJI. When the petitioner declined his request, Jacinto threw a fit
and shouted foul invectives. To pacify him, the petitioner bargained to issue a clearance but only for
Jacintos paid cash advances and salary loan.

He recounted that the next day he was assigned back at the Tarlac extension office and thereafter
repeatedly harassed and forced to resign. He tolerated such treatment and pleaded that he be allowed to
at least reach his retirement age. On March 7, 1996, he wrote a letter to George Cano Chua (George)
expressing his detestation of how the "new guys" are dominating the operations of the company by
destroying the image of pioneer employees, like him, who have worked hard for the good image and
market acceptability of RBSJI. The petitioner requested for his transfer to the operations or marketing
department. His request was, however, not acted upon.

About seven months later or on April 17, 1997, respondent Jesus issued a memorandum to the petitioner
requiring him to explain why no administrative action should be imposed on him for his unauthorized
issuance of a clearance to Jacinto whose accountabilities were yet to be audited. Jacinto was later found
to have unliquidated cash advances and was responsible for a questionable transaction involving P11
million for which RBSJI is being sued by a certain Actives Builders Manufacturing Corporation. The
memorandum stressed that the clearance petitioner issued effectively barred RBSJI from running after
Jacinto.6

The petitioner claimed that on March 19, 1997, respondent Jesus verbally terminated him from
employment but he later on retracted the same and instead asked the petitioner to tender a resignation
letter. The petitioner refused. A month thereafter, the petitioner received the memorandum asking him to
explain why he cleared Jacinto of financial accountabilities and thereafter another memorandum
terminating him from employment.

The petitioner submitted his explanation on the same day clarifying that the clearance was limited only to
Jacintos paid cash advances and salary loan based on the receipts presented by Lily Aguilar (Lily), the
cashier of N. Domingo branch. He emphasized that he had no foreknowledge nor was he forewarned of
Jacintos unliquidated cash advances and questionable transactions and that the clearance did not
extend to those matters.7

For their part, the respondents maintained that the petitioner was validly dismissed for loss of trust and
confidence precipitated by his unauthorized issuance of a financial accountability clearance sans audit to
a resigned employee. They averred that a copy of the clearance mysteriously disappeared from RBSJIs
records hence, the petitioners claim that it pertained only to Jacintos paid cash advances and salary
loan cannot stand for being uncorroborated.

Attempts at an amicable settlement were made but the same proved futile hence, the Labor Arbiter 11 (LA)
proceeded to rule on the complaint.

3. Moral and exemplary damages in the amount of Fifty Thousand ([P]50,000.00) Pesos each,
respectively; and

Ruling of LA

4. Attorneys fees amounting to ten percent (10%) of the total award, specifically amounting to
Fifty-Five Thousand Nine Hundred Twenty-Three Pesos and Eight ([P]55,923.08) Centavos.

In its Decision12 dated November 27, 1998, the LA sustained the claims of the petitioner as against the
factually unsubstantiated allegation of loss of trust and confidence propounded by the respondents. The
LA observed that the petitioners selfless dedication to his job and efforts to achieve RBSJIs stability,
which the respondents failed to dispute, negate any finding of bad faith on his part when he issued a
clearance of accountabilities in favor of Jacinto. As such, the said act cannot serve as a valid and
justifiable ground for the respondents to lose trust and confidence in him.

All other claims are hereby Dismissed for lack of merit.

SO ORDERED.13
Ruling of the National Labor Relations Commission (NLRC)

The LA further held that the failure of both parties to present a copy of the subject clearance amidst the
petitioners explanation that it did not absolutely release Jacinto from liability, should work against the
respondents since it is the proof that will provide basis for their supposed loss of trust and confidence.
The LA upheld the petitioners contention that the loss of trust and confidence in him was indeed a mere
afterthought to justify the respondents premeditated plan to ease him out of RBSJI. The LAs conclusion
was premised on the convergence of the following circumstances: (1) the petitioners stint from 19911996 was not marred with any controversy or complaint regarding his performance; (2) when Jobel joined
RBSJI in the latter part of 1996, he took over the department led by the petitioner thus placing the latter
in a floating status; and (3) the petitioners temporary transfer to the N. Domingo branch was designed to
deliberately put him in a bind and blame him on whatever course of action he may take to resolve the
same.
Accordingly, the petitioner was found to have been illegally dismissed and thus accorded the following
reliefs in the decretal portion of the LA Decision, viz:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Bank and
individual respondents, to reinstate [the petitioner to his previous or equivalent position, without loss of
seniority rights and other benefits and privileges appurtaining [sic] to him, and to pay the petitioner the
following:
1. The petitioners partial backwages and other emoluments in the form of allowances, as
gasoline, maintenance, representation, uniform and membership allowances, from the time of
his dismissal up to his actual date of reinstatement, which as of this date amount to:
Backwages (Partial) P244,800.00
Gasoline Allowances .. 63,000.00
Maintenance Allowance . 45,000.00
Representation Allowance .. 54,000.00

In its Resolution14 dated April 14, 2000, the NLRC disagreed with the LAs conclusion and opined that it
was anchored on irrelevant matters such as the petitioners performance and the preferential treatment
given to relatives of RBSJIs stockholders. The NLRC held that the legality of the petitioners dismissal
must be based on an appreciation of the facts and the proof directly related to the offense charged, which
NLRC found to have weighed heavily in favor of the respondents.
The NLRC remarked that the petitioner was indisputably not authorized to issue the clearance. Also, the
tantrums and furious attitude exhibited by Jacinto are not valid reasons to submit to his demands. The
fact that the N. Domingo branch had been sued civilly on February 25, 1997 for a tax scam while under
Jacintos leadership, should have alerted the petitioner into issuing him a clearance. The action taken by
the petitioner lacked the prudence expected from a man of his stature thus prejudicing the interests of
RBSJI. Accordingly, the dispositive portion of the decision reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE. Let a new one [sic]
entered DISMISSING the instant case for lack of merit. However, respondent should pay the petitioner
his proportionate 13th month pay for 1997 as he was dismissed on May 30, 1997.
SO ORDERED.15
The petitioner sought reconsideration16 which was admitted by the NLRC in an Order dated September
30, 2005. From such Order, the respondents filed a motion for reconsideration on the ground that the
petitioner failed to present a copy of his purported motion bearing the requisite proof of filing. 17
Traversing both motions, the NLRC issued its Decision 18 dated March 3, 2006: (1) granting the
petitioners plea for the reconsideration of its Resolution dated April 14, 2000 thus effectively reversing
and nullifying the same; and (2) denying the respondents motion for reconsideration of the Order dated
September 30, 2005.
Anent the first disposition, the NLRC accorded weight to the explanations proffered by the petitioner that
the clearance issued to Jacinto was limited only to his paid cash advances and salary loan. The NLRC
further held that the offense imputed to the petitioner is not covered by Category B, Grave Offense No. 1
of RBSJIs Code of Conduct and Discipline as it does not appear that he falsified or misrepresented
personal or other company records, documents or papers.19

Membership Allowance .. 12,000.00

Uniform Allowance 8,000.00

Taking an entirely opposite stance, the NLRC declared that the clearance issued by the petitioner did not
prejudice RBSJIs interest as it was limited in scope and did not entirely clear Jacinto from all his financial
accountabilities. Also, the petitioner was only "a day old" at the N. Domingo branch and thus he cannot
be reasonably expected to be aware of the misdeeds purportedly committed by Jacinto.20

Total P426,800.00
2. The petitioners 13th month pay from the time of his dismissal up to actual date of
reinstatement, which as of this date amounts to Twenty-Seven Thousand Two Hundred
(P27,200.00) Pesos;

For the foregoing reasons, the NLRC reversed its earlier ruling and reinstated the LAs Decision dated
November 27, 1998, thus:
WHEREFORE, the Arbiters decision of 27 November 1998 is hereby AFFIRMED and REINSTATED.

Accordingly, the Resolution of 14 April 2000 is REVERSED and SET ASIDE.

Finally, the respondents Motion for Reconsideration dated 2 November 2005 is DENIED for lack of merit.

Settled is the rule that when supported by substantial evidence, the findings of fact of the CA are
conclusive and binding on the parties and are not reviewable by this Court. 30 As such, only errors of law
are reviewed by the Court in petitions for review of CA decisions. By way of exception, however, the
Court will exercise its equity jurisdiction and re-evaluate, review and re-examine the factual findings of
the CA when, as in this case, the same are contradicting31 with the findings of the labor tribunals.

SO ORDERED.21
The respondents failed to prove that the petitioner was dismissed for a just cause.
Ruling of the CA
The respondents sought recourse with the CA, 22 which in its Decision 23 dated February 21, 2008
reversed and set aside the NLRC Decision dated March 3, 2006 and ruled that the petitioner was
dismissed for a just cause. The appellate court articulated that as the Acting Manager of RBSJIs N.
Domingo branch, the petitioner held a highly sensitive and critical position which entailed the
conscientious observance of company procedures. Not only was he unauthorized to issue the clearance,
he also failed to exercise prudence in clearing Jacinto of his accountabilities given the fact that the same
were yet to be audited. Such omission financially prejudiced RBSJI and it amounted to gross negligence
and incompetence sufficient to sow in his employer the seed of mistrust and loss of confidence. 24 The
decretal portion of the CA Decision thus reads:
IN VIEW OF ALL THE FOREGOING, the petition is GRANTED. The March 03, 2006 Decision of the
National Labor Relations Commission is REVERSED and SET ASIDE. The April 14, 2000 Decision of the
National Labor Relations Commission is hereby REINSTATED. No costs.
SO ORDERED.25
The petitioner moved for reconsideration 26 but the motion was denied in the CA Resolution 27 dated June
3, 2008. Hence, the present appeal.
Arguments of the parties
The petitioner avers that the respondents claim of loss of trust and confidence is not worthy of credence
since they failed to present a copy of the clearance purportedly showing that he cleared Jacinto of all his
financial accountabilities and not merely as to his paid cash advances and salary loan. He points out that
RBSJI must be in custody thereof considering that it is a vital official record.
The petitioner insists that the alleged loss of trust and confidence in him is a mere subterfuge to cover
the respondents ploy to oust him out of RBSJI. He asserts that the seven-month gap between the date
when he issued the subject clearance and the date when he was sent a memorandum for the said act
shows that the respondents supposed loss of trust and confidence was a mere afterthought. 28
On the other hand, the respondents invoke the ratiocinations of the CA that they were justified in losing
the trust and confidence reposed on the petitioner since he failed to exercise the degree of care expected
of his managerial position. They reiterate the petitioners admission that no audit was yet conducted as to
the accountabilities of Jacinto when he issued the clearance.
The respondents further assert that as a former Personnel Manager, the petitioner is well-aware of
RBSJIs policy that before a resigned employee can be cleared of accountabilities, he must be first
examined or audited. However, the petitioner opted to violate this policy and yield to Jacintos tantrums. 29
The above arguments yield the focal issue of whether or not the petitioner was validly dismissed from
employment.
The Courts Ruling
The petition is impressed with merit.

As provided in Article 28232 of the Labor Code and as firmly entrenched in jurisprudence, 33 an employer
has the right to dismiss an employee by reason of willful breach of the trust and confidence reposed in
him.
To temper the exercise of such prerogative and to reconcile the same with the employees Constitutional
guarantee of security of tenure, the law imposes the burden of proof upon the employer to show that the
dismissal of the employee is for just cause failing which would mean that the dismissal is not justified.
Proof beyond reasonable doubt is not necessary but the factual basis for the dismissal must be clearly
and convincingly established.34
Further, the law mandates that before validity can be accorded to a dismissal premised on loss of trust
and confidence, two requisites must concur, viz: (1) the employee concerned must be holding a position
of trust; and (2) the loss of trust must be based on willful breach of trust founded on clearly established
facts.35
There is no arguing that the petitioner was part of the upper echelons of RBSJIs management from
whom greater fidelity to trust is expected. At the time when he committed the act which allegedly led to
the loss of RBSJIs trust and confidence in him, he was the Acting Manager of N. Domingo branch. It was
part of the petitioners responsibilities to effect a smooth turn-over of pending transactions and to sign
and approve instructions within the limits assigned to the position under existing regulations. 36 Prior
thereto and ever since he was employed, he has occupied positions that entail the power or prerogative
to dictate management policies as Personnel and Marketing Manager and thereafter as Vice-President.
The presence of the first requisite is thus certain. Anent the second requisite, the Court finds that the
respondents failed to meet their burden of proving that the petitioners dismissal was for a just cause.
The act alleged to have caused the loss of trust and confidence of the respondents in the petitioner was
his issuance, without prior authority and audit, of a clearance to Jacinto who turned out to be still liable
for unpaid cash advances and for an P11-million fraudulent transaction that exposed RBSJI to suit.
According to the respondents, the clearance barred RBSJI from running after Jacinto. The records are,
however, barren of any evidence in support of these claims.
As correctly argued by the petitioner and as above set forth, the onus of submitting a copy of the
clearance allegedly exonerating Jacinto from all his accountabilities fell on the respondents. It was the
single and absolute evidence of the petitioners act that purportedly kindled the respondents loss of trust.
Without it, the respondents allegation of loss of trust and confidence has no leg to stand on and must
thus be rejected. Moreover, one can reasonably expect that a copy of the clearance, an essential
personnel document, is with the respondents. Their failure to present it and the lack of explanation for
such failure or the documents unavailability props up the presumption that its contents are unfavorable
to the respondents assertions.
At any rate, the absence of the clearance upon which the contradicting claims of the parties could ideally
be resolved, should work against the respondents. With only sworn pleadings as proof of their opposite
claims on the true contents of the clearance, the Court is bound to apply the principle that the scales of
justice should be tilted in favor of labor in case of doubt in the evidence presented.37
RBSJI also failed to substantiate its claim that the petitioners act estopped them from pursuing Jacinto
for his standing obligations. There is no proof that RBSJI attempted or at least considered to demand
from Jacinto the payment of his unpaid cash advances. Neither was RBSJI able to show that it filed a
civil or criminal suit against Jacinto to make him responsible for the alleged fraud. There is thus no factual

basis for RBSJIs allegation that it incurred damages or was financially prejudiced by the clearance
issued by the petitioner.

illegally dismissed from employment and is entitled to back wages, to be computed from the date he was
illegally dismissed until the finality of this decision.40

More importantly, the complained act of the petitioner did not evince intentional breach of the
respondents trust and confidence. Neither was the petitioner grossly negligent or unjustified in pursuing
the course of action he took.

The disposition of the case made by the LA in its Decision dated November 27, 1998, as affirmed by the
NLRC in its Decision dated March 6, 2006, is most in accord with the above disquisitions hence, must be
reinstated. However, the monetary awards therein should be clarified.

It must be pointed out that the petitioner was caught in the quandary of signing on the spot a standard
employment clearance for the furious Jacinto sans any information on his outstanding accountabilities,
and refusing to so sign but risk alarming or scandalizing RBSJI, its employees and clients. Contrary to
the respondents allegation, the petitioner did not concede to Jacintos demands. He was, in fact, able to
equalize two equally undesirable options by bargaining to instead clear Jacinto only of his settled
financial obligations after proper verification with branch cashier Lily. It was only after Lily confirmed
Jacintos recorded payments that the petitioner signed the clearance. The absence of an audit was
precisely what impelled the petitioner to decline signing a standard employment clearance to Jacinto and
instead issue a different one pertaining only to his paid accountabilities.

The petitioner is entitled to separation pay in lieu of reinstatement and his back wages shall earn legal
interest.

Under these circumstances, it cannot be concluded that the petitioner was in any way prompted by
malicious motive in issuing the clearance. He was also able to ensure that RBSJIs interests are
protected and that Jacinto is pacified. He did what any person placed in a similar situation can prudently
do. He was able to competently evaluate and control Jacintos demands and thus prevent compromising
RBSJIs image, employees and clients to an alarming scene.
The Court has repeatedly emphasized that the act that breached the trust must be willful such that it was
done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.38 The conditions under which the clearance was
issued exclude any finding of deliberate or conscious effort on the part of the petitioner to prejudice his
employer.
Also, the petitioner did not commit an irregular or prohibited act. He did not falsify or misrepresent any
company record as it was officially confirmed by Lily that the items covered by the clearance were truly
settled by Jacinto. Hence, the respondents had no factual basis in declaring that the petitioner violated
Category B Grave Offense No. 1 of the Company Code of Conduct and Discipline.
The respondents cannot capitalize on the petitioners lack of authority to issue a clearance to resigned
employees. First, it remains but an unsubstantiated allegation despite the several opportunities for them
in the proceedings below to show, through bank documents, that the petitioner is not among those
officers so authorized. Second, it is the Courts considered view that by virtue of the petitioners stature in
respondent bank, it was well-within his discretion to sign or certify the truthfulness of facts as they appear
in RBSJIs records. Here, the records of RBSJI cashier Lily clearly showed that Jacinto paid the cash
advances and salary loan covered by the clearance issued by the petitioner.
Lastly, the seven-month gap between the clearance incident and the April 17, 1997 memorandum asking
the petitioner to explain his action is too lengthy to be ignored. It likewise remains uncontroverted that
during such period, respondent Jesus verbally terminated the petitioner only to recall the same and
instead ask the latter to tender a resignation letter. When the petitioner refused, he was sent the
memorandum questioning his issuance of a clearance to Jacinto seven months earlier. The confluence of
these undisputed circumstances supports the inference that the clearance incident was a mere
afterthought used to gain ground for the petitioners dismissal.
Loss of trust and confidence as a ground for dismissal has never been intended to afford an occasion for
abuse because of its subjective nature. It should not be used as a subterfuge for causes which are
illegal, improper and unjustified. It must be genuine, not a mere afterthought intended to justify an earlier
action taken in bad faith.39
All told, the unsubstantiated claims of the respondents fall short of the standard proof required for valid
termination of employment. They failed to clearly and convincingly establish that the petitioners act of
issuing a clearance to Jacinto rendered him unfit to continue working for RBSJI. The petitioner was

In accordance with current jurisprudence, the award of back wages shall earn legal interest at the rate of
six percent (6%) per annum from the date of the petitioners illegal dismissal until the finality of this
decision.41 Thereafter, it shall earn 12% legal interest until fully paid 42 in accordance with the guidelines in
Eastern Shipping Lines, Inc., v. Court of Appeals.43
In addition to his back wages, the petitioner is also entitled to separation pay. It cannot be gainsaid that
animosity and antagonism have been brewing between the parties since the petitioner was gradually
eased out of key positions in RBSJI and to reinstate him will only intensify their hostile working
atmosphere.44 Thus, based on strained relations, separation pay equivalent to one (1) month salary for
every year of service, with a fraction of a year of at least six (6) months to be considered as one (1)
whole year, should be awarded in lieu of reinstatement, to be computed from date of his engagement by
RBSJI up to the finality of this decision.45
The award of separation pay in case of strained relations is more beneficial to both parties in that it
liberates the employee from what could be a highly oppressive work environment in as much as it
releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it
could no longer trust.46
The award of moral and exemplary damages is not warranted.
In M+W Zander Philippines, Inc. v. Enriquez, 47 the Court decreed that illegal dismissal, by itself alone,
does not entitle the dismissed employee to moral damages; additional facts must be pleaded and proven
to warrant the grant of moral damages, thus:
Moral damages are recoverable only where the dismissal of the employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy. Such an award cannot be justified solely upon the premise that the employer
fired his employee without just cause or due process. Additional facts must be pleaded and proven to
warrant the grant of moral damages under the Civil Code, i.e., that the act of dismissal was attended by
bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals,
good customs or public policy; and, of course, that social humiliation, wounded feelings, grave anxiety,
and similar injury resulted therefrom.48 (Citations omitted)
Bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral
obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest
or ill will; it partakes of the nature of fraud.49
Here, the petitioner failed to prove that his dismissal was attended by explicit oppressive, humiliating or
demeaning acts. The following events merely sketch the struggle for power within the upper
management of RBSJI between the "old guys" and the "new guys"; they do not convincingly prove that
the respondents schemed to gradually ease the petitioner out, viz: (1) his promotion as Vice-President;
(2) his replacement by Jobel as Personnel and Marketing Manager; (2) his designation as Acting
Manager of N. Domingo branch and the recall thereof on the very next day; (3) the presence of Andres,
Jose and Ofelia at the N. Domingo branch in the morning of

September 27, 1996; and (4) Georges inaction on the petitioners request to be transferred to the
operations or marketing department. As disagreeable as they may seem, these acts cannot be equated
with bad faith that can justify an award of damages.
Since no moral damages can be granted under the facts of the case, exemplary damages cannot also be
awarded.50
The solidary liability of individual respondents as corporate officers must be recalled.
In the same vein, the individual respondents cannot be made solidarily liable with RBSJI for the illegal
dismissal. Time and again, the Court has held that a corporation has its own legal personality separate
and distinct from those of its stockholders, directors or officers. Hence, absent any evidence that they
have exceeded their authority, corporate officers are not personally liable for their official acts. Corporate
directors and officers may be held solidarily liable with the corporation for the termination of employment
only if done with malice or in bad faith. 51 As discussed above, the acts imputed to the respondents do not
support a finding of bad faith.
In addition, the lack of a valid cause for the dismissal of an employee does not ipso facto mean that the
corporate officers acted with malice or bad faith. There must be an independent proof of malice or bad
faith,52 which is absent in the case at bar.
The award of 13th month pay is ncorrect.
Being a managerial employee, the petitioner is not entitled to 13th month pay.1wphi1 Pursuant to
Memorandum Order No. 28, as implemented by the Revised Guidelines on the Implementation of the
13th Month Pay Law dated November 16, 1987, managerial employees are exempt from receiving such
benefit without prejudice to the granting of other bonuses, in lieu of the 13th month pay, to managerial
employees upon the employers discretion.53
The award of attorneys fees is proper.
It is settled that where an employee was forced to litigate and, thus, incur expenses to protect his rights
and interest, the award of attorneys fees is legally and morally justifiable. 54 Pursuant to Article 111 of the
Labor Code, ten percent (10%) of the total award is the reasonable amount of attorneys fees that can be
awarded.
WHEREFORE, the petition is GRANTED. The Decision dated February 21, 2008 and Resolution dated
June 3, 2008 of the Court of Appeals in CA-G.R. SP No. 94690 are REVERSED and SET ASIDE. The
Decision of the Labor Arbiter dated November 27, 1998 is REINSTATED with the following
MODIFICATIONS/CLARIFICATIONS: Petitioner Rolando DS. Torres is entitled to the payment of: (a)
back wages reckoned from May 30, 1997 up to the finality of this Decision, with interest at six percent
(6%) per annum, and 12% legal interest thereafter until fully paid; and (b) in lieu of reinstatement,
separation pay equivalent to one (1) month salary for every year of service, with a fraction of at least six
(6) months to be considered as one (1) whole year, to be computed from the date of his employment up
to the finality of this decision.
The amounts awarded as moral damages, exemplary damages and 13th month pay are DELETED. Only
respondent Rural Bank of San Juan, Inc. is liable for the illegal dismissal and the consequential monetary
awards arising therefrom. The other portions of and monetary awards in the Labor Arbiter's Decision
dated November 27, 1998 are AFFIRMED.

G.R. No. 191459

Petitioners added that an administrative investigation 5 of the sexual harassment complaint was in fact
conducted by Bio Research but before it could be resolved, Jose resigned on April 15, 2005.6

January 17, 2011

BERNADETH
LONDONIO
AND
JOAN
vs.
BIO RESEARCH, INC. AND WILSON Y. ANG, Respondents.

CORCORO,

To refute Bio Researchs claim that it had been incurring business losses, Joan cited the
recommendation for her regularization on April 12, 2005, 18 days before she received a copy of the
Memorandum of April 30, 2005.

Petitioners,

Bio Research, disclaiming that the sexual harassment case had anything to do with its decision to
terminate the services of petitioners, maintained that financial reverses prompted it to take such drastic
action. It went on to stress that as Joan had already received her separation pay and had in fact signed a
waiver and quitclaim in its favor, she is estopped from challenging the validity of her dismissal.

DECISION
CARPIO MORALES, J.:
Petitioners Bernadeth E. Londonio (Bernadeth) and Joan T. Corcoro (Joan) were hired by respondent Bio
Research Inc. (Bio Research) as graphic/visual artists on February 12 and October 19, 2004,
respectively.
In a Memorandum dated April 30, 2005 which petitioners received on May 7, 2005, 1 Bio Research
informed its employees including petitioners that pursuant to its plan to reduce the workforce in order to
prevent losses, it would be severing their employment with the company. On May 9, 2005, Bio Research
filed an Establishment Termination Report 2 with the Department of Labor and Employment (DOLE)
stating that it was retrenching 18 of its employees including petitioners due to redundancy and to prevent
losses.
Bernadeth and Joan were in fact retrenched on May 26 and May 18, 2005, respectively.
Joan accepted her retrenchment pay in the sum of P9,990.14 and executed a Quitclaim and Waiver
reading:

By Decision of March 31, 2006,7 the Labor Arbiter (LA) ruled in favor of petitioners, the dispositive portion
of which reads:
WHEREFORE, premises considered, judgment is entered finding that complainants were illegally
dismissed by respondents in bad faith, ORDERING respondents BIO RESEARCH CORP. and/or
WILSON ANG (President/Manager), to reinstate complainants to their former positions, without loss of
seniority rights and benefits, and pay them full backwages from date of illegal dismissal/illegal
retrenchments of complainants, Bernadette Londonio on 05/26/2005, Joan Corcoro is 05/18/2005, until
actually reinstated, and to pay them moral and exemplary damages in the combined amount of
P125,000.00 each, plus to pay them 10% of the total award as attorneys fees. Complainants full
backwages, as of date of this decision is shown hereunder:
Bernadette Londonio

FOR AND IN CONSIDERATION OF THE SUM OF NINE THOUSAND NINE HUNDRED NINETY PESOS
& 14/100 (P9,990.14), as financial assistance, receipt whereof in settlement of my claims, I x x x do
hereby release/discharge xxx with principal office at x x x and/or its officers, from any or all
claims/liabilities by way of unpaid wages, overtime pay, separation pay, retirement benefits, 13th month,
or otherwise as may be due me incident to my past employment with the said x x x. I hereby state further
that I have no more claim or cause of action of whatsoever nature whether past, present or contingent,
including my alleged right for continued employment with xxx, and/or any of its officers.
This QUITCLAIM AND WAIVER may be used to secure dismissal of any complaint or action already filed
or may be subsequently filed either by myself, my heirs and successors in interests.

1wphi1
1) Basic

P95,000.00

(05/26/2005-03/31/2006 10 months x P9,500)

2) 13th month pay

P7,307.69

(1/12 P95,000.00)

3) 5 days SILP

P1,314.16

(P9,500.00/30=P316.66 x 5 x .83 year)

4) COLA

P15,208.33

(P50.00 X 365/12 P1,520.00 X 10months)

Total FB

P118,830.18

Joan Corcoro

I have executed this QUITCLAIM AND WAIVER voluntarily and of my own freewill and I understand the
legal and factual consequences.

1) Basic

P93,600.00

(05/18/2005 03/31/2006 10.4 months x P9,000)

2) 13th month pay

P7,800.00

(1/12 P93,600.00)

<="" p="">

3) 5 days SILP

P1,290.00

(P9,000.00/30 = P300.00 X 5 X .86 YEAR)

4) COLA

P15,816.66

(P50.00 X 365/12+p1,520.00 X 10.4 Months)

Total FB

P118,506.66

Petitioners later filed a complaint for illegal dismissal, moral and exemplary damages and attorneys fees
against respondent Bio Research and its co-respondent President/CEO Wilson Y. Ang (Ang). Petitioners
claimed that their dismissal was done in bad faith and tainted with malice, being retaliatory in nature,
following the filing by Bernadeth of a complaint against Jose Ang, Jr. (Jose), one of Bio Researchs
managers, for a sexual harassment incident that occurred in his office on February 19, 2005.
In support of their claim that their dismissal was retaliatory in nature, petitioners alleged that soon after
the filing by Bernadeth of the sexual harassment complaint, 4 several members of the management
approached Joan, to whom Bernadeth had poured her heart out after the incident, urging her to convince
her friend Bernadeth to drop the complaint, to which she (Joan) paid no heed as she expressed support
for Bernadeths cause.

In finding against Bio Research, the LA held that it failed to prove financial losses to justify its call for the
retrenchment of petitioners, and to use fair and reasonable criteria to ascertain who to dismiss or retain;
and that Bio Research failed to comply with the requirements of Article 283 of the Labor Code that
notice should be given to the DOLE and employees concerned at least a month before the intended
retrenchment.
Finally, the LA held that since Joans receipt of her salary for the period April 11, 2005 April 18, 2005,
the amount which was lumped with her retrenchment pay, was conditioned on her signing the quitclaim,
the execution thereof was done through force, hence, not valid.

On appeal by respondents, the National Labor Relations Commission (NLRC), by Resolution of February
18, 2008,8 affirmed the LAs decision. And it denied respondents reconsideration of its decision by
Resolution of May 30, 2008.
The Court of Appeals to which respondents assailed the NLRC resolutions by certiorari, sustained the
ratio decidendi behind the NLRC decision in favor of petitioners, by Decision of May 27, 2009. 9
Specifically with respect to Joan, however, it pronounced that she could no longer question the legality of
her dismissal in light of her execution of the quitclaim and waiver.
Further, the appellate court departed from the NLRC ruling holding respondent Ang solidarily liable with
Bio Research for the money claims of petitioners, the latter having failed to show that Ang was impelled
by malice and bad faith in dismissing them. Thus the appellate court held:
Settled is the rule in this jurisdiction that a corporation is invested by law with a legal personality separate
and distinct from those acting for and in behalf and, in general, from the people comprising it. Thus,
obligations incurred by corporate officers acting as corporate agents are not theirs but the direct
accountabilities of the corporation they represent. True, solidary liabilities may at times be incurred by
corporate officers, but only when exceptional circumstances so warrant. For instance, in labor cases,
corporate directors and officers may be held solidarily liable with the corporation for the termination of
employment if done with malice or in bad faith.10

Verily, in determining that petitioners were illegally retrenched, the appellate court pointed out that not
only did Bio Research fail to "submit in evidence its audited financial statements to show its financial
condition prior to and at the time it enforced its retrenchment program"; it also failed to show that it
adopted fair and reasonable standards in ascertaining who would be retained or dismissed among it
employees.16
It is, however, with respect to the appellate courts ruling that Joan is, on account of her execution of the
waiver and quitclaim, estopped from questioning her dismissal that this Court takes exception.
An employees execution of a final settlement and receipt of amounts agreed upon do not foreclose his
right to pursue a claim for illegal dismissal. 17 For, as reflected above, Joan was illegally retrenched. She
is thus entitled to reinstatement without loss of seniority rights and privileges, as well as to payment of full
backwages from the time of her separation until actual reinstatement, less the amount of P9,990.14
which she received as retrenchment pay.
Respecting the appellate courts freeing Ang from liability, the same is in order.1wphi1 Corporate
officers, absent any evidence that they have exceeded their authority, are not personally liable for their
official acts. For a corporation has, by legal fiction a personality separate and distinct from its officers,
stockholders and members. In cases of illegal dismissal, this fictional veil may be pierced and its
directors and officers held solidarily liable with it, where the dismissals of its employees are done with
malice or in bad faith, which was not proven to be the case here.18

Finally, the appellate court deleted the award of moral and exemplary damages.11
The appellate court thus disposed:
WHEREFORE, the instant petition for certiorari is PARTIALLY GRANTED. The assailed Resolutions of
the public respondent National Labor Relations Commission, in NLRC NCR-06-05472(05) CA No.
050702-06, are AFFIRMED with the following MODIFICATIONS: (1) petitioner Wilson Y. Ang is
ABSOLVED from any liability adjudged against co-petitioner Bio Research, Inc.; (2) the awards of moral
and exemplary damages in favor of the private respondents Bernadeth E. Londonio and Joan Corcoro
are DELETED; and (3) the complaint for illegal dismissal insofar as private respondent Joan Corcoro is
concerned is DISMISSED.
SO ORDERED.12 (underscoring supplied)
Petitioners Motion for Reconsideration of the appellate courts decision having been denied, 13 they filed
the present petition for review on certiorari, contending that
. . . petitioner [Joan] is not barred to question the validity of her dismissal notwithstanding the execution
of a waiver and quitclaim;
. . . they are entitled to the award of damages; and
. . . Wilson Y. Ang is solidarily liable with Bio Research.
Absent any showing that the appellate court ignored, misconstrued and misapplied facts and
circumstances of substance, its affirmance of the NLRC decision holding that petitioners were illegally
dismissed stands. It is settled that where the Labor Arbiter, the NLRC and the Court of Appeals all concur
in their factual findings and it does not appear that they acted with grave abuse of discretion or otherwise
acted without jurisdiction or in excess of the same, this Court is bound by the said findings. 14 The Labor
Arbiter and the NLRC, being the most equipped and having acquired expertise in the specific matters
entrusted to their jurisdiction, their findings of fact are accorded not only respect but even finality if they
are supported by substantial evidence, or that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.15

As for the deletion by the appellate court of the award of moral and exemplary damages, the same is in
order too, petitioners having failed to substantiate their claim that their dismissal was made in bad faith.
WHEREFORE, the challenged Decision and Resolution of the Court of Appeals are AFFIRMED with the
MODIFICATION in that petitioner Joan Corcoro is ordered reinstated to her former position, without loss
of seniority rights and with full backwages from the time of the termination of her employment until
reinstated less the amount of P9,990.14, or if reinstatement is not possible, the payment of separation
pay equivalent to one half month salary for every year of service.
The Decision is, in all other respects, including the reinstatement of Bernadeth Londonio, AFFIRMED.

G.R. No. 183390

February 16, 2011

PLASTIMER
INDUSTRIAL
CORPORATION
and
TEO
KEE
BIN,
Petitioners,
vs.
NATALIA C. GOPO, KLEENIA R. VELEZ, FILEDELFA T. AMPARADO, MIGNON H. JOSEPH, AMELIA
L. CANDA, MARISSA D. LABUNOS, MELANIE T. CAYABYAB, MA. CORAZON DELA CRUZ, and
LUZVIMINDA CABASA, Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 13 August 2007 Decision 2 and 5 June 2008
Resolution3 of the Court of Appeals in CA-G.R. SP No. 97271.
The Antecedent Facts
On 7 May 2004, the Personnel and Administration Manager of Plastimer Industrial Corporation
(Plastimer) issued a Memorandum informing all its employees of the decision of the Board of Directors to
downsize and reorganize its business operations due to withdrawal of investments and shares of stocks
which resulted in the change of its corporate structure. On 14 May 2004, the employees of Plastimer,
including Natalia C. Gopo, Kleenia R. Velez, Filedelfa T. Amparado, Mignon H. Joseph, Amelia L. Canda,
Marissa D. Labunos, Melanie T. Cayabyab, Ma. Corazon dela Cruz and Luzviminda Cabasa
(respondents) were served written notices of their termination effective 13 June 2004. On 24 May 2004,
Plastimer and Plastimer Industrial Corporation Christian Brotherhood (PICCB), the incumbent sole and
exclusive collective bargaining representative of all rank and file employees, entered into a Memorandum
of Agreement (MOA) relative to the terms and conditions that would govern the retrenchment of the
affected employees. On 26 May 2004, Plastimer submitted to the Department of Labor and Employment
(DOLE) an Establishment Termination Report containing the list of the employees affected by the
reorganization and downsizing. On 28 May 2004, the affected employees, including respondents, signed
individual "Release Waiver and Quitclaim."
Thereafter, respondents filed a complaint against Plastimer and its President Teo Kee Bin (petitioners)
before the Labor Arbiter for illegal dismissal with prayer for reinstatement and full backwages,
underpayment of separation pay, moral and exemplary damages and attorneys fees. Respondents
alleged that they did not voluntarily relinquish their jobs and that they were required to sign the waivers
and quitclaims without giving them an opportunity to read them and without explaining their contents.
Respondents further alleged that Plastimer failed to establish the causes/valid reasons for the
retrenchment and to comply with the one-month notice to the DOLE as well as the standard prescribed
under the Collective Bargaining Agreement between Plastimer and the employees. Petitioners countered
that the retrenchment was a management prerogative and that respondents got their retrenchment or
separation pay even before the effective date of their separation from service.
The Decisions of the Labor Arbiter and the NLRC
In its 22 August 2005 Decision,4 the Labor Arbiter ruled that petitioners were able to prove that there was
a substantial withdrawal of stocks that led to the downsizing of the workforce. The Labor Arbiter ruled that
notice to the affected employees were given on 14 May 2004, 30 days before its effective date on 14
June 2004. It was only the notice to the DOLE that was filed short of the 30-day period. The Labor Arbiter
further ruled that respondents claimed their separation pay in accordance with the MOA. The Labor
Arbiter further ruled that respondents could not claim ignorance of the contents of the waivers and
quitclaims because they were assisted by the union President and their counsel in signing them.

Respondents appealed the Labor Arbiters decision before the National Labor Relations Commission
(NLRC).
In its 29 December 2005 Resolution,5 the NLRC affirmed the Labor Arbiters decision. The NLRC noted
that respondents did not signify any protest to the MOA entered into between Plastimer and PICCB. The
NLRC held that there was no proof that respondents were intimidated or coerced into signing the waivers
and quitclaims because they were assisted by the union President and their counsel. The NLRC ruled
that the filing of the complaint was just an afterthought on the part of respondents.
Respondents filed a motion for reconsideration.
In its 25 October 2006 Resolution,6 the NLRC denied the motion.
Respondents filed a petition for certiorari before the Court of Appeals.
The Decision of the Court of Appeals
In its 13 August 2007 Decision, the Court of Appeals reversed the NLRC decision. The Court of Appeals
ruled that there was no valid cause for retrenchment. The Court of Appeals noted that the change of
management and majority stock ownership was brought about by execution of deeds of assignment by
several stockholders in favor of other stockholders. Further, the Court of Appeals noted that while
Plastimer claimed financial losses from 2001 to 2004, records showed an improvement of its finances in
2003.
The Court of Appeals further ruled that Plastimer failed to use a reasonable and fair standard or criteria in
ascertaining who would be dismissed and who would be retained among its employees. The Court of
Appeals ruled that the MOA between Plastimer and PICCB only recognized the need for partial
retrenchment and the computation of retrenchment pay without disclosing the criteria in the selection of
the employees to be retrenched.
Finally, the Court of Appeals ruled that the union President and the PICCBs counsel were not present
when the retrenched employees were made to sign the waivers and quitclaims.
The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, the instant petition is GRANTED. The assailed Resolutions of the NLRC in NLRC-NCR
CA No. 046013-05 are hereby REVERSED AND SET ASIDE and a new judgment is entered finding
petitioners to have been illegally dismissed. Plastimer Industrial Corporation is hereby ordered to
reinstate petitioners to their former positions, without loss of seniority rights and other privileges, and to
pay them their backwages from June 14, 2004 up to the time of actual reinstatement less the amounts
they respectively received as separation pay.
SO ORDERED.7
Petitioners filed a motion for reconsideration.
In its 5 June 2008 Resolution, the Court of Appeals denied the motion.
Hence, the petition before this Court.
The Issue
The only issue in this case is whether respondents were illegally retrenched by petitioners.

The Ruling of this Court

The petition has merit.
Petitioners assail the Court of Appeals in substituting its own findings of facts to the findings of the Labor
Arbiter and the NLRC. Petitioners argue that the findings of fact of the Labor Arbiter and the NLRC are
accorded with respect if not finality. Petitioners allege that the Court of Appeals did not find any
arbitrariness or grave abuse of discretion on the part of the NLRC and thus, it had no basis in reversing
the NLRC resolutions which affirmed the Labor Arbiters decision.
In a special civil action for certiorari, the Court of Appeals has ample authority to make its own factual
determination.8 Thus, the Court of Appeals can grant a petition for certiorari when it finds that the NLRC
committed grave abuse of discretion by disregarding evidence material to the controversy. 9 To make this
finding, the Court of Appeals necessarily has to look at the evidence and make its own factual
determination.10 In the same manner, this Court is not precluded from reviewing the factual issues when
there are conflicting findings by the Labor Arbiter, the NLRC and the Court of Appeals. 11 In this case, we
find that the findings of the Labor Arbiter and the NLRC are more in accord with the evidence on record.

of P6,185,707.05 for 2003 was not even enough for petitioners to recover from the P52,904,297.88 loss
in 2002.15 Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the
management to meet clear and continuing economic threats or during periods of economic recession to
prevent losses.16 There is no need for the employer to wait for substantial losses to materialize before
exercising ultimate and drastic option to prevent such losses.17
Validity of Waivers and Quitclaims
The Court has ruled that a waiver or quitclaim is a valid and binding agreement between the parties,
provided that it constitutes a credible and reasonable settlement, and that the one accomplishing it has
done so voluntarily and with a full understanding of its import.18
We agree with the Labor Arbiter and the NLRC that respondents were sufficiently apprised of their rights
under the waivers and quitclaims that they signed. Each document contained the signatures of Edward
Marcaida (Marcaida), PICCB President, and Atty. Bayani Diwa, the counsel for the union, which proved
that respondents were duly assisted when they signed the waivers and quitclaims. Further, Marcaidas
letter to Teo Kee Bin, dated 28 May 2004, proved that proper assistance was extended upon
respondents, thus:

One-Month Notice of Termination of Employment

Article 283 of the Labor Code provides:
ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Department of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at
least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month
pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
In this case, Plastimer submitted the notice of termination of employment to the DOLE on 26 May 2004.
However, notice to the affected employees were given to them on 14 May 2004 or 30 days before the
effectivity of their termination from employment on 13 June 2004. While notice to the DOLE was short of
the one-month notice requirement, the affected employees were sufficiently informed of their
retrenchment 30 days before its effectivity. Petitioners failure to comply with the one-month notice to the
DOLE is only a procedural infirmity and does not render the retrenchment illegal. In Agabon v. NLRC,12
we ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify the
dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for the
violation of his statutory rights.13 Here, the failure to fully comply with the one-month notice of termination
of employment did not render the retrenchment illegal but it entitles respondents to nominal damages.
Validity of Retrenchment
The Court of Appeals ruled that there was no valid cause for retrenchment.1avvphil The Court of Appeals
noted that while Plastimer claimed financial losses from 2001 to 2004, records showed an improvement
of its finances in 2003.
We do not agree.
The Court of Appeals acknowledged that an independent auditor confirmed petitioners losses for the
years 2001 and 2002.14 The fact that there was a net income in 2003 does not justify the Court of
Appeals ruling that there was no valid reason for the retrenchment. Records showed that the net income

Nais po naming iparating sa inyo na ginagampanan ng pamamahala ng unyon ang kanilang tungkulin
lalo na sa pag "assist" ng mga miyembrong kasali sa retrenchment program at tumanggap ng kanilang
separation pay sa ilalim ng napagkasunduang "Memorandum of Agreement."
Naipaliwanag po sa bawat miyembro ang epekto ng kanilang pagtanggap ng kanilang mga separation
pay. Wala kaming natanggap na masamang reaksiyon nang sila ay aming makausap at kanilang
naiintindihan ang sitwasyon ng kumpanya.19
Hence, we rule that the waivers and quitclaims that respondents signed were valid.
WHEREFORE, we SET ASIDE the 13 August 2007 Decision and 5 June 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 97271. We REINSTATE the 22 August 2005 Decision of the Labor Arbiter
and the 29 December 2005 Resolution of the NLRC upholding the validity of respondents retrenchment
with MODIFICATION that petitioners pay each of the respondents the amount of P30,000 as nominal
damages for non-compliance with statutory due process.

G.R. No. 190001

March 23, 2011

GENUINO ICE COMPANY, INC., HECTOR S. GENUINO and EDGAR A. CARRIAGA, Petitioners,
vs.
ERIC Y. LAVA and EDDIE BOY SODELA, Respondents.

petitioners failed to prove that GICI incurred or was about to incur financial losses leading to the
retrenchment it undertook; no documentary evidence was in fact presented to support the retrenchment
claim.9 The CA also found no malice or bad faith on the part of Hector S. Genuino, president of Genuino
Ice Company, Inc., to hold him solidarily liable with the corporation for illegal dismissal.
After the denial of their motion for reconsideration, the petitioners came to this Court through the present
petition on the sole issue of whether there had been a valid retrenchment (and hence, a valid termination
of the respondents service).

RESOLUTION
THE COURTS RULING
BRION, J.:
We dismiss the petition for lack of merit.
Before us is the petition for review on certiorari filed by petitioners Genuino Ice Company, Inc. (GICI),
Hector S. Genuino and Edgar A. Carriaga (collectively, petitioners) to challenge the Court of Appeals
(CA) Decision1 and Resolution2 in CA-G.R. No. SP 109429. These CA dispositions, in turn, affirmed the
decision3 and resolution4 of the National Labor Relations Commission (NLRC ) in NLRC CA No. 04947706.

Under Article 283 of the Labor Code, there are three (3) basic requisites for a valid retrenchment,
namely: (a) proof that the retrenchment is necessary to prevent losses or impending losses; (b) service of
written notices to the employees and to the DOLE at least one (1) month prior to the intended date of
retrenchment; and (c) payment of separation pay equivalent to one (1) month pay, or at least one-half
(1/2) month pay for every year of service, whichever is higher.

THE FACTUAL ANTECEDENTS

Petitioner GICI hired the respondents Eric Y. Lava and Eddie Boy Sodela (respondents) as ice plant
machine operators. Sometime in March 2005,5 due to the continuous decline of demand for ice products,
the company was forced to shut down a part of its plant facilities and operations, and to implement a
work rotation or reduction of workdays program affecting its seven (7) workers (including the present
respondents).
On September 30, 2005, GICI, through its personal manager, issued a memorandum ordering the
deletion of the respondents names from the work schedule. The memorandum had the effect of banning
the respondents from entering the company premises. The respondents reacted to this move by filing a
complaint for illegal dismissal with the Labor Arbiter (LA).
The petitioners alleged that the respondents were contractual employees who were under the control of
VICAR General Contractor & Management Services (VICAR), and L.C. Moreno General Contractor &
Management Services (MORENO). They argue that there is no employer-employee relationship between
GICI and the respondents so that the latter have no cause of action against the petitioners. Also, the
petitioners reason that due to the partial shut-down of the company, GICI was excused from complying
with the 30-day notice or clearance requirement under the law.
The LA rejected the petitioners argument and declared that the respondents adduced convincing
evidence that they were the employees of GICI. The LA went on to say that VICAR was engaged in
"management services" and merely supplied or processed workers for GICI, in a manner akin to the
services of a labor-only contractor.6 In this sense, the LA believed that GICIs liability in the illegal
dismissal is solidary with that of VICAR and MORENO.
Notwithstanding the observation that an arrangement akin to labor-only contracting existed, the LA ruled
that the respondents were validly retrenched. The LA reasoned out that due to the continuous decline in
the sales output of the ice plant, the temporary shut down had become permanent and GICI had no
alternative but to trim-down its manpower requirements. 7 However, the LA also found that GICI failed to
comply with the procedural requirements for a valid retrenchment. Hence, he awarded the respondents
their separation pay equivalent to one-half (1/2) month salary for every year of service in accordance with
Art. 283 of the Labor Code.
On appeal, the NLRC reversed the LAs decision and found that the respondents were illegally dismissed
from service.
The petitioners responded to the NLRCs adverse decision through a petition for certiorari8 under Rule 65
before the CA. The CA saw no grave abuse of discretion in the NLRCs decision, observing that the

We see no reason to reverse the NLRC and CA findings that no documentary evidence exists in the
records to substantiate the claimed business losses; in fact, the petitioners also failed to show its
financial conditions prior to and at the time GICI enforced its retrenchment program. In the absence of
any attendant grave abuse of discretion, these findings are entitled not only to respect but to our final
recognition in this appellate review.
The CA was also correct in affirming the NLRCs award of full backwages and separation pay in lieu of
reinstatement. In FF Marine Corporation v. NLRC, 10 we ruled that an illegally dismissed employee is
entitled to reinstatement without loss of seniority rights and to other established employment privileges,
and to his full backwages. In the event, reinstatement is no longer feasible, the employer must pay him
his separation pay.
In the present case, the respondents were illegally dismissed as the employer failed to prove that their
dismissal was for a duly authorized cause. The CA was thus correct in awarding them full backwages and
separation pay in lieu of reinstatement since the positions the respondents formerly held no longer
exist.1awphi1
We must however modify the CA decision to reflect the correct monetary award due to the respondents.
The dispositive portion of the CA decision is incomplete as it failed to specify the separation pay to be
awarded to the respondents as well as the reckoning point for the computation of the backwages. FF
Marine Corporation11 tells us that the separation pay shall be computed at one (1) month pay (for those
with one year or less of service), or one-half (1/2) month pay for every year of service (for those with
more than a year of service), whichever is higher, a fraction of at least six (6) months being considered
one whole year.12 The backwages shall be computed from the date of termination of service (September
30, 2005) until the finality of this Courts decision.
WHEREFORE, we hereby DISMISS the petition for lack of merit. The August 24, 2009 Decision and the
October 22, 2009 Resolution of the Court of Appeals in CA-G.R. No. SP 109429 affirming the ruling of
the NLRC in NLRC CA No. 049477-06 are hereby AFFIRMED, with MODIFICATION that Eric Lava shall
be awarded full backwages from September 30, 2005 until the finality of this Courts Decision. Separation
pay in lieu of reinstatement shall be computed at 1 month pay for every year of service, with years of
service reckoned from the respondents first day of employment up to the finality of this Decision. Costs
against the petitioners.

G.R. No. 164016

After the submission of the parties respective position papers, the Labor Arbiter rendered his Decision 5
dated November 16, 1999 finding Capor guilty of serious misconduct which is a just cause for
termination.

March 15, 2010

RENO
FOODS,
INC.,
and/or
VICENTE
KHU,
Petitioners,
vs.
Nagkakaisang Lakas ng Manggagawa (NLM) - KATIPUNAN on behalf of its member, NENITA
CAPOR, Respondent.

The Labor Arbiter noted that Capor was caught trying to sneak out six cans of Reno products without
authority from the company. Under Article 232 of the Labor Code, an employer may terminate the
services of an employee for just cause, such as serious misconduct. In this case, the Labor Arbiter found
that theft of company property is tantamount to serious misconduct; as such, Capor is not entitled to
reinstatement and backwages, as well as moral and exemplary damages.

DECISION
Moreover, the Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who
commits theft of company property may be validly terminated and consequently, the said employee is not
entitled to separation pay.6

DEL CASTILLO, J.:

There is no legal or equitable justification for awarding financial assistance to an employee who was
dismissed for stealing company property. Social justice and equity are not magical formulas to erase the
unjust acts committed by the employee against his employer. While compassion for the poor is desirable,
it is not meant to coddle those who are unworthy of such consideration.
1

Ruling of the National Labor Relations Commission

On appeal, the NLRC affirmed the factual findings and monetary awards of the Labor Arbiter but added
an award of financial assistance. The decretal portion of the September 20, 2002 Decision 7 reads:

This Petition for Review on Certiorari assails the June 3, 2004 Decision of the Court of Appeals (CA) in
CA-G.R. SP No. 76789 which denied the petition for certiorari filed by the petitioners and affirmed the
award of financial assistance to respondent Nenita Capor.
Factual Antecedents

WHEREFORE, premises considered, the decision under review is hereby MODIFIED by granting an
award of financial assistance in the form of separation pay equivalent to one-half month pay for every
year of service. In all other respects the decision stands affirmed. All other claims of the complainant are
dismissed for lack of merit.8

Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products of which Vicente
Khu is the president and is being sued in that capacity. Respondent Nenita Capor (Capor) was an
employee of Reno Foods until her dismissal on October 27, 1998.

Both parties moved for a reconsideration of the NLRC Decision. Petitioners asked that the award of
financial assistance be deleted, while Capor asked for a finding of illegal dismissal and for reinstatement
with full backwages.9

It is a standard operating procedure of petitioner-company to subject all its employees to reasonable

search of their belongings upon leaving the company premises. On October 19, 1998, the guard on duty
found six Reno canned goods wrapped in nylon leggings inside Capors fabric clutch bag. The only other
contents of the bag were money bills and a small plastic medicine container.

On February 28, 2003, the NLRC issued its Resolution 10 denying both motions for reconsideration for
lack of merit.

Petitioners accorded Capor several opportunities to explain her side, often with the assistance of the
union officers of Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan. In fact, after petitioners sent
a Notice of Termination to Capor, she was given yet another opportunity for reconsideration through a
labor-management grievance conference held on November 17, 1999. Unfortunately, petitioners did not
find reason to change its earlier decision to terminate Capors employment with the company.
On December 8, 1998, petitioners filed a complaint-affidavit against Capor for qualified theft in the Office
of the City Prosecutor, Malabon-Navotas Substation. On April 5, 1999, a Resolution 3 was issued finding
probable cause for the crime charged. Consequently, an Information was filed against Capor docketed as
Criminal Case No. 207-58-MN.
Meanwhile, the Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan filed on behalf of Capor a
complaint4 for illegal dismissal and money claims against petitioners with the Head Arbitration Office of
the National Labor Relations Commission (NLRC) for the National Capital Region. The complaint prayed
that Capor be paid her full backwages as well as moral and exemplary damages. The complaint was
docketed as NLRC NCR Case No. 00-01-00183-99.

Ruling of the Court of Appeals

Aggrieved, petitioners filed a Petition for Certiorari11 before the CA imputing grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the NLRC for awarding financial assistance to
Capor.
Citing Philippine Long Distance Telephone Company v. National Labor Relations Commission, 12
petitioners argued that theft of company property is a form of serious misconduct under Article 282(a) of
the Labor Code for which no financial assistance in the form of separation pay should be allowed.
Unimpressed, the appellate court affirmed the NLRCs award of financial assistance to Capor. It stressed
that the laborers welfare should be the primordial and paramount consideration when carrying out and
interpreting provisions of the Labor Code. It explained that the mandate laid down in Philippine Long
Distance Telephone Company v. National Labor Relations Commission 13 was not absolute, but merely
directory.
Hence, this petition.

Ruling of the Labor Arbiter

Issue

In the proceedings before the Labor Arbiter, Capor alleged that she was unaware that her clutch bag
contained the pilfered canned products. She claimed that petitioners might have planted the evidence
against her so it could avoid payment of her retirement benefits, as she was set to retire in about a years
time.

The issue before us is whether the NLRC committed grave abuse of discretion amounting to lack or
excess of jurisdiction in granting financial assistance to an employee who was validly dismissed for theft
of company property.

Our Ruling

SO ORDERED.17

We grant the petition.

In Nicolas v. National Labor Relations Commission, 18 we held that a criminal conviction is not necessary
to find just cause for employment termination. Otherwise stated, an employees acquittal in a criminal
case, especially one that is grounded on the existence of reasonable doubt, will not preclude a
determination in a labor case that he is guilty of acts inimical to the employers interests. 19

Conviction in a criminal case is not necessary to find just cause for termination of employment.
On the date that the appellate court issued its Decision, Capor filed a Manifestation 14 informing the CA of
her acquittal in the charge of qualified theft. The dispositive portion of said Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered acquitting Nenita Capor of the crime
charged against her in this case on the ground of reasonable doubt with costs de oficio.
Capor thus claims that her acquittal in the criminal case proves that petitioners failed to present
substantial evidence to justify her termination from the company. She therefore asks for a finding of illegal
dismissal and an award of separation pay equivalent to one month pay for every year of service.
On the other hand, petitioners argue that the dismissal of a criminal action should not carry a
corresponding dismissal of the labor action since a criminal conviction is unnecessary in warranting a
valid dismissal for employment.
Petitioners further maintain that the ruling in Philippine Long Distance Telephone Company v. National
Labor Relations Commission15 regarding the disallowance of separation pay for those dismissed due to
serious misconduct or moral turpitude is mandatory. Petitioners likewise argue that in Zenco Sales, Inc. v.
National Labor Relations Commission,16 the Supreme Court found grave abuse of discretion on the part
of the NLRC when it ignored the principles laid down in the Philippine Long Distance Telephone
Company v. National Labor Relations Commission. Thus, petitioners pray for the reversal of the CA
Decision and reinstatement of the Labor Arbiters Decision dated November 16, 1999.
Capor was acquitted in Criminal Case No. 207-58-MN based on reasonable doubt. In his Decision, the
trial judge entertained doubts regarding the guilt of Capor because of two circumstances: (1) an ensuing
labor dispute (though it omitted to state the parties involved), and (2) the upcoming retirement of Capor.
The trial judge made room for the possibility that these circumstances could have motivated petitioners to
plant evidence against Capor so as to avoid paying her retirement benefits. The trial court did not
categorically rule that the acts imputed to Capor did not occur. It did not find petitioners version of the
event as fabricated, baseless, or unreliable. It merely acknowledged that seeds of doubt have been
planted in the jurors mind which, in a criminal case, is enough to acquit an accused based on reasonable
doubt. The pertinent portion of the trial courts Decision reads:
During the cross examination of the accused, she was confronted with a document that must be related
to a labor dispute. x x x The Court noted very clearly from the transcript of stenographic notes that it must
have been submitted to the NLRC. This is indicative of a labor dispute which, although not claimed
directly by the accused, could be one of the reasons why she insinuated that evidence was planted
against her in order to deprive her of the substantial benefits she will be receiving when she retires from
the company. Incidentally, this document was never included in the written offer of evidence of the
prosecution.
Doubt has, therefore, crept into the mind of the Court concerning the guilt of accused Nenita Capor which
in this jurisdiction is mandated to be resolved in favor of her innocence.
Pertinent to the foregoing doubt being entertained by this Court, the Court of Appeals citing People v.
Bacus, G.R. No. 60388, November 21, 1991: "the phrase beyond reasonable doubt means not a single
iota of doubt remains present in the mind of a reasonable and unprejudiced man that a person is guilty of
a crime. Where doubt exists, even if only a shred, the Court must and should set the accused free."
(People v. Felix, CA-G.R. No. 10871, November 24, 1992)
WHEREFORE, premises considered, judgment is hereby rendered acquitting accused Nenita Capor of
the crime charged against her in this case on the ground of reasonable doubt, with costs de oficio.

Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial
evidence, which means such relevant evidence as a
reasonable mind might accept as adequate to justify a conclusion. 20 The evidence in this case was
reviewed by the appellate court and two labor tribunals endowed with expertise on the matter the Labor
Arbiter and the NLRC. They all found substantial evidence to conclude that Capor had been validly
dismissed for dishonesty or serious misconduct. It is settled that factual findings of quasi-judicial
agencies are generally accorded respect and finality so long as these are supported by substantial
evidence. In the instant case, we find no compelling reason to doubt the common findings of the three
reviewing bodies.
The award of separation pay is not warranted under the law and jurisprudence.
We find no justification for the award of separation pay to Capor. This award is a deviation from
established law and jurisprudence. 21
The law is clear. Separation pay is only warranted when the cause for termination is not attributable to
the employees fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in
cases of illegal dismissal in which reinstatement is no longer feasible. 22 It is not allowed when an
employee is dismissed for just cause,23 such as serious misconduct.
Jurisprudence has classified theft of company property as a serious misconduct and denied the award of
separation pay to the erring employee. 24 We see no reason why the same should not be similarly applied
in the case of Capor. She attempted to steal the property of her long-time employer. For committing such
misconduct, she is definitely not entitled to an award of separation pay.
It is true that there have been instances when the Court awarded financial assistance to employees who
were terminated for just causes, on grounds of equity and social justice. The same, however, has been
curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor Relations
Commission.25 In that case, we recognized the harsh realities faced by employees that forced them,
despite their good intentions, to violate company policies, for which the employer can rightfully terminate
their employment. For these instances, the award of financial assistance was allowed. But, in clear and
unmistakable language, we also held that the award of financial assistance shall not be given to validly
terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral
character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial
assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest
act, but an endorsement thereof. It will be an insult to all the laborers who, despite their economic
difficulties, strive to maintain good values and moral conduct.
In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National
Labor Relations Commission,26 we ruled that separation pay shall not be granted to all employees who
are dismissed on any of the four grounds provided in Article 282 of the Labor Code. Such ruling was
reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v. Diasnes: 27
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of
separation pay based on social justice when an employees dismissal is based on serious misconduct or
willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a
crime against the person of the employer or his immediate family grounds under Art. 282 of the Labor
Code that sanction dismissals of employees. They must be most judicious and circumspect in awarding
separation pay or financial assistance as the constitutional policy to provide full protection to labor is not
meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor

should not embarrass us from sustaining the employers when they are right, as here. In fine, we should
be more cautious in awarding financial assistance to the undeserving and those who are unworthy of the
liberality of the law.1avvphi1
We are not persuaded by Capors argument that despite the finding of theft, she should still be granted
separation pay in light of her long years of service with petitioners. We held in Central Pangasinan
Electric Cooperative, Inc. v. National Labor Relations Commission28 that:
Although long years of service might generally be considered for the award of separation benefits or
some form of financial assistance to mitigate the effects of termination, this case is not the appropriate
instance for generosity x x x. The fact that private respondent served petitioner for more than twenty
years with no negative record prior to his dismissal, in our view of this case, does not call for such award
of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If
an employees length of service is to be regarded as justification for moderating the penalty of dismissal,
such gesture will actually become a prize for disloyalty, distorting the meaning of social justice and
undermining the efforts of labor to clean its ranks of undesirables.
Indeed, length of service and a previously clean employment record cannot simply erase the gravity of
the betrayal exhibited by a malfeasant employee. 29 Length of service is not a bargaining chip that can
simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where
both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee
well, has accorded him fairness and adequate compensation as determined by law, it is only fair to
expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may
be said that betrayal by a long-time employee is more insulting and odious for a fair employer. As stated
in another case:
x x x The
betrayal of
dishonesty
been more
years.30

fact that [the employer] did not suffer pecuniary damage will not obliterate respondents
trust and confidence reposed by petitioner. Neither would his length of service justify his
or mitigate his liability. His length of service even aggravates his offense. He should have
loyal to petitioner company from which he derived his family bread and butter for seventeen

While we sympathize with Capors plight, being of retirement age and having served petitioners for 39
years, we cannot award any financial assistance in her favor because it is not only against the law but
also a retrogressive public policy. We have already explained the folly of granting financial assistance in
the guise of compassion in the following pronouncements:
x x x Certainly, a dishonest employee cannot be rewarded with separation pay or any financial benefit
after his culpability is established in two decisions by competent labor tribunals, which decisions appear
to be well-supported by evidence. To hold otherwise, even in the name of compassion, would be to send
a wrong signal not only that "crime pays" but also that one can enrich himself at the expense of another
in the name of social justice. And courts as well as quasi-judicial entities will be overrun by petitioners
mouthing dubious pleas for misplaced social justice. Indeed, before there can be an occasion for
compassion and mercy, there must first be justice for all. Otherwise, employees will be encouraged to
steal and misappropriate in the expectation that eventually, in the name of social justice and compassion,
they will not be penalized but instead financially rewarded. Verily, a contrary holding will merely
encourage lawlessness, dishonesty, and duplicity. These are not the values that society cherishes; these
are the habits that it abhors.31
WHEREFORE, the petition is GRANTED. The assailed June 3, 2004 Decision of the Court of Appeals in
CA-G.R. SP No. 76789 affirming the September 20, 2002 Decision of the National Labor Relations
Commission is ANNULLED and SET ASIDE. The November 16, 1999 Decision of the Labor Arbiter is
REINSTATED and AFFIRMED.

G.R. No. 169191

Examination Unit which we hereby adopt and approved (sic) as our own in the amount of
NINETY-ONE THOUSAND FOUR HUNDRED FORTY-FIVE PESOS (P91,445.00);

June 1, 2011

2. Ordering the respondents to pay service incentive leave equivalent to fifteen days salary in
the amount of THREE THOUSAND FIFTEEN PESOS (P3,015.00).

ROMEO
VILLARUEL,
Petitioner,
vs.
YEO HAN GUAN, doing business under the name and style YUHANS ENTERPRISES, Respondent.

All other claims are dismissed for lack of merit.

DECISION
SO ORDERED.6
PERALTA, J.:
Aggrieved, respondent filed an appeal with the NLRC.
Assailed in the present petition are the Decision 1 and Resolution2 of the Court of Appeals (CA) dated
February 16, 2005 and August 2, 2005, respectively, in CA-G.R. SP No. 79105. The CA Decision
modified the March 31, 2003 Decision of the National Labor Relations Commission (NLRC) in NLRC
NCR CA 028050-01, while the CA Resolution denied petitioner's Motion for Reconsideration.
The antecedents of the case are as follows:
On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a
Complaint3 for payment of separation pay against Yuhans Enterprises.

On March 31, 2003, the Third Division of the NLRC rendered its Decision 7 dismissing respondent's
appeal and affirming the Labor Arbiter's Decision.
Respondent filed a Motion for Reconsideration, 8 but the same was denied by the NLRC in a Resolution 9
dated May 30, 2003.
Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules of Court.
On February 16, 2005, the CA promulgated its presently assailed Decision disposing as follows:

Subsequently, in his Amended Complaint and Position Paper 4 dated December 6, 1999, petitioner
alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing
Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned
and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the
company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's
complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the
changes in the company's name, petitioner remained in the employ of respondent. Petitioner further
alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he
reported for work but was no longer permitted to go back because of his illness; he asked that
respondent allow him to continue working but be assigned a lighter kind of work but his request was
denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount
corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation
pay computed from his first day of employment in June 1963, but respondent refused. Aside from
separation pay, petitioner prayed for the payment of service incentive leave for three years as well as
attorney's fees.

WHEREFORE, premises considered, the petition is partially GRANTED. The award of separation pay is
hereby DELETED, but the Decision insofar as it awards private respondent [herein petitioner] service
incentive leave pay of three thousand and fifteen pesos (P3,015.00) stands. The NLRC is permanently
ENJOINED from partially executing its Decision dated November 27, 2000 insofar as the award of
separation pay is concerned; or if it has already effected execution, it should order the private respondent
to forthwith restitute the same.
SO ORDERED.10
Herein petitioner filed his Motion for Reconsideration11 of the CA Decision, but it was denied by the CA via
a Resolution12 dated August 2, 2005.
Hence, the instant petition based on the following assignment of errors:

On the other hand, respondent averred in his Position Paper5 that petitioner was hired as machine
operator from March 1, 1993 until he stopped working sometime in February 1999 on the ground that he
was suffering from illness; after his recovery, petitioner was directed to report for work, but he never
showed up. Respondent was later caught by surprise when petitioner filed the instant case for recovery
of separation pay. Respondent claimed that he never terminated the services of petitioner and that during
their mandatory conference, he even told the latter that he could go back to work anytime but petitioner
clearly manifested that he was no longer interested in returning to work and instead asked for separation
pay.

I
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FAILURE TO APPRECIATE THE
ADMISSION BY [PETITIONER] OF THE FACT AND VALIDITY OF HIS TERMINATION BY THE
[RESPONDENT].
II

On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner. The
dispositive portion of the Labor Arbiter's Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant and
against herein respondent, as follows:

[THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED] IN DENYING [PETITIONER'S]

ENTITLEMENT TO SEPARATION PAY UNDER ARTICLE 284 OF THE LABOR CODE AND UNDER
THE OMNIBUS RULES IMPLEMENTING THE LABOR CODE.
III

1. Ordering the respondents to pay separation benefits equivalent to one-half () month salary
per year of service, a fraction of six months equivalent to one year to herein complainant based
on the complainant's length of service reckoned from June 1963 up to October 1998 as
provided under Article 284 of the Labor Code, the same computed by the Computation and

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE BURDEN
OF PROOF THAT AN EMPLOYEE IS SUFFERING FROM DISEASE THAT HAS TO BE TERMINATED
REST[S] UPON THE EMPLOYER IN ORDER FOR THE EMPLOYEE TO BE ENTITLED TO
SEPARATION PAY.

IV
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE DELETION OF
THE AWARD OF SEPARATION PAY TO THE [PETITIONER].13
The Court finds the petition without merit.
The assigned errors in the instant petition essentially boil down to the question of whether petitioner is
entitled to separation pay under the provisions of the Labor Code, particularly Article 284 thereof, which
reads as follows:
An employer may terminate the services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to
the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to one-half () month salary for every year of service whichever is greater, a fraction of
at least six months being considered as one (1) whole year.
A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates
the services of the employee found to be suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not
contemplate a situation where it is the employee who severs his or her employment ties. This is precisely
the reason why Section 8,14 Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs
that an employer shall not terminate the services of the employee unless there is a certification by a
competent public health authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment.
Hence, the pivotal question that should be settled in the present case is whether respondent, in fact,
dismissed petitioner from his employment.
A perusal of the Decisions of the Labor Arbiter and the NLRC would show, however, that there was no
discussion with respect to the abovementioned issue. Both lower tribunals merely concluded that
petitioner is entitled to separation pay under Article 284 of the Labor Code without any explanation. The
Court finds no convincing justification, in the Decision of the Labor Arbiter on why petitioner is entitled to
such pay. In the same manner, the NLRC Decision did not give any rationalization as the gist thereof
simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter.
On the other hand, the Court agrees with the CA in its observation of the following circumstances as
proof that respondent did not terminate petitioner's employment: first, the only cause of action in
petitioner's original complaint is that he was "offered a very low separation pay"; second, there was no
allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper;
and, third, there was no prayer for reinstatement.
In consonance with the above findings, the Court finds that petitioner was the one who initiated the
severance of his employment relations with respondent. It is evident from the various pleadings filed by
petitioner that he never intended to return to his employment with respondent on the ground that his
health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for
him to return to work. This is tantamount to resignation.
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no
other choice but to disassociate himself from his employment.15
It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award
of separation pay is also authorized in the situations dealt with in Article 283 16 of the same Code and
under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the said Code 17 where
there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has
allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly

dismissed for causes other than serious misconduct or those reflecting on his moral character. 18
However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning
employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled
to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by
established employer practice or policy.19 In the present case, neither the abovementioned provisions of
the Labor Code and its implementing rules and regulations nor the exceptions apply because petitioner
was not dismissed from his employment and there is no evidence to show that payment of separation
pay is stipulated in his employment contract or sanctioned by established practice or policy of herein
respondent, his employer.
Since petitioner was not terminated from his employment and, instead, is deemed to have resigned
therefrom, he is not entitled to separation pay under the provisions of the Labor Code.
The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to
separated employees as a measure of social and compassionate justice and as an equitable concession.
Taking into consideration the factual circumstances obtaining in the present case, the Court finds that
petitioner is entitled to this kind of assistance.
Citing Eastern Shipping Lines, Inc. v. Sedan,20 this Court, in the more recent case of Eastern Shipping
Lines v. Antonio,21 held:
But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the
words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure
of social justice and exceptional circumstances, and as an equitable concession. The instant case
equally calls for balancing the interests of the employer with those of the worker, if only to approximate
what Justice Laurel calls justice in its secular sense.
In this instance, our attention has been called to the following circumstances: that private respondent
joined the company when he was a young man of 25 years and stayed on until he was 48 years old; that
he had given to the company the best years of his youth, working on board ship for almost 24 years; that
in those years there was not a single report of him transgressing any of the company rules and
regulations; that he applied for optional retirement under the company's non-contributory plan when his
daughter died and for his own health reasons; and that it would appear that he had served the company
well, since even the company said that the reason it refused his application for optional retirement was
that it still needed his services; that he denies receiving the telegram asking him to report back to work;
but that considering his age and health, he preferred to stay home rather than risk further working in a
ship at sea.
In our view, with these special circumstances, we can call upon the same "social and compassionate
justice" cited in several cases allowing financial assistance. These circumstances indubitably merit
equitable concessions, via the principle of "compassionate justice" for the working class. x x x
In the present case, respondent had been employed with the petitioner for almost twelve (12)
years.lawwphil On February 13, 1996, he suffered from a "fractured left transverse process of fourth
lumbar vertebra," while their vessel was at the port of Yokohama, Japan. After consulting a doctor, he
was required to rest for a month. When he was repatriated to Manila and examined by a company doctor,
he was declared fit to continue his work. When he reported for work, petitioner refused to employ him
despite the assurance of its personnel manager. Respondent patiently waited for more than one year to
embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by
another person known to one of the stockholders. Consequently, for having been deprived of continued
employment with petitioner's vessel, respondent opted to apply for optional retirement. In addition,
records show that respondent's seaman's book, as duly noted and signed by the captain of the vessel
was marked "Very Good," and "recommended for hire." Moreover, respondent had no derogatory record
on file over his long years of service with the petitioner.1avvphi1
Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice
would be served best if respondent will be given some equitable relief. Thus, the award of P100,000.00
to respondent as financial assistance is deemed equitable under the circumstances.22

While the abovecited cases authorized the grant of financial assistance in lieu of retirement benefits, the
Court finds no cogent reason not to employ the same guiding principle of compassionate justice applied
by the Court, taking into consideration the factual circumstances obtaining in the present case. In this
regard, the Court finds credence in petitioner's contention that he is in the employ of respondent for more
than 35 years. In the absence of a substantial refutation on the part of respondent, the Court agrees with
the findings of the Labor Arbiter and the NLRC that respondent company is not distinct from its
predecessors but, in fact, merely continued the operation of the latter under the same owners and the
same business venture. The Court further notes that there is no evidence on record to show that
petitioner has any derogatory record during his long years of service with respondent and that his
employment was severed not by reason of any infraction on his part but because of his failing physical
condition. Add to this the willingness of respondent to give him financial assistance. Hence, based on the
foregoing, the Court finds that the award of P50,000.00 to petitioner as financial assistance is deemed
equitable under the circumstances.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals are AFFIRMED with MODIFICATION by awarding petitioner with financial assistance in the
amount of P50,000.00.

G.R. No. 165381

February 9, 2011

NELSON
A.
CULILI,
Petitioner,
vs.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief
Executive Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice
President) and STELLA GARCIA (Assistant Vice President), Respondents.

Among the departments abolished was the Service Quality Department. The functions of the Customer
Premises Equipment Management Unit, Culilis unit, were absorbed by the Business and Consumer
Accounts Department. The abolition of the Service Quality Department rendered the specialized
functions of a Senior Technician unnecessary. As a result, Culilis position was abolished due to
redundancy and his functions were absorbed by Andre Andrada, another employee already with the
Business and Consumer Accounts Department.17
On March 5, 1999, Culili discovered that his name was omitted in ETPIs New Table of Organization.
Culili, along with three of his co-employees who were similarly situated, wrote their union president to
protest such omission.18

DECISION
LEONARDO-DE CASTRO, J.:
Before Us is a petition for review on certiorari1 of the February 5, 2004 Decision 2 and September 13,
2004 Resolution3 of the Court of Appeals in CA-G.R. SP No. 75001, wherein the Court of Appeals set
aside the March 1, 2002 Decision 4 and September 24, 2002 Resolution 5 of the National Labor Relations
Commission (NLRC), which affirmed the Labor Arbiters Decision6 dated April 30, 2001.
Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company
engaged mainly in the business of establishing commercial telecommunications systems and leasing of
international datalines or circuits that pass through the international gateway facility (IGF). 7 The other
respondents are ETPIs officers: Salvador Hizon, President and Chief Executive Officer; Emiliano Jurado,
Chairman of the Board; Virgilio Garcia, Vice President; and Stella Garcia, Assistant Vice President.
Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations
Department on January 27, 1981. On December 12, 1996, Culili was promoted to Senior Technician in
the Customer Premises Equipment Management Unit of the Service Quality Department and his basic
salary was increased.8
As a telecommunications company and an authorized IGF operator, ETPI was required, under Republic
Act. No. 7925 and Executive Order No. 109, to establish landlines in Metro Manila and certain
provinces.9 However, due to interconnection problems with the Philippine Long Distance Telephone
Company (PLDT), poor subscription and cancellation of subscriptions, and other business difficulties,
ETPI was forced to halt its roll out of one hundred twenty-nine thousand (129,000) landlines already
allocated to a number of its employees.10
In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program
which consisted of two phases: the first phase involved the reduction of ETPIs workforce to only those
employees that were necessary and which ETPI could sustain; the second phase entailed a companywide reorganization which would result in the transfer, merger, absorption or abolition of certain
departments of ETPI.11
As part of the first phase, ETPI, on December 10, 1998, offered to its employees who had rendered at
least fifteen years of service, the Special Retirement Program, which consisted of the option to voluntarily
retire at an earlier age and a retirement package equivalent to two and a half (2) months salary for
every year of service. 12 This offer was initially rejected by the Eastern Telecommunications Employees
Union (ETEU), ETPIs duly recognized bargaining agent, which threatened to stage a strike. ETPI
explained to ETEU the exact details of the Right-Sizing Program and the Special Retirement Program
and after consultations with ETEUs members, ETEU agreed to the implementation of both programs. 13
Thus, on February 8, 1999, ETPI re-offered the Special Retirement Program and the corresponding
retirement package to the one hundred two (102) employees who qualified for the program. 14 Of all the
employees who qualified to avail of the program, only Culili rejected the offer.15
After the successful implementation of the first phase of the Right-Sizing Program, ETPI, on March 1,
1999 proceeded with the second phase which necessitated the abolition, transfer and merger of a
number of ETPIs departments.16

In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella Garcia, informed Culili
of his termination from employment effective April 8, 1999. The letter reads:
March 8, 1999
To: N. Culili
Thru: S. Dobbin/G. Ebue
From: AVP-HRD
-----------------------------------------------------------------------------------------As you are aware, the current economic crisis has adversely affected our operations and undermined our
earlier plans to put in place major work programs and activities. Because of this, we have to implement a
Rightsizing Program in order to cut administrative/operating costs and to avoid losses. In line with this
program, your employment with the company shall terminate effective at the close of business hours on
April 08, 1999. However, to give you ample time to look for other employment, provided you have amply
turned over your pending work and settled your accountabilities, you are no longer required to report to
work starting tomorrow. You will be considered on paid leave until April 08, 1999.
You will likewise be paid separation pay in compliance with legal requirements (see attached), as well as
other benefits accruing to you under the law, and the CBA. We take this opportunity to thank you for your
services and wish you well in your future endeavors.
(Signed)
Stella J. Garcia19
This letter was similar to the memo shown to Culili by the union president weeks before Culili was
dismissed. The memo was dated December 7, 1998, and was advising him of his dismissal effective
January 4, 1999 due to the Right-Sizing Program ETPI was going to implement to cut costs and avoid
losses.20
Culili alleged that neither he nor the Department of Labor and Employment (DOLE) were formally notified
of his termination. Culili claimed that he only found out about it sometime in March 1999 when Vice
President Virgilio Garcia handed him a copy of the March 8, 1999 letter, after he was barred from
entering ETPIs premises by its armed security personnel when he tried to report for work. 21 Culili
believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter as
evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI had
contracted out the services he used to perform to a labor-only contractor which not only proved that his
functions had not become unnecessary, but which also violated their Collective Bargaining Agreement
(CBA) and the Labor Code. Aside from these, Culili also alleged that he was discriminated against when
ETPI offered some of his co-employees an additional benefit in the form of motorcycles to induce them to
avail of the Special Retirement Program, while he was not.22

ETPI denied singling Culili out for termination. ETPI claimed that while it is true that they offered the
Special Retirement Package to reduce their workforce to a sustainable level, this was only the first phase
of the Right-Sizing Program to which ETEU agreed. The second phase intended to simplify and
streamline the functions of the departments and employees of ETPI. The abolition of Culilis department the Service Quality Department - and the absorption of its functions by the Business and Consumer
Accounts Department were in line with the programs goals as the Business and Consumer Accounts
Department was more economical and versatile and it was flexible enough to handle the limited functions
of the Service Quality Department. ETPI averred that since Culili did not avail of the Special Retirement
Program and his position was subsequently declared redundant, it had no choice but to terminate Culili. 23
Culili, however, continued to report for work. ETPI said that because there was no more work for Culili, it
was constrained to serve a final notice of termination 24 to Culili, which Culili ignored. ETPI alleged that
Culili informed his superiors that he would agree to his termination if ETPI would give him certain special
work tools in addition to the benefits he was already offered. ETPI claimed that Culilis counter-offer was
unacceptable as the work tools Culili wanted were worth almost a million pesos. Thus, on March 26,
1999, ETPI tendered to Culili his final pay check of Eight Hundred Fifty-Nine Thousand Thirty-Three and
99/100 Pesos (P859,033.99) consisting of his basic salary, leaves, 13th month pay and separation pay.25
ETPI claimed that Culili refused to accept his termination and continued to report for work. 26 ETPI denied
hiring outside contractors to perform Culilis work and denied offering added incentives to its employees
to induce them to retire early. ETPI also explained that the December 7, 1998 letter was never given to
Culili in an official capacity. ETPI claimed that it really needed to reduce its workforce at that time and that
it had to prepare several letters in advance in the event that none of the employees avail of the Special
Retirement Program. However, ETPI decided to wait for a favorable response from its employees
regarding the Special Retirement Program instead of terminating them.27
On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor
practice, and money claims before the Labor Arbiter.
On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair
labor practice, to wit:
WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Nelson A. Culili illegal
for having been made through an arbitrary and malicious declaration of redundancy of his position and
for having been done without due process for failure of the respondent to give complainant and the
DOLE written notice of such termination prior to the effectivity thereof.
In view of the foregoing, respondents Eastern Telecommunications Philippines and the individual
respondents are hereby found guilty of unfair labor practice/discrimination and illegal dismissal and
ordered to pay complainant backwages and such other benefits due him if he were not illegally
dismissed, including moral and exemplary damages and 10% attorneys fees. Complainant likewise is to
be reinstated to his former position or to a substantially equivalent position in accordance with the
pertinent provisions of the Labor Code as interpreted in the case of Pioneer texturing [Pioneer Texturizing
Corp. v. National Labor Relations Commission], G.R. No. 11865[1], 16 October 1997. Hence,
Complainant must be paid the total amount of TWO MILLION SEVEN HUNDRED FORTY[-]FOUR
THOUSAND THREE [HUNDRED] SEVENTY[-] NINE and 41/100 (P2,744,379.41), computed as follows:
I. Backwages (from 16 March 1999 to 16 March 2001)

01
August
1991
(P1,850 x 12 mos = P22,200.00)
01
August
2000

16
(P1,950 x 7.5 mos. = P14,625.00)

31
March

July
2001

2000

44,700.00

e. Uniform Allowance
P7,000/annum x 2 years

14,000.00
P949,699.72

II. Damages
a. Moral P500,000.00
b. Exemplary P250,000.00
III. Attorneys Fees (10% of award)

94,969.97

GRAND TOTAL:

P2,744,379.4128

The Labor Arbiter believed Culilis claim that ETPI intended to dismiss him even before his position was
declared redundant. He found the December 7, 1998 letter to be a telling sign of this intention. The Labor
Arbiter held that a reading of the termination letter shows that the ground ETPI was actually invoking was
retrenchment and not redundancy, but ETPI stuck to redundancy because it was easier to prove than
retrenchment. He also did not believe that Culilis functions were as limited as ETPI made it appear to be,
and held that ETPI failed to present any reasonable criteria to justify the declaration of Culilis position as
redundant. On the issue of unfair labor practice, the Labor Arbiter agreed that the contracting out of
Culilis functions to non-union members violated Culilis rights as a union member. Moreover, the Labor
Arbiter said that ETPI was not able to dispute Culilis claims of discrimination and subcontracting, hence,
ETPI was guilty of unfair labor practice.
On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount of moral and
exemplary damages awarded, viz:
WHEREFORE, the Decision appealed from is AFFIRMED granting complainant the money claims prayed
for including full backwages, allowances and other benefits or their monetary equivalent computed from
the time of his illegal dismissal on 16 March 1999 up to his actual reinstatement except the award of
moral and exemplary damages which is modified to P200,000.00 for moral and P100,000.00 for
exemplary damages. For this purpose, this case is REMANDED to the Labor Arbiter for computation of
backwages and other monetary awards to complainant.29
ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure before the Court of
Appeals on the ground of grave abuse of discretion. ETPI prayed that a Temporary Restraining Order be
issued against the NLRC from implementing its decision and that the NLRC decision and resolution be
set aside.

a. Basic Salary (P29,030 x 24 mos.)

P696,720.96

b. 13th Month Pay (P692,720.96/12)

58,060.88

The Court of Appeals, on February 5, 2004, partially granted ETPIs petition. The dispositive portion of
the decision reads as follows:

1. Vacation Leave (30 days/annum) P1,116.54 x 60 days

66,992.40

2. Sick Leave (30 days/annum) P1,116.54 x 60 days

66,992.40

3. Birthday Leave (1 day/annum) P1,116.54 x 2 days

2,233.08

WHEREFORE, all the foregoing considered, the petition is PARTIALLY GRANTED. The assailed
Decision of public respondent National Labor Relations Commission is MODIFIED in that petitioner
Eastern Telecommunications Philippines Inc. (ETPI) is hereby ORDERED to pay respondent Nelson
Culili full backwages from the time his salaries were not paid until the finality of this Decision plus
separation pay in an amount equivalent to one (1) month salary for every year of service. The awards for
moral and exemplary damages are DELETED. The Writ of Execution issued by the Labor Arbiter dated
September 8, 2003 is DISSOLVED.30

c. Leave Benefits

d.

Rice and Meal Subsidy 16

(P1,750 x 4.5 mos. = P7,875.00)

March

31

July

1999

The Court of Appeals found that Culilis position was validly abolished due to redundancy. The Court of
Appeals said that ETPI had been very candid with its employees in implementing its Right-Sizing
Program, and that it was highly unlikely that ETPI would effect a company-wide reorganization simply for
the purpose of getting rid of Culili. The Court of Appeals also held that ETPI cannot be held guilty of
unfair labor practice as mere contracting out of services being performed by union members does not
per se amount to unfair labor practice unless it interferes with the employees right to self-organization.
The Court of Appeals further held that ETPIs officers cannot be held liable absent a showing of bad faith
or malice. However, the Court of Appeals found that ETPI failed to observe the standards of due process
as required by our laws when it failed to properly notify both Culili and the DOLE of Culilis termination.
The Court of Appeals maintained its position in its September 13, 2004 Resolution when it denied Culilis
Motion for Reconsideration and Urgent Motion to Reinstate the Writ of Execution issued by the Labor
Arbiter, and ETPIs Motion for Partial Reconsideration.
Culili is now before this Court praying for the reversal of the Court of Appeals decision and the
reinstatement of the NLRCs decision based on the following grounds:
I
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH THE
APPLICABLE LAW AND JURISPRUDENCE WHEN IT REVERSED THE DECISIONS OF THE NLRC
AND THE LABOR ARBITER HOLDING THE DISMISSAL OF PETITIONER ILLEGAL IN THAT:
A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, RESPONDENTS
CHARACTERIZATION OF PETITIONERS POSITION AS REDUNDANT WAS TAINTED BY BAD FAITH.
B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE PETITIONERS POSITION AS
REDUNDANT.

Power to Review Facts in a Petition

For Certiorari under Rule 65
Culili argued that the Court of Appeals acted in contravention of applicable law and jurisprudence when it
reexamined the facts in this case and reversed the factual findings of the Labor Arbiter and the NLRC in
a special civil action for certiorari.
This Court has already confirmed the power of the Court of Appeals, even on a Petition for Certiorari
under Rule 65,32 to review the evidence on record, when necessary, to resolve factual issues:
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has
been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations
Commission. This Court held that the proper vehicle for such review was a Special Civil Action for
Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals
in strict observance of the doctrine of the hierarchy of courts. Moreover, it is already settled that under
Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the
Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg.
129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant
to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the power to
pass upon the evidence, if and when necessary, to resolve factual issues. 33
While it is true that factual findings made by quasi-judicial and administrative tribunals, if supported by
substantial evidence, are accorded great respect and even finality by the courts, this general rule admits
of exceptions. When there is a showing that a palpable and demonstrable mistake that needs rectification
has been committed34 or when the factual findings were arrived at arbitrarily or in disregard of the
evidence on record, these findings may be examined by the courts.35
In the case at bench, the Court of Appeals found itself unable to completely sustain the findings of the
NLRC thus, it was compelled to review the facts and evidence and not limit itself to the issue of grave
abuse of discretion.

II
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW
AND JURISPRUDENCE IN FINDING THAT NO UNFAIR LABOR PRACTICE ACTS WERE COMMITTED
AGAINST THE PETITIONER.

With the conflicting findings of facts by the tribunals below now before us, it behooves this Court to make
an independent evaluation of the facts in this case.

III

Main Issue: Legality of Dismissal

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW
AND JURISPRUDENCE IN DELETING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND
ATTORNEYS FEES IN FAVOR OF PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION
DATED 8 SEPTEMBER 2003 ISSUED BY THE LABOR ARBITER.

Culili asserted that he was illegally dismissed because there was no valid cause to terminate his
employment. He claimed that ETPI failed to prove that his position had become redundant and that ETPI
was indeed incurring losses. Culili further alleged that his functions as a Senior Technician could not be
considered a superfluity because his tasks were crucial and critical to ETPIs business.

IV

Under our laws, an employee may be terminated for reasons involving measures taken by the employer
due to business necessities. Article 283 of the Labor Code provides:

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW
AND JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL RESPONDENTS OF PERSONAL LIABILITY.
V
CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE COURT OF APPEALS, IN A
CERTIORARI PROCEEDING, REVIEWED THE FACTUAL FINDINGS OF THE NLRC WHICH
AFFIRMED THAT OF THE LABOR ARBITER AND, THEREAFTER, ISSUED A WRIT OF CERTIORARI
REVERSING THE DECISIONS OF THE NLRC AND THE LABOR ARBITER EVEN IN THE ABSENCE
OF GRAVE ABUSE OF DISCRETION.31
Procedural Issue:

Court

of

Appeals'

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

There is redundancy when the service capability of the workforce is greater than what is reasonably
required to meet the demands of the business enterprise. A position becomes redundant when it is
rendered superfluous by any number of factors such as over-hiring of workers, decrease in volume of
business, or dropping a particular product line or service activity previously manufactured or undertaken
by the enterprise.36
This Court has been consistent in holding that the determination of whether or not an employees
services are still needed or sustainable properly belongs to the employer. Provided there is no violation of
law or a showing that the employer was prompted by an arbitrary or malicious act, the soundness or
wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor
Arbiter and the NLRC.37
However, an employer cannot simply declare that it has become overmanned and dismiss its employees
without producing adequate proof to sustain its claim of redundancy.38 Among the requisites of a valid
redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2)
fair and reasonable criteria in ascertaining what positions are to be declared redundant, 39 such as but not
limited to: preferred status, efficiency, and seniority.40
This Court also held that the following evidence may be proffered to substantiate redundancy: the new
staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description
and the approval by the management of the restructuring.41
In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing
Program. Even in the face of initial opposition from and rejection of the said program by ETEU, ETPI
patiently negotiated with ETEUs officers to make them understand ETPIs business dilemma and its
need to reduce its workforce and streamline its organization. This evidently rules out bad faith on the part
of ETPI.
In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency,
economy, versatility and flexibility. It needed to reduce its workforce to a sustainable level while
maintaining functions necessary to keep it operating. The records show that ETPI had sufficiently
established not only its need to reduce its workforce and streamline its organization, but also the
existence of redundancy in the position of a Senior Technician. ETPI explained how it failed to meet its
business targets and the factors that caused this, and how this necessitated it to reduce its workforce
and streamline its organization. ETPI also submitted its old and new tables of organization and
sufficiently described how limited the functions of the abolished position of a Senior Technician were and
how it decided on whom to absorb these functions.
In his affidavit dated April 10, 2000, 42 Mr. Arnel D. Reyel, the Head of both the Business Services
Department and the Finance Department of ETPI, described how ETPI went about in reorganizing its
departments. Mr. Reyel said that in the course of ETPIs reorganization, new departments were created,
some were transferred, and two were abolished. Among the departments abolished was the Service
Quality Department. Mr. Reyel said that ETPI felt that the functions of the Service Quality Department,
which catered to both corporate and small and medium-sized clients, overlapped and were too large for a
single department, thus, the functions of this department were split and simplified into two smaller but
more focused and efficient departments. In arriving at the decision to abolish the position of Senior
Technician, Mr. Reyel explained:
11.3. Thus, in accordance with the reorganization of the different departments of ETPI, the Service
Quality Department was abolished and its functions were absorbed by the Business and Consumer
Accounts Department and the Corporate and Major Accounts Department.
11.4. With the abolition and resulting simplification of the Service Quality Department, one of the units
thereunder, the Customer Premises Equipment Maintenance ("CPEM") unit was transferred to the
Business and Consumer Accounts Department. Since the Business and Consumer Accounts Department
had to remain economical and focused yet versatile enough to meet all the needs of its small and
medium sized clients, it was decided that, in the judgment of ETPI management, the specialized
functions of a Senior Technician in the CPEM unit whose sole function was essentially the repair and
servicing of ETPIs telecommunications equipment was no longer needed since the Business and

Consumer [Accounts] Department had to remain economical and focused yet versatile enough to meet
all the multifarious needs of its small and medium sized clients.
11.5. The business reason for the abolition of the position of Senior Technician was because in ETPIs
judgment, what was needed in the Business and Consumer Accounts Department was a versatile, yet
economical position with functions which were not limited to the mere repair and servicing of
telecommunications equipment. It was determined that what was called for was a position that could also
perform varying functions such as the actual installation of telecommunications products for medium and
small scale clients, handle telecommunications equipment inventory monitoring, evaluation of
telecommunications equipment purchased and the preparation of reports on the daily and monthly
activation of telecommunications equipment by these small and medium scale clients.
11.6. Thus, for the foregoing reasons, ETPI decided that the position of Senior Technician was to be
abolished due to redundancy. The functions of a Senior Technician was to be abolished due to
redundancy. The functions of a Senior Technician would then be absorbed by an employee assigned to
the Business and Consumer Accounts Department who was already performing the functions of actual
installation of telecommunications products in the field and handling telecommunications equipment
inventory monitoring, evaluation of telecommunications equipment purchased and the preparation of
reports on the daily and monthly activation of telecommunications equipment. This employee would then
simply add to his many other functions the duty of repairing and servicing telecommunications equipment
which had been previously performed by a Senior Technician.43
In the new table of organization that the management approved, one hundred twelve (112) employees
were redeployed and nine (9) positions were declared redundant.44 It is inconceivable that ETPI would
effect a company-wide reorganization of this scale for the mere purpose of singling out Culili and
terminating him. If Culilis position were indeed indispensable to ETPI, then it would be absurd for ETPI,
which was then trying to save its operations, to abolish that one position which it needed the most.
Contrary to Culilis assertions that ETPI could not do away with his functions as long as it is in the
telecommunications industry, ETPI did not abolish the functions performed by Culili as a Senior
Technician. What ETPI did was to abolish the position itself for being too specialized and limited. The
functions of that position were then added to another employee whose functions were broad enough to
absorb the tasks of a Senior Technician.
Culili maintains that ETPI had already decided to dismiss him even before the second phase of the RightSizing Program was implemented as evidenced by the December 7, 1998 letter.
The December 7, 1998 termination letter signed by ETPIs AVP Stella Garcia hardly suffices to prove bad
faith on the part of the company. The fact remains that the said letter was never officially transmitted and
Culili was not terminated at the end of the first phase of ETPIs Right-Sizing Program. ETPI had given an
adequate explanation for the existence of the letter and considering that it had been transparent with its
employees, through their union ETEU, so much so that ETPI even gave ETEU this unofficial letter, there
is no reason to speculate and attach malice to such act. That Culili would be subsequently terminated
during the second phase of the Right-Sizing Program is not evidence of undue discrimination or "singling
out" since not only Culilis position, but his entire unit was abolished and absorbed by another
department.
Unfair Labor Practice
Culili also alleged that ETPI is guilty of unfair labor practice for violating Article 248(c) and (e) of the
Labor Code, to wit:
Art. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of
the following unfair labor practice:
xxxx
c. To contract out services or functions being performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization;

xxxx

Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code provides:

e. To discriminate in regard to wages, hours of work, and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization. Nothing in this Code or in any
other law shall stop the parties from requiring membership in a recognized collective bargaining agent as
a condition for employment, except those employees who are already members of another union at the
time of the signing of the collective bargaining agreement. Employees of an appropriate collective
bargaining unit who are not members of the recognized collective bargaining agent may be assessed a
reasonable fee equivalent to the dues and other fees paid by members of the recognized collective
bargaining agent, if such non-union members accept the benefits under the collective agreement:
Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall not
apply to the non-members of the recognized collective bargaining agent.

(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:

Culili asserted that ETPI is guilty of unfair labor practice because his functions were sourced out to laboronly contractors and he was discriminated against when his co-employees were treated differently when
they were each offered an additional motorcycle to induce them to avail of the Special Retirement
Program. ETPI denied hiring outside contractors and averred that the motorcycles were not given to his
co-employees but were purchased by them pursuant to their Collective Bargaining Agreement, which
allowed a retiring employee to purchase the motorcycle he was assigned during his employment.

In Mayon Hotel & Restaurant v. Adana,50 we observed:

The concept of unfair labor practice is provided in Article 247 of the Labor Code which states:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor
practices violate the constitutional right of workers and employees to self-organization, are inimical to the
legitimate interest of both labor and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace
and hinder the promotion of healthy and stable labor-management relations.
In the past, we have ruled that "unfair labor practice refers to acts that violate the workers' right to
organize. The prohibited acts are related to the workers' right to self-organization and to the observance
of a CBA."45 We have likewise declared that "there should be no dispute that all the prohibited acts
constituting unfair labor practice in essence relate to the workers' right to self-organization." 46 Thus, an
employer may only be held liable for unfair labor practice if it can be shown that his acts affect in
whatever manner the right of his employees to self-organize.47
There is no showing that ETPI, in implementing its Right-Sizing Program, was motivated by ill will, bad
faith or malice, or that it was aimed at interfering with its employees right to self-organize. In fact, ETPI
negotiated and consulted with ETEU before implementing its Right-Sizing Program.
Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor practice because of its failure to
dispute Culilis allegations.
According to jurisprudence, "basic is the principle that good faith is presumed and he who alleges bad
faith has the duty to prove the same."48 By imputing bad faith to the actuations of ETPI, Culili has the
burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili
failed to discharge this burden and his bare allegations deserve no credit.
Observance of Procedural Due Process
Although the Court finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice,
ETPI, however, was remiss in its duty to observe procedural due process in effecting the termination of
Culili.
We have previously held that "there are two aspects which characterize the concept of due process
under the Labor Code: one is substantive whether the termination of employment was based on the
provision of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural
the manner in which the dismissal was effected."49

xxxx
For termination of employment as defined in Article 283 of the Labor Code, the requirement of due
process shall be deemed complied with upon service of a written notice to the employee and the
appropriate Regional Office of the Department of Labor and Employment at least thirty days before
effectivity of the termination, specifying the ground or grounds for termination.

The requirement of law mandating the giving of notices was intended not only to enable the employees to
look for another employment and therefore ease the impact of the loss of their jobs and the
corresponding income, but more importantly, to give the Department of Labor and Employment (DOLE)
the opportunity to ascertain the verity of the alleged authorized cause of termination.51
ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis termination. It,
however, insists that it has complied with the requirement to serve a written notice to Culili as evidenced
by his admission of having received it and forwarding it to his union president.
In Serrano v. National Labor Relations Commission, 52 we noted that "a job is more than the salary that it
carries." There is a psychological effect or a stigma in immediately finding ones self laid off from work. 53
This is exactly why our labor laws have provided for mandating procedural due process clauses. Our
laws, while recognizing the right of employers to terminate employees it cannot sustain, also recognize
the employees right to be properly informed of the impending severance of his ties with the company he
is working for. In the case at bar, ETPI, in effecting Culilis termination, simply asked one of its guards to
serve the required written notice on Culili. Culili, on one hand, claims in his petition that this was handed
to him by ETPIs vice president, but previously testified before the Labor Arbiter that this was left on his
table.54 Regardless of how this notice was served on Culili, this Court believes that ETPI failed to properly
notify Culili about his termination. Aside from the manner the written notice was served, a reading of that
notice shows that ETPI failed to properly inform Culili of the grounds for his termination.
The Court of Appeals, in finding that Culili was not afforded procedural due process, held that Culilis
dismissal was ineffectual, and required ETPI to pay Culili full backwages in accordance with our decision
in Serrano v. National Labor Relations Commission. 55 Over the years, this Court has had the opportunity
to reexamine the sanctions imposed upon employers who fail to comply with the procedural due process
requirements in terminating its employees. In Agabon v. National Labor Relations Commission, 56 this
Court reverted back to the doctrine in Wenphil Corporation v. National Labor Relations Commission 57 and
held that where the dismissal is due to a just or authorized cause, but without observance of the due
process requirements, the dismissal may be upheld but the employer must pay an indemnity to the
employee. The sanctions to be imposed however, must be stiffer than those imposed in Wenphil to
achieve a result fair to both the employers and the employees.58
In Jaka Food Processing Corporation v. Pacot, 59 this Court, taking a cue from Agabon, held that since
there is a clear-cut distinction between a dismissal due to a just cause and a dismissal due to an
authorized cause, the legal implications for employers who fail to comply with the notice requirements
must also be treated differently:
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.60

Hence, since it has been established that Culilis termination was due to an authorized cause and cannot
be considered unfair labor practice on the part of ETPI, his dismissal is valid. However, in view of ETPIs
failure to comply with the notice requirements under the Labor Code, Culili is entitled to nominal
damages in addition to his separation pay.1avvphi1
Personal
And Award of Damages

Liability

of

ETPIs

Officers

Culili asserts that the individual respondents, Salvador Hizon, Emiliano Jurado, Virgilio Garcia, and Stella
Garcia, as ETPIs officers, should be held personally liable for the acts of ETPI which were tainted with
bad faith and arbitrariness. Furthermore, Culili insists that he is entitled to damages because of the
sufferings he had to endure and the malicious manner he was terminated.
As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a
corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and
members. To pierce this fictional veil, it must be shown that the corporate personality was used to
perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In
illegal dismissal cases, corporate officers may be held solidarily liable with the corporation if the
termination was done with malice or bad faith. 61
In illegal dismissal cases, moral damages are awarded only where the dismissal was attended by bad
faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy.62 Exemplary damages may avail if the dismissal was effected in a wanton,
oppressive or malevolent manner to warrant an award for exemplary damages. 63
It is our considered view that Culili has failed to prove that his dismissal was orchestrated by the
individual respondents herein for the mere purpose of getting rid of him. In fact, most of them have not
even dealt with Culili personally. Moreover, it has been established that his termination was for an
authorized cause, and that there was no bad faith on the part of ETPI in implementing its Right-Sizing
Program, which involved abolishing certain positions and departments for redundancy. It is not enough
that ETPI failed to comply with the due process requirements to warrant an award of damages, there
being no showing that the companys and its officers acts were attended with bad faith or were done
oppressively.
WHEREFORE, the instant petition is DENIED and the assailed February 5, 2004 Decision and
September 13, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 75001 are AFFIRMED with
the MODIFICATION that petitioner Nelson A. Culilis dismissal is declared valid but respondent Eastern
Telecommunications Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount of Fifty
Thousand Pesos (P50,000.00) representing nominal damages for non-compliance with statutory due
process, in addition to the mandatory separation pay required under Article 283 of the Labor Code.

G.R. No. 181738

January 30, 2013

GENERAL
MILLING
vs.
VIOLETA L. VIAJAR, Respondent.

CORPORATION,

Petitioner,

DECISION
REYES, J.:

For its part, the petitioner insisted that Viajars dismissal was due to the redundancy of her position. GMC
reasoned out that it was forced to terminate the services of the respondent because of the economic
setbacks the company was suffering which affected the companys profitability, and the continuing rise of
its operating and interest expenditures. Redundancy was part of the petitioners concrete and actual cost
reduction measures. GMC also presented the required "Establishment Termination Report" which it filed
before the Department of Labor and Employment (DOLE) on October 28, 2003, involving thirteen (13) of
its employees, including Viajar. Subsequently, GMC issued to the respondent two (2) checks respectively
amounting to P440,253.02 and P21,211.35 as her separation pay.13
On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City, rendered a Decision, the
decretal portion of which reads:

This is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioner General
Milling Corporation (GMC), asking the Court to set aside the Decision 2 dated September 21, 2007 and
the Resolution3 dated January 30, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 01734; and to
reinstate the Decision4 dated October 28, 2005 and Resolution 5 dated January 31, 2006 of the National
Labor Relations Commission (NLRC) in NLRC Case No. V-000416-05.

WHEREFORE, foregoing considered, judgment is hereby rendered declaring that respondents acted in
good faith in terminating the complainant from the service due to redundancy of works, thus,
complainants refusal to accept the payment of her allowed separation pay and other benefits under the
law is NOT JUSTIFIED both in fact and law, and so, therefore complainants case for illegal dismissal
against the herein respondents and so are complainants monetary claims are hereby ordered
DISMISSED for lack of merit.

The antecedent facts are as follows:

SO ORDERED.14

GMC is a domestic corporation with principal office in Makati City and a manufacturing plant in LapuLapu City.

The LA found that the respondent was properly notified on October 30, 2003 through a LetterMemorandum dated October 27, 2003, signed by GMCs HRD Manager Almocera, that her position as
Purchasing Staff had been declared redundant. It also found that the petitioner submitted to the DOLE on
October 28, 2003 the "Establishment Termination Report." The LA even faulted the respondent for not
questioning the companys action before the DOLE Regional Office, Region VII, Cebu City so as to
compel the petitioner to prove that Viajars position was indeed redundant. It ruled that the petitioner
complied with the requirements under Article 283 of the Labor Code, considering that the nation was then
experiencing an economic downturn and that GMC must adopt measures for its survival.15

In October 2003, GMC terminated the services of thirteen (13) employees for redundancy, including
herein respondent, Violeta Viajar (Viajar). GMC alleged that it has been gradually downsizing its Vismin
(Visayas-Mindanao) Operations in Cebu where a sizeable number of positions became redundant over a
period of time.6
On December 2, 2003, Viajar filed a Complaint 7 for Illegal Dismissal with damages against GMC, its
Human Resource Department (HRD) Manager, Johnny T. Almocera (Almocera), and Purchasing
Manager, Joel Paulino before the Regional Arbitration Branch (RAB) No. VII, NLRC, Cebu City.

Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the NLRC promulgated its
decision, the dispositive portion of which reads:

In her Position Paper,8 Viajar alleged that she was employed by GMC on August 6, 1979 as Invoicing
Clerk. Through the years, the respondent held various positions in the company until she became
Purchasing Staff.

WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring the validity of
complainants termination due to redundancy is hereby AFFIRMED. Respondent General Milling
Corporation is hereby ordered to pay complainants separation pay in the amount of P461,464.37.

On October 30, 2003, Viajar received a Letter-Memorandum dated October 27, 2003 from GMC, through
Almocera, informing her that her services were no longer needed, effective November 30, 2003 because
her position as Purchasing Staff at the Purchasing Group, Cebu Operations was deemed redundant.
Immediately thereafter, the respondent consulted her immediate superior at that time, Thaddeus Oyas,
who told her that he too was shocked upon learning about it.9

SO ORDERED.16

When Viajar reported for work on October 31, 2003, almost a month before the effectivity of her
severance from the company, the guard on duty barred her from entering GMCs premises. She was also
denied access to her office computer and was restricted from punching her daily time record in the bundy
clock.10
On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was asked to sign certain
documents, which turned out to be an "Application for Retirement and Benefits." The respondent refused
to sign and sought clarification because she did not apply for retirement and instead asserted that her
services were terminated for alleged redundancy. Almocera told her that her signature on the Application
for Retirement and Benefits was needed to process her separation pay. The respondent also claimed that
between the period of July 4, 2003 and October 13, 2003, GMC hired fifteen (15) new employees which
aroused her suspicion that her dismissal was not necessary.11 At the time of her termination, the
respondent was receiving the salary rate of P19,651.41 per month.12

The NLRC, however, stated that it did not agree with the LA that Viajar should be faulted for failing to
question the petitioners declaration of redundancy before the DOLE Regional Office, Region VII, Cebu
City. It was not imperative for Viajar to challenge the validity of her termination due to redundancy. 17
Notwithstanding, the NLRC affirmed the findings of the LA that Viajars dismissal was legal considering
that GMC complied with the requirements provided for under Article 283 of the Labor Code and existing
jurisprudence, particularly citing Asian Alcohol Corporation v. NLRC. 18 The NLRC further stated that Viajar
was aware of GMCs "reduction mode," as shown in the GMC Vismin Manpower Complement, as
follows:
No.
of
Employees
Terminated (Redundancy)

Year

Manpower Profile

2000

795

2001

782

2002

736

41

2003

721

24

2004

697

16

2005

696 (As of June 2005)

0619

The NLRC stated that the characterization of positions as redundant is an exercise of the employers
business judgment and prerogative. It also ruled that the petitioner did not exercise this prerogative in
bad faith and that the payment of separation pay in the amount of P461,464.37 was in compliance with
Article 283 of the Labor Code.20
Respondent Viajar filed a Motion for Reconsideration which was denied by the NLRC in its Resolution
dated January 31, 2006.
Undaunted, Viajar filed a petition for certiorari before the CA. In the now assailed Decision dated
September 21, 2007, the CA granted the petition, reversing the decision of the NLRC in the following
manner:
WHEREFORE, premises considered, this Petition for Certiorari is GRANTED. The Decision, dated 28
October 2005, and Resolution, dated 31 January 2006 respectively, of public respondent National Labor
Relations Commission-Fourth Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-12-2495-03)
are SET ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and ordering
respondent to reinstate petitioner without loss of seniority rights and other privileges with full backwages
inclusive of allowances and other benefits computed from the time she was dismissed on 30 November
2003 up to the date of actual reinstatement. Further, moral and exemplary damages, in the amount of
Fifty Thousand Pesos ([P]50,000.00) each; and attorneys fees equivalent to ten percent (10%) of the
total monetary award, are awarded.
Costs against respondent.
SO ORDERED.21
Aggrieved by the reversal of the NLRC decision, GMC filed a motion for reconsideration. However, in its
Resolution dated January 30, 2008, the CA denied the same; hence, this petition.
The petitioner raises the following issues, to wit:
I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30,
2008 OF THE COURT OF APPEALS ARE CONTRARY TO LAW AND ESTABLISHED
JURISPRUDENCE.
II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30,
2008 OF THE COURT OF APPEALS VIOLATE THE LAW AND ESTABLISHED
JURISPRUDENCE ON THE OBSERVANCE OF RESPECT AND FINALITY TO FACTUAL
FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION.
III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ITS
DECISION OF SEPTEMBER 21, 2007 AND RESOLUTION OF JANUARY 30, 2008 AS THE
SAME ARE CONTRARY TO THE EVIDENCE ON RECORD.22

The rule is that factual findings of quasi-judicial agencies such as the NLRC are generally accorded not
only respect, but at times, even finality because of the special knowledge and expertise gained by these
agencies from handling matters falling under their specialized jurisdiction. 24 It is also settled that this
Court is not a trier of facts and does not normally embark in the evaluation of evidence adduced during
trial.25 This rule, however, allows for exceptions. One of these exceptions covers instances when the
findings of fact of the trial court, or of the quasi-judicial agencies concerned, are conflicting or
contradictory with those of the CA. When there is a variance in the factual findings, it is incumbent upon
the Court to re-examine the facts once again.26
Furthermore, another exception to the general rule is when the said findings are not supported by
substantial evidence or if on the basis of the available facts, the inference or conclusion arrived at is
manifestly erroneous.27 Factual findings of administrative agencies are not infallible and will be set aside
when they fail the test of arbitrariness. 28 In the instant case, the Court agrees with the CA that the
conclusions arrived at by the LA and the NLRC are manifestly erroneous.
GMC claims that Viajar was validly dismissed on the ground of redundancy which is one of the
authorized causes for termination of employment. The petitioner asserts that it has observed the
procedure provided by law and that the same was done in good faith. To justify the respondents
dismissal, the petitioner presented: (i) the notification Letter-Memorandum dated October 27, 2003
addressed to the respondent which was received on October 30, 2003; 29 (ii) the "Establishment
Termination Report" as prescribed by the DOLE; 30 (iii) the two (2) checks issued in the respondents
name amounting to P440,253.02 and P21,211.35 as separation pay;31 and (iv) the list of dismissed
employees as of June 6, 2006 to show that GMC was in a "reduction mode." 32 Both the LA and the NLRC
found these sufficient to prove that the dismissal on the ground of redundancy was done in good faith.
The Court does not agree.
Article 283 of the Labor Code provides that redundancy is one of the authorized causes for dismissal. It
reads:
Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installment of labor-saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
worker and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at
least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year. (Emphasis supplied)
From the above provision, it is imperative that the employer must comply with the requirements for a
valid implementation of the companys redundancy program, to wit: (a) the employer must serve a written
notice to the affected employees and the DOLE at least one (1) month before the intended date of
retrenchment; (b) the employer must pay the employees a separation pay equivalent to at least one
month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must
abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria
in ascertaining which positions are redundant and may be abolished.33

The petition is denied.

In Smart Communications, Inc., v. Astorga,34 the Court held that:

The petitioner argues that the factual findings of the NLRC, affirming that of the LA must be accorded
respect and finality as it is supported by evidence on record. Both the LA and the NLRC found the
petitioners evidence sufficient to terminate the employment of respondent on the ground of redundancy.
The evidence also shows that GMC has complied with the procedural and substantive requirements for a
valid termination. There was, therefore, no reason for the CA to disturb the factual findings of the NLRC. 23

The nature of redundancy as an authorized cause for dismissal is explained in the leading case of
Wiltshire File Co., Inc. v. National Labor Relations Commission, viz:
"x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of
work. That no other person was holding the same position that private respondent held prior to

termination of his services does not show that his position had not become redundant. Indeed, in any
well organized business enterprise, it would be surprising to find duplication of work and two (2) or more
people doing the work of one person. We believe that redundancy, for purposes of the Labor Code, exists
where the services of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise."
The characterization of an employees services as superfluous or no longer necessary and, therefore,
properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and
soundness of such characterization or decision is not subject to discretionary review provided, of course,
that a violation of law or arbitrary or malicious action is not shown. 35 (Emphasis supplied and citations
omitted)
While it is true that the "characterization of an employees services as superfluous or no longer
necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the
employer,"36 the exercise of such judgment, however, must not be in violation of the law, and must not be
arbitrary or malicious. The Court has always stressed that a company cannot simply declare redundancy
without basis. To exhibit its good faith and that there was a fair and reasonable criteria in ascertaining
redundant positions, a company claiming to be over manned must produce adequate proof of the same.
We reiterate what was held in Caltex (Phils.), Inc. v. NLRC:37

On the other hand, the respondent presented proof that the petitioner had been hiring new employees
while it was firing the old ones, 45 negating the claim of redundancy. It must, however, be pointed out that
in termination cases, like the one before us, the burden of proving that the dismissal of the employees
was for a valid and authorized cause rests on the employer. It was incumbent upon the petitioner to show
by substantial evidence that the termination of the employment of the respondent was validly made and
failure to discharge that duty would mean that the dismissal is not justified and therefore illegal. 46
Furthermore, the Court cannot overlook the fact that Viajar was prohibited from entering the company
premises even before the effectivity date of termination; and was compelled to sign an "Application for
Retirement and Benefits." These acts exhibit the petitioners bad faith since it cannot be denied that the
respondent was still entitled to report for work until November 30, 2003. The demand for her to sign the
"Application for Retirement and Benefits" also contravenes the fact that she was terminated due to
redundancy. Indeed, there is a difference between voluntary retirement of an employee and forced
termination due to authorized causes.
In Quevedo v. Benguet Electric Cooperative, Incorporated,47 this Court explained the difference between
retirement and termination due to redundancy, to wit:
While termination of employment and retirement from service are common modes of ending employment,
they are mutually exclusive, with varying juridical bases and resulting benefits. Retirement from service is
contractual (i.e. based on the bilateral agreement of the employer and employee), while termination of
employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds,
benefits and procedure). The benefits resulting from termination vary, depending on the cause. For
retirement, Article 287 of the Labor Code gives leeway to the parties to stipulate above a floor of benefits.

In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a company to merely declare
that it has become overmanned (sic). It must produce adequate proof of such redundancy to justify the
dismissal of the affected employees.

xxxx

In Panlilio v. National Labor Relations Commission, we held that evidence must be presented to
substantiate redundancy such as but not limited to the new staffing pattern, feasibility studies/proposal,
on the viability of the newly created positions, job description and the approval by the management of the
restructuring.38 (Emphasis supplied and citations omitted)

The line between voluntary and involuntary retirement is thin but it is one which this Court has drawn.
Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement
amounts to a discharge, rendering the employer liable for termination without cause. The employees
intent is the focal point of analysis. In determining such intent, the fairness of the process governing the
retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or
coercion are relevant parameters.48 (Emphasis supplied and citations omitted)

In the instant case, the Court agrees with the CA when it held that the petitioner failed to present
substantial proof to support GMCs general allegations of redundancy. As shown from the records, the
petitioner simply presented as its evidence of good faith and compliance with the law the notification
letter to respondent Viajar;39 the "Establishment Termination Report" it submitted to the DOLE Office; 40
the two (2) checks issued in the respondents name amounting to P440,253.02 and P21,211.35;41 and
the list of terminated employees as of June 6, 2006. 42 We agree with the CA that these are not enough
proof for the valid termination of Viajars employment on the ground of redundancy.
The letter-memorandum which contains general allegations is not enough to convince this Court that
Viajars termination of employment due to redundancy was warranted under the circumstances. There is
no showing that GMC made an evaluation of the existing positions and their effect to the company.
Neither did GMC exert efforts to present tangible proof that it was experiencing business slow down or
over hiring. The "Establishment Termination Report" it submitted to the DOLE Office did not account for
anything to justify declaring the positions redundant. The Court notes that the list of terminated
employees presented by GMC was a list taken as of June 6, 2006 or almost three years after the
respondent was illegally dismissed and almost a year after the LA promulgated its decision. While the
petitioner had been harping that it was on a "reduction mode" of its employees, it has not presented any
evidence (such as new staffing pattern, feasibility studies or proposal, viability of newly created positions,
job description and the approval of the management of the restructuring, 43 audited financial documents
like balance sheets, annual income tax returns and others) 44 which could readily show that the companys
declaration of redundant positions was justified. Such proofs, if presented, would suffice to show the
good faith on the part of the employer or that this business prerogative was not whimsically exercised in
terminating respondents employment on the ground of redundancy. Unfortunately, these are wanting in
the instant case. The petitioner only advanced a self-serving general claim that it was experiencing
business reverses and that there was a need to reduce its manpower complement.

Clearly, the instant case is not about retirement since the term has its peculiar meaning and is governed
by Article 287 of the Labor Code. Rather, this is a case of termination due to redundancy under Article
283 of the Labor Code. Thus, the demand of GMC for the respondent to sign an "Application for
Retirement and Benefits" is really suspect.
Finally, the Court agrees with the CA that the award of moral and exemplary damages is proper.1wphi1
The Court has awarded moral damages in termination cases when bad faith, malice or fraud attend the
employees dismissal or where the act oppresses labor, or where it was done in a manner contrary to
morals, good customs or public policy.49 We quote with favor the findings of the CA:
We also award moral and exemplary damages to petitioner. While it is true that good faith is presumed,
the circumstances surrounding the dismissal of petitioner negate its existence. Moral damages may be
recovered only where the dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary to morals, good customs or public
policy while exemplary damages are recoverable only if the dismissal was done in a wanton, oppressive,
or malevolent manner. To reiterate, immediately after receipt of her termination letter which was effective
on 30 November 2003, petitioner was no longer treated as an employee of respondent as early as the
31st of October 2003; she was already barred from entering the company premises; she was deprived
access to her office computer; and she was excluded from the bandy [sic] clock. She was also made to
sign documents, including an "APPLICATION FOR RETIREMENT AND BENEFITS" in the guise of
payment of her separation pay. When petitioner confronted her immediate superior regarding her
termination, the latters shock aggravated her confusion and suffering. She also learned about the
employment of a number of new employees, several of whom were even employed in her former
department. Petitioner likewise suffered mental torture brought about by her termination even though its
cause was not clear and substantiated.50 (Citations omitted)

WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007 of the Court of Appeals,
as well as its Resolution dated January 30, 2008 in CA-G.R. SP No. 01734, are hereby AFFIRMED.

CERTIFICATION OF SEPARATION FROM EMPLOYMENT

G.R. No. 161787

April 27, 2011

To whom it may concern:

MASING AND SONS DEVELOPMENT CORPORATION and CRISPIN CHAN,

vs.
GREGORIO P. ROGELIO, Respondent.

Petitioners,
This is to certify that my employee, GREGORIO P. ROGELIO bearing SSS ID No. 07-0495213-7 who
was first covered effective January, 1974 up to June 30, 1989 inclusive, is now officially separated from
my employ effective the 1st of July, 1989.

DECISION
Please be guided accordingly.
BERSAMIN, J.:
In any controversy between a laborer and his master, doubts reasonably arising from the evidence are
resolved in favor of the laborer.
We re-affirm this principle, as we uphold the decision of the Court of Appeals (CA) that reversed the
uniform finding that there existed no employment relationship between the petitioners, as employers, and
the respondent, as employee, made by the National Labor Relations Commission (NLRC) and the Labor
Arbiter (LA).
Petitioners Masing and Sons Development Corporation (MSDC) and Crispin Chan assail the October 24,
2003 decision,1 whereby the CA reversed the decision dated January 28, 2000 of the NLRC that affirmed
the decision of the LA (dismissing the claim of the respondent for retirement benefits on the ground that
he had not been employed by the petitioners but by another employer).
Antecedents
On May 19, 1997, respondent Gregorio P. Rogelio (Rogelio) brought against Chan a complaint for
retirement pay pursuant to Republic Act No. 7641, 2 in relation to Article 287 of the Labor Code, holiday
and rest days premium pay, service incentive leave, 13th month pay, cost of living allowances (COLA),
underpayment of wages, and attorneys fees. On January 20, 1998, Rogelio amended his complaint to
include MSDC as a co-respondent. His version follows.
Rogelio was first employed in 1949 by Pan Phil. Copra Dealer, MSDCs predecessor, which engaged in
the buying and selling of copra in Ibajay, Aklan, with its main office being in Kalibo, Aklan. Masing Chan
owned and managed Pan Phil. Copra Dealer, and the Branch Manager in Ibajay was a certain So Na. In
1965, Masing Chan changed the business name of Pan Phil. Copra Dealer to Yao Mun Tek, and
appointed Jose Conanan Yap Branch Manager in Ibajay. In the 1970s, the business name of Yao Mun
Tek was changed to Aklan Lumber and General Merchandise, and Leon Chan became the Branch
Manager in Ibajay. Finally, in 1984, Masing Chan adopted the business name of Masing and Sons
Development Corporation (MSDC), appointing Wynne or Wayne Lim (Lim) as the Branch Manager in
Ibajay. Crispin Chan replaced his father, Masing Chan, in 1990 as the manager of the entire business.
In all that time, Rogelio worked as a laborer in the Ibajay Branch, along with twelve other employees. In
January 1974, Rogelio was reported for Social Security System (SSS) coverage. After paying
contributions to the SSS for more than 10 years, he became entitled to receive retirement benefits from
the SSS. Thus, in 1991, he availed himself of the SSS retirement benefits, and in order to facilitate the
grant of such benefits, he entered into an internal arrangement with Chan and MSDC to the effect that
MSDC would issue a certification of his separation from employment notwithstanding that he would
continue working as a laborer in the Ibajay Branch.
The certification reads as follows:3
CRISPIN
IBAJAY, AKLAN
August 10, 1991

AMIGO

(SGD.)
Proprietor
SSS ID No. 07-0595800-4

CRISPIN

AMIGO

CHAN

On March 17, 1997, Rogelio was paid his last salary. Lim, then the Ibajay Branch Manager, informed
Rogelio that he was deemed retired as of that date. Chan confirmed to Rogelio that he had already
reached the compulsory retirement age when he went to the main office in Kalibo to verify his status.
Rogelio was then 67 years old.
Considering that Rogelio was supposedly receiving a daily salary of P70.00 until 1997, but did not
receive any 13th month pay, service incentive leave, premium pay for holidays and rest days and COLA,
and even any retirement benefit from MSDC upon his retirement in March 1997, he commenced his
claim for such pay and benefits.
In substantiation, Rogelio submitted the January 19, 1998 affidavits of his co-workers, namely: Domingo
Guevarra,4 Juanito Palomata,5 and Ambrosio Seeres,6 whereby they each declared under oath that
Rogelio had already been working at the Ibajay Branch by the time that MSDCs predecessor had hired
them in the 1950s to work in that branch; and that MSDC and Chan had continuously employed them
until their own retirements, that is, Guevarra in 1994, and Palomata and Seeres in 1997. They thereby
corroborated the history of MSDC and the names of the various Branch Managers as narrated by
Rogelio, and confirmed that like Rogelio, they did not receive any retirement benefits from Chan and
MSDC upon their retirement.
In their defense, MSDC and Chan denied having engaged in copra buying in Ibajay, insisting that they did
not ever register in such business in any government agency. They asserted that Lim had not been their
agent or employee, because he had been an independent copra buyer. They averred, however, that
Rogelio was their former employee, hired on January 3, 1977 and retired on June 30, 1989; 7 and that
Rogelio was thereafter employed by Lim starting from July 1, 1989 until the filing of the complaint.
MSDC and Chan submitted the affidavit of Lim, whereby Lim stated that Rogelio was one of his
employees from 1989 until the termination of his services. 8 They also submitted SSS Form R-1A, Lims
SSS Report of Employee-Members (showing that Rogelio and Palomata were reported as Lims
employees);9 Lims application for registration as copra buyer; 10 Chans affidavit;11 and the affidavit of
Guevarra12 and Seeres,13 whereby said affiants denied having executed or signed the January 19, 1998
affidavits submitted by Rogelio.
In his affidavit, Guevarra recanted the statement attributed to him that he had been employed by Chan
and MSDC, and declared that he had been an employee of Lim. Likewise, Guevarras daughter executed
an affidavit,14 averring that his father had been an employee of Lim and that his father had not signed the
affidavit dated January 19, 1998.
On April 5, 1999, the LA dismissed the complaint against Chan and MSDC, ruling thus:

CHAN

COPRA

DEALER

From said evidence, it is our considered view that there exists no employer-employee relationship
between the parties effective July 1, 1989 up to the date of the filing of the instant complaint complainant
was an employee of Wynne O. Lim. Hence, his claim for retirement should have been filed against the

latter for he admitted that he was the employer of herein complainant in his sworn statement dated June
9, 1998.

Ruling
The petition for review is barren of merit.

Complainants claim for retirement benefits against herein respondents under RA No. 7641 has been
barred by prescription considering the fact that it partakes of the nature of a money claim which
prescribed after the lapse of three years after its accrual.
The rest of the claims are also dismissed for the same accrued during complainants employment with
Wynne O. Lim.
WHEREFORE, PREMISES CONSIDERED, this case is hereby DISMISSED for lack of merit.
SO ORDERED.15
Rogelio appealed, but the NLRC affirmed the decision of the LA on January 28, 2000, observing that
there could be no double retirement in the private sector; that with the double retirement, Rogelio would
be thereby enriching himself at the expense of the Government; and that having retired in 1991, Rogelio
could not avail himself of the benefits under Republic Act No. 7641 entitled An Act Amending Article 287
of Presidential Decree No. 442, As Amended, Otherwise Known as The Labor Code Of The Philippines,
By Providing for Retirement Pay to Qualified Private Sector Employees in the Absence Of Any
Retirement Plan in the Establishment, which took effect only on January 7, 1993.16
The NLRC denied Rogelios motion for reconsideration.
Ruling of the CA
Rogelio commenced a special civil action for certiorari in the CA, charging the NLRC with grave abuse of
discretion in denying to him the benefits under Republic Act No. 7641, and in rejecting his money claims
on the ground of prescription.
On October 24, 2003, the CA promulgated its decision, 17 holding that Rogelio had substantially
established that he had been an employee of Chan and MSDC, and that the benefits under Republic Act
No. 7641 were apart from the retirement benefits that a qualified employee could claim under the Social
Security Law, conformably with the ruling in Oro Enterprises, Inc. v. NLRC (G.R. No. 110861, November
14, 1994, 238 SCRA 105).
The CA decreed:
WHEREFORE, premises considered, the Decision of the public respondent NLRC is hereby VACATED
and SET ASIDE. This case is remanded to the Labor Arbiter for the proper computation of the retirement
benefits of the petitioner based on Article 287 of the Labor Code, as amended, to be pegged at the
minimum wage prevailing in Ibajay, Aklan as of March 17, 1997, and attorneys fees based on the same.
Without costs.

I
Certiorari was timely commenced in the CA
Anent the first error, the Court finds that the CA did not err in taking cognizance of the petition for
certiorari of Rogelio.
Based on the records, Rogelio received the NLRCs denial of his motion for reconsideration on January
16, 2003. He then had 60 days from January 16, 2003, or until March 17, 2003, within which to file his
petition for certiorari. It is without doubt, therefore, that his filing was timely considering that the CA
received his petition for certiorari at 2:44 oclock in the afternoon of March 17, 2003.
The petitioners insistence, that the issuance of the entry of judgment with respect to the NLRCs decision
precluded Rogelio from filing a petition for certiorari, was unwarranted. It ought to be without debate that
the finality of the NLRCs decision was of no consequence in the consideration of whether or not he could
bring a special civil action for certiorari within the period of 60 days for doing so under Section 4, Rule 65,
Rules of Court, simply because the question being thereby raised was jurisdictional.
II
Respondent
remained
employee despite his supposed separation

the

petitioners

Did Rogelio remain the employee of the petitioners from July 6, 1989 up to March 17, 1997?
The issue of whether or not an employer-employee relationship existed between the petitioners and the
respondent in that period was essentially a question of fact. 18 In dealing with such question, substantial
evidence that amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion19 is sufficient. Although no particular form of evidence is required to prove the
existence of the relationship, and any competent and relevant evidence to prove the relationship may be
admitted,20 a finding that the relationship exists must nonetheless rest on substantial evidence.
Generally, the Court does not review errors that raise factual questions, primarily because the Court is
not a trier of facts. However, where, like now, there is a conflict between the factual findings of the Labor
Arbiter and the NLRC, on the one hand, and those of the CA, on the other hand, 21 it is proper, in the
exercise of our equity jurisdiction, to review and re-evaluate the factual issues and to look into the
records of the case and re-examine the questioned findings.
The CA delved on and resolved the issue of the existence of an employer-employee relationship between
the petitioners and the respondent thusly:

SO ORDERED.
Chan and MSDCs motion for reconsideration was denied by the CA.
Issues
In this appeal, Chan and MSDC contend that the CA erred: (a) in taking cognizance of Rogelios petition
for certiorari despite the decision of the NLRC having become final and executory almost two months
before the petition was filed; (b) in concluding that Rogelio had remained their employee from July 6,
1989 up to March 17, 1997; and (c) in awarding retirement benefits and attorneys fees to Rogelio.

As to the factual issue, the petitioners evidence consists of his own statements and those of his alleged
co-worker from 1950 until 1997, Juanito Palomata, who unlike his former co-workers Domingo Guevarra
and Ambrosio Seeres, did not disown the "Sinumpaang Salaysay" he executed, in corroboration of
petitioners allegations; and the Certification dated August 10, 1991 stating that petitioner was first placed
under coverage of the SSS in January 1974 to June 30, 1989 and was separated from service effective
July 1, 1989, a certification executed by respondent Crispin Amigo Chan which, petitioner maintains, was
only intended for his application for retirement benefits with the SSS.
Private respondents evidence, on the other hand, consisted of respondent Crispin Amigo Chans counter
statements as well as documentary evidence consisting of (1) Wayne Lims Affidavit which petitioner
acknowledged in his Reply dated July 11, 1998, par. 8, admitting to being the employer of petitioner from

July 1, 1989 until the filing of the complaint; (2) Certification dated October 22, 1991 showing petitioners
employment with respondents to have been between January 3, 1977 until July 1, 1989; (3) Affidavits of
Guevarra and Seeres disowning their signatures in the affidavits submitted in evidence by the petitioner;
(4) SSS report executed by Wayne Lim of his initial list of employees as of July 1, 1989 which includes
the petitioner. On appeal, the respondents further submitted documentary evidence showing that Wayne
Lim registered his business name on July 11, 1989 and apparently went into business buying copra.
At this point, we should note the following factual discrepancies in the evidence on hand: First, the
respondents issued certificates stating the commencement of petitioners employment on different dates,
i.e. January 1974 and January 1977, although the earlier date referred only to the period when petitioner
was first placed under the coverage of the SSS, which need not necessarily refer to the commencement
of his employment. Secondly, while respondent Crispin Amigo Chan denied having ever engaged in
copra buying in Ibajay, the certificates he issued both dated in 1991 state otherwise, for he declared
himself as a "copra dealer" with address in Ibajay. Then there is the statement of the petitioner that
Wayne Lim was the respondents manager in their branch office in Ibajay since 1984, a statement that
respondents failed to disavow. Instead, respondents insisted on their non sequitur argument that they
had never engaged in copra buying activities in Ibajay, and that Wayne Lim was in business all by himself
in regard to such activity.
The denial on respondents part of their copra buying activities in Ibajay begs the obvious question: What
were petitioner and his witness Juanito Palomata then doing for respondents as laborers in Ibajay prior to
July 1, 1989? Indeed, what did petitioner do for the respondents as the latters laborer prior to July 1,
1989, which was different from what he did after said date? The records showed that he continued doing
the same job, i.e. as laborer and trusted employee tasked with the responsibility of getting money from
the Kalibo office of respondents which was used to buy copra and pay the employees salaries. He did
not only continue doing the same thing but he apparently did the same at or from the same place, i.e. the
bodega in Ibajay, which his co-worker Palomata believed to belong to the respondent Masing & Sons.
Since respondents admitted to employing petitioner from 1977 to 1989, we have to conclude that,
indeed, the bodega in Ibajay was owned by respondents at least prior to July 1, 1989 since petitioner had
consistently stated that he worked for the respondents continuously in their branch office in Ibajay under
different managers and nowhere else.
We believe that the respondents strongest evidence in regard to the alleged separation of petitioner from
service effective July 1, 1989 would be the affidavit of Wayne Lim, owning to being the employer of
petitioner since July 1, 1989 and the SSS report that he executed listing petitioner as one of his
employees since said date. But in light of the incontrovertible physical reality that petitioner and his coworkers did go to work day in and day out for such a long period of time, doing the same thing and in the
same place, without apparent discontinuity, except on paper, these documents cannot be taken at their
face value. We note that Wayne Lim apparently inherited, at least on paper, ten (10) employees of
respondent Crispin Amigo Chan, including petitioner, all on the same day, i.e. on July 1, 1989. We note,
too, that while there exists an initial report of employees to the SSS by Wayne Lim, no other document
apart from his affidavit and business registration was offered by respondents to bolster their contention,
irrespective of the fact that Wayne Lim was not a party respondent. What were the circumstances
underlying such alleged mass transfer of employment? Unfortunately, the evidence for the respondents
does not provide us with ready answers. We could conclude that respondents sold their business in
Ibajay and assets to Wayne Lim on July 1, 1989; however, as pointed out above, respondent Crispin
Amigo Chan himself said that he was a "copra dealer" from Ibajay in August and October of 1991.
Whether or not he was registered as a copra buyer is immaterial, given that he declared himself a "copra
dealer" and had apparently engaged in the activity of buying copra, as shown precisely by the
employment of petitioner and Palomata. If Wayne Lim, from being the respondents manager in Ibajay
became an independent businessman and took over the respondents business in Ibajay along with all
their employees, why did not the respondents simply state that fact for the record? More importantly, why
did the petitioner and Palomata continue believing that Wayne Lim was only the respondents manager?
Given the long employment of petitioner with the respondents, was it possible for him and his witness to
make such mistake? We do not think so. In case of doubt, the doubt is resolved in favor of labor, in favor
of the safety and decent living for the laborer as mandated by Article 1702 of the Civil Code. The reality of
the petitioners toil speaks louder than words. xxx22
We agree with the CAs factual findings, because they were based on the evidence and records of the
case submitted before the LA. The CA essentially complied with the guidepost that the substantiality of
evidence depends on both its quantitative and its qualitative aspects. 23 Indeed, the records substantially

established that Chan and MSDC had employed Rogelio until 1997. In contrast, Chan and MSDC failed
to adduce credible substantiation of their averment that Rogelio had been Lims employee from July 1989
until 1997. Credible proof that could outweigh the showing by Rogelio to the contrary was demanded of
Chan and MSDC to establish the veracity of their allegation, for their mere allegation of Rogelios
employment under Lim did not constitute evidence, 24 but they did not submit such proof, sadly failing to
discharge their burden of proving their own affirmative allegation. 25 In this regard, as we pointed out at
the start, the doubts reasonably arising from the evidence are resolved in favor of the laborer in any
controversy between a laborer and his master.
III
Respondent
from the petitioners

entitled

to

retirement

benefits

Article 287 of the Labor Code, as amended by Republic Act No. 7641, provides:
Article 287. Retirement. Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements; Provided,
however, That an employees retirement benefits under any collective bargaining and other agreements
shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5)
years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves.
Retail, service and agricultural establishments or operations employing not more than ten (10)
employees or workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under
Article 288 of this Code.
Was Rogelio entitled to the retirement benefits under Article 287 of the Labor Code, as amended by
Republic Act No. 7641?
The CA held so in its decision, to wit:
Having reached the conclusion that petitioner was an employee of the respondents from 1950 to March
17, 1997, and considering his uncontroverted allegation that in the Ibajay branch office where he was
assigned, respondents employed no less than 12 workers at said later date, thus affording private
respondents no relief from the duty of providing retirement benefits to their employees, we see no reason
why petitioner should not be entitled to the retirement benefits as provided for under Article 287 of the
Labor Code, as amended. The beneficent provisions of said law, as applied in Oro Enterprises Inc. v.
NLRC, is apart from the retirement benefits that can be claimed by a qualified employee under the social
security law. Attorneys fees are also granted to the petitioner. But the monetary benefits claimed by
petitioner cannot be granted on the basis of the evidence at hand.26

We concur with the CAs holding. The third paragraph of the aforequoted provision of the Labor Code
entitled Rogelio to retirement benefits as a necessary consequence of the finding that Rogelio was an
employee of MSDC and Chan. Indeed, there should be little, if any, doubt that the benefits under
Republic Act No. 7641, which was enacted as a labor protection measure and as a curative statute to
respond, in part at least, to the financial well-being of workers during their twilight years soon following
their life of labor, can be extended not only from the date of its enactment but retroactively to the time the
employment contracts started.27
WHEREFORE, the Court denies the petition for review on certiorari, and affirms the decision
promulgated on October 24, 2003 in CA-G.R. SP No.75983.Costs of suit to be paid by the petitioners.

G.R. No. 167678

WHEREFORE, premises considered judgment is hereby rendered dismissing the complaint for lack of
merit.

June 22, 2010

SOUTHEASTERN SHIPPING, SOUTHEASTERN

vs.
FEDERICO U. NAVARRA, JR., Respondent.

SHIPPING

GROUP,

LTD.,

Petitioners,

SO ORDERED.6
Evelyn appealed the Decision to the NLRC.

DECISION

Ruling of the NLRC

DEL CASTILLO, J.:

On May 7, 2003, the NLRC rendered a Decision reversing that of the Labor Arbiter, the dispositive
portion of which provides:

Money claims arising from employer-employee relations, including those specified in the Standard
Employment Contract for Seafarers, prescribe within three years from the time the cause of action
accrues.1 However, for death benefit claims to prosper, the seafarers death must have occurred during
the effectivity of said contract.

WHEREFORE, the appealed decision is REVERSED and SET ASIDE. Judgment is hereby rendered
ordering the respondents Southeastern Shipping/Southeastern Shipping Group Ltd. jointly and severally,
to pay complainant Evelyn J. Navarra the following:

This Petition for Review assails the January 31, 2005 Decision 2 and the April 4, 2005 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP. No. 85584. The CA dismissed the petition for certiorari filed before
it assailing the May 7, 2003 Decision4 of the National Labor Relations Commission (NLRC) ordering
petitioners to pay to Evelyn J. Navarra (Evelyn), the surviving spouse of deceased Federico U. Navarra,
Jr. (Federico), death compensation, allowances of the three minor children, burial expenses plus 10% of
the total monetary awards as and for attorney's fees.

Death compensation -

US$ 50,000.00

Minor child allowance

(3 x US$ 7,000) -

21,000.00

Burial expense -

1,000.00

Total

US$ 72,000.00

Factual Antecedents
Petitioner Southeastern Shipping, on behalf of its foreign principal, petitioner Southeastern Shipping
Group, Ltd., hired Federico to work on board the vessel "George McLeod." Federico signed 10
successive separate employment contracts of varying durations covering the period from October 5,
1995 to March 30, 1998. His latest contract was approved by the Philippine Overseas Employment
Administration (POEA) on January 21, 1998 for 56 days extendible for another 56 days. He worked as
roustabout during the first contract and as a motorman during the succeeding contracts.
On March 6, 1998, Federico, while on board the vessel, complained of having a sore throat and on and
off fever with chills. He also developed a soft mass on the left side of his neck. He was given medication.
On March 30, 1998, Federico arrived back in the Philippines. On April 21, 1998 the specimen excised
from his neck lymph node was found negative for malignancy. 5 On June 4, 1998, he was diagnosed at
the Philippine General Hospital to be suffering from a form of cancer called Hodgkin's Lymphoma,
Nodular Sclerosing Type (also known as Hodgkin's Disease). This diagnosis was confirmed in another
test conducted at the Medical Center Manila on June 8, 1998.
On September 6, 1999, Federico filed a complaint against petitioners with the arbitration branch of the
NLRC claiming entitlement to disability benefits, loss of earning capacity, moral and exemplary damages,
and attorney's fees.
During the pendency of the case, on April 29, 2000, Federico died. His widow, Evelyn, substituted him as
party complainant on her own behalf and in behalf of their three children. The claim for disability benefits
was then converted into a claim for death benefits.
Ruling of the Labor Arbiter
On May 10, 2000, Labor Arbiter Ermita T. Abrasaldo-Cuyuca rendered a Decision dismissing the
complaint on the ground that "Hodgkin's Lymphoma is not one of the occupational or compensable
diseases or the exact cause is not known," the dispositive portion of which states:

Plus 10% of the total monetary awards as and for attorney's fees.
SO ORDERED.7
Petitioners filed a Motion for Reconsideration which was denied by the NLRC. They, thus, filed a petition
for certiorari with the CA.
Ruling of the Court of Appeals
The CA found that the claim for benefits had not yet prescribed despite the complaint being filed more
than one year after Federico's return to the Philippines. It also found that although Federico died 17
months after his contract had expired, his heirs could still claim death benefits because the cause of his
death was the same illness for which he was repatriated. The dispositive portion of the CA Decision
states:
WHEREFORE, premises considered, petition is hereby DISMISSED for lack of merit and the May 7,
2003 Decision of the National Labor Relations Commission is hereby AFFIRMED en toto.1avvphi1
SO ORDERED.8
After the denial by the CA of their motion for reconsideration, petitioners filed the present petition for
review.
Issues
Petitioners raise the following issues:

I
THE HON. COURT OF APPEALS ERRED IN RULING THAT PRESCRIPTION DOES NOT APPLY
DESPITE THE LATE FILING OF THE COMPLAINT OF THE RESPONDENT FEDERICO U. NAVARRA,
JR.
II
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT HODGKIN'S DISEASE IS A
COMPENSABLE ILLNESS.
III
THE HON. COURT OF APPEALS ERRED IN ITS CONCLUSION THAT PETITIONERS ARE LIABLE
FOR THE DEATH OF THE RESPONDENT AS SUCH DEATH WAS DURING THE TERM OF HIS
EMPLOYMENT CONTRACT.9
Petitioners' Arguments
Petitioners contend that the factual findings of the CA were not supported by sufficient evidence. They
argue that as can be seen from the medical report of Dr. Salim Marangat Paul, Federico suffered from
and was treated for Acute Respiratory Tract Infection, not Hodgkin's Disease, during his employment in
March 1998. They further contend that Federico returned to the Philippines on March 30, 1998 because
he had already finished his contract, not because he had to undergo further medical treatment.
They also insist that the complaint has already prescribed. Despite having been diagnosed on June 4,
1998 of Hodgkin's Disease, the complaint was filed only on September 6, 1999, one year and five
months after Federico arrived in Manila from Qatar.
They also posit that respondents are not entitled to the benefits claimed because Federico did not die
during the term of his contract and the cause of his death was not contracted by him during the term of
his contract.
Respondents' Arguments

The Philippine Overseas Employment Administration (POEA) or the National Labor Relations
Commission (NLRC) shall have original and exclusive jurisdiction over any and all disputes or
controversies arising out of or by virtue of this Contract.
Recognizing the peculiar nature of overseas shipboard employment, the employer and the seafarer
agree that all claims arising from this contract shall be made within one (1) year from the date of the
seafarer's return to the point of hire.
On the other hand, the Labor Code states:
Art. 291. Money claims.-All money claims arising from employer-employee relations during the effectivity
of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they
shall forever be barred.
The Constitution affirms labor as a primary social economic force. 10 Along this vein, the State vowed to
afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.11
"The employment of seafarers, including claims for death benefits, is governed by the contracts they sign
every time they are hired or rehired; and as long as the stipulations therein are not contrary to law,
morals, public order or public policy, they have the force of law between the parties." 12
In Cadalin v. POEA's Administrator,13 we held that Article 291 of the Labor Code covers all money claims
from employer-employee relationship. "It is not limited to money claims recoverable under the Labor
Code, but applies also to claims of overseas contract workers".14
Based on the foregoing, it is therefore clear that Article 291 is the law governing the prescription of
money claims of seafarers, a class of overseas contract workers. This law prevails over Section 28 of the
Standard Employment Contract for Seafarers which provides for claims to be brought only within one
year from the date of the seafarers return to the point of hire. Thus, for the guidance of all, Section 28 of
the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within which
the seafarers may file their money claims, is hereby declared null and void. The applicable provision is
Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord with the
States declared policy to afford full protection to labor. The prescriptive period in the present case is thus
three years from the time the cause of action accrues.1avvphi1

Respondents on the other hand contend that the complaint has not prescribed and that the prescriptive
period for filing seafarer claims is three years from the time the cause of action accrued. They claim that
in case of conflict between the law and the POEA Contract, it is the law that prevails.

In the present case, there is no exact showing of when the cause of action accrued. Nevertheless, it
could not have accrued earlier than January 21, 1998 which is the date of his last contract. Hence, the
claim has not yet prescribed, since the complaint was filed with the arbitration branch of the NLRC on
September 6, 1999.

Respondents also submit that Federico contracted on board the vessel the illness which later caused his
death, hence it is compensable.

Compensability and Liability

Our Ruling
The petition is partly meritorious.
Prescription
The employment contract signed by Federico stated that "the same shall be deemed an integral part of
the Standard Employment Contract for Seafarers," Section 28 of which states:
SECTION 28. JURISDICTION

In petitions for review on certiorari, only questions of law may be raised, the only exceptions being when
the factual findings of the appellate court are erroneous, absurd, speculative, conjectural, conflicting, or
contrary to the findings culled by the court of origin. Considering the conflicting findings of the NLRC, the
CA and the Labor Arbiter, we are impelled to resolve the factual issues in this case along with the legal
ones.15
Section 20 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers OnBoard Ocean-Going Vessels states:
A. COMPENSATION AND BENEFITS FOR DEATH
1. In case of death of the seafarer during the term of his contact, the employer shall pay his
beneficiaries the Philippine currency equivalent to the amount of Fifty Thousand US Dollars (US$50,000)

and an additional amount of Seven Thousand US Dollars (US$7,000) to each child under the age of
twenty-one (21) but not exceeding four children, at the exchange rate prevailing during the time of
payment. (Emphasis supplied)
Thus, as we declared in Gau Sheng Phils., Inc. v. Joaquin, Hermogenes v. Oseo Shipping Services, Inc.,
Prudential Shipping and Management Corporation v. Sta. Rita, Klaveness Maritime Agency, Inc. v.
Beneficiaries of Allas, in order to avail of death benefits, the death of the employee should occur during
the effectivity of the employment contract.16 For emphasis, we reiterate that the death of a seaman during
the term of employment makes the employer liable to his heirs for death compensation benefits, but if the
seaman dies after the termination of his contract of employment, his beneficiaries are not entitled to the
death benefits.17 Federico did not die while he was under the employ of petitioners. His contract of
employment ceased when he arrived in the Philippines on March 30, 1998, whereas he died on April 29,
2000. Thus, his beneficiaries are not entitled to the death benefits under the Standard Employment
Contract for Seafarers.
Moreover, there is no showing that the cancer was brought about by Federico's stint on board petitioners'
vessel. The records show that he got sick a month after he boarded M/V George Mcleod. He was then
brought to a doctor who diagnosed him to have acute respiratory tract infection. It was only on June 6,
1998, more than two months after his contract with petitioners had expired, that he was diagnosed to
have Hodgkin's Disease. There is no proof and we are not convinced that his exposure to the motor
fumes of the vessel, as alleged by Federico, caused or aggravated his Hodgkin's Disease.
While the Court adheres to the principle of liberality in favor of the seafarer in construing the Standard
Employment Contract, we cannot allow claims for compensation based on surmises. When the evidence
presented negates compensability, we have no choice but to deny the claim, lest we cause injustice to
the employer.
The law in protecting the rights of the employees, authorizes neither oppression nor self-destruction of
the employer there may be cases where the circumstances warrant favoring labor over the interests of
management but never should the scale be so tilted as to result in an injustice to the employer.18
WHEREFORE, the petition is PARTLY GRANTED. The January 31, 2005 Decision of the Court of
Appeals in CA-G.R. SP No. 85584 holding that the claim for death benefits has not yet prescribed is
AFFIRMED with MODIFICATION that petitioners are not liable to pay to respondents death
compensation benefits for lack of showing that Federicos disease was brought about by his stint on
board petitioners vessels and also considering that his death occurred after the effectivity of his contract.