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[G.R. No. 174208. January 25, 2012.]

JONATHAN V. MORALES, petitioner, vs. HARBOUR
CENTRE PORT TERMINAL, INC., respondent.
Assailed in this petition for review on certiorari filed pursuant to
Rule 45 of the 1997 Rules of Civil Procedure is the
Decision 1 dated 19 June 2006 rendered by the Special Tenth
Division of the Court of Appeals in CA-G.R. SP No.
92491, 2 the dispositive portion of which states:
WHEREFORE, premises considered, the Petition is GRANTED
and the assailed NLRC decision is hereby SET ASIDE. In lieu
thereof, the decision of the Labor Arbiter is ordered
REINSTATED. No costs.
SO ORDERED. 3
The Facts
On 16 May 2000, petitioner Jonathan V. Morales (Morales) was
hired by respondent Harbour Centre Port Terminal, Inc.
(HCPTI) as an Accountant and Acting Finance Officer, with a
monthly salary of P18,000.00. 4 Regularized on 17 November
2000, 5 Morales was promoted to Division Manager of the
Accounting Department, for which he was compensated a
monthly salary of P33,700.00, plus allowances starting 1 July
2002. 6 Subsequent to HCPTI's transfer to its new offices at
Vitas, Tondo, Manila on 2 January 2003, Morales received an
inter-office memorandum dated 27 March 2003, reassigning him
to Operations Cost Accounting, tasked with the duty of
"monitoring and evaluating all consumables requests, gears and
equipment" related to the corporation's operations and of
interacting with its sub-contractor, Bulk Fleet Marine
Corporation. The memorandum was issued by Danilo V. Singson
(Singson), HCPTI's new Administration Manager, duly noted by
Johnny U. Filart (Filart), its new Vice President for
Administration and Finance, and approved by its President and
Chief Executive Officer, Vicente T. Suazo, Jr. 7 SHIcDT
On 31 March 2003, Morales wrote Singson, protesting that his
reassignment was a clear demotion since the position to which
he was transferred was not even included in HCPTI's plantilla.
In response to Morales' grievance that he had been effectively
placed on floating status, 8 Singson issued a 4 April 2003 interoffice memorandum to the effect that "transfer of employees is a
management prerogative" and that HCPTI had "the right and
responsibility to find the perfect balance between the skills and
abilities of employees to the needs of the business." 9 For the
whole of the ensuing month Morales was absent from work
and/or tardy. Singson issued to Morales a 29 April 2003 interoffice memorandum denominated as a First Warning. The

memorandum reminded Morales that, as an employee of HCPTI,

he was subject to its rules and regulations and could be
disciplinarily dealt with pursuant to its Code of Conduct. 10 In
view of the absences Morales continued to incur, HCPTI issued
a Second Warning dated 6 May 2003 11and a Notice to Report
for Work and Final Warning dated 22 May 2003. 12
In the meantime, Morales filed a complaint dated 25 April 2003
against HCPTI, Filart and Singson, for constructive dismissal,
moral and exemplary damages as well as attorney's fees. In
support of the complaint which was docketed as NLRC-NCR
Case No. 00-04-05061-2003 before the arbitral level of the
National Labor Relations Commission (NLRC), 13 Morales
alleged that subsequent to its transfer to its new offices, HCPTI
had suspended all the privileges enjoyed by its Managers,
Division Chiefs and Section Heads; that upon the instruction of
Filart, Paulo Christian Suarez, HCPTI's Corporate Treasurer,
informed him on 7 March 2003 that he was going to be
terminated and had only three (3) weeks to look for another job;
that having confirmed his impending termination on 27 March
2003, Filart decided to "temper" the same by instead reassigning
him to Operations Cost Accounting; and, that his reassignment
to a position which was not included in HCPTI's plantilla was a
demotion and operated as a termination from employment as of
said date. Maintaining that he suffered great humiliation when,
in addition to being deprived of his office and its equipments, he
received no further instructions from Filart and Singson
regarding his new position, Morales claimed that he was left no
other choice but file his complaint for constructive dismissal. 14
Served with summons on 7 May 2003, 15 HCPTI, Filart and
Singson filed their position paper, arguing that Morales
abandoned his employment and was not constructively
dismissed. Calling attention to the supposed fact that Morales'
negligence had resulted in HCPTI's payment of P3,350,000.00
in taxes from which it was exempt as a PEZA-registered
company, said respondents averred that, confronted by Filart
sometime in March 2003 regarding the lapses in his work
performance, Morales admitted his inability to handle his tasks
at the corporation's Accounting Department; that as a
consequence, HCPTI reassigned Morales from managerial
accounting to operations cost accounting as an exercise of its
management prerogative to assign its employees to jobs for
which they are best suited; and, that despite the justification in
Singson's 4 April 2003 reply to his 31 March 2003 protest
against his reassignment, Morales chose to stop reporting for
work. Faulting Morales with unjustified refusal to heed the
repeated warnings and notices directing him to report for work,
HCPTI, Filart and Singson prayed for the dismissal of the
complaint and the grant of their counterclaim for attorney's
fees. 16

In receipt of the parties' replies 17 and rejoinders, 18 Labor

Arbiter Facundo L. Leda went on to render a Decision dated 21
November 2003, dismissing for lack of merit Morales' complaint
for constructive dismissal. In discounting said employees' illegal
dismissal from service, the Labor Arbiter ruled that Morales'
reassignment was a valid exercise of HCPTI's management
prerogative which cannot be construed as constructive dismissal
absent showing that the same was done in bad faith and resulted
in the diminution of his salary and benefits. 19 On appeal, the
foregoing decision was, however, reversed and set aside in the
29 July 2005 Decision rendered by the NLRC's Third Division
in NLRC NCR CA No. 038548-04. Finding that Morales'
reassignment was a clear demotion despite lack of showing of
diminution of salaries and benefits, 20 the NLRC disposed of
the appeal in the following wise:
WHEREFORE, the decision dated 21 November 2003 is
VACATED and SET ASIDE. The respondent company is
ordered to pay complainant the following: SacTCA
1. Backwages: (28 March 2003 to 21 Nov. 2003)
a. Salary: P33,700 x 7.77 mos. = P261,849.00
b. 13th month pay: P261,849/12 21,820.75

P283,669.75
2. Separation Pay: (16 May 2000 to 21 Nov. 2003)
one month for every year of service
(P33,700.00 x 4) = P134,800.00

Total = P 418,469.75
The other claims are DISMISSED.
SO ORDERED. 21
With the NLRC's 10 October 2005 denial of the motion for
reconsideration of the foregoing decision, 22 HCPTI elevated
the case to the CA through the Rule 65 petition
forcertiorari docketed before said court's then Special Tenth
Division as CA-G.R. SP No. 92491. 23 In view of the 3
November 2005 Entry of Judgment issued by the
NLRC, 24Morales filed a motion for execution 25 which
remained unresolved due to the parties' signification of their

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willingness to explore the possibility of amicably settling the

case. 26On 19 June 2006, the CA rendered the herein assailed
decision, reversing the NLRC's 29 July 2005 Decision, upon the
following findings and conclusions: (a) Morales' reassignment to
Operations Cost Accounting was a valid exercise of HCPTI's
prerogative to transfer its employees as the exigencies of the
business may require; (b) the transfer cannot be construed as
constructive dismissal since it entailed no demotion in rank,
salaries and benefits; and, (c) rather than being terminated,
Morales refused his new assignment by taking a leave of
absence from 4 to 17 April 2003 and disregarding HCPTI's
warnings and directives to report back for work. 27

made to appear as if it were not, 31constructive dismissal may,

likewise, exist if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to
forego his continued employment. 32 In cases of a transfer of an
employee, the rule is settled that the employer is charged with
the burden of proving that its conduct and action are for valid
and legitimate grounds such as genuine business
necessity 33 and that the transfer is not unreasonable,
inconvenient or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the employee's transfer
shall be tantamount to unlawful constructive dismissal. 34

Morales' motion for reconsideration of the foregoing decision

was denied for lack of merit in the CA's Resolution dated 14
August 2006, 28 hence, this petition.

Our perusal of the record shows that HCPTI miserably failed to

discharge the foregoing onus. While there was a lack of showing
that the transfer or reassignment entailed a diminution of salary
and benefits, one fact that must not be lost sight of was that
Morales was already occupying the position of Division
Manager at HCPTI's Accounting Department as a consequence
of his promotion to said position on 22 October 2002.
Concurrently appointed as member of HCPTI's Management
Committee (MANCOM) on 2 December 2002, 35 Morales was
subsequently reassigned by HCPTI "from managerial
accounting to Operations Cost Accounting" on 27 March 2003,
without any mention of the position to which he was actually
being transferred. That the reassignment was a demotion is,
however, evident from Morales' new duties which, far from
being managerial in nature, were very simply and vaguely
described as inclusive of "monitoring and evaluating all
consumables requests, gears and equipments related to
[HCPTI's] operations" as well as "close interaction with [its]
sub-contractor Bulk Fleet Marine Corporation." 36

The Issues
Morales proffers the following issues for resolution in seeking
the reversal of the CA's 19 June 2006 Decision and 14 August
2006 Resolution, to wit:
I
WHETHER OR NOT THE CHANGE IN THE
DESIGNATION/POSITION OF PETITIONER
CONSTITUTED CONSTRUCTIVE DISMISSAL.
II
WHETHER OR NOT THE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION. DaTICE
III
WHETHER OR NOT THE NATIONAL LABOR RELATIONS
COMMISSION DECISION WHICH HAS GAINED
FINALITY MAY BE PREVENTED EXECUTION BY
REASON OF THE PETITION FOR CERTIORARI FILED BY
RESPONDENTS. 29
The Court's Ruling
We find the petition impressed with merit.
Constructive dismissal exists where there is cessation of work
because "continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in
rank or a diminution in pay" 30 and other benefits. Aptly called
a dismissal in disguise or an act amounting to dismissal but

We have carefully pored over the records of the case but found
no evidentiary basis for the CA's finding that Morales was
designated as head of HCPTI's Operations
Department 37 which, as indicated in the corporation's plantilla,
had the Vice-President for Operations at its helm. 38 On the
contrary, Morales' demotion is evident from the fact that his
reassignment entailed a transfer from a managerial position to
one which was not even included in the corporation's plantilla.
For an employee newly charged with functions which even the
CA recognized as pertaining to the Operations Department, it
also struck a discordant chord that Morales was, just the same,
directed by HCPTI to report to Filart, its Vice-President for
Finance 39 with whom he already had a problematic working
relationship. 40 This matter was pointed out in Morales' 31
March 2003 protest but was notably brushed aside by HCPTI by
simply invoking management prerogative in its inter-office
memorandum dated 4 April 2003. 41 DIEAHc

Admittedly, 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. 42 By management prerogative
is meant the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work
assignments, working methods, processes to be followed,
regulation regarding transfer of employees, supervision of their
work, lay-off and discipline, and dismissal and recall of
workers. 43 Although jurisprudence recognizes said
management prerogative, it has been ruled that the exercise
thereof, while ordinarily not interfered with, 44 is not absolute
and is subject to limitations imposed by law, collective
bargaining agreement, and general principles of fair play and
justice. 45 Thus, an employer may transfer or assign employees
from one office or area of operation to another, provided there is
no demotion in rank or diminution of salary, benefits, and other
privileges, and the action is not motivated by discrimination,
made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. 46 Indeed, having the right
should not be confused with the manner in which that right is
exercised. 47
In its comment to the petition, HCPTI argues that Morales'
transfer was brought about by the reorganization of its corporate
structure in 2003 which was undertaken in the exercise of its
management prerogative to regulate every aspect of its
business. 48 This claim is, however, considerably at odds with
HCPTI's assertions before the Labor Arbiter to the effect, among
other matters, that Morales erroneously and negligently
authorized the repeated payments of realty taxes from which the
corporation was exempt as a PEZA-registered company; that
confronted by Filart regarding his poor work performance which
resulted in losses amounting to P3,350,000.00, Morales admitted
his inability to handle his job at the accounting department; and,
that as a consequence, HCPTI decided to reassign him to the
Operations Cost Accounting. 49 Without so much as an affidavit
from Filart to prove the same, this purported reason for the
transfer was, moreover, squarely refuted by Morales' 31 March
2003 protest against his reassignment. 50
By itself, HCPTI's claim of reorganization is bereft of any
supporting evidence in the record. Having pointed out the matter
in his 31 March 2003 written protest, Morales was able to prove
that HCPTI's existing plantilla did not include an Operations
Cost Accounting Department and/or an Operations Cost
Accountant. 51 As the party belatedly seeking to justify the
reassignment due to the supposed reorganization of its corporate
structure, HCPTI, in contrast, did not even bother to show that it
had implemented a corporate reorganization and/or approved a
new plantilla of positions which included the one to which
Morales was being transferred. Since the burden of evidence lies

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with the party who asserts the affirmative of an issue, the

respondent has to prove the allegations in his affirmative
defenses in the same manner that the complainant has to prove
the allegations in the complaint. 52 In administrative or quasijudicial proceedings like those conducted before the NLRC, the
standard of proof is substantial evidence which is understood to
be more than just a scintilla or such amount of relevant evidence
which a reasonable mind might accept as adequate to justify a
conclusion. 53

accordingly, REVERSED and SET ASIDE. In lieu thereof,

another is entered REINSTATING the NLRC's 29 July 2005
Decision.

Having alleged 27 March 2003 as the date of his constructive

dismissal, Morales was erroneously taken to task by the CA for
inconsistently claiming that he took a leave of absence from 4
April 2003 to 17 April 2003. 54 As the date of his reassignment,
27 March 2003 was understandably specified by Morales as the
date of his constructive dismissal since it was on said date that
he considered himself demoted. Alongside his reporting for duty
subsequent thereto, Morales' leave of absence on the aforesaid
dates is, in turn, buttressed by HCPTI's 29 April 2003 InterOffice Memorandum which, labeled as a First Warning, called
attention to his being "either absent or tardy from work on
several occasions during the entire month of April". 55 Since
Morales could not have been tardy had he outrightly rejected his
reassignment, this Inter-Office Memorandum notably debunks
HCPTI's contention that he altogether stopped reporting for
work after receiving Singson's reply to his 31 March 2003
protest against the demotion that resulted from his reassignment
to Operations Cost Accounting. 56

LOLITA
S. CONCEPCION, petitioner, vs. MINEX IMPORT
CORPORATION/MINERAMA CORPORATION,
KENNETH MEYERS, SYLVIA P. MARIANO and VINA
MARIANO, respondents.

Although much had been made about Morales' supposed refusal

to heed his employer's repeated directives for him to return to
work, our perusal of the record also shows that HCPTI's theory
of abandonment of employment cannot bear close scrutiny.
While ostensibly dated 6 May 2003, the Inter-Office
Memorandum labeled as a Second Warning was sent to Morales
thru the JRS Express only on 9 May 2003 57 or two (2) days
after summons were served on HCPTI, Filart and Singson on 7
May 2003. 58 Sent to Morales on 26 May 2003 or after the
parties' initial conference before the Labor Arbiter on 19 May
2003, 59 there was obviously even less reason for HCPTI's 22
May 2003 letter denominated as Notice to Report for Work and
Final Warning. As a just and valid ground for dismissal, at any
rate, abandonment requires the deliberate, unjustified refusal of
the employee to resume his employment, 60 without any
intention of returning. 61 Since an employee like Morales who
takes steps to protest his dismissal cannot logically be said to
have abandoned his work, it is a settled doctrine that the filing of
a complaint for illegal dismissal is inconsistent with
abandonment of employment. 62
WHEREFORE, premises considered, the petition
is GRANTED and the CA's assailed 19 June 2006 Decision is,

amount at the bottom of the cabinet the night before, and how
she had found upon reporting to work that morning that the
contents of the cabinet were in disarray and the money already
missing.

SO ORDERED.

[G.R. No. 153569. January 24, 2012.]

The employer may validly dismiss for loss of trust and

confidence an employee who commits an act of fraud prejudicial
to the interest of the employer. Neither a criminal prosecution
nor a conviction beyond reasonable doubt for the crime is a
requisite for the validity of the dismissal. Nonetheless, the
dismissal for a just or lawful cause must still be made upon
compliance with the requirements of due process under
the Labor Code; otherwise, the employer is liable to pay
nominal damages as indemnity to the dismissed employee.
Antecedents
Respondent Minex Import-Export Corporation (Minex) engaged
in the retail of semi-precious stones, selling them in kiosks or
stalls installed in various shopping centers within Metro Manila.
It employed the petitioner initially as a salesgirl, 1 rotating her
assignment among nearly all its outlets. It made her a supervisor
in July 1997, but did not grant her any salary increase. On
October 23, 1997, respondent Vina Mariano, an Assistant
Manager of Minex, assigned the petitioner to the SM Harrison
Plaza kiosk with the instruction to hold the keys of the kiosk.
Working under her supervision there were salesgirls Cristina
Calung and Lida Baquilar.
On November 9, 1997, a Sunday, the petitioner and her
salesgirls had sales of crystal items totaling P39,194.50. At the
close of business that day, they conducted a cash-count of their
sales proceeds, including those from the preceding Friday and
Saturday, and determined their total for the three days to be
P50,912.00. The petitioner wrapped the amount in a plastic bag
and deposited it in the drawer of the locked wooden cabinet of
the kiosk.
At about 9:30 am of November 10, 1997, the petitioner phoned
Vina Mariano to report that the P50,912.00 was missing,
explaining how she and her salesgirls had placed the wrapped

Later, while the petitioner was giving a detailed statement on the

theft to the security investigator of Harrison Plaza, Vina and
Sylvia Mariano, her superiors, arrived with a policeman who
immediately placed the petitioner under arrest and brought her
to Precinct 9 of the Malate Police Station. There, the police
investigated her. She was detained for a day, from 11:30 am of
November 10, 1997 until 11:30 am of November 11, 1997,
being released only because the inquest prosecutor instructed so.
On November 12, 1997, the petitioner complained against the
respondents for illegal dismissal in the Department of Labor and
Employment.
On November 14, 1997, Minex, through Vina, filed a complaint
for qualified theft against the petitioner in the Office of the City
Prosecutor in Manila. cSTHAC
To the charge of qualified theft, the petitioner insisted on her
innocence, reiterating that on November 9, 1997 she, together
with Calung and Baquilar, had first counted the cash before
placing it in a plastic bag that she deposited inside the drawer of
the cabinet with the knowledge of Calung and Baquilar. She
explained that on that night Baquilar had left for home ahead,
leaving her and Calung to close the kiosk at around 8:00 pm;
that at exactly 8:01 pm she proceeded to SM Department Store
in Harrison Plaza to wait for her friends whom she had
previously walked with to the LRT station; that she noticed upon
arriving at the kiosk the next morning that the cabinet that they
had positioned to block the entrance of the kiosk had been
slightly moved; and that she then discovered upon opening the
cabinet that its contents, including the cash, were already
missing.
Calung executed a sinumpaang salaysay, however, averring that
she had left the petitioner alone in the kiosk in the night of
November 9, 1997 because the latter had still to change her
clothes; and that that was the first time that the petitioner had
ever asked to be left behind, for they had previously left the
kiosk together.
Vina declared that the petitioner did not call the office
of Minex for the pick-up of the P39,194.50 cash sales on
Sunday, November 9, 1997, in violation of the standard
operating procedure (SOP) requiring cash proceeds exceeding
P10,000.00 to be reported for pick-up if the amount could not be
deposited in the bank.

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After the preliminary investigation, the Assistant Prosecutor

rendered a resolution dated February 4, 1998 finding probable
cause for qualified theft and recommending the filing of an
information against the petitioner. 2 Thus, she was charged with
qualified theft in the Regional Trial Court (RTC) in Manila,
docketed as Criminal Case No. 98-165426.
The petitioner appealed by petition for review to the Department
of Justice (DOJ), but the DOJ Secretary denied her petition for
review on July 4, 2001. 3
As to the petitioner's complaint for illegal dismissal, Labor
Arbiter Jose G. de Vera rendered his decision dated December
15, 1998, viz.: 4
WHEREFORE, all the foregoing considered, judgment is hereby
rendered in favor of the complainant and against the respondents
declaring the dismissal of the latter from work illegal and
ordering her reinstatement to her former work position with full
backwages counted from November 10, 1997 until her actual
reinstatement without loss of seniority or other employees' rights
and benefits. DSAEIT
Respondents are likewise ordered to pay complainant her
monetary claims above as well as moral damages of P50,000.00
and exemplary damages of P20,000.00.
Lastly, respondents are liable to pay ten percent (10%) of the
total award as and by way of payment of attorney's fees.
SO ORDERED.
On appeal by the respondents, the National Labor Relations
Commission (NLRC) reversed the decision of the Labor Arbiter
on December 28, 2000, declaring that the petitioner had not been
dismissed, but had abandoned her job after being found to have
stolen the proceeds of the sales; and holding that even if she had
been dismissed, her dismissal would be justifiable for loss of
trust and confidence in the light of the finding of probable cause
by the DOJ and the City Prosecutor and the filing of the
information for qualified theft against her. 5

the Court of Appeals (CA) on certiorari,claiming that the NLRC

thereby committed grave abuse of discretion amounting to
excess of jurisdiction for finding that there had been lawful
cause to dismiss her; and insisting that the NLRC relied on mere
suspicions and surmises, disregarding not only her explanations
that, if considered, would have warranted a judgment in her
favor but even the findings and disquisitions of the Labor
Arbiter, which were in full accord with pertinent case law.
On December 20, 2001, 7 however, the CA sustained the NLRC
mainly because of the DOJ Secretary's finding of probable cause
for qualified theft, holding:
With the finding of probable cause not only by the Investigating
Prosecutor but by the Secretary of Justice no less, it cannot be
validly claimed, as the Petitioner does, in her Petition at bench,
that there is no lawful cause for her dismissal. The felony of
qualified theft involves moral turpitude.
"Respondent cannot use social justice to shield wrongdoing. He
occupied a position of trust and confidence. Petitioner relied on
him to protect the properties of the company. Respondent
betrayed this trust when he ordered the subject lamp posts to be
delivered to the Adelfa Homeowners' Association. The offense
he committed involves moral turpitude. Indeed, a City
Prosecutor found probable cause to file an information for
qualified theft against him." (United South Dockhandlers, Inc.,
versus NLRC, et al., 267 SCRA 401, at page
407, supra) DTAIaH
Admittedly, there is no direct evidence that the Petitioner took
the money from the drawer in the cabinet in the Kiosk. But
direct evidence that the Petitioner took the money is not required
for the Petitioner to be lawfully dismissed for the loss of the
money of the Private Respondent corporation. If circumstantial
evidence is sufficient on which to anchor a judgment of
conviction in criminal cases under Section 4, Rule 133 of the
Revised Rules of Evidence, there is no cogent reason why
circumstantial evidence is not sufficient on which to anchor a
factual basis for the dismissal of the Petitioner for loss of
confidence.

The NLRC deleted the awards of backwages, service incentive

leave pay, holiday pay and 13th month pay, moral and
exemplary damages and attorney's fees, opining that the
petitioner would be entitled to an award of damages only when
the dismissal was shown to be effected in bad faith or fraud or
was an act oppressive to labor, or was done in a manner contrary
to good morals, good customs, or public policy. 6

IN THE LIGHT OF ALL THE FOREGOING, the Petition at

bench is denied due course and is hereby DISMISSED.

After the NLRC denied her motion for reconsideration on March

16, 2001, the petitioner challenged the reversal by the NLRC in

Issues

SO ORDERED.
On May 13, 2002, the CA denied the petitioner's motion for
reconsideration. 8

In her appeal, the petitioner submits that:

THE COURT OF APPEALS ERRED IN FINDING THAT
THERE WAS NO ILLEGAL DISMISSAL IN THE CASE AT
BAR, PARTICULARLY IN FINDING THAT:
A.THERE WAS JUST CAUSE FOR HER DISMISSAL, AND
B.RESPONDENT NEED NOT AFFORD THE PETITIONER
DUE PROCESS TO PETITIONER.
Ruling
The petition lacks merit.
The decisive issue for resolution is whether or not the petitioner
was terminated for a just and valid cause.
To dismiss an employee, the law requires the existence of a just
and valid cause. Article 282 of the Labor Code enumerates
the just causes for termination by the employer: (a) serious
misconduct or willful disobedience by the employee of the
lawful orders of his employer or the latter's representative in
connection with the employee's work; (b) gross and habitual
neglect by the employee of his duties; (c) fraud or willful breach
by the employee of the trust reposed in him by his employer or
his duly authorized representative; (d)commission of a crime or
offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
The NLRC held that the termination of the petitioner was due to
loss of trust and confidence. Sustaining the NLRC, the CA
stated:
With the finding of probable cause not only by the investigating
prosecutor but by the Secretary of Justice no less, it cannot be
validly claimed, as the Petitioner does, in her Petition at bench,
that there is no lawful cause for her dismissal . . . .
xxx xxx xxx
Admittedly, there is no direct evidence that the Petitioner took
the money from the drawer in the cabinet in the Kiosk. But
direct evidence that the Petitioner took the money is not required
for the Petitioner to be lawfully dismissed for the loss of the
money of the Private Respondent corporation. If circumstantial
evidence is sufficient on which to anchor a judgment of
conviction in criminal cases under Section 4, Rule 133 of the
Revised Rules of Evidence, there is no cogent reason why
circumstantial evidence is not sufficient on which to anchor a

Page | 5

factual basis for the dismissal of the Petitioner for loss of

confidence. 9
The petitioner still argues, however, that there was no evidence
at all upon which Minex could validly dismiss her considering
that she had not yet been found guilty beyond reasonable doubt
of the crime of qualified theft.
The petitioner's argument is not novel. It has been raised and
rejected many times before on the basis that neither conviction
beyond reasonable doubt for a crime against the employer nor
acquittal after criminal prosecution was indispensable. Nor was
a formal charge in court for the acts prejudicial to the interest of
the employer a pre-requisite for a valid dismissal. DacASC
In its 1941 ruling in National Labor Union, Inc. v. Standard
Vacuum Oil Company, 10 the Court expressly stated thus:
. . . The conviction of an employee in a criminal case is not
indispensable to warrant his dismissal by his employer. If there
is sufficient evidence to show that the employee has been guilty
of a breach of trust, or that his employer has ample reason to
distrust him, it cannot justly deny to the employer the authority
to dismiss such employee. All that is incumbent upon the Court
of Industrial Relations (now National Labor Relations
Commission) to determine is whether the proposed dismissal is
for just cause . . . . It is not necessary for said court to find that
an employee has been guilty of a crime beyond reasonable doubt
in order to authorize his dismissal. (Emphasis supplied)
In Philippine Long Distance Telephone Co. (BLTB Co.) vs.
NLRC, 11 the Court held that the acquittal of the employee from
the criminal prosecution for a crime committed against the
interest of the employer did not automatically eliminate loss of
confidence as a basis for administrative action against the
employee; and that in cases where the acts of misconduct
amounted to a crime, a dismissal might still be properly ordered
notwithstanding that the employee was not criminally
prosecuted or was acquitted after a criminal prosecution.
In Batangas Laguna Tayabas Bus Co. v. NLRC, 12 the Court
explained further, as follows:
Fraud or willful breach of trust reposed upon an employee by his
employer is a recognized cause for termination of employment
and it is not necessary that the employer should await the
employee's final conviction in the criminal case involving such
fraud or breach of trust before it can terminate the employee's
services. In fact, even the dropping of the charges or an acquittal
of the employee therefrom does not preclude the dismissal of an
employee for acts inimical to the interests of the employer.

To our mind, the criminal charges initiated by the company

against private respondents and the finding after preliminary
investigation of their prima facieguilt of the offense charged
constitute substantial evidence sufficient to warrant a finding by
the Labor Tribunal of the existence of a just cause for their
termination based on loss of trust and confidence. The Labor
Tribunal need not have gone further as to require private
respondent's conviction of the crime charged, or inferred
innocence on their part from their release from detention, which
was mainly due to their posting of bail. (Emphasis supplied)
Indeed, the employer is not expected to be as strict and rigorous
as a judge in a criminal trial in weighing all the probabilities of
guilt before terminating the employee. Unlike a criminal case,
which necessitates a moral certainty of guilt due to the loss of
the personal liberty of the accused being the issue, a case
concerning an employee suspected of wrongdoing leads only to
his termination as a consequence. The quantum of proof
required for convicting an accused is thus higher proof of
guilt beyond reasonable doubt than the quantum prescribed
for dismissing an employee substantial evidence. In so
stating, we are not diminishing the value of employment, but
only noting that the loss of employment occasions a
consequence lesser than the loss of personal liberty, and may
thus call for a lower degree of proof.
It is also unfair to require an employer to first be morally certain
of the guilt of the employee by awaiting a conviction before
terminating him when there is already sufficient showing of the
wrongdoing. Requiring that certainty may prove too late for the
employer, whose loss may potentially be beyond repair. Here, no
less than the DOJ Secretary found probable cause for qualified
theft against the petitioner. That finding was enough to justify
her termination for loss of confidence. To repeat, her
responsibility as the supervisor tasked to oversee the affairs of
the kiosk, including seeing to the secure handling of the sales
proceeds, could not be ignored or downplayed. The employer's
loss of trust and confidence in her was directly rooted in the
manner of how she, as the supervisor, had negligently handled
the large amount of sales by simply leaving the amount inside
the cabinet drawer of the kiosk despite being aware of the great
risk of theft. At the very least, she could have resorted to the
SOP of first seeking guidance from the main office on how to
secure the amount if she could not deposit in the bank due to
that day being a Sunday. SICDAa
Yet, even as we now say that the respondents had a just or valid
cause for terminating the petitioner, it becomes unavoidable to
ask whether or not they complied with the requirements of due
process prior to the termination as embodied in Section 2 (d) of
Rule I of the Implementing Rules of Book VI of the Labor
Code, viz.:

Section 2.Security of tenure. . . .

xxx xxx xxx
(d)In all cases of termination of employment, the following
standards of due process shall be substantially observed:
For termination of employment based on just causes as defined
in Article 282 of the Labor Code:
(i)A written notice served on the employee specifying the
ground or grounds for termination, and giving said employee
reasonable opportunity within which to explain his side.
(ii)A hearing or conference during which the employee
concerned, with the assistance of counsel if he so desires is
given opportunity to respond to the charge, present his evidence,
or rebut the evidence presented against him.
(iii)A written notice of termination served on the employee,
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his
termination. (emphasis supplied)
xxx xxx xxx
We answer the query in the negative in the light of the
circumstances of the petitioner's termination set forth in her
affidavit, to wit:
xxx xxx xxx
14.While I was giving my statement to the security officer of the
Mall, respondents Vina and Sylvia Mariano came with a
policeman and they brought me to Precinct 9, Malate Police
Station. Cristina Calung also arrived and together with the sister
of Vina and Sylvia, they operated the booth as if nothing
happened;
15.I was detained at the police station from 11:15 a.m.,
November 10, up to 11:30 a.m., November 11, 1997;
16.After my release from the police precinct, I contacted by
phone our office and I was able to talk to respondent Sylvia
Mariano. I told her that since I was innocent of the charges they
filed against me, I will report back to work. She shouted at me
on the phone and told me she no longer wanted to see my face. I
therefore decided to file a complaint for illegal dismissal against
respondents with the NLRC, hence this present suit; (emphasis
supplied) 13
xxx xxx xxx

Page | 6

The petitioner plainly demonstrated how quickly and summarily

her dismissal was carried out without first requiring her to
explain anything in her defense as demanded under Section
2 (d) of Rule I of the Implementing Rules of Book VI of the
Labor Code. Instead, the respondents forthwith had her arrested
and investigated by the police authorities for qualified theft.
This, we think, was a denial of her right to due process of law,
consisting in the opportunity to be heard and to defend
herself. 14 In fact, their decision to dismiss her was already final
even before the police authority commenced an investigation of
the theft, the finality being confirmed by no less than Sylvia
Mariano herself telling the petitioner during their phone
conversation following the latter's release from police custody
on November 11, 1997 that she (Sylvia) "no longer wanted to
see" her. DSAacC
The fact that the petitioner was the only person suspected of
being responsible for the theft aggravated the denial of due
process. When the respondents confronted her in the morning of
November 10, 1997 for the first time after the theft, they brought
along a police officer to arrest and hale her to the police precinct
to make her answer for the theft. They evidently already
concluded that she was the culprit despite a thorough
investigation of the theft still to be made. This, despite their
obligation under Section 2 (d)of Rule I of the Implementing
Rules of Book VI of the Labor Code, firstly, to give her a
"reasonable opportunity within which to explain (her)
side;" secondly, to set a "hearing or conference during which the
employee concerned, with the assistance of counsel if (she) so
desires is given opportunity to respond to the charge, present
(her) evidence, or rebut the evidence presented against (her);"
and lastly, to serve her a "written notice of termination . . .
indicating that upon due consideration of all the circumstances,
grounds have been established to justify (her) termination."
They wittingly shunted aside the tenets that mere accusation did
not take the place of proof of wrongdoing, and that a suspicion
or belief, no matter how sincere, did not substitute for factual
findings carefully established through an orderly procedure. 15
The fair and reasonable opportunity required to be given to the
employee before dismissal encompassed not only the giving to
the employee of notice of the cause and the ability of the
employee to explain, but also the chance to defend against the
accusation. This was our thrust in Philippine Pizza, Inc. v.
Bungabong, 16 where we held that the employee was not
afforded due process despite the dismissal being upon a just
cause, considering that he was not given a fair and reasonable
opportunity to confront his accusers and to defend himself
against the charge of theft notwithstanding his having submitted
his explanation denying that he had stolen beer from the
company dispenser. The termination letter was issued a day
before the employee could go to the HRD Office for the

investigation, which made it clear to him that the decision to

terminate was already final even before he could submit his side
and refute the charges against him. Nothing that he could say or
do at that point would have changed the decision to dismiss him.
Such omission to give the employee the benefit of a hearing and
investigation before his termination constituted an infringement
of his constitutional right to due process by the employer.
The respondents would further excuse their failure to afford due
process by averring that "even before the respondents could
issue the petitioner any formal written memorandum requiring
her to explain the loss of the P50,912.00 sales proceeds . . . she
went post haste to the NLRC and filed a case for illegal
dismissal" in order to "beat the gun on
respondents." 17 However, we cannot excuse the noncompliance with the requirement of due process on that basis,
considering that her resort to the NLRC came after she had been
told on November 11, 1997 by Sylvia that she (Sylvia) "no
longer wanted to see" her. The definitive termination closed the
door to any explanation she would tender. Being afforded no
alternative, she understandably resorted to the complaint for
illegal dismissal.
In view of the foregoing, we impose on the respondents the
obligation to pay to the petitioner an indemnity in the form of
nominal damages of P30,000.00, conformably withAgabon v.
NLRC, 18 where the Court said:
Where the dismissal is for a just cause, as in the instant case, the
lack of statutory due process should not nullify the dismissal, or
render it illegal, or ineffectual. However, the employer should
indemnify the employee for the violation of his statutory rights,
as ruled in Reta v. National Labor Relations Commission. The
indemnity to be imposed should be stiffer to discourage the
abhorrent practice of "dismiss now, pay later," which we sought
to deter in the Serrano ruling. The sanction should be in the
nature of indemnification or penalty and should depend on the
facts of each case, taking into special consideration the gravity
of the due process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order
that a right of the plaintiff, which has been violated or invaded
by the defendant, may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss suffered by
him.
As enunciated by this Court in Viernes v. National Labor
Relations Commissions, an employer is liable to pay indemnity
in the form of nominal damages to an employee who has been
dismissed if, in effecting such dismissal, the employer fails to
comply with the requirements of due process. The Court, after
considering the circumstances therein, fixed the indemnity at

P2,590.50, which was equivalent to the employee's one month

salary. This indemnity is intended not to penalize the employer
but to vindicate or recognize the employee's right to statutory
due process which was violated by the employer. EIcTAD
The violation of the petitioners' right to statutory due process by
the private respondent warrants the payment of indemnity in the
form of nominal damages. The amount of such damages is
addressed to the sound discretion of the court, taking into
account the relevant circumstances. Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to
deter employers from future violations of the statutory due
process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to
the latter under the Labor Code and its Implementing Rules.
(emphasis is in the original text)
WHEREFORE, the Court AFFIRMS the decision promulgated
on December 20, 2001 by the Court of Appeals,
but ORDERS the respondents to pay to the petitioner an
indemnity in the form of nominal damages of P30,000.00 for
non-compliance with the requirements of due process. HacADE
No pronouncement as to costs of suit.
SO ORDERED.
Corona, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Peralta,
Del Castillo, Abad, Villarama, Jr., Perez, Mendoza, Sereno,
Reyes and Perlas-Bernabe, JJ., concur.
Brion, J., is on official leave.
||| (Concepcion v. Minex Import Corp./Minerama Corp., G.R.
No. 153569, January 24, 2012)
SECOND DIVISION
[G.R. No. 175170. September 5, 2012.]
MISAMIS ORIENTAL II ELECTRIC SERVICE
COOPERATIVE (MORESCO II), petitioner, vs. VIRGILIO M.
CAGALAWAN, respondent.
DECISION
DEL CASTILLO, J p:
In labor cases, strict adherence with the technical rules is not
required. 1 This liberal policy, however, should still conform
with the rudiments of equitable principles of law. For instance,

Page | 7

belated submission of evidence may only be allowed if the delay

is adequately justified and the evidence is clearly material to
establish the party's cause. 2 TAcSaC
By this Petition for Review on Certiorari, 3 petitioner Misamis
Oriental II Electric Service Cooperative (MORESCO II) assails
the Decision 4 dated July 26, 2005 of the Court of Appeals (CA)
in CA-G.R. SP No. 84991, which reversed and set aside the
Resolutions dated February 27, 2004 5 and April 26, 2004 6 of
the National Labor Relations Commission (NLRC), and thereby
reinstated the Labor Arbiter's Decision 7 dated September 30,
2003 pronouncing respondent Virgilio M. Cagalawan
(Cagalawan) to have been constructively dismissed from
employment. Also assailed is the CA Resolution 8 dated
September 6, 2006 which denied MORESCO II's Motion for
Reconsideration and granted Cagalawan's Partial Motion for
Reconsideration.

In reply, Cagalawan claimed that he was transferred because he

executed an Affidavit 14 in support of his co-employee Jessie
Rances, who filed an illegal dismissal case against MORESCO
II. 15 He emphasized though that his action was not an act of
disloyalty to MORESCO II, contrary to what was being accused
of him. Nonetheless, Cagalawan still reported for work at
Gingoog sub-office on May 27, 2002 but reserved his right to
contest the legality of such transfer. 16 EDcIAC
Meanwhile and in view of Cagalawan's transfer, Ke-e issued an
order 17 recalling the former's previous designation as Acting
Head of the disconnection crew of the Balingasag sub-office.
Cagalawan eventually stopped reporting for work. On July 1,
2002, he filed a Complaint for constructive dismissal before the
Arbitration branch of the NLRC against MORESCO II and its
officers, Ke-e and Danilo Subrado (Subrado), in their capacities
as General Manager and Board Chairman, respectively.

Factual Antecedents
Proceedings before the Labor Arbiter
On September 1, 1993, MORESCO II, a rural electric
cooperative, hired Cagalawan as a Disconnection Lineman on a
probationary basis. On March 1, 1994 Cagalawan was appointed
to the same post this time on a permanent basis. 9 On July 17,
2001, he was designated as Acting Head of the disconnection
crew in Area III sub-office of MORESCO II in Balingasag,
Misamis Oriental (Balingasag sub-office). 10 In a
Memorandum 11 dated May 9, 2002, MORESCO II General
Manager Amado B. Ke-e (Ke-e) transferred Cagalawan to Area I
sub-office in Gingoog City, Misamis Oriental (Gingoog suboffice) as a member of the disconnection crew. Said
memorandum stated that the transfer was done "in the exigency
of the service."
In a letter 12 dated May 15, 2002, Cagalawan assailed his
transfer claiming he was effectively demoted from his position
as head of the disconnection crew to a mere member thereof. He
also averred that his transfer to the Gingoog sub-office is
inconvenient and prejudicial to him as it would entail additional
travel expenses to and from work. He likewise sought
clarification on what kind of exigency exists as to justify his
transfer and why he was the one chosen to be transferred.
In a Memorandum 13 dated May 16, 2002, Ke-e explained that
Cagalawan's transfer was not a demotion since he was holding
the position of Disconnection Head only by mere designation
and not by appointment. Ke-e did not, however, state the basis
of the transfer but instead advised Cagalawan to just comply
with the order and not to question management's legitimate
prerogative to reassign him.

When the Labor Arbiter, in an Order 18 dated September 13,

2002, directed the parties to submit their respective verified
position papers, only Cagalawan complied. 19 He alleged that
his transfer was unnecessary and was made only in retaliation
for his having executed an affidavit in favor of a co-worker and
against MORESCO II. In support of his contention, Cagalawan
submitted a certification 20 executed by the Head of the
disconnection crew of the Gingoog sub-office, Teodoro Ortiz
(Ortiz), attesting that the said sub-office was not undermanned.
In fact, when Cagalawan stopped working, no other employee
was transferred or hired in his stead, a proof that there were
enough disconnection crew members in Gingoog sub-office who
can very well handle the assigned tasks. Moreover, Cagalawan
claimed that his transfer constituted a demotion from his
position as Acting Head of the disconnection crew which he had
occupied for almost 10 months. As such, he should be
considered regular in that position and entitled to its
corresponding salary.
Cagalawan further alleged that his transfer from Balingasag to
Gingoog sub-office was tantamount to illegal constructive
dismissal for being prejudicial and inconvenient as he had to
spend an additional amount of P197.00 21 a day, leaving him
nothing of his salary. He therefore had no choice but to stop
working.
Aside from reinstatement and backwages, Cagalawan sought to
recover damages and attorney's fees because to him, his transfer
was effected in a wanton, fraudulent, oppressive or malevolent
manner. Apart from MORESCO II, he averred that Ke-e and
Subrado should also be held personally liable for damages since

the two were guilty of bad faith in effecting his transfer. He

believed that Subrado had a hand in his arbitrary transfer
considering that he is the son-in-law of Subrado's opponent in
the recent election for directorship in the electric cooperative. In
fact, Subrado even asked a certain Cleopatra Moreno Manuel to
file a baseless complaint against him as borne out by the
declaration of Bob Abao in an affidavit. 22 aTcIEH
In view of MORESCO II's failure to file a position paper,
Cagalawan filed a Motion 23 for the issuance of an order to
declare the case submitted for decision. This was granted in an
Order 24 dated March 14, 2003.
On September 30, 2003, the Labor Arbiter rendered a
Decision 25 declaring that Cagalawan's transfer constituted
illegal constructive dismissal. Aside from finding merit in
Cagalawan's uncontroverted allegation that the transfer became
grossly inconvenient for him, the Labor Arbiter found no
sufficient reason for his transfer and that the same was
calculated to rid him of his employment, impelled by a
vindictive motive after he executed an Affidavit in favor of a
colleague and against MORESCO II.
Thus, the Labor Arbiter ordered Cagalawan's reinstatement to
the position of Collector and awarded him backwages from the
date of his transfer on May 16, 2002 up to his actual
reinstatement. However, the Labor Arbiter denied his prayer for
regularization as head of the disconnection crew since the period
of six months which he claimed as sufficient to acquire regular
status applies only to probationary employment. Hence, the fact
that he was acting as head of the disconnection crew for 10
months did not entitle him to such position on a permanent
basis. Moreover, the decision to promote him to the said position
should only come from the management.
With respect to damages, the Labor Arbiter found Ke-e to have
acted capriciously in effecting the transfer, hence, he awarded
moral and exemplary damages to Cagalawan. Attorney's fees
was likewise adjudged in his favor.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is rendered
declaring the transfer of complainant as tantamount to
constructive dismissal and ordering respondent[s] to reinstate
complainant to his position as collector in Balingasag, Misamis
Oriental without loss of seniority rights and to pay complainant
the following:
1. Backwages - P189,096.00
2. Exemplary damages - P10,000.00

Page | 8

3. Moral damages - P20,000.00

4. Attorney's fee 10% - P21,909.60

GRAND TOTAL AWARD P241,005.60

========
SO ORDERED. 26 HDTSIE
Proceedings before the National Labor Relations Commission
MORESCO II and Cagalawan both appealed the Labor Arbiter's
Decision.
In its Memorandum on Appeal, 27 MORESCO II invoked the
liberal application of the rules and prayed for the NLRC to
admit its evidence on appeal. MORESCO II denied that
Cagalawan's transfer was done in retaliation for executing an
affidavit in favor of a co-worker. MORESCO II explained that
the transfer was in response to the request of the area manager in
Gingoog sub-office for additional personnel in his assigned area.
To substantiate this, it submitted a letter 28 dated May 8, 2002
from Gingoog sub-office Area Manager, Engr. Ronel B. Canada
(Engr. Canada), addressed to Ke-e. In said letter, Engr. Canada
requested for two additional disconnection linemen in order to
attain the collection quota allocated in his area. MORESCO II
then averred that as against this letter of Engr. Canada who is a
managerial employee, the certification issued by Ortiz should be
considered as incompetent since the latter is a mere
disconnection crew.
Moreover, Cagalawan's claim of additional expenses brought
about by his transfer, specifically for meal and transportation,
deserves no appreciation at all since he would still incur these
expenses regardless of his place of assignment and also
considering that he was provided with a rented motorcycle with
fuel and oil allowance.
Also, MORESCO II intimated that it has no intention of
removing Cagalawan from its employ especially since his
father-in-law was its previous Board Member. In fact, it was
Cagalawan himself who committed an act of insubordination
when he abandoned his job.
In his Reply 29 to MORESCO II's Memorandum of Appeal,
Cagalawan averred that the latter cannot present any evidence
for the first time on appeal without giving any valid reason for
its failure to submit its evidence before the Labor Arbiter as
provided under the NLRC rules. Further, the evidence sought to

be presented by MORESCO II is not newly discovered evidence

as to warrant its admission on appeal. In particular, he claimed
that the May 8, 2002 letter of Engr. Canada should have been
submitted at the earliest opportunity, that is, before the Labor
Arbiter. MORESCO II's failure to present the same at such time
thus raises suspicion that the document was merely fabricated
for the purpose of appeal. Moreover, Cagalawan claimed that if
there was indeed a request from the Area Manager of Gingoog
sub-office for additional personnel as required by the exigency
of the service, such reason should have been mentioned in Kee's May 16, 2002 Memorandum. In this way, the transfer would
appear to have a reasonable basis at the outset. However, no
such mention was made precisely because the transfer was
without any valid reason.
Anent Cagalawan's partial appeal, 30 he prayed that the decision
be modified in that he should be reinstated as Disconnection
Lineman and not as Collector.
The NLRC, through a Resolution 31 dated February 27, 2004,
set aside and vacated the Decision of the Labor Arbiter and
dismissed Cagalawan's complaint against MORESCO II. The
NLRC admitted MORESCO II's evidence even if submitted
only on appeal in the interest of substantial justice. It then found
said evidence credible in showing that Cagalawan's transfer to
Gingoog sub-office was required in the exigency of the
cooperative's business interest. It also ruled that the transfer did
not entail a demotion in rank and diminution of pay as to
constitute constructive dismissal and thus upheld the right of
MORESCO II to transfer Cagalawan in the exercise of its sound
business judgment.
Cagalawan filed a Motion for Reconsideration 32 but the same
was denied by the NLRC in a Resolution 33 dated April 26,
2004. ESHcTD
Proceedings before the Court of Appeals
Cagalawan thus filed a Petition for Certiorari 34 with the CA. In
a Decision 35 dated July 26, 2005, the CA found the NLRC to
have gravely abused its discretion in admitting MORESCO II's
evidence, citing Section 3, Rule V of the NLRC Rules of
Procedure 36 which prohibits the parties from making new
allegations or cause of action not included in the complaint or
position paper, affidavits and other documents. It held that what
MORESCO II presented on appeal was not just an additional
evidence but its entire evidence after the Labor Arbiter rendered
a Decision adverse to it. To the CA, MORESCO II's belated
submission of evidence despite the opportunities given it cannot
be countenanced as such practice "defeats speedy administration
of justice" and "smacks of unfairness."

The dispositive portion of the CA Decision reads:

IN VIEW THEREOF, the petition is GRANTED. The Decision
of the Labor Arbiter is reinstated with the modification that if
reinstatement of petitioner is not feasible, he should be paid
separation pay in accordance with law.
SO ORDERED. 37
MORESCO II filed a Motion for Reconsideration 38 insisting
that it may present evidence for the first time on appeal as the
NLRC is not precluded from admitting the same because
technical rules are not binding in labor cases. Besides, of
paramount importance is the opportunity of the other party to
rebut or comment on the appeal, which in this case, was afforded
to Cagalawan.
Cagalawan, for his part, filed a Partial Motion for
Reconsideration, 39 seeking modification of the Decision by
ordering his reinstatement to the position of Disconnection
Lineman instead of Collector. ACcaET
In a Resolution 40 dated September 6, 2006, the CA maintained
its ruling that MORESCO II's unexplained failure to present
evidence or submit a position paper before the Labor Arbiter for
almost 12 months from receipt of Cagalawan's position paper is
intolerable and cannot be permitted. Hence, it denied its Motion
for Reconsideration. With respect to Cagalawan's motion, the
same was granted by the CA, viz.:
Anent petitioner's Partial Motion for Reconsideration, We find
the same meritorious. The records of this case reveal that prior
to his constructive dismissal, petitioner was a Disconnection
Lineman, not a Collector, assigned at Balingasag, Misamis
Oriental. Hence, We modify the dispositive portion of Our July
26, 2005 Decision, to read:
'IN VIEW THEREOF, the petition is GRANTED. The Decision
of the Labor Arbiter is reinstated with modification that
petitioner be reinstated to his position as Disconnection Lineman
in Balingasag, Misamis Oriental with further modification that if
reinstatement of petitioner is not feasible, he should be paid
separation pay in accordance with law.' 41 (Emphasis in the
original.)
Issues
MORESCO II thus filed this petition raising the following
issues:
(1) Was the respondent constructively dismissed by the
petitioner?

Page | 9

(2) Did the Court of Appeals err in reversing the NLRC? 42

MORESCO II insists that Cagalawan's transfer was necessary in
order to attain the collection quota of the Gingoog sub-office. It
contests the credibility of Ortiz's certification which stated that
there was no need for additional personnel in the Gingoog suboffice. According to it, Ortiz is not a managerial employee but
merely a disconnection crew who is not competent to make
declarations in relation to MORESCO II's business needs. It
likewise refutes Cagalawan's claim of incurring additional
expenses due to his transfer which caused him inconvenience. In
sum, it claims that Cagalawan was not constructively dismissed
but instead had voluntarily abandoned his job. SCEDAI
MORESCO II avers that the CA's ruling is not in accordance
with jurisprudence on the matter of admitting evidence on
appeal in labor cases. It submits that the NLRC is correct in
accepting its evidence submitted for the first time on appeal in
line with the basic precepts of equity and fairness. The NLRC
also correctly ruled in its favor after properly appreciating its
evidence which had been rebutted and contradicted by
Cagalawan.
Our Ruling
The petition has no merit.
MORESCO II's belated submission of
evidence cannot be permitted.
Labor tribunals, such as the NLRC, are not precluded from
receiving evidence submitted on appeal as technical rules are not
binding in cases submitted before them. 43However, any delay
in the submission of evidence should be adequately explained
and should adequately prove the allegations sought to be
proven. 44
In the present case, MORESCO II did not cite any reason why it
had failed to file its position paper or present its cause before the
Labor Arbiter despite sufficient notice and time given to do so.
Only after an adverse decision was rendered did it present its
defense and rebut the evidence of Cagalawan by alleging that his
transfer was made in response to the letter-request of the area
manager of the Gingoog sub-office asking for additional
personnel to meet its collection quota. To our mind, however, the
belated submission of the said letter-request without any valid
explanation casts doubt on its credibility, specially so when the
same is not a newly discovered evidence. For one, the letterrequest was dated May 8, 2002 or a day before the memorandum
for Cagalawan's transfer was issued. MORESCO II could have
easily presented the letter in the proceedings before the Labor
Arbiter for serious examination. Why it was not presented at the

earliest opportunity is a serious question which lends credence

to Cagalawan's theory that it may have just been fabricated for
the purpose of appeal.
It should also be recalled that after Cagalawan received the
memorandum for his transfer to the Gingoog sub-office, he
immediately questioned the basis thereof through a letter
addressed to Ke-e. If at that time there was already a letterrequest from the Gingoog area manager, Ke-e could have easily
referred to or specified this in his subsequent memorandum of
May 16, 2002 which served as his response to Cagalawan's
queries about the transfer. However, the said memorandum was
silent in this respect. Nevertheless, Cagalawan, for his part,
faithfully complied with the transfer order but with the
reservation to contest its validity precisely because he was not
adequately informed of its real basis. aDcHIS
The rule is that it is within the ambit of the employer's
prerogative to transfer an employee for valid reasons and
according to the requirement of its business, provided that the
transfer does not result in demotion in rank or diminution of
salary, benefits and other privileges. 45 This Court has always
considered the management's prerogative to transfer its
employees in pursuit of its legitimate interests. But this
prerogative should be exercised without grave abuse of
discretion and with due regard to the basic elements of justice
and fair play, such that if there is a showing that the transfer was
unnecessary or inconvenient and prejudicial to the employee, it
cannot be upheld. 46
Here, while we find that the transfer of Cagalawan neither
entails any demotion in rank since he did not have tenurial
security over the position of head of the disconnection crew, nor
result to diminution in pay as this was not sufficiently proven by
him, MORESCO II's evidence is nevertheless not enough to
show that said transfer was required by the exigency of the
electric cooperative's business interest. Simply stated, the
evidence sought to be admitted by MORESCO II is not
substantial to prove that there was a genuine business urgency
that necessitated the transfer.
Notably, the only evidence adduced by MORESCO II to support
the legitimacy of the transfer was the letter-request of Engr.
Canada. However, this piece of evidence cannot in itself
sufficiently establish that the Gingoog sub-office was indeed
suffering from losses due to collection deficiency so as to justify
the assignment of additional personnel in the area. Engr.
Canada's letter is nothing more than a mere request for
additional personnel to augment the number of disconnection
crew assigned in the area. While it mentioned that the area's
collection efficiency should be improved and that there is a
shortage of personnel therein, it is, standing alone, self-serving

and thus cannot be considered as competent evidence to prove

the accuracy of the allegations therein. MORESCO II could
have at least presented financial documents or any other
concrete documentary evidence showing that the collection
quota of the Gingoog sub-office has not been met or could not
be reached. It should have also submitted such other documents
which would show the lack of sufficient personnel in the area.
Unfortunately, the area manager's letter provides no more than
bare allegations which deserve not even the slightest credit.
When there is doubt between the evidence submitted by the
employer and that submitted by the employee, the scales of
justice must be tilted in favor of the employee. 47This is
consistent with the rule that an employer's cause could only
succeed on the strength of its own evidence and not on the
weakness of the employee's evidence. 48 Thus, MORESCO II
cannot rely on the weakness of Ortiz's certification in order to
give more credit to its own evidence. Self-serving and
unsubstantiated declarations are not sufficient where the
quantum of evidence required to establish a fact is substantial
evidence, described as more than a mere scintilla. 49 "The
evidence must be real and substantial, and not merely
apparent." 50 MORESCO II has miserably failed to discharge
the onus of proving the validity of Cagalawan's transfer. TAaEIc
Clearly, not only was the delay in the submission of MORESCO
II's evidence not explained, there was also failure on its part to
sufficiently support its allegation that the transfer of Cagalawan
was for a legitimate purpose. This being the case, MORESCO
II's plea that its evidence be admitted in the interest of justice
does not deserve any merit.
Ke-e and Subrado, as corporate officers,
could not be held personally liable for
Cagalawan's monetary awards.
In the Decision of the Labor Arbiter, the manager of MORESCO
II was held to have acted in an arbitrary manner in effecting
Cagalawan's transfer such that moral and exemplary damages
were awarded in the latter's favor. However, the said Decision
did not touch on the issue of bad faith on the part of MORESCO
II's officers, namely, Ke-e and Subrado. Consequently, no
pronouncement was made as to whether the two are also
personally liable for Cagalawan's money claims arising from his
constructive dismissal.
Still, we hold that Ke-e and Subrado cannot be held personally
liable for Cagalawan's money claims.
"[B]ad faith does not simply connote bad judgment or
negligence; it imputes a dishonest purpose or some moral
obliquity and conscious doing of a wrong; a breach of sworn

Page | 10

duty through some motive or intent or ill will; it partakes of the

nature of fraud." 51 Here, although we agree with the Labor
Arbiter that Ke-e acted in an arbitrary manner in effecting
Cagalawan's transfer, the same, absent any showing of some
dishonest or wrongful purpose, does not amount to bad faith.
Suffice it to say that bad faith must be established clearly and
convincingly as the same is never presumed. 52 Similarly, no
bad faith can be presumed from the fact that Subrado was the
opponent of Cagalawan's father-in-law in the election for
directorship in the cooperative. Cagalawan's claim that this was
one of the reasons why he was transferred is a mere allegation
without proof. Neither does Subrado's alleged instruction to file
a complaint against Cagalawan bolster the latter's claim that the
former had malicious intention against him. As the Chairman of
the Board of Directors of MORESCO II, Subrado has the duty
and obligation to act upon complaints of its clients. On the
contrary, the Court finds that Subrado had no participation
whatsoever in Cagalawan's illegal dismissal; hence, the
imputation of bad faith against him is untenable. ACTIHa
WHEREFORE, the petition is DENIED. The Decision dated
July 26, 2005 of the Court of Appeals in CA-G.R. SP No. 84991
and its Resolution dated September 6, 2006, areAFFIRMED.
SO ORDERED.
[G.R. No. 173882. February 15, 2012.]
JULIE'S BAKESHOP AND/OR EDGAR
REYES, petitioners, vs. HENRY ARNAIZ EDGAR
NAPAL, * and JONATHAN TOLORES, respondents.
Management has a wide latitude to conduct its own affairs in
accordance with the necessities of its business. This so-called
management prerogative, however, should be exercised in
accordance with justice and fair play.
By this Petition for Review on Certiorari, 1 petitioners Julie's
Bakeshop and/or Edgar Reyes (Reyes) assail the September 23,
2005 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP
No. 86257, which reversed the Resolutions dated December 18,
2003 3 and April 19, 2004 4 of the National Labor Relations
Commission (NLRC) and ordered petitioners to reinstate
respondents Henry Arnaiz (Arnaiz), Edgar Napal (Napal) and
Jonathan Tolores (Tolores) and to pay them their backwages for
having been constructively dismissed, as well as their other
monetary benefits.
Factual Antecedents
Reyes hired respondents as chief bakers in his three franchise
branches of Julie's Bakeshop in Sibalom and San Jose, Antique.

On January 26, 2000, respondents filed separate complaints

against petitioners for underpayment of wages, payment of
premium pay for holiday and rest day, service incentive leave
pay, 13th month pay, cost of living allowance (COLA) and
attorney's fees. These complaints were later on consolidated.
Subsequently, in a memorandum dated February 16, 2000,
Reyes reassigned respondents as utility/security personnel
tasked to clean the outside vicinity of his bakeshops and to
maintain peace and order in the area. Upon service of the memo,
respondents, however, refused to sign the same and likewise
refused to perform their new assignments by not reporting for
work.
In a letter-memorandum dated March 13, 2000, Reyes directed
respondents to report back for work and to explain why they
failed to assume their duties as utility/security personnel. A
second letter-memorandum of the same tenor dated March 28,
2000 was also sent to respondents. Respondents did not heed
both memoranda.
Proceedings before the Labor Arbiter
Meanwhile, in the preliminary conference set on February 21,
2000, respondents with their counsel, Atty. Ronnie V. Delicana
(Atty. Delicana), on one hand, and Reyes on the other, appeared
before the Labor Arbiter to explore the possibility of an
amicable settlement. It was agreed that the parties would enter
into a compromise agreement on March 7, 2000. However, on
February 29, 2000, respondents, who were then represented by a
different counsel, Atty. Mariano R. Pefianco (Atty. Pefianco),
amended their complaints by including in their causes of action
illegal dismissal and a claim for reinstatement and
backwages. aSIDCT
The supposed signing of the compromise agreement (which
could have culminated in respondents receiving the total amount
of P54,126.00 as payment for their 13th month pay and
separation pay) was reset to March 28, 2000 because of
respondents' non-appearance in the hearing of March 7, 2000.
On March 28, 2000, Atty. Pefianco failed to appear despite due
notice. On the next hearing scheduled on April 24, 2000, both
Atty. Delicana and Atty. Pefianco appeared but the latter
verbally manifested his withdrawal as counsel for respondents.
Thus, respondents, through Atty. Delicana, and Reyes, continued
to explore the possibility of settling the case amicably.
Manifesting that they need to sleep on the proposed settlement,
respondents requested for continuance of the hearing on April
26, 2000. Come said date, however, respondents did not appear.

Realizing the futility of further resetting the case to give way to

a possible settlement, the Labor Arbiter ordered the parties to
file their respective position papers.
Despite his earlier withdrawal as counsel, Atty. Pefianco filed a
Joint Position Paper 5 on behalf of respondents alleging that
they were dismissed from employment on February 21, 2000
without valid cause. As for petitioners, they stated in their
position paper 6 that respondents were never dismissed but that
they abandoned their jobs after filing their complaints.
Petitioners denied that Reyes is the employer of Arnaiz and
Napal but admitted such fact insofar as Tolores is concerned.
In his Decision 7 dated August 25, 2000, the Labor Arbiter
expressed dismay over respondents' lack of good faith in
negotiating a settlement. The Labor Arbiter denounced the way
respondents dealt with Atty. Delicana during their discussions
for a possible settlement since respondents themselves later on
informed the said tribunal that at the time of the said
discussions, they no longer considered Atty. Delicana as their
counsel. Despite this, the Labor Arbiter still required the parties
to submit their respective position papers. And as respondents'
position paper was filed late and no evidence was attached to
prove the allegations therein, the Labor Arbiter resolved to
dismiss the complaints, thus:
WHEREFORE, premises considered the above-entitled cases
should be, as they are hereby dismissed without prejudice.
SO ORDERED. 8
Proceedings before the National Labor Relations Commission
Respondents filed a joint appeal 9 with the NLRC. In a
Decision 10 dated January 17, 2002, the NLRC overruled the
Decision of the Labor Arbiter and held that the burden of proof
lies on herein petitioners as Reyes admitted being the employer
of Tolores. Hence, petitioners not Tolores, had the duty to
advance proof. With respect to Arnaiz and Napal, the NLRC
noted that since their alleged employer was not impleaded, said
respondents' cases should be remanded to the Labor Arbiter, and
tried as new and separate cases. The dispositive portion of the
NLRC's Decision reads:
WHEREFORE, the case is REMANDED for purposes of
identifying the real respondents, to be separated as discussed, if
warranted, and for further proceedings to be conducted.
SO ORDERED. 11
Respondents filed a Motion for Reconsideration, 12 alleging that
the NLRC Decision violated their right to speedy disposition of

Page | 11

their cases. They also insisted that Reyes is their employer as

shown by his letter-memorandum dated March 13, 2000 which
directed all of them to report back for work. In addition, the fact
that Reyes was willing to pay all the respondents the amount of
P54,126.00 as settlement only proves that there is an employeremployee relationship between them and Reyes. ASHEca
In a Resolution 13 dated September 23, 2003, the NLRC found
merit in respondents' Motion for Reconsideration. It held that
Reyes failed to present concrete proof of his allegation that a
certain Rodrigo Gandiongco is the employer of Arnaiz and
Napal; hence, Reyes is still presumed to be their employer as
franchise owner of the branches where these employees were
assigned. The NLRC further ruled that respondents' demotion in
rank from chief bakers to utility/security personnel is tantamount
to constructive dismissal which entitles them to the reliefs
available to illegally dismissed employees. As for the money
claims, the NLRC granted respondents their salary differentials,
premium pay for rest day, holiday pay, service incentive leave
pay, 13th month pay and COLA. In awarding such monetary
awards, the NLRC ratiocinated that the employer bears the
burden of proving that the employees received their wages and
benefits. In this case, however, no proof of such payment was
presented by the petitioners. The claim for overtime pay though
was denied since proof of overtime work is necessary to warrant
such award. Lastly, for Reyes' unjustified act done in bad faith,
respondents were awarded 10% attorney's fees. The NLRC ruled
as follows:
WHEREFORE, Our previous Decision is VACATED and a new
one rendered declaring complainants to have been illegally
dismissed. Complainants are to be reinstated to their former
positions without loss of seniority rights. Complainants are
further awarded backwages reckoned from the time they were
constructively dismissed up to the time of their actual
reinstatement, whether physically or on payroll.
Complainants being underpaid are to be [paid] their salary
differentials reckoned three (3) years backwards from the time
they filed the instant complaints on January 26, 2000, premium
pay for holiday, premium pay for rest day, holiday pay, service
incentive leave pay, 13th month pay and COLA, if these have
not been paid to them yet.

Reyes claimed that it would be likely for respondents, after

filing complaints against him, to do something prejudicial to the
business as chief bakers, like mixing harmful ingredients into
the bread that they bake. This could be inimical to the health of
the consuming public. Petitioners averred that respondents'
reassignment as utility/security personnel is a preventive
measure designed to protect the business and its customers.
They likewise added that the transfer was meant to be only
temporary and besides, same does not involve any diminution in
pay, rights and privileges of the respondents. Petitioners also
alleged that respondents' wage of P115.00 per day is in
consonance with and is even higher than the mandated minimum
wage of P105.00 under Wage Order No. RB6-09 for retail and
service establishments employing not more than 10 workers as
in his business.

dismissed since their designation from chief bakers to

utility/security personnel is undoubtedly a demotion in rank
which involved "a drastic change in the nature of work resulting
to a demeaning and humiliating work condition." It also held
that petitioners' fear that respondents might introduce harmful
foreign substances in baking bread is more imaginary than real.
Further, respondents could not be held guilty of abandonment of
work as this was negated by their immediate filing of complaints
to specifically ask for reinstatement. Nevertheless, the CA
denied the claim for salary differentials by totally agreeing with
the NLRC's finding on the matter. Said court then resolved to
award respondents the rest of their monetary claims for failure
of petitioners to present proof of payment and 10% attorney's
fees as respondents' dismissal was attended with bad faith which
forced them to litigate, viz.:

The NLRC, in its Resolution 16 dated December 18, 2003, again

reconsidered its own ruling and held that respondents were not
dismissed, either actually or constructively, but instead willfully
disobeyed the return to work order of their employer. The NLRC
upheld petitioners' prerogative to transfer respondents if only to
serve the greater interest, safety and well-being of the buying
public by forestalling irregular acts of said employees. The
NLRC then put the blame on respondents for disobeying the
lawful orders of their employer, noting that it was the same
attitude displayed by them in their dealings with their counsel,
Atty. Delicana, in the proceedings before the Labor Arbiter. It
also reversed its previous ruling that respondents were underpaid
their wages and adjudged them to be even overpaid by P10.00
per Wage Order No. RB 6-09-A. Thus, respondents' complaints
were dismissed except for their claims for premium pay for
holiday, and rest day, service incentive leave pay, 13th month
pay and COLA, which awards would stand only if no payment
therefor has yet been made.

WHEREFORE, in view of the foregoing premises, judgment is

hereby rendered by us SETTING ASIDE and REVERSING the
Resolutions dated December 18, 2003 and April 19, 2004 in
NLRC Case No. V-000785-2000. The record of this case is
hereby REMANDED to the Labor Arbiter for the computation
of backwages, premium pay for holidays and rest days, holiday
pay, service incentive leave pay, 13th month pay and attorney's
fees due to the petitioners and, thereafter, for the payment
thereof by the private respondent Reyes. 21

Respondents filed a Motion for Reconsideration 17 and sought

for the execution of the NLRC Resolution dated September 23,
2003 due to the alleged finality of the ruling. According to them,
petitioners' pro forma Motion for Reconsideration of the said
resolution did not suspend the running of the period for taking
an appeal. This motion was, however, denied in the NLRC
Resolution 18 dated April 19, 2004. cEaCAH
Proceedings before the Court of Appeals

SO ORDERED. 14
Petitioners sought to reconsider this ruling via a Motion for
Reconsideration, 15 insisting that respondents were not illegally
dismissed and that their reassignment or transfer as
utility/security personnel was indispensable, made in good faith
and in the exercise of a valid management prerogative. Hence,
such reassignment does not amount to constructive dismissal.

Respondents appealed to the CA through a petition

for certiorari, 19 wherein they imputed grave abuse of discretion
on the part of the NLRC in not declaring them to have been
illegally dismissed and entitled to salary differentials.
The CA, in its Decision 20 dated September 23, 2005, found
merit in the petition, ruling that respondents were constructively

Petitioners filed a Motion for Reconsideration 22 but the same

was denied by the CA in a Resolution 23 dated May 25, 2006.
Issues
Hence, this present petition raising the following issues for the
Court's consideration:
I. DID THE HONORABLE COURT OF APPEALS, IN
DISTURBING THE FINDINGS OF FACTS OF THE LABOR
ARBITER AS WELL AS THE NATIONAL LABOR
[RELATIONS] COMMISSION WHO HAVE TRIED THE
CASE, [COMMIT] GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION?
II. DID THE HONORABLE COURT OF APPEALS
MANIFESTLY [OVERLOOK] RELEVANT FACTS NOT
DISPUTED BY THE RESPONDENTS, WHICH, IF
PROPERLY CONSIDERED COULD JUSTIFY A DIFFERENT
CONCLUSION?
III. WAS THE TRANSFER/REASSIGNMENT OF
RESPONDENTS TO ANOTHER POSITION WITHOUT
DIMINUTION IN PAY AND OTHER PRIVILEGES
TANTAMOUNT TO CONSTRUCTIVE DISMISSAL? 24

Page | 12

Petitioners maintain that the NLRC, in its Resolution dated

December 18, 2003, merely upheld the findings of the Labor
Arbiter that there was no constructive dismissal because of the
absence of any evidence to prove such allegation. As such,
Reyes' supposition is that the CA erred in coming up with a
contrary finding.
Petitioners insist that the order transferring or reassigning
respondents from chief bakers to utility/security personnel is a
valid exercise of management prerogative for it does not involve
any diminution in pay and privileges and that same is in
accordance with the requirements of the business, viz.: to protect
its goodwill and reputation as well as the health and welfare of
the consuming public.
Our Ruling
We find no merit in the petition.
The Court of Appeals is correct in
reviewing the findings of the National
Labor Relations Commission. cACDaH
Petitioners claim that the CA should have accorded respect and
finality to the factual findings rendered by the NLRC in its
December 18, 2003 Resolution as the same merely affirmed the
findings of the Labor Arbiter. Citing several jurisprudence on the
matter, petitioners add that factual findings of labor officials
who acquired expertise on matters within their jurisdiction have
conclusive effect.
We reject this contention as none of the NLRC divergent rulings
affirmed the findings of the Labor Arbiter. To recall, the Labor
Arbiter dismissed respondents' complaints on a technicality, that
is, on the ground that respondents' Joint Position Paper was filed
late and that it did not contain any attachments to prove the
allegations therein. Upon appeal, the NLRC rendered its first
Decision on January 17, 2002 which remanded the case to the
Labor Arbiter for purposes of identifying the real respondents
and separating the consolidated cases if warranted, and for the
conduct of further proceedings due to Reyes's allegation that
Arnaiz and Napal have a different employer. The NLRC also
disagreed with the Labor Arbiter's ratiocination that it behooved
upon respondents to attach proof of their illegal dismissal.
According to the NLRC, since Reyes admitted that he is
Tolores's employer, the burden to prove that the termination is
valid as well as the due payment of money claims falls upon
petitioners. Upon petitioners' motion, however, the NLRC
reconsidered this ruling and resolved the case on the merits. In
so doing, it found the respondents to have been constructively
dismissed through its Resolution dated September 23, 2003. The
NLRC, however, once again reversed itself in a Resolution dated

December 18, 2003 upon Reyes's filing of a Motion for

Reconsideration. This time, the NLRC held that respondents
were not illegally dismissed but instead abandoned their jobs. It
was at this point that respondents sought recourse from the CA.
Indeed, "factual findings of labor officials who are deemed to
have acquired expertise in matters within their respective
jurisdictions are generally accorded not only respect, but even
finality." 25 It is a well-entrenched rule that findings of facts of
the NLRC, affirming those of the Labor Arbiter, are accorded
respect and due consideration when supported by substantial
evidence. 26 We, however, find that the doctrine of great respect
and finality has no application to the case at bar. As stated, the
Labor Arbiter dismissed respondents' complaints on mere
technicality. The NLRC, upon appeal, then came up with three
divergent rulings. At first, it remanded the case to the Labor
Arbiter. However, in a subsequent resolution, it decided to
resolve the case on the merits by ruling that respondents were
constructively dismissed. But later on, it again reversed itself in
its third and final resolution of the case and ruled in petitioners'
favor. Therefore, contrary to Reyes's claim, the NLRC did not,
on any occasion, affirm any factual findings of the Labor
Arbiter. The CA is thus correct in reviewing the entire records of
the case to determine which findings of the NLRC is sound and
in accordance with law. Besides, the CA, at any rate, may still
resolve factual issues by express mandate of the law despite the
respect given to administrative findings of fact. 27
The transfer/reassignment of respondents
constitutes constructive dismissal.
Petitioners contend that the order transferring or reassigning
respondents from their position as chief bakers to utility/security
personnel is within the ambit of management prerogative as
employer. They harp on the fact that no evidence was presented
by respondents to show that they were dismissed from
employment.
We have held that management is free to regulate, according to
its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed, supervision
of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and
recall of workers. The exercise of management prerogative,
however, is not absolute as it must be exercised in good faith
and with due regard to the rights of labor. 28
In constructive dismissal cases, the employer has the burden of
proving that the transfer of an employee is for just or valid
ground, such as genuine business necessity. The employer must
demonstrate that the transfer is not unreasonable, inconvenient,

or prejudicial to the employee and that the transfer does not

involve a demotion in rank or a diminution in salary and other
benefits. "If the employer fails to overcome this burden of proof,
the employee's transfer is tantamount to unlawful constructive
dismissal." 29
In this case, petitioners insist that the transfer of respondents
was a measure of self-preservation and was prompted by a
desire to protect the health of the buying public, claiming that
respondents should be transferred to a position where they could
not sabotage the business pending resolution of their cases.
According to petitioners, the possibility that respondents might
introduce harmful substances to the bread while in the
performance of their duties as chief bakers is not imaginary but
real as borne out by what Tolores did in one of the bakeshops in
Culasi, Antique where he was assigned as baker. cSATEH
This postulation is not well-taken. On the contrary, petitioners
failed to satisfy the burden of proving that the transfer was based
on just or valid ground. Petitioners' bare assertions of imminent
threat from the respondents are mere accusations which are not
substantiated by any proof. This Court is proscribed from
making conclusions based on mere presumptions or
suppositions. An employee's fate cannot be justly hinged upon
conjectures and surmises. 30 The act attributed against Tolores
does not even convince us as he was merely a suspected culprit
in the alleged sabotage for which no investigation took place to
establish his guilt or culpability. Besides, Reyes still retained
Tolores as an employee and chief baker when he could have
dismissed him for cause if the allegations were indeed found
true. In view of these, this Court finds no compelling reason to
justify the transfer of respondents from chief bakers to
utility/security personnel. What appears to this Court is that
respondents' transfer was an act of retaliation on the part of
petitioners due to the former's filing of complaints against them,
and thus, was clearly made in bad faith. In fact, petitioner Reyes
even admitted that he caused the reassignments due to the
pending complaints filed against him. As the CA aptly held:
In the case at bench, respondent Reyes failed to justify
petitioners' transfer from the position of chief bakers to
utility/security personnel. We find that the threat being alluded
to by respondent Reyes that the petitioners might introduce
harmful foreign substances in baking bread is imaginary and
not real. We recall that what triggered the petitioners'
reassignment was the filing of their complaints against private
respondents in the NLRC. The petitioners were not even given
an opportunity to refute the reason for the transfer. The drastic
change in petitioners' nature of work unquestionably resulted in,
as rightly perceived by them, a demeaning and humiliating work
condition. The transfer was a demotion in rank, beyond doubt.
There is demotion when an employee is transferred from a

Page | 13

position of dignity to a servile or menial job. One does not need

to stretch the imagination to distinguish the work of a chief
baker to that of a security cum utility man. 31
"[D]emotion involves a situation in which an employee is
relegated to a subordinate or less important position constituting
a reduction to a lower grade or rank, with a corresponding
decrease in duties and responsibilities, and usually accompanied
by a decrease in salary." 32 When there is a demotion in rank
and/or a diminution in pay; when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to
the employee; or when continued employment is rendered
impossible, unreasonable or unlikely, the transfer of an
employee may constitute constructive dismissal. 33
We agree with the CA in ruling that the transfer of respondents
amounted to a demotion. Although there was no diminution in
pay, there was undoubtedly a demotion in titular rank. One
cannot deny the disparity between the duties and functions of a
chief baker to that of a utility/security personnel tasked to clean
and manage the orderliness of the outside premises of the
bakeshop. Respondents were even prohibited from entering the
bakeshop. The change in the nature of their work undeniably
resulted to a demeaning and humiliating work condition.
In Globe Telecom, Inc. v. Florendo-Flores, 34 we held:
The managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion. It must always bear
in mind the basic elements of justice and fair play. Having the
right must not be confused with the manner that right is
exercised. Thus, it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker.
Petitioners' claim that respondents abandoned their job stands on
shallow grounds. Respondents cannot be faulted for refusing to
report for work as they were compelled to quit their job due to a
demotion without any just cause. Moreover, we have
consistently held that a charge of abandonment is inconsistent
with the filing of a complaint for constructive
dismissal. 35 Respondents' demand to maintain their positions as
chief bakers by filing a case and asking for the relief of
reinstatement belies abandonment. 36
As the transfer proves unbearable to respondents as to foreclose
any choice on their part except to forego continued employment,
same amounts to constructive dismissal for which reinstatement
without loss of seniority rights, full backwages, inclusive of
allowances, and other benefits or their monetary equivalent,
computed from the time their compensation was withheld up to
the time of their actual reinstatement, should be granted. 37 The
CA, therefore, did not err in awarding the reliefs prayed for by

the respondents as they were, without a doubt, constructively

dismissed.
WHEREFORE, the petition is DENIED. The September 23,
2005 Decision of the Court of Appeals in CA-G.R. SP No.
86257 is AFFIRMED.
SO ORDERED.
[G.R. No. 144412. November 18, 2003.]
ALLIED BANKING CORPORATION, petitioner, vs.
COURT OF APPEALS and POTENCIANO L.
GALANIDA, respondents.
SYNOPSIS
Respondent Galanida was assistant manager when he was
dismissed by petitioner Allied Bank for refusing an order to
transfer to another branch. Hence, the issue on the legality of
such dismissal.
The transfer of an employee is within the ambit of the
employer's prerogatives, for valid reasons according to the
requirement of the business, and provided that the transfer does
not result in demotion in rank or diminution of the employee's
remunerations.'Here, the constant transfer of bank personnel
with accounting responsibilities from one branch to another is a
standard practice of Allied Bank, and the Bangko Sentral ng
Pilipinas' Manual of Regulations for Banks also require the
rotation of these personnel. Galanida was well aware of this, as
it was a condition which he consented to in his employment.
And neither was the transfer in the nature of a demotion. His
refusal to obey a valid transfer order constitutes willful
disobedience of a lawful order of an employer. Thus, he was
dismissed for just cause under Art. 282 (a) of the Labor Code,
and he was not entitled to reinstatement or to separation pay.
SYLLABUS
1.LEGAL ETHICS; CODE OF PROFESSIONAL
RESPONSIBILITY; DUTY OF LAWYER TO CITE THE
RULINGS OF THE SUPREME COURT ACCURATELY.
The syllabus of cases in official or unofficial reports of Supreme
Court decisions or resolutions is not the work of the Court, nor
does it state this Court's decision. The syllabus is simply the
work of the reporter who gives his understanding of the
decision. The reporter writes the syllabus for the convenience of
lawyers in reading the reports. A syllabus is not a part of the
court's decision. A counsel should not cite a syllabus in place of
the carefully considered text in the decision of the Court. In the
present case, Labor Arbiter Almirante and Atty. Durano began

by quoting from Dosch, but substituted a portion of the decision

with a headnote from the SCRA syllabus, which they even
underscored. In short, they deliberately made the quote from the
SCRA syllabus appear as the words of the Supreme Court. We
admonish them for what is at the least patent carelessness, if not
an outright attempt to mislead the parties and the courts taking
cognizance of this case. Rule 10.02, Canon 10 of the Code of
Professional Responsibility mandates that a lawyer shall not
knowingly misquote or misrepresent the text of a decision or
authority. It is the duty of all officers of the court to cite the
rulings and decisions of the Supreme Court accurately.
2.REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF
COURT OF APPEALS AFFIRMING FINDINGS OF NLRC,
ACCORDED GREAT WEIGHT AND FINALITY;
EXCEPTIONS. We accord great weight and even finality to
the factual findings of the Court of Appeals, particularly when
they affirm the findings of the NLRC or the lower courts.
However, there are recognized exceptions to this rule. These
exceptions are: (1) when the findings are grounded on
speculation, surmise and conjecture; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when
there is grave abuse of discretion in the appreciation of facts; (4)
when the factual findings of the trial and appellate courts are
conflicting; (5) when the Court of Appeals, in making its
findings, has gone beyond the issues of the case and such
findings are contrary to the admissions of both appellant and
appellee; (6) when the judgment of the appellate court is
premised on a misapprehension of facts or when it has failed to
consider certain relevant facts which, if properly considered,
will justify a different conclusion; (7) when the findings of fact
are conclusions without citation of specific evidence on which
they are based; and (8) when the findings of fact of the Court of
Appeals are premised on the absence of evidence but are
contradicted by the evidence on record.
3.LABOR AND SOCIAL LEGISLATION; TERMINATION OF
EMPLOYMENT; ILLEGAL DISMISSAL; TRANSFER OF
EMPLOYEE MUST BE PROVED NECESSARY BY THE
EMPLOYER. The rule is that the transfer of an employee
ordinarily lies within the ambit of the employer's prerogatives.
The employer exercises the prerogative to transfer an employee
for valid reasons and according to the requirement of its
business, provided the transfer does not result in demotion in
rank or diminution of the employee's salary, benefits and other
privileges. In illegal dismissal cases, the employer has the
burden of showing that the transfer is not unnecessary,
inconvenient and prejudicial to the displaced employee. The
constant transfer of bank officers and personnel with accounting
responsibilities from one branch to another is a standard practice
of Allied Bank, which has more than a hundred branches
throughout the country. Allied Bank does this primarily for

Page | 14

internal control. It also enables bank employees to gain the

necessary experience for eventual promotion. The Bangko
Sentral ng Pilipinas, in its Manual of Regulations for Banks and
Other Financial Intermediaries, requires the rotation of these
personnel. The Manual directs that the "duties of personnel
handling cash, securities and bookkeeping records should be
rotated" and that such rotation "should be irregular,
unannounced and long enough to permit disclosure of any
irregularities or manipulations." Galanida was well aware of
Allied Bank's policy of periodically transferring personnel to
different branches. As the Court of Appeals found, assignment to
the different branches of Allied Bank was a condition of
Galanida's employment. Galanida consented to this condition
when he signed the Notice of Personnel Action. The evidence on
record contradicts the charge that Allied Bank discriminated
against Galanida and was in bad faith when it ordered his
transfer. The employer has the prerogative, based on its
assessment of the employees' qualifications and competence, to
rotate them in the various areas of its business operations to
ascertain where they will function with maximum benefit to the
company. Neither was Galanida's transfer in the nature of a
demotion.
4.ID.; ID.; UNFAIR LABOR PRACTICE; NOT PRESENT IN
CASE AT BAR. There is also no basis for the finding that
Allied Bank was guilty of unfair labor practice in dismissing
Galanida. Unfair labor practices relate only to violations of "the
constitutional right of workers and employees to selforganization" and are limited to the acts enumerated in Article
248 of the Labor Code, none of which applies to the present
case. There is no evidence that Galanida took part in forming a
union, or even that a union existed in Allied Bank.
5.ID.; ID.; DISMISSAL JUST CAUSE; WILLFUL
DISOBEDIENCE OF A LAWFUL ORDER OF AN
EMPLOYER; PRESENT WHEN EMPLOYEE REFUSED
VALID TRANSFER ORDER. The refusal to obey a valid
transfer order constitutes willful disobedience of a lawful order
of an employer. Employees may object to, negotiate and seek
redress against employers for rules or orders that they regard as
unjust or illegal. However, until and unless these roles or orders
are declared illegal or improper by competent authority, the
employees ignore or disobey them at their peril. For Galanida's
continued refusal to obey Allied Bank's transfer orders, we hold
that the bank dismissed Galanida for just cause in accordance
with Article 282 (a) of the Labor Code. Galanida is thus not
entitled to reinstatement or to separation pay.
6.ID.; ID.; ID.; REQUIREMENTS. To be effective, a
dismissal must comply with Section 2 (d), Rule 1, Book VI of
the Omnibus Rules' Implementing the Labor Code ("Omnibus
Rules"), which provides: For termination of employment based

on just causes as defined in Article 282 of the Labor Code: (i) A

written notice served on the employee specifying the ground or
grounds of termination, and giving said employee reasonable
opportunity within which to explain his side. (ii) A hearing or
conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to
respond to the charge, present his evidence, or rebut the
evidence presented against him. (iii) A written notice of
termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been
established to justify his termination.
7.ID.; ID.; ID.; ID.; HEARING; DOES NOT REQUIRE
ACTUAL HEARING. On the requirement of a hearing, this
Court has held that the essence of due process is simply an
opportunity to be heard. An actual hearing is not necessary. The
exchange of several letters, in which Galanida's wife, a lawyer
with the City Prosecutor's Office, assisted him, gave Galanida an
opportunity to respond to the charges against him.
8.ID.; ID.; ID.; ID.; NOTICE OF TERMINATION; MEMO
INFORMING EMPLOYER'S DECISION TO DISMISS
EMPLOYEE; SUFFICIENT. A cursory reading of the Memo
will show that it unequivocally informed Galanida of Allied
Bank's decision to dismiss him. The statement, "please be
informed that the Bank has terminated your services effective
September 1, 1994 and considered whatever benefit, if any, that
you are entitled [to] as forfeited xxx" is plainly worded and
needs no interpretation. The Memo also discussed the findings
of the Investigation Committee that served as grounds for
Galanida's dismissal. The Memo referred to Galanida's "open
defiance and refusal" to transfer first to the Bacolod City branch
and then to the Tagbilaran City branch. The Memo also
mentioned his continued refusal to report for work despite the
denial of his application for additional vacation leave. The
Memo also refuted Galanida's charges of discrimination and
demotion, and concluded that he had violated Article XII of the
bank's Employee Discipline Policy and Procedure. The Memo,
although captioned "Transfer and Reassignment," did not
preclude it from being a notice of termination. The Court has
held that the nature of an instrument is characterized not by the
title given to it but by its body and contents.

9.ID.; ID.; ID.; ID.; ID.; EFFECTIVE ONLY UPON RECEIPT

THEREOF. To be effective, a written notice of termination
must be served on the employee. Allied Bank could not
terminate Galanida on 1 September 1994 because he had not
received as of that date the notice of Allied Bank's decision to
dismiss him. Galanida's dismissal could only take effect on 5
October 1994, upon his receipt of the Memo. For this reason,

Galanida is entitled to backwages for the period from 1

September 1994 to 4 October 1994. Under the circumstances,
we also find an award of P10,000 in nominal damages proper.
Courts award nominal damages to recognize or vindicate the
right of a person that another has violated. The law entitles
Galanida to receive timely notice of Allied Bank's decision to
dismiss him. Allied Bank should have exercised more care in
issuing the notice of termination.
DECISION
CARPIO, J p:
The Case
Before the Court is a petition for review 1 assailing the
Decision 2 of 27 April 2000 and the Resolution of 8 August
2000 of the Court of Appeals in CA-G.R. SP No. 51451. The
Court of Appeals upheld the Decision 3 of 18 September 1998
and the Resolution of 24 December 1998 of the National Labor
Relations Commission ("NLRC") in NLRC Case No. V-00018098. The NLRC modified the Decision dated 23 December 1997
of Labor Arbiter Dominador A. Almirante ("Labor Arbiter") in
NLRC Case No. RAB VII-05-0545-94 holding that Allied
Banking Corporation ("Allied Bank") illegally dismissed
Potenciano L. Galanida ("Galanida"). The NLRC awarded
Galanida separation pay, backwages, moral and exemplary
damages, and other amounts totaling P1,264,933.33.
Antecedent Facts
For a background of this case, we quote in part from the
Decision of the Court of Appeals:
Private respondent Potenciano Galanida was hired by petitioner
Allied Banking Corporation on 11 January 1978 and rose from
accountant-book(k)eeper to assistant manager in 1991. His
appointment was covered by a "Notice of Personnel Action"
which provides as one of the conditions of employment the
provision on petitioner's right to transfer employees:
"REGULAR APPOINTMENT: . . . It is understood that the bank
reserves the right to transfer or assign you to other departments
or branches of the bank as the need arises and in the interest of
maintaining smooth and uninterrupted service to the public."
Private respondent was promoted several times and was
transferred to several branches as follows:
"a)January, 1978 to March, 1982
Tagbilaran City Branch

Page | 15

"b)April, 1982 to May, 1984

Lapulapu City Branch
"c)June, 1984
Mandaue City Branch
"d)July, 1984 to April, 1986
Tagbilaran City Branch
"e)May, 1986 to May, 1987
Dumaguete City Branch
"f)June, 1987 to August, 1987

citing difficulty of working away from your family as if the

other officers concerned do not suffer the same predicament. To
exempt you from the officer transfer would result in favoritism
in your favor and discrimination as against the other officers
concerned.
"In furtherance of maintaining a smooth and uninterrupted
service to the public, and in accordance with the Bank's order of
priority of rotating its accountants' places of assignments, you
are well aware that Roberto Isla, AM/Accountant, assigned in
Cebu form ore than ten (10) years, was, on February 14, 1994,
reassigned to Iligan City Branch and then to Cagayan de Oro
City Branch on June 8, 1994. Hence, your objection on the
ground of your length of service is without merit.
xxx xxx xxx

"g)September, 1987 to Sept. 1989

"As discussed, your refusal to follow instruction concerning

your transfer and reassignment to Bacolod City and to
Tagbilaran City is penalized under Article XII of the Bank's
Employee Discipline Policy and Procedure [which] provides:

Lapulapu City Branch, Cebu

'XII Transfer and Reassignment

"h)October, 1989 to Sept. 1992

Refusal to follow instruction concerning transfers and

reassignments.

Carbon Branch, Cebu City

Carbon Branch, Cebu City

"i)October 1992 to Sept. 1994
Jakosalem Regional Branch,
Cebu City: (Rollo, p. 47)
Effecting a rotation/movement of officers assigned in the Cebu
homebase, petitioner listed respondent as second in the order of
priority of assistant managers to be assigned outside of Cebu
City having been stationed in Cebu for seven years already.
Private respondent manifested his refusal to be transferred to
Bacolod City in a letter dated 19 April 1994 citing as reason
parental obligations, expenses, and the anguish that would result
if he is away from his family. He then filed a complaint before
the Labor Arbiter for constructive dismissal.
Subsequently, petitioner bank informed private respondent
(Rollo, p. 86) that he was to report to the Tagbilaran City Branch
effective 23 May 1994. Private respondent refused. In a letter
dated 13 June 1994, petitioner warned and required of private
respondent as follows:
"There is no discrimination in your transfer. In fact, among the
officers mentioned, only you have refused the new assignment

First and subsequent offenses

The penalty may range from suspension to dismissal as
determined by management. The employee shall be required to
comply with the order of transfer and reassignment, if the
penalty is not termination of employment.'
"In view of the foregoing, please explain in writing within three
(3) days from receipt hereof why no disciplinary action should
be meted against you for your having refused to follow
instructions concerning the foregoing transfer and
reassignment." . . . 4
On 16 June 1994, Galanida replied that "(w)hether the bank's
penalty for my refusal be Suspension or Dismissal . . . it will all
the more establish and fortify my complaint now pending at
NLRC, RAB 7." 5 In the same letter, he charged Allied Bank
with discrimination and favoritism in ordering his transfer, thus:
. . . What I cannot decipher now under the headship of Mr.
Olveda is management's discriminatory act of transferring only
the long staying accountants of Cebu in the guise of its exercise
of management prerogative when in truth and in fact, the ulterior
motive is to accommodate some new officers who happen to
enjoy favorable connection with management. How can the

bank ever justify the transfer of Melinda T. Co, a new officer

who had experienced being assigned outside of Cebu for more
than a year only to Tabunok Branch? If the purpose is for check
and balance, is management implying that Melinda Co can
better carry out such function over Mr. Larry Sabelino, who is a
seasoned and experienced accountant or any of the Metro Cebu
accountants for that matter? Isn't this act of management an
obvious display of favoritism? . . . 6
On 5 October 1994, Galanida received an inter-office
communication 7 ("Memo") dated 8 September 1994 from
Allied Bank's Vice-President for Personnel, Mr. Leonso C. Pe.
The Memo informed Galanida that Allied Bank had terminated
his services effective 1 September 1994. The reasons given for
the dismissal were: (1) Galanida's continued refusal to be
transferred from the Jakosalem, Cebu City branch; and (2) his
refusal to report for work despite the denial of his application for
additional vacation leave. The salient portion of the Memo
reads:
Therefore, your refusal to follow instruction concerning your
transfer and reassignment to Bacolod City and to Tagbilaran
City is without any justifiable reason and constituted violations
of Article XII of the Bank's EDPP . . .
In view of the foregoing, please be informed that the Bank has
terminated your services effective September 1, 1994 and
considered whatever benefit, if any, that you are entitled as
forfeited in accordance with 04, V Administrative Penalties,
page 6 of the Bank's EDPP which provides as follows:
"04.Dismissal.
Dismissal is a permanent separation for cause . . .
Notice of termination shall be issued by the Investigation
Committee subject to the confirmation of the President or his
authorized representative as officer/employee who is terminated
for cause shall not be eligible to receive any benefit arising from
her/his employment with the Bank or to termination pay."
It is understood that the termination of your service shall be
without prejudice to whatever legal remedies which the Bank
may have already undertaken and/or will undertake against you.
Please be guided accordingly. (Emphasis supplied) 8
The Ruling of the Labor Arbiter
After several hearings, the Labor Arbiter held that Allied Bank
had abused its management prerogative in ordering the transfer
of Galanida to its Bacolod and Tagbilaran branches. In ruling

Page | 16

that Galanida's refusal to transfer did not amount to

insubordination, the Labor Arbiter misquoted this Court's
decision in Dosch v. NLRC, 9 thus:
As a general rule, the right to transfer or reassign an employee is
recognized as an employer's exclusive right and the prerogative
of management (Abbott Laboratories vs. NLRC, 154 SCRA 713
[1987]).

WHEREFORE, premises considered, judgment is hereby

rendered ordering respondent Allied Banking Corporation to pay
complainant the aggregate total amount of Three Hundred
Twenty Four Thousand Pesos (P324,000.00) representing the
following awards:
a)Separation pay for P272,000.00;
b)Quarter bonus for 1994 P16,000.00;

The exercise of this right, is not however, absolute. It has certain

limitations. Thus, in Helmut Dosch vs. NLRC, et al. 123 SCRA
296 (1983), the Supreme Court, ruled:
"While it may be true that the right to transfer or reassign an
employee is an employer's exclusive right and the prerogative of
management, such right is not absolute. The right of an
employer to freely select or discharge his employee is limited by
the paramount police power . . . for the relations between capital
and labor are not merely contractual but impressed with public
interest. . . . And neither capital nor labor shall act oppressively
against each other. IaESCH
Refusal to obey a transfer order cannot be considered
insubordination where employee cited reason for said refusal,
such (sic) as that of being away from the family." 10 (Emphasis
supplied by the Labor Arbiter)
The Labor Arbiter reasoned that Galanida's transfer was
inconvenient and prejudicial because Galanida would have to
incur additional expenses for board, lodging and travel. On the
other hand, the Labor Arbiter held that Allied Bank failed to
show any business urgency that would justify the transfer.

The Labor Arbiter also gave credence to Galanida's claim that

Allied Bank gave Ms. Co special treatment. The Labor Arbiter
stated that Allied Bank deliberately left out Ms. Co's name from
the list of accountants transferred to Cebu as contained in Allied
Bank's letter dated 13 June 1994. However, Mr. Regidor Olveda,
Allied Bank's Vice President for Operations Accounting,
testified that the bank transferred Ms. Co to the Tabunok, Cebu
branch within the first half of 1994.
Still, the Labor Arbiter declined to award Galanida back wages
because he was not entirely free from blame. Since another bank
had already employed Galanida, the Labor Arbiter granted
Galanida separation pay in lieu of reinstatement. The dispositive
portion of the Labor Arbiter's Decision of 23 December 1997
provides:

c)13th month pay for 1994 P16,000.00;

d)Refund of contribution to Provident Fund P20,000.00.
SO ORDERED. 11
The Ruling of the NLRC
On appeal, the NLRC likewise ruled that Allied Bank terminated
Galanida without just cause. The NLRC agreed that the transfer
order was unreasonable and unjustified, considering the family
considerations mentioned by Galanida. The NLRC characterized
the transfer as a demotion since the Bacolod and Tagbilaran
branches were smaller than the Jakosalem branch, a regional
office, and because the bank wanted Galanida, an assistant
manager, to replace an assistant accountant in the Tagbilaran
branch. The NLRC found unlawful discrimination since Allied
Bank did not transfer several junior accountants in Cebu. The
NLRC also held that Allied Bank gave Ms. Co special treatment
by assigning her to Cebu even though she had worked for the
bank for less than two years.
The NLRC ruled that Galanida's termination was illegal for lack
of due process. The NLRC stated that Allied Bank did not
conduct any hearing. The NLRC declared that Allied Bank
failed to send a termination notice, as required by law for a valid
termination. The Memo merely stated that Allied Bank would
issue a notice of termination, but the bank did not issue any
notice.
The NLRC concluded that Allied Bank dismissed Galanida in
bad faith, tantamount to an unfair labor practice as the dismissal
undermined Galanida's right to security of tenure and equal
protection of the laws. On these grounds, the NLRC
promulgated its Decision of 18 September 1998, the relevant
portion of which states:
In this particular case, We view as impractical, unrealistic and no
longer advantageous to both parties to order reinstatement of the
complainant. . . . For lack of sufficient basis, We deny the claim
for 1994 quarter bonus. Likewise, no attorney's fees is awarded

as counsels for complainant-appellee are from the City

Prosecutor's Office of Cebu.
WHEREFORE, premises considered, the decision of the Labor
Arbiter dated December 23, 1997 is hereby MODIFIED by
increasing the award of separation pay and granting in addition
thereto backwages, moral and exemplary damages. The
respondent-appellant, ALLIED BANKING CORPORATION, is
thus ordered to pay to herein complainant-appellee,
POTENCIANO L. GALANIDA, the following amounts:
a)P336,000.00, representing separation pay
b)P833,600.00, representing backwages
c)P5,333.23 representing proportional 1994 13th month pay
d)P20,000.00 representing refund of Provident Fund
Contribution
e)P50,000.00 representing moral damages
f)P20,000.00 representing exemplary damages
========
P1,264,933.33 TOTAL AWARD
All other claims are dismissed for lack of basis. The other
respondents are dropped for lack of sufficient basis that they
acted in excess of their corporate powers.
SO ORDERED. 12
Allied Bank filed a motion for reconsideration which the NLRC
denied in its Resolution of 24 December 1998. 13
Dissatisfied, Allied Bank filed a petition for review questioning
the Decision and Resolution of the NLRC before the Court of
Appeals.
The Ruling of the Court of Appeals
Citing Dosch v. NLRC, 14 the Court of Appeals held that
Galanida's refusal to comply with the transfer orders did not
warrant his dismissal. The appellate court ruled that the transfer
from a regional office to the smaller Bacolod or Tagbilaran
branches was effectively a demotion. The appellate court agreed
that Allied Bank did not afford Galanida procedural due process
because there was no hearing and no notice of termination. The
Memo merely stated that the bank would issue a notice of
termination but there was no such notice.

Page | 17

The Court of Appeals affirmed the ruling of the NLRC in its

Decision of 27 April 2000, thus:

Court, prepared by Atty. Loreto M. Durano, againmisquoted the

Court's ruling in Dosch v. NLRC, thus:

WHEREFORE, for lack of merit, the petition is DISMISSED

and the assailed Decision of public respondent NLRC is
AFFIRMED.

. . . His [Galanida's] refusal to transfer falls well within the

ruling of the Supreme Court in Helmut Dosch vs. NLRC, et al.,
123 SCRA 296 (1983) quoted as follows:

SO ORDERED. 15

xxx xxx xxx

Allied Bank filed a motion for reconsideration which the

appellate court denied in its Resolution of 8 August 2000. 16

Refusal to obey a transfer order cannot be considered

insubordination where employee cited reason for said refusal,
such as that of being away from the family." 18

On 26 April 2001, Allied Bank appealed the appellate court's

decision and resolution to the Supreme Court. Allied Bank
prayed that the Supreme Court: (1) issue a temporary restraining
order or writ of preliminary injunction ex parte to restrain the
implementation or execution of the questioned Decision and
Resolution; (2) declare Galanida's termination as valid and legal;
(3) set aside the Court of Appeals' Decision and Resolution; (4)
make permanent the restraining order or preliminary injunction;
(5) order Galanida to pay the costs; and (6) order other equitable
reliefs.
The Issues
Allied Bank raises the following issues:
1.WHETHER UNDER THE FACTS PRESENTED THERE IS
LEGAL BASIS IN PETITIONER'S EXERCISE OF ITS
MANAGEMENT PREROGATIVE.
2.WHETHER PRIVATE RESPONDENT'S VIOLATIONS OF
COMPANY RULES CONSTITUTE A GROUND TO
WARRANT THE PENALTY OF DISMISSAL.
3.WHETHER UNDER THE FACTS PRESENTED, THERE IS
LEGAL BASIS TO HOLD THAT ALLIED BANK
AFFORDED PRIVATE RESPONDENT THE REQUIRED
DUE PROCESS.
4.WHETHER UNDER THE FACTS, THERE IS LEGAL
BASIS TO HOLD THAT PRIVATE RESPONDENT CANNOT
RECOVER ANY MONETARY AWARD. 17
In sum, Allied Bank argues that the transfer of Galanida was a
valid exercise of its management prerogative. Allied Bank
contends that Galanida's continued refusal to obey the transfer
orders constituted willful disobedience or insubordination,
which is a just cause for termination under the Labor Code.
On the other hand, Galanida defended his right to refuse the
transfer order. The memorandum for Galanida filed with this

The Ruling of the Court

The petition is partly meritorious.
Preliminary Matter: Misquoting Decisions of the Supreme Court
The memorandum prepared by Atty. Durano and, worse, the
assailed Decision of the Labor Arbiter, both misquoted the
Supreme Court's ruling in Dosch v. NLRC. The Court held
in Dosch:
We cannot agree to Northwest's submission that petitioner was
guilty of disobedience and insubordination which respondent
Commission sustained. The only piece of evidence on which
Northwest bases the charge of contumacious refusal is
petitioner's letter dated August 28, 1975 to R.C. Jenkins wherein
petitioner acknowledged receipt of the former's memorandum
dated August 18, 1975, appreciated his promotion to Director of
International Sales but at the same time regretted "that at this
time for personal reasons and reasons of my family, I am unable
to accept the transfer from the Philippines" and thereafter
expressed his preference to remain in his position, saying: "I
would, therefore, prefer to remain in my position of ManagerPhilippines until such time that my services in that capacity are
no longer required by Northwest Airlines." From this evidence,
We cannot discern even the slightest hint of defiance, much less
imply insubordination on the part of petitioner. 19
The phrase "[r]efusal to obey a transfer order cannot be
considered insubordination where employee cited reason for
said refusal, such as that of being away from the family" does
not appear anywhere in the Dosch decision. Galanida's counsel
lifted the erroneous phrase from one of the italicized lines in
the syllabus of Dosch found in the Supreme Court Reports
Annotated ("SCRA").
The syllabus of cases in official or unofficial reports of Supreme
Court decisions or resolutions is not the work of the Court, nor
does it state this Court's decision. The syllabus is simply the

work of the reporter who gives his understanding of the

decision. The reporter writes the syllabus for the convenience of
lawyers in reading the reports. A syllabus is not a part of the
court's decision. 20 A counsel should not cite a syllabus in place
of the carefully considered text in the decision of the Court.
In the present case, Labor Arbiter Almirante and Atty. Durano
began by quoting from Dosch, but substituted a portion of the
decision with a headnote from the SCRA syllabus, which they
even underscored. In short, they deliberately made the quote
from the SCRA syllabus appear as the words of the Supreme
Court. We admonish them for what is at the least patent
carelessness, if not an outright attempt to mislead the parties and
the courts taking cognizance of this case. Rule 10.02, Canon 10
of the Code of Professional Responsibility mandates that a
lawyer shall not knowingly misquote or misrepresent the text of
a decision for authority. It is the duty of all officers of the court
to cite the rulings and decisions of the Supreme Court
accurately. 21

Whether Galanida was dismissed for just cause

We accord great weight and even finality to the factual findings
of the Court of Appeals, particularly when they affirm the
findings of the NLRC or the lower courts. However, there are
recognized exceptions to this rule. These exceptions are: (1)
when the findings are grounded on speculation, surmise and
conjecture; (2) when the inference made is manifestly mistaken,
absurd or impossible; (3) when there is grave, abuse of
discretion in the appreciation of facts; (4) when the factual
findings of the trial and appellate courts are conflicting; (5)
when the Court of Appeals, in making its findings, has gone
beyond the issues of the case and such findings are contrary to
the admissions of both appellant and appellee; (6) when the
judgment of the appellate court is premised on a
misapprehension of facts or when it has failed to consider
certain relevant facts which, if properly considered, will justify a
different conclusion; (7) when the findings of fact are
conclusions without citation of specific evidence on which they
are based; and (8) when the findings of fact of the Court of
Appeals are premised on the absence of evidence but are
contradicted by the evidence on record. 22 After a scrutiny of
the records, we find that some of these exceptions obtain in the
present case.
The rule is that the transfer of an employee ordinarily lies within
the ambit of the employer's prerogatives. 23 The employer
exercises the prerogative to transfer an employee for valid
reasons and according to the requirement of its business,
provided the transfer does not result in demotion in rank or

Page | 18

diminution of the employee's salary, benefits and other

privileges. 24 In illegal dismissal cases, the employer has the
burden of showing that the transfer is not unnecessary,
inconvenient and prejudicial to the displaced employee. 25
The constant transfer of bank officers and personnel with
accounting responsibilities from one branch to another is a
standard practice of Allied Bank, which has more than a hundred
branches throughout the country. 26 Allied Bank does this
primarily for internal control. It also enables bank employees to
gain the necessary experience for eventual promotion.
The Bangko Sentral ng Pilipinas, in its Manual of Regulations
for Banks and Other Financial Intermediaries, 27 requires the
rotation of these personnel. The Manual directs that the "duties
of personnel, handling cash, securities and bookkeeping records
should be rotated" and that such rotation "should be irregular,
unannounced and long enough to permit disclosure of any
irregularities or manipulations." 28
Galanida was well aware of Allied Bank's policy of periodically
transferring personnel to different branches. As the Court of
Appeals found, assignment to the different branches of Allied
Bank was a condition of Galanida's employment. Galanida
consented to this condition when he signed the Notice of
Personnel Action. 29
The evidence on record contradicts the charge that Allied Bank
discriminated against Galanida and was in bad faith when it
ordered his transfer. Allied Bank's letter of 13 June
1994 30 showed that at least 14 accounting officers and
personnel from various branches, including Galanida, were
transferred to other branches. Allied Bank did not single out
Galanida. The same letter explained that Galanida was second in
line for assignment outside Cebu because he had been in Cebu
for seven years already. The person first in line, Assistant
Manager Roberto Isla, who had been in Cebu for more than ten
years, had already transferred to a branch in Cagayan de Oro
City. We note that none of the other transferees joined Galanida
in his complaint or corroborated his allegations of widespread
discrimination and favoritism.
As regards Ms. Co, Galanida's letter of 16 June 1994 itself
showed that her assignment to Cebu was not in any way related
to Galanida's transfer. Ms. Co was supposed to replace a certain
Larry Sabelino in the Tabunok branch. The employer has the
prerogative, based on its assessment of the employees'
qualifications and competence, to rotate them in the various
areas of its business operations to ascertain where they will
function with maximum benefit to the company. 31
Neither was Galanida's transfer in the nature of a demotion.
Galanida did not present evidence showing that the transfer

would diminish his salary, benefits or other privileges. Instead,

Allied Bank's letter of 13 June 1994 assured Galanida that he
would not suffer any reduction in rank or grade, and that the
transfer would involve the same rank, duties and obligations.
Mr. Olveda explained this further in the affidavit he submitted to
the Labor Arbiter, thus:
19.There is no demotion in position/rank or diminution of
complainant's salary, benefits and other privileges as the
transfer/assignment of branch officers is premised on the
role/functions that they will assume in the management and
operations of the branch, as shown below:
(a)The Branch Accountant, as controller of the branch is
responsible for the proper discharge of the functions of the
accounting section of the branch, review of
documentation/proper accounting and control of transaction. As
such, the accounting functions in the branch can be assumed by
any of the following officers with the rank of: Senior
Manager/Acctg.; Manager/Acctg.; Senior Asst. Manager/Acctg.;
Asst. Manager/Acctg.; Accountant or Asst. Accountant.
xxx xxx xxx
20.The transfer/assignment of branch officer from one branch, to
another branch/office is lateral in nature and carries with it the
same position/rank, salary, benefits and other privileges. The
assignment/transfer is for the officer to assume the functions
relative to his job and NOT the position/rank of the officer to be
replaced.
There is also no basis for the finding that Allied Bank was guilty
of unfair labor practice in dismissing Galanida. Unfair labor
practices relate only to violations of "the constitutional right of
workers and employees to self-organization" 32 and are limited
to the acts enumerated in Article 248 of the Labor Code, none of
which applies to the present case. There is no evidence that
Galanida took part in forming a union, or even that a union
existed in Allied Bank.
This leaves the issue of whether Galanida could validly refuse
the transfer orders on the ground of parental obligations,
additional expenses, and the anguish he would suffer if assigned
away from his family.
The Court has ruled on this issue before. In the case
of Homeowners Savings and Loan Association, Inc. v.
NLRC, 33 we held:
The acceptability of the proposition that transfer made by an
employer for an illicit or underhanded purpose i.e., to defeat
an employee's right to self-organization, to rid himself of an

undesirable worker, or to penalize an employee for union

activities cannot be upheld is self-evident and cannot be
gainsaid. The difficulty lies in the situation where no such illicit,
improper or underhanded purpose can be ascribed to the
employer, the objection to the transfer being grounded solely
upon the personal inconvenience or hardship that will be caused
to the employee by reason of the transfer. What then?
This was the very same situation we faced in Phil. Telegraph and
Telephone Corp. v. Laplana. In that case, the employee, Alicia
Laplana, was a cashier at the Baguio City Branch of PT&T who
was directed to transfer to the company's branch office at Laoag
City. In refusing the transfer, the employee averred that she had
established Baguio City as her permanent residence and that
such transfer will involve additional expenses on her part, plus
the fact that an assignment to a far place will be a big sacrifice
for her as she will be kept away from her family which might
adversely affect her efficiency. In ruling for the employer, the
Court upheld the transfer from one city to another within the
country as valid as long as there is no bad faith on the part of the
employer. We held then:
"Certainly the Court cannot accept the proposition that when an
employee opposes his employer's 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 employee's wishes
that should be made to prevail."
Galanida, through counsel, invokes the Court's ruling in Dosch
v. NLRC. 34 Dosch, however, is not applicable to the present
case. Helmut Dosch refused a transfer consequential to a
promotion. We upheld the refusal because no law compels an
employee to accept a promotion, and because the position Dosch
was supposed to be promoted to did not even exist at that
time. 35 This left as the only basis for the charge of
insubordination a letter from Dosch in which the Court found
"not even the slightest hint of defiance, much less . . .
insubordination." 36
Moreover, the transfer of an employee to an overseas post, as in
the Dosch case, cannot be likened to a transfer from one city to
another within the country, 37 which is the situation in the
present case. The distance from Cebu City to Bacolod City or
from Cebu City to Tagbilaran City does not exceed the distance
from Baguio City to Laoag City or from Baguio City to Manila,
which the Court considered a reasonable distance in PT&T v.
Laplana. 38
The refusal to obey a valid transfer order constitutes willful
disobedience of a lawful order of an employer. 39 Employees
may object to, negotiate and seek redress against employers for
rules or orders that they regard as unjust or illegal. However,

Page | 19

until and unless these rules or orders are declared illegal or

improper by competent authority, the employees ignore or
disobey them at their peril. 40 For Galanida's continued refusal
to obey Allied Bank's transfer orders, we hold that the bank
dismissed Galanida for just cause in accordance with Article
282(a) of the Labor Code. 41 Galanida is thus not entitled to
reinstatement or to separation pay.

Whether Galanida's dismissal violated the requirement of notice

and hearing
To be effective, a dismissal must comply with Section 2(d), Rule
1, Book VI of the Omnibus Rules Implementing the Labor Code
("Omnibus Rules"), which provides:
For termination of employment based on just causes as defined
in Article 282 of the Labor Code:
(i)A written notice served on the employee specifying the
ground or grounds of termination, and giving said employee
reasonable opportunity within which to explain his side.
(ii)A hearing or conference during which the employee
concerned, with the assistance of counsel if he so desires is
given opportunity to respond to the charge, present his evidence,
or rebut the evidence presented against him.
(iii)A written notice of termination served on the employee
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
The first written notice was embodied in Allied Bank's letter of
13 June 1994. The first notice required Galanida to explain why
no disciplinary action should be taken against him for his refusal
to comply with the transfer orders.
On the requirement of a hearing this Court has held that the
essence of due process is simply an opportunity to be
heard. 42 An actual hearing is not necessary. The exchange of
several letters, in which Galanida's wife, a lawyer with the City
Prosecutor's Office, assisted him, gave Galanida an opportunity
to respond to the charges against him.
The remaining issue is whether the Memo dated 8 September
1994 sent to Galanida constitutes the written notice of
termination required by the Omnibus Rules. In finding that it did
not, the Court of Appeals and the NLRC cited Allied Bank's rule
on dismissals, quoted in the Memo, that, "Notice of termination
shall be issued by the Investigation Committee subject to the
confirmation of the President or his authorized

representative." 43 The appellate court and NLRC held that

Allied Bank did not send any notice of termination to Galanida.
The Memo, with the heading "Transfer and Reassignment," was
not the termination notice required by law.

his complaint for constructive dismissal 49 to one for illegal

dismissal 50 after he received the Memo. Clearly, Galanida had
understood the Memo to mean that Allied Bank had terminated
his services.

We do not agree.

The Memo complied with Allied Bank's internal rules which

required the bank's President or his authorized representative to
confirm the notice of termination. The bank's Vice-President for
Personnel, as the head of the department that handles the
movement of personnel within Allied Bank, can certainly
represent the bank president in cases involving the dismissal of
employees.

Even a cursory reading of the Memo will show that it

unequivocally informed Galanida of Allied Bank's decision to
dismiss him. The statement, "please be informed that the Bank
has terminated your services effective September 1, 1994 and
considered whatever benefit, if any, that you are entitled [to] as
forfeited . . ." 44 is plainly worded and needs no interpretation.
The Memo also discussed the findings of the Investigation
Committee that served as grounds for Galanida's dismissal, The
Memo referred to Galanida's "open defiance and refusal" to
transfer first to the Bacolod City branch and then to the
Tagbilaran City branch. The Memo also mentioned his
continued refusal to report for work despite the denial of his
application for additional vacation leave. 45 The Memo also
refuted Galanida's charges of discrimination and demotion, and
concluded that he had violated Article XII of the bank's
Employee Discipline Policy and Procedure.
The Memo, although captioned "Transfer and Reassignment,"
did not preclude it from being a notice of termination. The Court
has held that the nature of an instrument is characterized not by
the title given to it but by its body and contents. 46 Moreover, it
appears that Galanida himself regarded the Memo as a notice of
termination. We quote, from the Memorandum for Private
Respondent-Appellee, as follows:
The proceedings may be capsulized as follows:
1.On March 13, 1994 47 Private Respondent-Appellee filed
before the Region VII Arbitration Branch a Complaint for
Constructive Dismissal. A copy of the Complaint is attached to
the Petition as Annex "H";
xxx xxx xxx
5.On September 8, 1994, Petitioner-Appellant issued him a
Letter of Termination. A copy of said letter is attached to the
Petition as Annex "N";
6.Private Respondent-Appellee filed an Amended/Supplemental
Complaint wherein he alleged illegal dismissal. A copy of the
Amended/Supplemental Complaint is attached to the Petition as
Annex "O"; . . . 48 (Emphasis supplied)
The Memorandum for Private Respondent-Appellee refers to the
Memo as a "Letter of Termination." Further, Galanida amended

Nevertheless, we agree that the Memo suffered from certain

errors. Although the Memo stated that Allied Bank terminated
Galanida's services as of 1 September 1994, the Memo bore the
date 8 September 1994. More importantly, Galanida only
received a copy of the Memo on 5 October 1994, or more than a
month after the supposed date of his dismissal. To be effective, a
written notice of termination must be served on the
employees. 51 Allied Bank could not terminate Galanida on 1
September 1994 because he had not received as of that date the
notice of Allied Bank's decision to dismiss him. Galanida's
dismissal could only take effect on 5 October 1994, upon his
receipt of the Memo. For this reason, Galanida is entitled to
backwages for the period from 1 September 1994 to 4 October
1994.
Under the circumstances, we also find an award of P10,000 in
nominal damages proper. Courts award nominal damages to
recognize or vindicate the right of a person that another has
violated. 52 The law entitles Galanida to receive timely notice of
Allied Bank's decision to dismiss him. Allied Bank should have
exercised more care in issuing the notice of termination.
WHEREFORE, the Decision of 27 April 2000 of the Court of
Appeals in CA-G.R. SP No. 51451 upholding the Decision of 18
September 1998 of the NLRC in NLRC Case No. V-000180-98
is AFFIRMED, with the following MODIFICATIONS:
1)The awards of separation pay, moral damages and exemplary
damages are hereby deleted for lack of basis;
2)Reducing the award of backwages to cover only the period
from 1 September 1994 to 4 October 1994; and
3)Awarding nominal damages to private respondent for P10,000.
This case is REMANDED to the Labor Arbiter for the
computation, within thirty (30) days from receipt of this
Decision, of the backwages, inclusive of allowances and other
benefits, due to Potenciano L. Galanida for the time his

Page | 20

dismissal was ineffectual from 1 September 1994 until 4

October 1994.
Labor Arbiter Dominador A. Almirante and Atty. Loreto M.
Durano are ADMONISHED to be more careful in citing the
decisions of the Supreme Court in the future.
SO ORDERED. ScTIAH
Davide, Jr., C .J ., Panganiban, Ynares-Santiago and Azcuna,
JJ ., concur.
||| (Allied Banking Corp. v. Court of Appeals, G.R. No. 144412,
November 18, 2003)

[G.R. No. 173774. January 30, 2012.]

MANILA ELECTRIC COMPANY, petitioner, vs. MA. LUISA
BELTRAN, respondent.
DECISION
DEL CASTILLO, J p:
As the law regards workers with compassion, an employer's
right to discipline them should be tempered with compassion as
well. In line with this, the imposition of the supreme penalty of
dismissal is justified only when there are sufficient grounds as
supported by substantial evidence.
This Petition for Review on Certiorari 1 assails the November
25, 2005 Decision 2 of the Court of Appeals (CA) in CA-G.R.
SP No. 67960, which granted the petition filed therewith,
reversed the May 30, 2001 Decision 3 of the National Labor
Relations Commission (NLRC), and accordingly affirmed the
July 16, 1999 Decision 4 of the Labor Arbiter ordering petitioner
Manila Electric Company (MERALCO) to reinstate respondent
Ma. Luisa Beltran (Beltran) to her former position but without
payment of backwages. Likewise assailed is the CA
Resolution 5 dated July 19, 2006 which denied the Motion for
Reconsideration thereto.
Factual Antecedents
Beltran was employed by MERALCO on December 16, 1987.
At the time material to this case, she was holding the position of
Senior Branch Clerk at MERALCO's Pasig branch. While
rendering overtime work on September 28, 1996, a Saturday,

Beltran accepted P15,164.48 from Collection Route Supervisor

Berlin Marcos (Marcos), which the latter received from
customer Andy Chang (Chang). The cash payment was being
made in lieu of a returned check earlier issued as payment for
Chang's electric bill. Beltran was at first hesitant as it was not
part of her regular duties to accept payments from customers but
was later on persuaded by Marcos' persistence. Hence, Beltran
received the payment and issued Auxiliary Receipt No.
87964 6 which she dated September 30, 1996, a Monday,
instead of September 28, 1996. This was done to show that it
was an accommodation, an accepted practice in the office. She
thereafter placed the money and the original auxiliary receipt
and other documents pertinent to the returned check underneath
her other files inside the drawer of her table. ScEaAD
Beltran, however, was only able to remit Chang's payment on
January 13, 1997. Thus, in a Memorandum 7 dated January 16,
1997, she was placed under preventive suspension effective
January 20, 1997 pending completion of an investigation.
MERALCO considered as misappropriation or withholding of
company funds her failure to immediately remit said payment in
violation of its Code on Employee Discipline. Investigation
thereafter ensued. 8
In her Sinumpaang Salaysay, 9 Beltran admitted receipt of
Chang's payment of P15,164.48 on September 28, 1996. She
also admitted having issued an Auxiliary Receipt dated
September 30, 1996 and having remitted the amount only on
January 13, 1997, after her immediate supervisor, Elenita L.
Garcia (Garcia), called her attention about the payment and its
non-remittance. Beltran nevertheless explained the
circumstances which caused the delay of the turn-over of
Chang's payment. She recounted that on the day following her
receipt of the money, she had a huge fight with her husband
which led to their separation; that on September 30, 1997, she
reported at MERALCO's Taguig branch where she worked until
8:30 p.m.; and, that subsequent marital woes coupled with her
worries for her ailing child distracted her into forgetting Chang's
payment. Beltran claimed that after Garcia approached her
regarding the unremitted payment of Chang, she immediately
looked for the money in her drawer and right there and then
handed it over to Garcia together with the other pertinent
documents. Beltran denied having personally used the money.
Garcia, the Administrative Supervisor of MERALCO's Pasig
branch, on the other hand, testified that while doing an
accounting of all outstanding returned checks sometime in
December 1996, she noticed that Chang's returned check was
missing. Upon further inquiry, she discovered that Chang had
already redeemed the returned check after paying P15,164.48 to
Beltran, who in turn issued an Auxiliary Receipt dated
September 30, 1996. It was also discovered that the payment has

not yet been remitted. This prompted her to inquire from Beltran
on January 7, 1997 about the supposed payment and
immediately ordered the remittance of the same. Beltran,
however, failed to do so on that day and even on the next day
when she reported for work. Beltran subsequently went on leave
of absence on January 9 and 10, 1997. It was only on January
13, 1997 that the money with the pertinent documents were
handed over. 10
In a memorandum 11 dated February 25, 1997, the investigator
found Beltran guilty of misappropriating and withholding
Chang's payment of P15,164.48 and recommended her dismissal
from service thus:
For wil[l]fully, unlawfully and feloniously withholding and/or
misappropriating for your personal purposes or benefit electric
bill payment of a Meralco customer, you have thereby violated
Section 7 par. (1) of the Company Code on Employee Discipline
which proscribes "(m)isappropriating, or withholding, Company
funds: penalized therein with dismissal from the service.
Because of this act of fraud and dishonesty, you have wil[l]fully
breached the trust and confidence reposed in you by your
employer.
xxx xxx xxx
Accordingly, Management is constrained to dismiss you for
cause from the service and employ of the Company, as you are
hereby so dismissed effective 13 March 1997, with forfeiture of
all rights and privileges. 12 (Emphasis supplied.)
By virtue thereof, Beltran was terminated effective March 13,
1997. 13
Beltran filed a complaint for illegal dismissal 14 against
MERALCO. She argued that she had no intention to withhold
company funds. Besides, it was not her customary duty to
collect and remit payments from customers. She claimed good
faith, believing that her acceptance of Chang's payment is
considered goodwill in favor of both MERALCO and its
customer. If at all, her only violation was a simple delay in
remitting the payment, which caused no considerable harm to
the company. Further, her nine years of unblemished service to
the company should be taken into account such that the penalty
of dismissal is not a commensurate penalty for the unintentional
act committed. cCSHET
MERALCO, on the other hand, maintained that under company
policy, Beltran had the duty to remit payment for electric bills by
any customer on the day the same was received. It opined that if
indeed the money was kept intact inside the drawer and was not
put to personal use, Beltran could have easily turned over the

Page | 21

same when Garcia instructed her to do so on January 7, 1997.

However, Beltran failed to remit the money on said date and
even on the following day, January 8, when she reported for
work. Worse, in the two succeeding days, she went on leave.
Thus, there was a clear sign of misappropriation of company
funds, considered a serious misconduct and punishable by
dismissal from the service. Further, Beltran's reason for her
failure to perform such obligation on account of family
problems deserves scant consideration. MERALCO insisted that
Beltran's act renders her unworthy of the trust and confidence
demanded of her position.
Ruling of the Labor Arbiter
In a Decision 15 dated June 16, 1999, the Labor Arbiter
regarded the penalty of dismissal as not commensurate to the
degree of infraction committed as there was no adequate proof
of misappropriation on the part of Beltran. If there was delay in
Beltran's remittance of Chang's payment, it was unintentional
and same cannot serve as sufficient basis to conclude that there
was misappropriation of company funds. In fact, Beltran did not
even attempt to deny possession of, or refuse to hand in, the
money. The Labor Arbiter thus gave compassionate
consideration for the neglect to remit the money promptly,
stating that it is excusable for Beltran to commit lapses in her
work due to serious family difficulties. While the Labor Arbiter
commiserated with Beltran's circumstances and took into
account her long and untainted service, he nonetheless imposed
disciplinary action in the form of forfeiture of salary for her
neglect in remitting the funds at once. The dispositive portion of
his Decision reads as follows:
IN THE LIGHT OF THE FOREGOING, the respondent is
hereby ordered to reinstate the complainant to her former
position without backwages. The forfeiture of backwages should
be an equitable penalty for the delay in the remittance of
company funds.
SO ORDERED. 16
Ruling of the National Labor Relations Commission
Upon appeal, the NLRC reversed the Labor Arbiter's Decision
and dismissed Beltran's complaint against MERALCO in its
Decision 17 dated May 30, 2001. It found that Beltran withheld
company funds by failing to remit it for almost four months. It
disregarded Beltran's assertion of family problems as the same
cannot be used as an excuse for committing a serious
misconduct in violation of the trust reposed on her as a Senior
Branch Clerk. The NLRC was convinced that Beltran used the
money for her personal needs since her act of taking a leave of
absence right after her confrontation with Garcia suggested that

she needed time to produce it. The NLRC thus ruled that
MERALCO validly dismissed Beltran from the service in the
exercise of its inherent right to discipline its employees.
In her Motion for Reconsideration, 18 Beltran attributed grave
abuse of discretion on the part of the NLRC in basing its
conclusions on mere inferences and presumptions. Beltran
argued that she could not be guilty of withholding Chang's
payment, much more, misappropriating it. She alleged that
Garcia did not order her to remit the money on January 7, 1997
or on the following day. Further, records reveal that she was on
leave from January 9 to 10 to attend to her child who was
suffering from asthma. And since January 11 and 12 are
Saturday and Sunday, she deemed it appropriate to make the
remittance on the following Monday, January 13, 1997. Garcia,
however, refused to accept the money, saying that she already
committed withholding of company funds. IEaATD
The NLRC denied Beltran's Motion for Reconsideration. 19

THE HONORABLE COURT OF APPEALS SERIOUSLY

ERRED IN ORDERING THE REINSTATEMENT OF
[BELTRAN] DESPITE THE UNDISPUTED FINDING THAT
SHE IS GUILTY OF WITHHOLDING . . . COMPANY
FUNDS. 24
Our Ruling
MERALCO insists that there was convincing basis to dismiss
Beltran from employment. While there was no concrete proof of
misappropriation, the fact that there was withholding of
company funds remains undisputed. This act of negligence by
Beltran in the performance of her duties has resulted to the loss
of trust and confidence reposed on her, notwithstanding her selfserving allegations of marital woes and family difficulties,
which were not even corroborated by any clear evidence.
We do not agree. On the contrary, we support the CA's finding
that there are no sufficient grounds to warrant Beltran's
dismissal.

Ruling of the Court of Appeals

When Beltran brought the case to the CA via a Petition
for Certiorari, 20 the NLRC's ruling was reversed. The CA
instead agreed with the findings of the Labor Arbiter that there
were no serious grounds to warrant Beltran's dismissal. The CA
held that the penalty of dismissal is harsh considering the
infraction committed and Beltran's nine years of unblemished
service with MERALCO. It held that Beltran's mere failure to
remit the payment was unintentional and not attended by any ill
motive and that her excuse for the inadvertence was reasonable.
As such, the CA affirmed the ruling of the Labor Arbiter
ordering MERALCO to reinstate Beltran to her former position
but with the forfeiture of her salary as an equitable penalty for
her negligence. Thus, in its Decision 21 dated November 25,
2005, the petition was resolved as follows:
WHEREFORE, premises considered, the instant petition is
hereby GRANTED. The . . . Decision dated May 30, 2001 and
the Resolution dated August 22, 2001 of the National Labor
Relations Commission are hereby REVERSED.
ACCORDINGLY, the Decision of the Labor Arbiter dated June
16, 1999, is hereby AFFIRMED.
SO ORDERED. 22
In a Resolution 23 dated July 19, 2006, MERALCO's Motion
for Reconsideration was denied by the CA. Hence, MERALCO
filed this present Petition for Review on Certiorari, raising the
lone issue of whether
Issue

For loss of trust and confidence to be a valid ground for

dismissal, it must be based on a willful breach of trust and
founded on clearly established facts. A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable
excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. In addition, loss of
trust and confidence must rest on substantial grounds and not on
the employer's arbitrariness, whims, caprices or
suspicion. 25 IASCTD
In the case at bench, Beltran attributed her delay in turning over
Chang's payment to her difficult family situation as she and her
husband were having marital problems and her child was
suffering from an illness. Admittedly, she was reminded of
Chang's payment by her supervisor on January 7, 1997 but
denied having been ordered to remit the money on that day. She
then reasoned that her continued delay was caused by an
inevitable need to take a leave of absence for her to attend to the
needs of her child who was suffering from asthma.
It should be emphasized at this point that the burden of proving
the legality of an employee's dismissal lies with the
employer. 26 "Unsubstantiated suspicions, accusations, and
conclusions of employers do not provide legal justification for
dismissing employees." 27 "[M]ere conjectures cannot work to
deprive employees of their means of livelihood."28 To begin
with, MERALCO cannot claim or conclude that Beltran
misappropriated the money based on mere suspicion. The NLRC
thus erred in concluding that Beltran made use of the money
from the mere fact that she took a leave of absence after having
been reminded of the unremitted funds. And even if Beltran

Page | 22

delayed handing over the funds to the company, MERALCO

still has the burden of proof to show clearly that such act of
negligence is sufficient to justify termination from employment.
Moreover, we find that Beltran's delay does not clearly and
convincingly establish a willful breach on her part, that is, which
is done "intentionally, knowingly and purposely, without any
justifiable excuse." True, the reasons Beltran proffered for her
delay in remitting the cash payment are mere allegations without
any concrete proof. Nonetheless, we emphasize that as the
employer, the burden still lies on MERALCO to provide clear
and convincing facts upon which the alleged loss of confidence
is to be made to rest.
Undoubtedly, Beltran was remiss in her duties for her failure to
immediately turn over Chang's payment to the company. Such
negligence, however, is not sufficient to warrant separation from
employment. To justify removal from service, the negligence
should be gross and habitual. 29 "Gross negligence . . . is the
want of even slight care, acting or omitting to act in a situation
where there is duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences
insofar as other persons may be affected." 30 Habitual neglect,
on the other hand, connotes repeated failure to perform one's
duties for a period of time, depending upon the
circumstances. 31 No concrete evidence was presented by
MERALCO to show that Beltran's delay in remitting the funds
was done intentionally. Neither was it shown that same is
willful, unlawful and felonious contrary to MERALCO's finding
as stated in the letter of termination it sent to Beltran. 32 Surely,
Beltran's single and isolated act of negligence cannot justify her
dismissal from service.
Moreover, Beltran's simple negligence did not result in any loss.
From the time she received the payment on September 28, 1996
until January 7, 1997 when she was apprised by her supervisor
about Chang's payment, no harm or damage to the company or
to its customers attributable to Beltran's negligence was alleged
by MERALCO. Also, from the time she was apprised of the
non-remittance by her superior on January 7, 1997, until the
turn-over of the amount on January 13, 1997, no such harm or
damage was ever claimed by MERALCO. cHaDIA
Under the circumstances, MERALCO's sanction of dismissal
will not be commensurate to Beltran's inadvertence not only
because there was no clear showing of bad faith and malice but
also in consideration of her untainted record of long and
dedicated service to MERALCO. 33 In the similar case
of Philippine Long Distance Telephone Company v. Berbano,
Jr., 34 we held that:
The magnitude of the infraction committed by an employee
must be weighed and equated with the penalty prescribed and

must be commensurate thereto, in view of the gravity of the

penalty of dismissal or termination from the service. The
employer should bear in mind that in termination cases, what is
at stake is not simply the employee's job or position but [her]
very livelihood.
Where a penalty less punitive would suffice, whatever missteps
may be committed by an employee ought not to be visited with a
consequence so severe such as dismissal from
employment. 35 Hence, we find no reversible error or any grave
abuse of discretion on the part of the CA in ordering Beltran's
reinstatement without backwages. The forfeiture of her salary is
an equitable punishment for the simple negligence committed.
WHEREFORE, the petition is DENIED. The Court of Appeals
Decision dated November 25, 2005 and Resolution dated July
19, 2006 in CA-G.R. SP No. 67960 are AFFIRMED.
SO ORDERED.

Officer, Annie Llamanzares Abad. His tasks involved principally

the review of the clients' applications for immigration to Canada
to ensure that they are in accordance with Canadian and
Philippine laws.
Through a memorandum 4 dated October 27, 2001, signed by
Abad, the company terminated Dalangin's employment,
declaring him "unfit" and "unqualified" to continue as
Immigration and Legal Manager, for the following
reasons: AICTcE
a) Obstinacy and utter disregard of company policies. Propensity
to take prolonged and extended lunch breaks, shows no interest
in familiarizing oneself with the policies and objectives.
b) Lack of concern for the company's interest despite having just
been employed in the company. (Declined to attend company
sponsored activities, seminars intended to familiarize company
employees with Management objectives and enhancement of
company interest and objectives.)

||| (MERALCO v. Beltran, G.R. No. 173774, January 30, 2012)

c) Showed lack of enthusiasm toward work.
[G.R. No. 172223. February 6, 2012.]
CANADIAN OPPORTUNITIES UNLIMITED,
INC., petitioner, vs. BART Q. DALANGIN, JR., respondent.

d) Showed lack of interest in fostering relationship with his coemployees. 5

The Compulsory Arbitration Proceedings
Dalangin's submission

DECISION
BRION, J p:
For resolution is the petition for review on certiorari 1 to nullify
the decision dated December 19, 2005 2 and the resolution dated
March 30, 2006 3 of the Court of Appeals (CA) rendered in CAG.R. SP No. 84907.
The Antecedents
On November 20, 2001, respondent Bart Q. Dalangin, Jr. filed a
complaint for illegal dismissal, with prayer for reinstatement and
backwages, as well as damages (moral and exemplary) and
attorney's fees, against petitioner Canadian Opportunities
Unlimited, Inc. (company). The company, based in Pasong
Tamo, Makati City, provides assistance and related services to
applicants for permanent residence in Canada.
Dalangin was hired by the company only in the previous month,
or in October 2001, as Immigration and Legal Manager, with a
monthly salary of P15,000.00. He was placed on probation for
six months. He was to report directly to the Chief Operations

Dalangin alleged, in his Position Paper, 6 that the company

issued a memorandum requiring its employees to attend a
"Values Formation Seminar" scheduled for October 27, 2001 (a
Saturday) at 2:00 p.m. onwards. He inquired from Abad about
the subject and purpose of the seminar and when he learned that
it bore no relation to his duties, he told Abad that he would not
attend the seminar. He said that he would have to leave at 2:00
p.m. in order to be with his family in the province. Dalangin
claimed that Abad insisted that he attend the seminar so that the
other employees would also attend. He replied that he should not
be treated similarly with the other employees as there are
marked differences between their respective positions and
duties. Nonetheless, he signified his willingness to attend the
seminar, but requested Abad to have it conducted within office
hours to enable everybody to attend.
Dalangin further alleged that Abad refused his request and
stressed that all company employees may be required to stay
beyond 2:00 p.m. on Saturdays which she considered still part of
office hours. Under his employment contract, 7 his work
schedule was from 9:00 a.m. to 6:00 p.m., Monday to Friday,
and 9:00 a.m. to 2:00 p.m. on Saturdays. Dalangin argued that it

Page | 23

has been an established company practice that on Saturdays,

office hours end at 2:00 p.m.; and that an employee cannot be
made to stay in the office beyond office hours, except under
circumstances provided in Article 89 of the Labor
Code. DcHSEa
On October 26, 2001, Dalangin claimed that Abad issued a
memorandum 8 requiring him to explain why he could not
attend the seminar scheduled for October 27, 2001 and the other
forthcoming seminars. The following day, October 27, 2001,
Abad informed him that Mr. Yadi N. Sichani, the company's
Managing Director, wanted to meet with him regarding the
matter. He alleged that at the meeting, he was devastated to hear
from Sichani that his services were being terminated because
Sichani could not keep in his company "people who are hardheaded and who refuse to follow orders from
management." 9 Sichani also told him that since he was a
probationary employee, his employment could be terminated at
any time and at will. Sichani refused to accept his letter-reply to
the company memorandum dated October 26, 2001 and instead
told him to just hand it over to Abad.
The company's defense
Through their position paper, 10 the company and its principal
officers alleged that at the time of Dalangin's engagement, he
was advised that he was under probation for six months and his
employment could be terminated should he fail to meet the
standards to qualify him as a regular employee. He was
informed that he would be evaluated on the basis of the results
of his work; on his attitude towards the company, his work and
his co-employees, as spelled out in his job description; 11 and
on the basis of Abad's affidavit. 12
They further alleged that during his brief employment in the
company, Dalangin showed lack of enthusiasm towards his work
and was indifferent towards his co-employees and the company
clients. Dalangin refused to comply with the company's policies
and procedures, routinely taking long lunch breaks, exceeding
the one hour allotted to employees, and leaving the company
premises without informing his immediate superior, only to call
the office later and say that he would be unable to return because
he had some personal matters to attend to. He also showed lack
of interpersonal skills and initiative which he manifested when
the immigration application of a company client, Mrs. Jennifer
Tecson, was denied by the Canadian Embassy. Dalangin failed
to provide counsel to Tecson; he also should have found a way
to appeal her denied application, but he did not. As it turned out,
the explanation he gave to Tecson led her to believe that the
company did not handle her application well. Dalangin's lack of
interest in the company was further manifested when he refused
to attend company-sponsored seminars designed to acquaint or

update the employees with the company's policies and

objectives.
The company argued that since Dalangin failed to qualify for the
position of Immigration and Legal Manager, the company
decided to terminate his services, after duly notifying him of the
company's decision and the reason for his separation. AHCETa
The Compulsory Arbitration Rulings
In his decision dated April 23, 2003, 13 Labor Arbiter Eduardo
G. Magno declared Dalangin's dismissal illegal, and awarded
him backwages of P75,000.00, moral damages of P50,000.00
and exemplary damages of P50,000.00, plus 10% attorney's
fees. The labor arbiter found that the charges against Dalangin,
which led to his dismissal, were not established by clear and
substantial proof.
On appeal by the company, the National Labor Relations
Commission (NLRC) rendered a decision on March 26,
2004 14 granting the appeal, thereby reversing the labor arbiter's
ruling. It found Dalangin's dismissal to be a valid exercise of the
company's management prerogative because Dalangin failed to
meet the standards for regular employment. Dalangin moved for
reconsideration, but the NLRC denied the motion, prompting
him to go to the CA on a petition for certiorari under Rule 65 of
the Rules of Court.
The CA Decision
In its now assailed decision, 15 the CA held that the NLRC erred
when it ruled that Dalangin was not illegally dismissed. As the
labor arbiter did, the CA found that the company failed to
support, with substantial evidence, its claim that Dalangin failed
to meet the standards to qualify as a regular employee.
Citing a ruling of the Court in an earlier case, 16 the CA pointed
out that the company did not allow Dalangin to prove that he
possessed the qualifications to meet the reasonable standards for
his regular employment; instead, it dismissed Dalangin
peremptorily from the service. It opined that it was quite
improbable that the company could fully determine Dalangin's
performance barely one month into his employment. 17
The CA denied the company's subsequent motion for
reconsideration in its resolution of March 30, 2006. 18 Hence,
this appeal.
The Company's Case
Through its submissions the Petition, 19 the Reply 20 and the
Memorandum 21 the company seeks a reversal of the CA

rulings, raising the following issues: (1) whether the

requirements of notice and hearing in employee dismissals are
applicable to Dalangin's case; and (2) whether Dalangin is
entitled to moral and exemplary damages, and attorney's fees.
On the first issue, the company argues that the notice and
hearing requirements are to be observed only in termination of
employment based on just causes as defined in Article 282 of the
Labor Code. Dalangin's dismissal, it maintains, was not based
on a just cause under Article 282, but was due to his failure to
meet the company's standards for regular employment. It
contends that under the Labor Code's Implementing Rules and
Regulations, "[i]f the termination is brought about . . . by failure
of an employee to meet the standards of the employer in the case
of probationary employment, it shall be sufficient that a written
notice is served the employee within a reasonable time from the
effective date of termination." 22 It points out that it properly
observed the notice requirement when it notified Dalangin of his
dismissal on October 27, 2001, 23 after it asked him to explain
(memorandum of October 26, 2001) why he could not attend the
seminar scheduled for October 27, 2001; Dalangin failed to
submit his explanation. It posits that contrary to the CA's
conclusion, the company's finding that Dalangin failed to meet
its standards for regular employment was supported by
substantial evidence. aSIHcT
With respect to the second issue, the company submits that
Dalangin is not entitled to moral and exemplary damages, and
attorney's fees. It maintains that Dalangin failed to present
convincing evidence establishing bad faith or ill-motive on its
part. It insists that it dismissed Dalangin in good faith with the
belief that he would not contribute any good to the company, as
manifested by his behavior towards his work and co-employees.
The Case for Dalangin
Through his Comment 24 and Memorandum, 25 Dalangin asks
the Court to deny the petition. He argues that (1) probationary
employees, under existing laws and jurisprudence, are entitled to
notice and hearing prior to the termination of their employment;
and (2) he is entitled to moral and exemplary damages, and
attorney's fees.
Dalangin disputes the company's submission that under the
Labor Code's implementing rules, only a written notice is
required for the dismissal of probationary employees. He argues
that the rules cited by the company clearly mandate the
employer to (1) serve the employee a written notice and (2)
within a reasonable time before effecting the dismissal. He
stresses that for the dismissal to be valid, these requirements
must go hand in hand.

Page | 24

He explains that in the present case, the company did not

observe the above two requirements as he was dismissed the day
after he was asked, by way of a memorandum dated October 26,
2001, 26 to explain within twenty-four hours why he could not
attend the October 27, 2001 seminar. He adds that on the
assumption that the termination letter dated October 27, 2001
refers to the written notice contemplated under the rules, still the
company did not observe the second requirement of providing
him a reasonable time before he was dismissed. He posits that
the company disregarded the security of tenure guarantee under
the Constitution which makes no distinction between regular and
probationary employees.
On the company's claim that he failed to perform in accordance
with its standards, Dalangin argues that a perusal of the
"grounds" in support of his dismissal reveals that none of the
charges leveled against him is supported by concrete and
tangible evidence. He maintains that the company miserably
failed to cite a single company policy which he allegedly
violated and defied. He refutes the company's claim that his job
description and his employment contract apprise him of the
company policy that he is to observe for the duration of his
employment. He, thus, maintains that he had not been previously
informed of the company standards he was supposed to satisfy.
He stresses that the CA did not err in holding that the company's
general averments regarding his failure to meet its standards for
regular employment were not corroborated by any other
evidence and, therefore, are insufficient to justify his
dismissal. HEcSDa
Dalangin insists that he is entitled to backwages, moral and
exemplary damages, as well as attorney's fees, claiming that his
dismissal was unjust, oppressive, tainted with bad faith, and
contrary to existing morals, good customs and public policy.
There was bad faith, he argues, because he was dismissed
without the requisite notice and hearing required under the law;
and merely on the basis of the company's bare, sweeping and
general allegations that he is difficult to deal with and that he
might cause problems to the company's future business
operations. He is entitled to attorney's fees, he submits, because
he was forced to litigate and vindicate his rights.
He bewails what he considers as "a pre-conceived plan and
determined design" 27 on the part of Sichani and Abad to
immediately terminate his employment. Elaborating, he points
out that the company, through Abad, prepared two memoranda,
both dated October 26, 2001, one is the memo to him requiring
his written explanation 28 and the other, addressed to Sichani,
recommending his dismissal. 29 He was surprised that Sichani
did not bother to ask Abad why she gave him two conflicting
memos on the same day; neither did Sichani or Abad investigate

the surrounding circumstances on the matter nor did they give

him the opportunity to explain his side.
The Court's Ruling
As a rule, the Court is not a trier of facts, the resolution of
factual issues being the function of lower courts whose findings
are received with respect and are binding on the Court subject to
certain exceptions. 30 A recognized exception to the rule is the
circumstance in which there are conflicting findings of fact by
the CA, on the one hand, and the trial court or government
agency concerned, on the other, as in the present case. The
factual findings of the NLRC on the dispute between Dalangin
and the company are at variance with those of the CA, thus
necessitating our review of the case, especially the evidence on
record. 31
We now resolve the core issue of whether Dalangin, a
probationary employee, was validly dismissed.
In International Catholic Migration Commission v.
NLRC, 32 the Court explained that a probationary employee, as
understood under Article 281 of the Labor Code, is one who is
on trial by an employer, during which, the latter determines
whether or not he is qualified for permanent employment. A
probationary appointment gives the employer an opportunity to
observe the fitness of a probationer while at work, and to
ascertain whether he would be a proper and efficient
employee. DHacTC
Dalangin was barely a month on the job when the company
terminated his employment. He was found wanting in qualities
that would make him a "proper and efficient" employee or, as
the company put it, he was unfit and unqualified to continue as
its Immigration and Legal Manager.
Dalangin's dismissal was viewed differently by the NLRC and
the CA. The NLRC upheld the dismissal as it was, it declared, in
the exercise of the company's management prerogative. On the
other hand, the CA found that the dismissal was not supported
by substantial evidence and that the company did not allow
Dalangin to prove that he had the qualifications to meet the
company's standards for his regular employment. The CA did
not believe that the company could fully assess Dalangin's
performance within a month. It viewed Dalangin's dismissal as
arbitrary, considering that the company had very little time to
determine his fitness for the job.
We disagree.
The essence of a probationary period of employment
fundamentally lies in the purpose or objective of both the

employer and the employee during the period. While the

employer observes the fitness, propriety and efficiency of a
probationer to ascertain whether he is qualified for permanent
employment, the latter seeks to prove to the former that he has
the qualifications to meet the reasonable standards for
permanent employment. 33 IDTHcA
The "trial period" or the length of time the probationary
employee remains on probation depends on the parties'
agreement, but it shall not exceed six (6) months under Article
281 of the Labor Code, unless it is covered by an apprenticeship
agreement stipulating a longer period. Article 281 provides:
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.
As the Court explained in International Catholic Migration
Commission, "the word 'probationary,' as used to describe the
period of employment, implies the purpose of the term or period,
but not its length." 34 Thus, the fact that Dalangin was separated
from the service after only about four weeks does not
necessarily mean that his separation from the service is without
basis.
Contrary to the CA's conclusions, we find substantial evidence
indicating that the company was justified in terminating
Dalangin's employment, however brief it had been. Time and
again, we have emphasized that substantial evidence is such
relevant evidence as a reasonable mind might accept as adequate
to support a conclusion. 35
Dalangin overlooks the fact, wittingly or unwittingly, that he
offered glimpses of his own behavior and actuations during his
four-week stay with the company; he betrayed his negative
attitude and regard for the company, his co-employees and his
work.
Dalangin admitted in compulsory arbitration that the proximate
cause for his dismissal was his refusal to attend the company's
"Values Formation Seminar" scheduled for October 27, 2001, a
Saturday. He refused to attend the seminar after he learned that it
had no relation to his duties, as he claimed, and that he had to
leave at 2:00 p.m. because he wanted to be with his family in the
province. When Abad insisted that he attend the seminar to

Page | 25

encourage his co-employees to attend, he stood pat on not

attending, arguing that marked differences exist between their
positions and duties, and insinuating that he did not want to join
the other employees. He also questioned the scheduled 2:00 p.m.
seminars on Saturdays as they were not supposed to be doing a
company activity beyond 2:00 p.m. He considers 2:00 p.m. as
the close of working hours on Saturdays; thus, holding them
beyond 2:00 p.m. would be in violation of the law. CHTcSE
The "Values Formation Seminar" incident is an eye-opener on
the kind of person and employee Dalangin was. His refusal to
attend the seminar brings into focus and validates what was
wrong with him, as Abad narrated in her affidavit 36 and as
reflected in the termination of employment memorandum. 37 It
highlights his lack of interest in familiarizing himself with the
company's objectives and policies. Significantly, the seminar
involved acquainting and updating the employees with the
company's policies and objectives. Had he attended the seminar,
Dalangin could have broadened his awareness of the company's
policies, in addition to Abad's briefing him about the company's
policies on punctuality and attendance, and the procedures to be
followed in handling the clients' applications. No wonder the
company charged him with obstinacy.
The incident also reveals Dalangin's lack of interest in
establishing good working relationship with his co-employees,
especially the rank and file; he did not want to join them because
of his view that the seminar was not relevant to his position and
duties. It also betrays an arrogant and condescending attitude on
his part towards his co-employees, and a lack of support for the
company objective that company managers be examples to the
rank and file employees.
Additionally, very early in his employment, Dalangin exhibited
negative working habits, particularly with respect to the one
hour lunch break policy of the company and the observance of
the company's working hours. Thus, Abad stated that Dalangin
would take prolonged lunch breaks or would go out of the office
without leave of the company only to call the personnel
manager later to inform the latter that he would be unable to
return as he had to attend to personal matters. Without expressly
countering or denying Abad's statement, Dalangin dismissed the
charge for the company's failure to produce his daily time
record. 38
The same thing is true with Dalangin's handling of Tecson's
application for immigration to Canada, especially his failure to
find ways to appeal the denial of Tecson's application, as Abad
stated in her affidavit. Again, without expressly denying Abad's
statement or explaining exactly what he did with Tecson's
application, Dalangin brushes aside Abad's insinuation that he

was not doing his job well, with the ready argument that the
company did not even bother to present Tecson's testimony.
In the face of Abad's direct statements, as well as those of his
co-employees, it is puzzling that Dalangin chose to be silent
about the charges, other than saying that the company could not
cite any policy he violated. All along, he had been complaining
that he was not able to explain his side, yet from the labor
arbiter's level, all the way to this Court, he offered no
satisfactory explanation of the charges. In this light, coupled
with Dalangin's adamant refusal to attend the company's "Values
Formation Seminar" and a similar program scheduled earlier, we
find credence in the company's submission that Dalangin was
unfit to continue as its Immigration and Legal Manager. As we
stressed earlier, we are convinced that the company had seen
enough from Dalangin's actuations, behavior and deportment
during a four-week period to realize that Dalangin would be a
liability rather than an asset to its operations. caAICE
We, therefore, disagree with the CA that the company could not
have fully determined Dalangin's performance barely one month
into his employment. As we said inInternational Catholic
Migration Commission, the probationary term or period denotes
its purpose but not its length. To our mind, four weeks was
enough for the company to assess Dalangin's fitness for the job
and he was found wanting. In separating Dalangin from the
service before the situation got worse, we find the company not
liable for illegal dismissal.
The procedural due process issue
Section 2, Rule I, Book VI of the Labor Code's Implementing
Rules and Regulations provides:
If the termination is brought about by the completion of a
contract or phase thereof, or by failure of an employee to meet
the standards of the employer in the case of probationary
employment, it shall be sufficient that a written notice is served
the employee within a reasonable time from the effective date of
termination.
The company contends that it complied with the above rule
when it asked Dalangin, through Abad's Memorandum dated
October 26, 2001, 39 to explain why he could not attend the
seminar scheduled for October 27, 2001. When he failed to
submit his explanation, the company, again through Abad,
served him a notice the following day, October 27, 2001,
terminating his employment. Dalangin takes strong exception to
the company's submission. He insists that the company failed to
comply with the rules as he was not afforded a reasonable time
to defend himself before he was dismissed.

The records support Dalangin's contention. The notice served on

him did not give him a reasonable time, from the effective date
of his separation, as required by the rules. He was dismissed on
the very day the notice was given to him, or, on October 27,
2001. Although we cannot invalidate his dismissal in light of the
valid cause for his separation, the company's non-compliance
with the notice requirement entitles Dalangin to indemnity, in
the form of nominal damages in an amount subject to our
discretion. 40 Under the circumstances, we consider appropriate
an award of nominal damages of P10,000.00 to Dalangin.
Damages and attorney's fees
Finally, given the valid reason for Dalangin's dismissal, the
claim for moral and exemplary damages, as well as attorney's
fees, must necessarily fail.
WHEREFORE, premises considered, the petition is
hereby GRANTED. The assailed decision and resolution of the
Court of Appeals are hereby SET ASIDE. The complaint
isDISMISSED for lack of merit.
Petitioner Canadian Opportunities Unlimited, Inc.
is DIRECTED to pay respondent Bart Q. Dalangin, Jr. nominal
damages in the amount of P10,000.00. ASHECD
Costs against the respondent.
SO ORDERED.
||| (Canadian Opportunities Unlimited, Inc. v. Dalangin, Jr., G.R.
No. 172223, February 06, 2012)

[G.R. No. 185829. April 25, 2012.]

ARMANDO ALILING, petitioner, vs. JOSE B.
FELICIANO, MANUEL F. SAN MATEO III, JOSEPH R.
LARIOSA, and WIDE WIDE WORLD EXPRESS
CORPORATION, respondents.
The Case
This Petition for Review on Certiorari under Rule 45 assails and
seeks to set aside the July 3, 2008 Decision 1 and December 15,
2008 Resolution 2 of the Court of Appeals (CA), in CA-G.R. SP
No. 101309, entitled Armando Aliling v. National Labor
Relations Commission, Wide Wide World Express Corporation,
Jose B. Feliciano, Manuel F. San Mateo III and Joseph R.
Lariosa. The assailed issuances modified the Resolutions dated
May 31, 2007 3 and August 31, 2007 4 rendered by the National

Page | 26

Labor Relations Commission (NLRC) in NLRC NCR Case No.

00-10-11166-2004, affirming the Decision dated April 25,
2006 5 of the Labor Arbiter.
The Facts
Via a letter dated June 2, 2004, 6 respondent Wide Wide World
Express Corporation (WWWEC) offered to employ petitioner
Armando Aliling (Aliling) as "Account Executive (Seafreight
Sales)," with the following compensation package: a monthly
salary of PhP13,000, transportation allowance of PhP3,000,
clothing allowance of PhP800, cost of living allowance of
PhP500, each payable on a per month basis and a 14th month
pay depending on the profitability and availability of financial
resources of the company. The offer came with a six (6)-month
probation period condition with this express
caveat: "Performance during [sic] probationary period shall be
made as basis for confirmation to Regular or Permanent Status."
On June 11, 2004, Aliling and WWWEC inked an Employment
Contract 7 under the following terms, among others:
Conversion to regular status shall be determined on the basis
of work performance; and
Employment services may, at any time, be terminated for
just cause or in accordance with the standards defined at the
time of engagement. 8
Training then started. However, instead of a Seafreight Sale
assignment, WWWEC asked Aliling to handle Ground Express
(GX), a new company product launched on June 18, 2004
involving domestic cargo forwarding service for Luzon.
Marketing this product and finding daily contracts for it formed
the core of Aliling's new assignment.

explain his absence taken without leave from September 20,

2004.

and Aliling have signed a letter of appointment 20 on June 11,

2004 containing the following terms of engagement:

Aliling responded two days later. He denied being absent on the

days in question, attaching to his reply-letter 11 a copy of his
timesheet 12 which showed that he worked from September 20
to 24, 2004. Aliling's explanation came with a query regarding
the withholding of his salary corresponding to September 11 to
25, 2004.

Additionally, upon the effectivity of your probation, you and

your immediate superior are required to jointly define your
objectives compared with the job requirements of the position.
Based on the pre-agreed objectives, your performance shall be
reviewed on the 3rd month to assess your competence and work
attitude. The 5th month Performance Appraisal shall be the basis
in elevating or confirming your employment status from
Probationary to Regular.

In a separate letter dated September 27, 2004, 13 Aliling wrote

San Mateo stating: "Pursuant to your instruction on September
20, 2004, I hereby tender my resignation effective October 15,
2004." While WWWEC took no action on his
tender, Aliling nonetheless demanded reinstatement and a
written apology, claiming in a subsequent letter dated October 1,
2004 14 to management that San Mateo had forced him to
resign.
Lariosa's response-letter of October 1,
2004, 15 informed Aliling that his case was still in the process
of being evaluated. On October 6, 2004, 16 Lariosa again wrote,
this time to advise Aliling of the termination of his services
effective as of that date owing to his "non-satisfactory
performance" during his probationary period. Records show
thatAliling, for the period indicated, was paid his outstanding
salary which consisted of:
PhP

Armand,
My expectations is [sic] that GX Shuttles should be 80% full by
the 3rd week (August 5) after launch (July 15). Pls. make that
happen. It has been more than a month since you came in. I am
expecting sales to be pumping in by now. Thanks.

(salary for the September 25, 2004

payroll)

1,987.28

(salary for 4 days in October 2004)

6,975.46

Total

========
Earlier, however, or on October 4, 2004, Aliling filed a
Complaint 17 for illegal dismissal due to forced resignation,
nonpayment of salaries as well as damages with the NLRC
against WWWEC. Appended to the complaint was Aliling's
Affidavit dated November 12, 2004, 18 in which he stated: "5.
At the time of my engagement, respondents did not make known
to me the standards under which I will qualify as a regular
employee."

Nonong
Thereafter, in a letter of September 25, 2004, 10 Joseph R.
Lariosa (Lariosa), Human Resources Manager of WWWEC,
asked Aliling to report to the Human Resources Department to

WWWEC also attached to its Position Paper a memo dated

September 20, 2004 21 in which San Mateo asked Aliling to
explain why he should not be terminated for failure to meet the
expected job performance, considering that the load factor for
the GX Shuttles for the period July to September was only
0.18% as opposed to the allegedly agreed upon load of 80%
targeted for August 5, 2004. According to WWWEC, Aliling,
instead of explaining himself, simply submitted a resignation
letter.
In a Reply-Affidavit dated December 13,
2004, 22 Aliling denied having received a copy of San Mateo's
September 20, 2004 letter.
Issues having been joined, the Labor Arbiter issued on April 25,
2006 23 a Decision declaring Aliling's termination as
unjustified. In its pertinent parts, the decision reads:

PhP

Barely a month after, Manuel F. San Mateo III (San Mateo),

WWWEC Sales and Marketing Director, emailed Aliling 9 to
express dissatisfaction with the latter's performance, thus:

4,988.18

Failure to meet the job requirements during the probation stage

means that your services may be terminated without prior notice
and without recourse to separation pay.

Refuting Aliling's basic posture, WWWEC stated in its Position

Paper dated November 22, 2004 19 that, in addition to the letteroffer and employment contract adverted to, WWWEC

The grounds upon which complainant's dismissal was based did

not conform not only the standard but also the compliance
required under Article 281 of the Labor Code, Necessarily,
complainant's termination is not justified for failure to comply
with the mandate the law requires. Respondents should be
ordered to pay salaries corresponding to the unexpired portion of
the contract of employment and all other benefits amounting to a
total of THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) covering the period from
October 6 to December 7, 2004, computed as follows:
Unexpired Portion of the Contract:
Basic Salary

P13,000.00

Transportation

3,000.00

Clothing Allowance

800.00

Page | 27

ECOLA

500.00

P17,300.00

10/06/04 - 12/07/04
P17,300.00 x 2.7 mos.

= P35,811.00
=========

Complainant's 13th month pay proportionately for 2004 was not

shown to have been paid to complainant, respondent be made
liable to him therefore computed at SIX THOUSAND FIVE
HUNDRED THIRTY TWO PESOS AND 50/100 (P6,532.50).
For engaging the services of counsel to protect his interest,
complainant is likewise entitled to a 10% attorney's fees of the
judgment amount. Such other claims for lack of basis sufficient
to support for their grant are unwarranted.
WHEREFORE, judgment is hereby rendered ordering
respondent company to pay complainant Armando Aliling the
sum of THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) representing his salaries and
other benefits as discussed above.
Respondent company is likewise ordered to pay said
complainant the amount of TEN THOUSAND SEVEN
HUNDRED SIXTY SIX PESOS AND 85/100 ONLY
(10,766.85)representing his proportionate 13th month pay for
2004 plus 10% of the total judgment as and by way of attorney's
fees.
Other claims are hereby denied for lack of merit. (Emphasis
supplied.)
The labor arbiter gave credence to Aliling's allegation about not
receiving and, therefore, not bound by, San Mateo's purported
September 20, 2004 memo. The memo, to reiterate, supposedly
apprised Aliling of the sales quota he was, but failed, to meet.
Pushing the point, the labor arbiter explained that Aliling cannot
be validly terminated for non-compliance with the quota
threshold absent a prior advisory of the reasonable standards
upon which his performance would be evaluated.
Both parties appealed the above decision to the NLRC, which
affirmed the Decision in toto in its Resolution dated May 31,

2007. The separate motions for reconsideration were also denied

by the NLRC in its Resolution dated August 31, 2007.

dismissed to prevent the acquisition of his regular status) is

contrary to law and applicable jurisprudence. 25

Therefrom, Aliling went on certiorari to the CA, which

eventually rendered the assailed Decision, the dispositive
portion of which reads:

In their Comment, 26 respondents reiterated their position that

WWWEC hired petitioner on a probationary basis and fired him
before he became a regular employee.

WHEREFORE, the petition is PARTLY GRANTED. The

assailed Resolutions of respondent (Third Division) National
Labor Relations Commission are AFFIRMED, with the
following MODIFICATION/CLARIFICATION: Respondents
Wide Wide World Express Corp. and its officers, Jose B.
Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa,
are jointly and severally liable to pay petitioner
Armando Aliling: (A) the sum of Forty Two Thousand Three
Hundred Thirty Three & 50/100 (P42,333.50) as the total money
judgment, (B) the sum of Four Thousand Two Hundred Thirty
Three & 35/100 (P4,233.35) as attorney's fees, and (C) the
additional sum equivalent to one-half (1/2) month of petitioner's
salary as separation pay.

The Court's Ruling

SO ORDERED. 24 (Emphasis supplied.)

The CA anchored its assailed action on the strength of the
following premises: (a) respondents failed to prove that Aliling's
dismal performance constituted gross and habitual neglect
necessary to justify his dismissal; (b) not having been informed
at the time of his engagement of the reasonable standards under
which he will qualify as a regular employee, Aliling was
deemed to have been hired from day one as a regular employee;
and (c) the strained relationship existing between the parties
argues against the propriety of reinstatement.
Aliling's motion for reconsideration was rejected by the CA
through the assailed Resolution dated December 15, 2008.
Hence, the instant petition.
The Issues
Aliling raises the following issues for consideration:
A.The failure of the Court of Appeals to order reinstatement
(despite its finding that petitioner was illegally dismissed from
employment) is contrary to law and applicable jurisprudence.
B.The failure of the Court of Appeals to award backwages (even
if it did not order reinstatement) is contrary to law and
applicable jurisprudence.
C.The failure of the Court of Appeals to award moral and
exemplary damages (despite its finding that petitioner was

The petition is partly meritorious.

Petitioner is a regular employee
On a procedural matter, petitioner Aliling argues that WWWEC,
not having appealed from the judgment of CA which
declared Aliling as a regular employee from the time he signed
the employment contract, is now precluded from questioning the
appellate court's determination as to the nature of his
employment.
Petitioner errs. The Court has, when a case is on appeal, the
authority to review matters not specifically raised or assigned as
error if their consideration is necessary in reaching a just
conclusion of the case. We said as much in Sociedad Europea de
Financiacion, SA v. Court of Appeals, 27 "It is axiomatic that an
appeal, once accepted by this Court, throws the entire case open
to review, and that this Court has the authority to review matters
not specifically raised or assigned as error by the parties, if their
consideration is necessary in arriving at a just resolution of the
case."
The issue of whether or not petitioner was, during the period
material, a probationary or regular employee is of pivotal
import. Its resolution is doubtless necessary at arriving at a fair
and just disposition of the controversy.
The Labor Arbiter cryptically held in his decision dated April
25, 2006 that:
Be that as it may, there appears no showing that indeed the said
September 20, 2004 Memorandum addressed to complainant
was received by him. Moreover, complainant's tasked where he
was assigned was a new developed service. In this regard, it is
noted:
"Due process dictates that an employee be apprised beforehand
of the conditions of his employment and of the terms of
advancement therein. Precisely, implicit in Article 281 of the
Labor Code is the requirement that reasonable standards be
previously made known by the employer to the employee at the
time of his engagement (Ibid., citing Sameer Overseas

Page | 28

Placement Agency, Inc. vs. NLRC, G.R. No. 132564, October

20, 1999). 28
From our review, it appears that the labor arbiter, and later the
NLRC, considered Aliling a probationary employee despite
finding that he was not informed of the reasonable standards by
which his probationary employment was to be judged.
The CA, on the other hand, citing Cielo v. National Labor
Relations Commission, 29 ruled that petitioner was a regular
employee from the outset inasmuch as he was not informed of
the standards by which his probationary employment would be
measured. The CA wrote:
Petitioner was regularized from the time of the execution of the
employment contract on June 11, 2004, although respondent
company had arbitrarily shortened his tenure. As pointed
out, respondent company did not make known the reasonable
standards under which he will qualify as a regular employee at
the time of his engagement. Hence, he was deemed to have been
hired from day one as a regular employee. 30 (Emphasis
supplied.)
WWWEC, however, excepts on the argument that it
put Aliling on notice that he would be evaluated on the 3rd and
5th months of his probationary employment. To WWWEC, its
efforts translate to sufficient compliance with the requirement
that a probationary worker be apprised of the reasonable
standards for his regularization. WWWEC invokes the ensuing
holding in Alcira v. National Labor Relations Commission 31 to
support its case:
Conversely, an employer is deemed to substantially comply with
the rule on notification of standards if he apprises the employee
that he will be subjected to a performance evaluation on a
particular date after his hiring. We agree with the labor arbiter
when he ruled that:
In the instant case, petitioner cannot successfully say that he was
never informed by private respondent of the standards that he
must satisfy in order to be converted into regular status. This
rans (sic) counter to the agreement between the parties that after
five months of service the petitioner's 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 company's standard required of him. (Emphasis supplied.)
WWWEC's contention is untenable.

Alcira is cast under a different factual setting. There, the labor

arbiter, the NLRC, the CA, and even finally this Court were one
in their findings that the employee concerned knew, having been
duly informed during his engagement, of the standards for
becoming a regular employee. This is in stark contrast to the
instant case where the element of being informed of the
regularizing standards does not obtain. As such, Alcira cannot be
made to apply to the instant case.

Sec. 6.Probationary employment. There is probationary

employment where the employee, upon his engagement, is made
to undergo a trial period where the employee determines his
fitness to qualify for regular employment, based on reasonable
standards made known to him at the time of engagement.

To note, the June 2, 2004 letter-offer itself states that the

regularization standards or the performance norms to be used
are still to be agreed upon by Aliling and his
supervisor. WWWEC has failed to prove that an agreement as
regards thereto has been reached. Clearly then, there were
actually no performance standards to speak of. And lest it be
overlooked, Aliling was assigned to GX trucking sales, an
activity entirely different to the Seafreight Sales he was
originally hired and trained for. Thus, at the time of his
engagement, the standards relative to his assignment with GX
sales could not have plausibly been communicated to him as he
was under Seafreight Sales. Even for this reason alone, the
conclusion reached in Alcira is of little relevant to the instant
case.

xxx xxx xxx

Based on the facts established in this case in light of extant

jurisprudence, the CA's holding as to the kind of employment
petitioner enjoyed is correct. So was the NLRC ruling,
affirmatory of that of the labor arbiter. In the final analysis, one
common thread runs through the holding of the labor arbiter, the
NLRC and the CA, i.e., petitioner Aliling, albeit hired from
management's standpoint as a probationary employee, was
deemed a regular employee by force of the following selfexplanatory provisions:
Article 281 of the Labor Code

Probationary employment shall be governed by the following

rules:

(d)In all cases of probationary employment, the employer shall

make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that
time, he shall be deemed a regular employee. (Emphasis
supplied.)
To repeat, the labor arbiter, NLRC and the CA are agreed, on the
basis of documentary evidence adduced, that respondent
WWWEC did not inform petitioner Aliling of the reasonable
standards by which his probation would be measured against at
the time of his engagement. The Court is loathed to interfere
with this factual determination. As We have held:
Settled is the rule that the findings of the Labor Arbiter, when
affirmed by the NLRC and the Court of Appeals, are binding on
the Supreme Court, unless patently erroneous. It is not the
function of the Supreme Court to analyze or weigh all over
again the evidence already considered in the proceedings below.
The jurisdiction of this Court in a petition for review
on certiorari is limited to reviewing only errors of law, not of
fact, unless the factual findings being assailed are not supported
by evidence on record or the impugned judgment is based on a
misapprehension of facts. 32

ART. 281.Probationary employment. Probationary

employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered
a regular employee. (Emphasis supplied.)

The more recent Peafrancia Tours and Travel Transport, Inc. v.

Sarmiento 33 has reaffirmed the above ruling, to wit:

Section 6(d) of the Implementing Rules of Book VI, Rule VIIIA of the Labor Code

WWWEC also cannot validly argue that "the factual findings

being assailed are not supported by evidence on record or the
impugned judgment is based on a misapprehension of facts." Its

Finally, the CA affirmed the ruling of the NLRC and adopted as

its own the latter's factual findings. Long-established is the
doctrine that findings of fact of quasi-judicial bodies . . . are
accorded respect, even finality, if supported by substantial
evidence. When passed upon and upheld by the CA, they are
binding and conclusive upon this Court and will not normally be
disturbed. Though this doctrine is not without exceptions, the
Court finds that none are applicable to the present case.

Page | 29

very own letter-offer of employment argues against its above

posture. Excerpts of the letter-offer:
Additionally, upon the effectivity of your probation, you and
your immediate superior are required to jointly define your
objectives compared with the job requirements of the
position. Based on the pre-agreed objectives, your performance
shall be reviewed on the 3rd month to assess your competence
and work attitude. The 5th month Performance Appraisal shall
be the basis in elevating or confirming your employment status
from Probationary to Regular.
Failure to meet the job requirements during the probation stage
means that your services may be terminated without prior notice
and without recourse to separation pay. (Emphasis supplied.)
Respondents further allege that San Mateo's email dated July 16,
2004 shows that the standards for his regularization were made
known to petitioner Aliling at the time of his engagement. To
recall, in that email message, San Mateo reminded Aliling of the
sales quota he ought to meet as a condition for his continued
employment, i.e., that the GX trucks should already be 80% full
by August 5, 2004. Contrary to respondents' contention, San
Mateo's email cannot support their allegation on Aliling being
informed of the standards for his continued employment, such as
the sales quota, at the time of his engagement. As it were, the
email message was sent to Aliling more than a month after he
signed his employment contract with WWWEC. The
aforequoted Section 6 of the Implementing Rules of Book VI,
Rule VIII-A of the Code specifically requires the employer to
inform the probationary employee of such reasonable
standards at the time of his engagement, not at any time later;
else, the latter shall be considered a regular employee. Thus,
pursuant to the explicit provision of Article 281 of the Labor
Code, Section 6 (d) of the Implementing Rules of Book VI, Rule
VIII-A of the Labor Code and settled jurisprudence,
petitioner Aliling is deemed a regular employee as of June 11,
2004, the date of his employment contract.
Petitioner was illegally dismissed
To justify fully the dismissal of an employee, the employer
must, as a rule, prove that the dismissal was for a just cause and
that the employee was afforded due process prior to dismissal.
As a complementary principle, the employer has the onus of
proving with clear, accurate, consistent, and convincing
evidence the validity of the dismissal. 34
WWWEC had failed to discharge its twin burden in the instant
case.

First off, the attendant circumstances in the instant case aptly

show that the issue of petitioner's alleged failure to achieve his
quota, as a ground for terminating employment, strikes the Court
as a mere afterthought on the part of WWWEC. Consider:
Lariosa's letter of September 25, 2004 already betrayed
management's intention to dismiss the petitioner for alleged
unauthorized absences. Aliling was in fact made to explain and
he did so satisfactorily. But, lo and behold, WWWEC
nonetheless proceeded with its plan to dismiss the petitioner for
non-satisfactory performance, although the corresponding
termination letter dated October 6, 2004 did not even
specifically state Aliling's "non-satisfactory performance," or
that Aliling's termination was by reason of his failure to achieve
his set quota.
What WWWEC considered as the evidence purportedly showing
it gave Aliling the chance to explain his inability to reach his
quota was a purported September 20, 2004 memo of San Mateo
addressed to the latter. However, Aliling denies having received
such letter and WWWEC has failed to refute his contention of
non-receipt. In net effect, WWWEC was at a loss to explain the
exact just reason for dismissing Aliling.
At any event, assuming for argument that the petitioner indeed
failed to achieve his sales quota, his termination from
employment on that ground would still be unjustified.
Article 282 of the Labor Code considers any of the following
acts or omission on the part of the employee as just cause or
ground for terminating employment:
(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. (Emphasis supplied)
In Lim v. National Labor Relations Commission, 35 the Court
considered inefficiency as an analogous just cause for
termination of employment under Article 282 of the Labor
Code:

We cannot but agree with PEPSI that "gross inefficiency" falls

within the purview of "other causes analogous to the foregoing,"
this constitutes, therefore, just cause to terminate an employee
under Article 282 of the Labor Code. One is analogous to
another if it is susceptible of comparison with the latter either in
general or in some specific detail; or has a close relationship
with the latter. "Gross inefficiency" is closely related to "gross
neglect," for both involve specific acts of omission on the part of
the employee resulting in damage to the employer or to his
business. In Buiser vs. Leogardo, this Court ruled that failure to
observed prescribed standards to inefficiency may constitute just
cause for dismissal. (Emphasis supplied.)
It did so anew in Leonardo v. National Labor Relations
Commission 36 on the following rationale:
An employer is entitled to impose productivity standards for its
workers, and in fact, non-compliance may be visited with a
penalty even more severe than demotion. Thus,
[t]he practice of a company in laying off workers because they
failed to make the work quota has been recognized in this
jurisdiction.(Philippine American Embroideries vs. Embroidery
and Garment Workers, 26 SCRA 634, 639). In the case at bar,
the petitioners' failure to meet the sales quota assigned to each of
them constitute a just cause of their dismissal, regardless of the
permanent or probationary status of their employment.Failure to
observe prescribed standards of work, or to fulfill reasonable
work assignments due to inefficiency may constitute just cause
for dismissal. Such inefficiency is understood to mean failure to
attain work goals or work quotas, either by failing to complete
the same within the allotted reasonable period, or by producing
unsatisfactory results. This management prerogative of requiring
standards may be availed of so long as they are exercised
in good faith for the advancement of the employer's
interest. (Emphasis supplied.)
In fine, an employee's failure to meet sales or work quotas falls
under the concept of gross inefficiency, which in turn is
analogous to gross neglect of duty that is a just cause for
dismissal under Article 282 of the Code. However, in order for
the quota imposed to be considered a valid productivity standard
and thereby validate a dismissal, management's prerogative of
fixing the quota must be exercised in good faith for the
advancement of its interest. The duty to prove good faith,
however, rests with WWWEC as part of its burden to show that
the dismissal was for a just cause. WWWEC must show that
such quota was imposed in good faith. This WWWEC failed to
do, perceptibly because it could not. The fact of the matter is
that the alleged imposition of the quota was a desperate attempt
to lend a semblance of validity to Aliling's illegal dismissal. It
must be stressed that even WWWEC's sales manager, Eve

Page | 30

Amador (Amador), in an internal e-mail to San Mateo, hedged

on whether petitioner performed below or above expectation:
Could not quantify level of performance as he as was tasked to
handle a new product (GX). Revenue report is not yet
administered by IT on a month-to-month basis. Moreover, this in
a way is an experimental activity. Practically you have a close
monitoring with Armand with regards to his performance. Your
assessment of him would be more accurate.
Being an experimental activity and having been launched for the
first time, the sales of GX services could not be reasonably
quantified. This would explain why Amador implied in her
email that other bases besides sales figures will be used to
determine Aliling's performance. And yet, despite such a neutral
observation, Aliling was still dismissed for his dismal sales of
GX services. In any event, WWWEC failed to demonstrate the
reasonableness and the bona fides on the quota imposition.
Employees must be reminded that while probationary employees
do not enjoy permanent status, they enjoy the constitutional
protection of security of tenure. They can only be terminated for
cause or when they otherwise fail to meet the reasonable
standards made known to them by the employer at the time of
their engagement. 37 Respondent WWWEC miserably failed to
prove the termination of petitioner was for a just cause nor was
there substantial evidence to demonstrate the standards were
made known to the latter at the time of his engagement. Hence,
petitioner's right to security of tenure was breached.
Aliling's right to procedural due process was violated
As earlier stated, to effect a legal dismissal, the employer must
show not only a valid ground therefor, but also that procedural
due process has properly been observed. When the Labor Code
speaks of procedural due process, the reference is usually to the
two (2)-written notice rule envisaged in Section 2 (III), Rule
XXIII, Book V of the Omnibus Rules Implementing the Labor
Code, which provides:
Section 2.Standard of due process: requirements of notice. In
all cases of termination of employment, the following standards
of due process shall be substantially observed.
I.For termination of employment based on just causes as defined
in Article 282 of the Code:
(a)A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side;

(b)A hearing or conference during which the employee

concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and
(c)A written notice [of] termination served on the employee
indicating that upon due consideration of all the circumstance,
grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on
the employee's last known address.
MGG Marine Services, Inc. v. NLRC 38 tersely described the
mechanics of what may be considered a two-part due process
requirement which includes the two-notice rule, ". . . one, of the
intention to dismiss, indicating therein his acts or omissions
complained against, and two, notice of the decision to dismiss;
and an opportunity to answer and rebut the charges against him,
in between such notices."
King of Kings Transport, Inc. v. Mamac 39 expounded on this
procedural requirement in this manner:
(1)The first written notice to be served on the employees should
contain the specific causes or grounds for termination against
them, and a directive that the employees are given the
opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately
for their defense. This should be construed as a period of at least
five calendar days from receipt of the notice . . . . Moreover, in
order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis
for the charge against the employees. A general description of
the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which
among the grounds under Art. 288 [of the Labor Code] is being
charged against the employees.
(2)After serving the first notice, the employees should schedule
and conduct a hearing or conference wherein the employees will
be given the opportunity to (1) explain and clarify their defenses
to the charge against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence presented against them
by the management. During the hearing or conference, the
employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of
their choice . . . .

(3)After determining that termination is justified, the employer

shall serve the employees a written notice of
termination indicating that: (1) all the circumstances involving
the charge against the employees have been considered; and (2)
grounds have been established to justify the severance of their
employment. (Emphasis in the original.)
Here, the first and second notice requirements have not been
properly observed, thus tainting petitioner's dismissal with
illegality.
The adverted memo dated September 20, 2004 of WWWEC
supposedly informing Aliling of the likelihood of his
termination and directing him to account for his failure to meet
the expected job performance would have had constituted the
"charge sheet," sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had
been sent to and received by him. In fact, in his December 13,
2004 Complainant's Reply Affidavit, Aliling goes on to tag such
letter/memorandum as fabrication. WWWEC did not adduce
proof to show that a copy of the letter was duly served
upon Aliling. Clearly enough, WWWEC did not comply with
the first notice requirement.
Neither was there compliance with the imperatives of a hearing
or conference. The Court need not dwell at length on this
particular breach of the due procedural requirement. Suffice it to
point out that the record is devoid of any showing of a hearing
or conference having been conducted. On the contrary, in its
October 1, 2004 letter toAliling, or barely five (5) days after it
served the notice of termination, WWWEC acknowledged that it
was still evaluating his case. And the written notice of
termination itself did not indicate all the circumstances
involving the charge to justify severance of employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement
As may be noted, the CA found Aliling's dismissal as having
been illegally effected, but nonetheless concluded that his
employment ceased at the end of the probationary period. Thus,
the appellate court merely affirmed the monetary award made by
the NLRC, which consisted of the payment of that amount
corresponding to the unserved portion of the contract of
employment.
The case disposition on the award is erroneous.
As earlier explained, Aliling cannot be rightfully considered as a
mere probationary employee. Accordingly, the probationary
period set in the contract of employment dated June 11, 2004
was of no moment. In net effect, as of that date June 11,

Page | 31

2004, Aliling became part of the WWWEC organization as a

regular employee of the company without a fixed term of
employment. Thus, he is entitled to backwages reckoned from
the time he was illegally dismissed on October 6, 2004, with a
PhP17,300.00 monthly salary, until the finality of this Decision.
This disposition hews with the Court's ensuing holding
in Javellana v. Belen: 40
Article 279 of the Labor Code, as amended by Section 34
of Republic Act 6715 instructs:
Art. 279.Security of Tenure. In cases of regular employment,
the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the
time of his actual reinstatement. (Emphasis supplied)

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. . . .

Clearly, the law intends the award of backwages and similar

benefits to accumulate past the date of the Labor Arbiter's
decision until the dismissed employee is actually reinstated. But
if, as in this case, reinstatement is no longer possible, this Court
has consistently ruled that backwages shall be computed from
the time of illegal dismissal until the date the decision becomes
final. (Emphasis supplied.)

Velasco v. National Labor Relations Commission emphasizes:

Additionally, Aliling is entitled to separation pay in lieu of

reinstatement on the ground of strained relationship.

Under the doctrine of strained relations, the payment of

separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from
what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no
longer trust.

In Golden Ace Builders v. Talde, 41 the Court ruled:

The basis for the payment of backwages is different from that
for the award of separation pay. Separation pay is granted where
reinstatement is no longer advisable because of strained relations
between the employee and the employer. Backwages represent
compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for
computing backwages is usually the length of the employee's
service while that for separation pay is the actual period when
the employee was unlawfully prevented from working.
As to how 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

The accepted doctrine is that separation pay may avail in lieu of

reinstatement if reinstatement is no longer practical or in the best
interest of the parties. Separation pay in lieu of reinstatement
may likewise be awarded if the employee decides not to be
reinstated. (emphasis in the original; italics supplied)

Strained relations must be demonstrated as a fact, however, to be

adequately supported by evidence substantial evidence to
show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the
judicial controversy.
In the present case, the Labor Arbiter found that actual
animosity existed between petitioner Azul and respondent as a
result of the filing of the illegal dismissal case. Such finding,
especially when affirmed by the appellate court as in the case at
bar, is binding upon the Court, consistent with the prevailing
rules that this Court will not try facts anew and that findings of
facts of quasi-judicial bodies are accorded great respect, even
finality. (Emphasis supplied.)

As the CA correctly observed, "To reinstate petitioner [Aliling]

would only create an atmosphere of antagonism and distrust,
more so that he had only a short stint with respondent
company." 42 The Court need not belabor the fact that the patent
animosity that had developed between employer and employee
generated what may be considered as the arbitrary dismissal of
the petitioner.
Following the pronouncements of this Court Sagales v. Rustan's
Commercial Corporation, 43 the computation of separation pay
in lieu of reinstatement includes the period for which backwages
were awarded:
Thus, in lieu of reinstatement, it is but proper to award
petitioner separation pay computed at one-month salary for
every year of service, a fraction of at least six (6) months
considered as one whole year. In the computation of separation
pay, the period where backwages are awarded must be
included. (Emphasis supplied.)
Thus, Aliling is entitled to both backwages and separation pay
(in lieu of reinstatement) in the amount of one (1) month's salary
for every year of service, that is, from June 11, 2004 (date of
employment contract) until the finality of this decision with a
fraction of a year of at least six (6) months to be considered as
one (1) whole year. As determined by the labor arbiter, the basis
for the computation of backwages and separation pay will
be Aliling's monthly salary at PhP17,300.
Finally, Aliling is entitled to an award of PhP30,000 as nominal
damages in consonance with prevailing jurisprudence 44 for
violation of due process.
Petitioner is not entitled to moral and exemplary damages
In Nazareno v. City of Dumaguete, 45 the Court expounded on
the requisite elements for a litigant's entitlement to moral
damages, thus:
Moral damages are awarded if the following elements exist in
the case: (1) an injury clearly sustained by the claimant; (2) a
culpable act or omission factually established; (3) a wrongful act
or omission by the defendant as the proximate cause of the
injury sustained by the claimant; and (4) the award of damages
predicated on any of the cases stated Article 2219 of the Civil
Code. In addition, the person claiming moral damages must
prove the existence of bad faith by clear and convincing
evidence for the law always presumes good faith. It is not
enough that one merely suffered sleepless nights, mental
anguish, and serious anxiety as the result of the actuations of the
other party. Invariably such action must be shown to have been
willfully done in bad faith or with ill motive. Bad faith, under

Page | 32

the law, does not simply connote bad judgment or negligence. It

imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of a known duty through
some motive or interest or ill will that partakes of the nature of
fraud. (Emphasis supplied.)
In alleging that WWWEC acted in bad faith, Aliling has the
burden of proof to present evidence in support of his claim, as
ruled in Culili v. Eastern Telecommunications Philippines,
Inc.: 46
According to jurisprudence, "basic is the principle that good
faith is presumed and he who alleges bad faith has the duty to
prove the same." By imputing bad faith to the actuations of
ETPI, Culili has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice. Culili
failed to discharge this burden and his bare allegations deserve
no credit.
This was reiterated in United Claimants Association of NEA
(UNICAN) v. National Electrification Administration
(NEA), 47 in this wise:
It must be noted that the burden of proving bad faith rests on the
one alleging it. As the Court ruled in Culili v. Eastern
Telecommunications, Inc., "According to jurisprudence, 'basic is
the principle that good faith is presumed and he who alleges bad
faith has the duty to prove the same.'" Moreover, in Spouses
Palada v. Solidbank Corporation, the Court stated, "Allegations
of bad faith and fraud must be proved by clear and convincing
evidence."
Similarly, Aliling has failed to overcome such burden to prove
bad faith on the part of WWWEC. Aliling has not presented any
clear and convincing evidence to show bad faith. The fact that
he was illegally dismissed is insufficient to prove bad faith.
Thus, the CA correctly ruled that "[t]here was no sufficient
showing of bad faith or abuse of management prerogatives in the
personal action taken against petitioner." 48 In Lambert
Pawnbrokers and Jewelry Corporation v. Binamira, 49 the Court
ruled:
A dismissal may be contrary to law but by itself alone, it does
not establish bad faith to entitle the dismissed employee to moral
damages. The award of moral and exemplary damages cannot be
justified solely upon the premise that the employer dismissed his
employee without authorized cause and due process.
The officers of WWWEC cannot be held
jointly and severally liable with the company

The CA held the president of WWWEC, Jose B. Feliciano, San

Mateo and Lariosa jointly and severally liable for the monetary
awards of Aliling on the ground that the officers are considered
"employers" acting in the interest of the corporation. The CA
cited NYK International Knitwear Corporation Philippines
(NYK) v. National Labor Relations Commission 50 in support
of its argument. Notably, NYK in turn cited A.C. Ransom Labor
Union-CCLU v. NLRC. 51
Such ruling has been reversed by the Court in Alba v. Yupangco,
52 where the Court ruled:
By Order of September 5, 2007, the Labor Arbiter denied
respondent's motion to quash the 3rd alias writ. Brushing aside
respondent's contention that his liability is merely joint, the
Labor Arbiter ruled:
Such issue regarding the personal liability of the officers of a
corporation for the payment of wages and money claims to its
employees, as in the instant case, has long been resolved by the
Supreme Court in a long list of cases [A.C. Ransom Labor
Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the
cases of Chua vs. NLRC(182 SCRA 353), Gudez vs.
NLRC (183 SCRA 644)]. In the aforementioned cases, the
Supreme Court has expressly held that the irresponsible officer
of the corporation (e.g., President) is liable for the corporation's
obligations to its workers. Thus, respondent Yupangco, being the
president of the respondent YL Land and Ultra Motors Corp., is
properly jointly and severally liable with the defendant
corporations for the labor claims of Complainants Alba and De
Guzman. . . .
xxx xxx xxx
As reflected above, the Labor Arbiter held that respondent's
liability is solidary.
There is solidary liability when the obligation expressly so
states, when the law so provides, or when the nature of the
obligation so requires. MAM Realty Development Corporation
v. NLRC, on solidary liability of corporate officers in labor
disputes, enlightens:
. . . 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;
xxx xxx xxx
In labor cases, for instance, the Court has held corporate
directors and officers solidarily liable with the corporation for
the termination of employment of employees done with malice
or in bad faith.
A review of the facts of the case does not reveal ample and
satisfactory proof that respondent officers of WWEC acted in
bad faith or with malice in effecting the termination of
petitioner Aliling. Even assuming arguendo that the actions of
WWWEC are ill-conceived and erroneous, respondent officers
cannot be held jointly and solidarily with it. Hence, the ruling on
the joint and solidary liability of individual respondents must be
recalled.
Aliling is entitled to Attorney's Fees and Legal Interest
Petitioner Aliling is also entitled to attorney's fees in the amount
of ten percent (10%) of his total monetary award, having been
forced to litigate in order to seek redress of his grievances,
pursuant to Article 111 of the Labor Code and following our
ruling in Exodus International Construction Corporation v.
Biscocho, 53 to wit:
In Rutaquio v. National Labor Relations Commission, this Court
held that:
It is settled that in actions for recovery of wages or where an
employee was forced to litigate and, thus, incur expenses to
protect his rights and interest, the award of attorney's fees is
legally and morally justifiable.
In Producers Bank of the Philippines v. Court of Appeals this
Court ruled that:
Attorney's fees may be awarded when a party is compelled to
litigate or to incur expenses to protect his interest by reason of
an unjustified act of the other party.
While in Lambert Pawnbrokers and Jewelry Corporation, 54 the
Court specifically ruled:
However, the award of attorney's fee is warranted pursuant to
Article 111 of the Labor Code. Ten (10%) percent of the total
award is usually the reasonable amount of attorney's fees
awarded. It is settled that where an employee was forced to

Page | 33

litigate and, thus, incur expenses to protect his rights and

interest, the award of attorney's fees is legally and morally
justifiable.

Decision dated 20 May 2009 2 and Resolution dated 8

September 2010 3 issued by the Court of Appeals (CA). The
dispositive portion of the Decision reads: TaDAHE

Finally, legal interest shall be imposed on the monetary awards

herein granted at the rate of 6% per annum from October 6,
2004 (date of termination) until fully paid.

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

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

WHEREFORE, the petition is PARTIALLY GRANTED. The

July 3, 2008 Decision of the Court of Appeals in CA-G.R. SP
No. 101309 is hereby MODIFIED to read:
WHEREFORE, the petition is PARTIALLY GRANTED. The
assailed Resolutions of respondent (Third Division) National
Labor Relations Commission are AFFIRMED,with the
following MODIFICATION/CLARIFICATION: Respondent
Wide Wide World Express Corp. is liable to pay
Armando Aliling the following: (a) backwages reckoned from
October 6, 2004 up to the finality of this Decision based on a
salary of PhP17,300 a month, with interest at 6% per annum on
the principal amount from October 6, 2004 until fully paid; (b)
the additional sum equivalent to one (1) month salary for every
year of service, with a fraction of at least six (6) months
considered as one whole year based on the period from June 11,
2004 (date of employment contract) until the finality of this
Decision, as separation pay; (c) PhP30,000 as nominal damages;
and (d) Attorney's Fees equivalent to 10% of the total award.
SO ORDERED.

There being no data from which this Court can properly assess
Petitioner's full retirement benefits, the case is, thus, remanded
to the Labor Arbiter only for that purpose.
SO ORDERED.
Wilson B. Fermin (Fermin) was a forklift operator at Cosmos
Bottling Corporation (COSMOS), where he started his
employment on 27 August 1976. 4 On 16 December 2002, he
was accused of stealing the cellphone of his fellow employee,
Luis Braga (Braga). 5 Fermin was then given a Show Cause
Memorandum, requiring him to explain why the cellphone was
found inside his locker. 6 In compliance therewith, he submitted
an affidavit the following day, explaining that he only hid the
phone as a practical joke and had every intention of returning it
to Braga. 7
On 21 December 2002, Braga executed a handwritten narration
of events stating the following: 8

||| (Aliling v. Feliciano, G.R. No. 185829, April 25, 2012)

(a)At around 6:00 a.m. on 16 December 2002, he was changing
his clothes inside the locker room, with Fermin as the only other
person present.
[G.R. No. 193676. June 20, 2012.]
COSMOS BOTTLING CORP., petitioner, vs. WILSON
FERMIN, respondent.

(b)Braga went out of the locker room and inadvertently left his
cellphone by the chair. Fermin was left inside the room.

[G.R. No. 194303. June 20, 2012.]

(c)After 10 minutes, Braga went back to the locker room to

retrieve his cellphone, but it was already gone.

WILSON B. FERMIN, petitioner, vs. COSMOS BOTTLING

CORPORATION and CECILIA BAUTISTA, respondents.

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

DECISION

(e)Braga reported the incident to the security guard, who

thereafter conducted an inspection of all the lockers.

SERENO, J p:
Before this Court are two consolidated cases, namely: (1)
Petition for Review dated 26 October 2010 (G.R. No. 193676)
and (2) Petition for Review on Certiorari under Rule 45 dated 14
October 2010 (G.R. No. 194303). 1 Both Petitions assail the

(f)The security guard found the cellphone inside Fermin's locker.

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

After conducting an investigation, COSMOS found Fermin

guilty of stealing Braga's phone in violation of company rules
and regulations. 9 Consequently, on 2 October 2003, 10the
company terminated Fermin from employment after 27 years of
service, 11 effective on 6 October 2003. 12
Following the dismissal of Fermin from employment, Braga
executed an affidavit, which stated the belief that the former had
merely pulled a prank without any intention of stealing the
cellphone, and withdrew from COSMOS his complaint against
Fermin. 13
Meanwhile, Fermin filed a Complaint for Illegal
Dismissal, 14 which the Labor Arbiter (LA) dismissed for lack
of merit on the ground that the act of taking a fellow employee's
cellphone amounted to gross misconduct. 15 Further, the LA
likewise took into consideration Fermin's other infractions,
namely: (a) committing acts of disrespect to a superior officer,
and (b) sleeping on duty and abandonment of duty. 16
Fermin filed an appeal with the National Labor Relations
Commission (NLRC), which affirmed the ruling of the
LA 17 and denied Fermin's subsequent Motion for
Reconsideration. 18
Thereafter, Fermin filed a Petition for Certiorari with the Court
of Appeals (CA), 19 which reversed the rulings of the LA and
the NLRC and awarded him his full retirement
benefits. 20 Although the CA accorded with finality the factual
findings of the lower tribunals as regards Fermin's commission
of theft, it nevertheless held that the penalty of dismissal from
service was improper on the ground that the said violation did
not amount to serious misconduct or wilful disobedience, to wit:
[COSMOS], on which the onus of proving lawful cause in
sustaining the dismissal of [Fermin] lies, failed to prove that the
latter's misconduct was induced by a perverse and wrongful
intent, especially in the light of Braga's Sinumpaang
Salaysay which corroborated [Fermin's] claim that [Fermin] was
merely playing a prank when he hid Braga's cellular phone.
Parenthetically, the labor courts dismissed Braga's affidavit of
desistance as a mere afterthought because the same was
executed only after [Fermin] had been terminated.
It must be pointed out, however, that in labor cases, in which
technical rules of procedure are not to be strictly applied if the
result would be detrimental to the workingman, an affidavit of
desistance gains added importance in the absence of any
evidence on record explicitly showing that the dismissed
employee committed the act which caused the dismissal. While
We cannot completely exculpate [Fermin] from his violation at
this point, We cannot, however, turn a blind eye and disregard

Page | 34

Braga's recantation altogether. Braga's recantation all the more

bolsters Our conclusion that [Fermin's] violation does not
amount to or borders on "serious or willful" misconduct or
willful disobedience to call for his dismissal.
Morever, [COSMOS] failed to prove any resultant material
damage or prejudice on their part as a consequence of [Fermin's]
questioned act. To begin with, the cellular phone subject of the
stealth belonged, not to [COSMOS], but to Braga. Secondly, the
said phone was returned to Braga in due time. Under the
circumstances, a penalty such as suspension without pay would
have sufficed to teach [Fermin] a lesson and for him to realize
his wrongdoing. CaDSHE
xxx xxx xxx
On another note, [COSMOS], in upholding the legality of
[Fermin's] termination from service, considered the latter's past
infractions with [COSMOS], i.e., threatening, provoking,
challenging, insulting and committing acts of disrespect to a
superior officer/defiance to an instruction and a lawful order of a
superior officer; and, sleeping while on duty and abandonment
of duty or leaving assigned post with permission from
immediate supervisor, as aggravating circumstances to his
present violation [stealth (sic) of a co-employee's property].
We disagree with Public Respondent on this matter.
The correct rule is that previous infractions may be used as
justification for an employee's dismissal from work in
connection with a subsequent similar offense, which is
obviously not the case here. . . . . 21 (Emphases in the original.)
COSMOS and Fermin moved for reconsideration, but the CA
likewise denied their motions. 22 Thus, both parties filed the
present Petitions for Review.
COSMOS argues, among other things, that: (a) Fermin
committed a clear act of bad faith and dishonesty in taking the
cellphone of Braga and denying knowledge thereof; (b) the
latter's recantation was a mere afterthought; (c) the lack of
material damage or prejudice on the part of COSMOS does not
preclude it from imposing the penalty of termination; and (d) the
previous infractions committed by Fermin strengthen the
decision of COSMOS to dismiss him from service. 23

agencies, if established by substantial evidence as borne out by

the records, are final and binding on this Court, whose
jurisdiction is limited to reviewing questions of law. 25 The only
disputed issue left for resolution is whether the imposition of the
penalty of dismissal was appropriate. We rule in the affirmative.
Theft committed against a co-employee is considered as a case
analogous to serious misconduct, for which the penalty of
dismissal from service may be meted out to the erring
employee, 26 viz.:
Article 282 of the Labor Code provides:
Article 282.Termination by Employer. An employer may
terminate an employment for any of the following causes:
(a)Serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or his representatives in
connection with his work;cSHIaA
xxx xxx xxx
(e)Other causes analogous to the foregoing.
Misconduct involves "the transgression of some established and
definite rule of action, forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere
error in judgment." For misconduct to be serious and therefore a
valid ground for dismissal, it must be:
1.of grave and aggravated character and not merely trivial or
unimportant and
2.connected with the work of the employee.
In this case, petitioner dismissed respondent based on the NBI's
finding that the latter stole and used Yuseco's credit cards.
But since the theft was not committed against petitioner itself
but against one of its employees, respondent's misconduct was
not work-related and therefore, she could not be dismissed for
serious misconduct.

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

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

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

It must be noted that in the case at bar, all the lower tribunals
were in agreement that Fermin's act of taking Braga's cellphone
amounted to theft. Factual findings made by administrative

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

willful act or omission attesting to an employee's moral
depravity. Theft committed by an employee against a person

other than his employer, if proven by substantial evidence, is a

cause analogous to serious misconduct. 27 (Emphasis supplied.)
In this case, the LA has already made a factual finding, which
was affirmed by both the NLRC and the CA, that Fermin had
committed theft when he took Braga's cellphone. Thus, this act
is deemed analogous to serious misconduct, rendering Fermin's
dismissal from service just and valid.
Further, the CA was correct in ruling that previous infractions
may be cited as justification for dismissing an employee only if
they are related to the subsequent offense. 28However, it must
be noted that such a discussion was unnecessary since the theft,
taken in isolation from Fermin's other violations, was in itself a
valid cause for the termination of his employment.
Finally, it must be emphasized that the award of financial
compensation or assistance to an employee validly dismissed
from service has no basis in law. Therefore, considering that
Fermin's act of taking the cellphone of his co-employee is a case
analogous to serious misconduct, this Court is constrained to
reverse the CA's ruling as regards the payment of his full
retirement benefits. In the same breath, neither can this Court
grant his prayer for backwages.
WHEREFORE, the Petition in G.R. No. 194303 is DENIED,
while that in G.R. No. 193676 is GRANTED. The Decision
dated 20 May 2009 and Resolution dated 8 September 2010 of
the Court of Appeals are hereby REVERSED and SET ASIDE.
The Decision dated 20 August 2004 of the Labor Arbiter
is REINSTATED. AHSaTI
SO ORDERED.
||| (Cosmos Bottling Corp. v. Fermin, G.R. No. 193676, 194303,
June 20, 2012)

[G.R. No. 82580. April 25, 1989.]

COCA-COLA BOTTLERS PHILIPPINES
INCORPORATED, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and FERNANDO
VEGA, respondents.
[G.R. No. 84075. April 25, 1989]
FERNANDO VEGA, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION THIRD DIVISION, MANILA
and COCA-COLA BOTTLERS, PHILIPPINES,
INC., respondents.

Page | 35

SYLLABUS
1. LABOR LAWS; EMPLOYMENT; TERMINATION
THEREOF; VALID GROUNDS THEREFOR; BREACH OF
TRUST AND LOSS OF CONFIDENCE. When adequately
proven, the dual grounds of breach of trust and loss of
confidence constitute valid and ample bases to warrant
termination of an errant employee. (Manila Midtown
Commercial Corporation v. Nuwhrain (Ramada Chapter), 159
SCRA 212 [1988]). The employer's obligation to give his
workers just compensation and treatment carries with it the
corollary right to expect from the workers adequate work,
diligence and good conduct. (Firestone Tire and Rubber Co. of
the Phils. v. Lariosa, 148 SCRA 187 [1987]). In the last cited
case, this Court held: "Although as a rule this Court leans over
backwards to help workers and employees continue with their
employment or to mitigate the penalties imposed on them, acts
of dishonesty in the handling of company property are a
different matter. "Thus under Article 283 of the Labor Code, an
employer may terminate an employment for 'serious misconduct'
or for fraud or willful breach by the employee of the trust
reposed in him by his employer or representative. "If there is
sufficient evidence that an employee has been guilty of a breach
of trust or that his employer has ample reasons to distrust him,
the labor tribunal cannot justly deny to the employer the
authority to dismiss such an employee."

3. ID.; ID.; ID.; ID.; ID.; PREVIOUS RECORD OF

EMPLOYEE TAKEN INTO CONSIDERATION. In this
case, the employee's infraction was not his first offense. We note
that he was suspended and grounded for other offenses he
committed in 1978. We regret, then, that this Court is powerless
to extend to him the remedy of reinstatement even on the ground
of equity based on his length of service. As this Court held in the
case of Piedad v. Lanao del Norte Electric Cooperative, Inc.
(153 SCRA 500, 509 [1987]): "The precedents on the issue
before us are clear. Dismissal of a dishonest employee is to the
best interest not only of management but also of labor
(International Hardwood and Veneer Co. of the Phils. v.
Leogardo, Jr., 117 SCRA 967). As a measure of self-protection
against acts inimical to its interest, a company has the right to
dismiss its erring employees (Dole Phils., Inc. v. National Labor
Relations Commission, supra). An employer cannot be
compelled to continue in employment an employee guilty of acts
inimical to its interest, justifying loss of confidence in him
(International Hardwood and Veneer Co., of the Philippines v.
Leogardo, Jr. supra; National Service Corporation v. Leogardo,
Jr; supra; Engineering Equipment, Inc. v. National Labor
Relations Commission, supra). The law does not impose unjust
situations on either labor or management."
DECISION
GUTIERREZ, JR., J p:

2. ID.; ID.; ID.; ID.; ID.; DEGREE OF TRUST AND

CONFIDENCE REQUIRED; DEPENDS UPON NATURE OF
THE JOB. As a general rule, employers are allowed a wider
latitude of discretion in terminating the employment of
managerial personnel or those who, while not of similar rank,
perform functions which by their nature require the employer's
full trust and confidence. This must be distinguished from the
case of ordinary rank-and-file employees, whose termination on
the basis of these same grounds requires a higher proof of
involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice. (See
Manila Midtown Commercial Corporation v. Nuwhrain
(Ramada Chapter), supra). Thus, in the case of San Miguel
Corp. v. National Labor Relations Commission (142 SCRA 376,
384 [1986]), this Court held: "Private respondent represents
petitioner in his dealings with the public. When charges of theft
of customer's properties and misconduct on the job are imputed
on the sales agent, and these charges are supported with
evidence, they constitute sufficient reasons for termination of
employment. Well established in our jurisprudence is the right of
am employer to dismiss an employee whose continuance in the
service is inimical to the employer's interest. (Manila Trading
and Supply, Co. v. Philippine Labor Union, 71 Phil. 124;
Engineering Equipment, Inc. v. NLRC, 133 SCRA 752)"

Before us are two separate petitions docketed as G.R. No. 82680

and G.R. No. 84075 both assailing the decision of the National
Labor Relations Commission in RAB Case No. VI-0038-85.
Fernando Vega, the petitioner in G.R. No. 84075, began his
employment with Coca-Cola Bottlers Philippines, Inc., the
petitioner in G.R. No. 82580, on November 1, 1976 as Sprite
Salesman covering the Iloilo City routes. He was subsequently
promoted to regular salesman in 1978. In the same year,
however, on charges of issuing temporary credit sales receipts
and denying dealer's accounts, he was demoted to relief
salesman. He was also suspended for one (1) month and six (6)
days and grounded for six (6) months.
In 1981, he was again promoted to regular salesman. He held the
same position until June 26, 1984 when he was terminated from
employment on the charge of falsification of route sales report.
On July 16, 1984, he filed with the then Ministry of Labor and
Employment a complaint for unfair labor practice, illegal
dismissal, unpaid wages and separation pay and for damages and
attorney's fees. He alleged that he was dismissed without lawful
cause because the falsification imputed to him did not result
from deliberate and malicious intent but from honest mistake

and oversight. He averred that on March 10, 1984, on the might

he was about to turn over to the company the proceeds of his
sales, he noticed a discrepancy of about P100.00 in his
liquidation report; that after he checked his papers he found that
the Incoming Load Report issued by the gate guard declared
only five (5) cases of empty bottles while the duplicate copy
issued by the stock clerk listed fifteen (15) cases of empties; that
as he was about to correct the report, an unscheduled brown-out
occurred; that he immediately submitted the uncorrected report
to the pre-audit personnel with the intention to settle the error
the following day. He further related that after he was informed
by the cashier of his shortage, he immediately paid the amount
of P100.00; that on May 12, 1984, he was grounded, and, that he
submitted to an investigation hoping that his mistake will not be
taken against him but he received a letter terminating his
services on June 26, 1984. He pointed out that it is unlikely that
he would bargain his seven years of dedicated service to the
Company for a measly sum of P100.00, and stated that the
Company was bent on terminating his services because he was
an active union officer. prLL
To rebut Vega's allegations of honest mistake and oversight,
however, Coca-Cola Bottlers Philippines, Inc. outlined the
procedure for the liquidation of sales. It contended that because
of the sensitive nature of a sales agent's job, a system of
liquidation was required which consists of daily checks on the
goods and accomplishment of several documents which are
subject to regular audit. It narrated that on March 10, 1984, upon
entering the company's premises, Vega had the contents of his
truck examined by the guard; that he prepared three (3) copies of
the Incoming Load Report (ILR), one copy for him, one copy
for the guard, and one for the files in a box; that the copy in the
files listed five (5) cases of empty bottles; that thereafter, when
Vega entered the plant, the plant checker examined his cargo and
prepared two copies of checker slips, one copy for the stock
clerk and one for Vega; that once inside the plant, Vega prepared
his Route Sales Report (RSR) and turned over to the cashier and
finance officer the RSR, ILR, and checker slips together with the
cash collection; that upon audit, it was discovered that while the
ILR and checker slips listed only five (5) cases of empty bottles,
the RSR listed fifteen (16) cases; that it was also learned that
Vega's copy of the ILR and checker slips were altered and also
listed fifteen (15) cases; that due to the discrepancy the company
was defrauded in the amount of P100.00 more or less.
Coca-Cola Bottlers Philippines, Inc. alleged that it cannot
condone Vega's acts because his job exposes him to financial
transactions everyday. It further averred that Vega's acts showed
willful and malicious intent to defraud the company and
rendered him unworthy of its trust and confidence.

Page | 36

On July 24, 1986, the Labor Arbiter found in favor of Vega. He

ruled that any error in the entries in the sales report was made
unintentionally and may probably be due to the sudden
brownout alleged by Vega. He opined that the penalty of
dismissal was too severe considering Vega's seven years of
dedicated service to the company. Thus, he ordered the company
to reinstate Vega to his former position and to pay him full and
complete backwages and other benefits at the rate of P2,280.00 a
month until reinstated, 10% attorney's fees and the amount of
P5,000.00 as transportation and other incidental expenses.
On appeal to the National Labor Relations Commission; the
decision was modified. The NLRC was not convinced that the
falsification was unintentional. It further observed that under
company rules, the infraction calls for the penalty of dismissal.
It, however, noted Vega's seven years of service to the company
and accordingly ordered his reinstatement with only three (3)
months backwages.
Both parties appealed from the decision. Coca-Cola Bottlers
Philippines, Inc. filed its petition for review docketed as G.R.
No. 82580 on April 6, 1988 while Vega filed the present petition
for review on certiorari docketed as G.R. No. 84075 on April 21,
1988.

In a resolution dated October 17, 1988, this Court ordered the

two cases consolidated considering that the subject matter and
the issues involved in the two cases emanated from the same
decision of the NLRC. In accordance with the Manifestation
filed by the Office of the Solicitor General for the respondent
NLRC, the Comment filed in G.R. No. 82580 is considered as
the Comment required by this Court in G.R. No. 84076. We treat
the Comments as Answers and decide these petitions on their
merits. cdll
Coca-Cola Bottlers Philippines, Inc. alleges that the NLRC erred
in ordering Vega's reinstatement notwithstanding its finding that
falsification was clearly committed by Vega. It contends that
length of service does not warrant an employee's reinstatement
where there is a clear showing that he committed acts
constituting just causes of termination. cdphil
On the other hand, Vega alleges that the NLRC committed grave
abuse of discretion in considering facts not alleged in the labor
arbiter's decision. He further states that the NLRC erred in
denying him full backwages in spite of the fact that the labor
arbiter clearly found that Coca-Cola Bottlers Philippines, Inc.
committed an unfair labor practice.

We rule in favor of Coca-Cola Bottlers Philippines, Inc. The

NLRC's order of reinstatement based on the sole ground of
length of service does it find support in either law or
jurisprudence.
When adequately proven, the dual grounds of breach of trust and
loss of confidence constitute valid and ample bases to warrant
termination of an errant employee. (Manila Midtown
Commercial Corporation v. Nuwhrain (Ramada Chapter), 159
SCRA 212 [1988]). The employer's obligation to give his
workers just compensation and treatment carries with it the
corollary right to expect from the workers adequate work,
diligence and good conduct. (Firestone Tire and Rubber Co. of
the Phils. v. Lariosa, 148 SCRA 187 [1987]). In the last cited
case, this Court held:
"Although as a rule this Court leans over backwards to help
workers and employees continue with their employment or to
mitigate the penalties imposed on them, acts of dishonesty in the
handling of company property are a different matter.
"Thus under Article 283 of the Labor Code, an employer may
terminate an employment for 'serious misconduct' or for fraud or
willful breach by the employee of the trust reposed in him by his
employer or representative.
"If there is sufficient evidence that an employee has been guilty
of a breach of trust or that his employer has ample reasons to
distrust him, the labor tribunal cannot justly deny to the
employer the authority to dismiss such an employee."
There is no question that Coca-Cola Bottlers Philippines, Inc., is
correct when it states that Vega's position as a sales agent is of
such a nature as to require a substantial amount of trust and
confidence on the part of the employer. The work of a salesman
exposes him to voluminous financial transactions involving his
employer's goods. The life of the softdrinks company depends
not so much on the bottling or production of the product since
this is primarily done by automatic machines and personnel who
are easily supervised but upon mobile and far ranging salesmen
who go from store to store all over the country or region.
Salesmen are highly individualistic personnel who have to be
trusted and left essentially on their own. A high degree of
confidence is reposed in them when they are entrusted with
funds or properties of their employer. LexLib
As a general rule, employers are allowed a wider latitude of
discretion in terminating the employment of managerial
personnel or those who, while not of similar rank, perform
functions which by their nature require the employer's full trust
and confidence. This must be distinguished from the case
of ordinary rank-and-file employees, whose termination on the

basis of these same grounds requires a higher proof of

involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice. (See
Manila Midtown Commercial Corporation v. Nuwhrain
(Ramada Chapter), supra). Thus, in the case of San Miguel
Corp. v. National Labor Relations Commission (142 SCRA 376,
384 [1986]), this Court held:
"Private respondent represents petitioner in his dealings with the
public. When charges of theft of customer's properties and
misconduct on the job are imputed on the sales agent, and these
charges are supported with evidence, they constitute sufficient
reasons for termination of employment. Well established in our
jurisprudence is the right of am employer to dismiss an
employee whose continuance in the service is inimical to the
employer's interest. (Manila Trading and Supply, Co. v.
Philippine Labor Union, 71 Phil. 124; Engineering Equipment,
Inc. v. NLRC, 133 SCRA 752)"
In this case, the employee's infraction was not his first offense.
We note that he was suspended and grounded for other offenses
he committed in 1978. We regret, then, that this Court is
powerless to extend to him the remedy of reinstatement even on
the ground of equity based on his length of service. As this
Court held in the case of Piedad v. Lanao del Norte Electric
Cooperative, Inc. (153 SCRA 500, 509 [1987]):
"The precedents on the issue before us are clear. Dismissal of a
dishonest employee is to the best interest not only of
management but also of labor (International Hardwood and
Veneer Co. of the Phils. v. Leogardo, Jr., 117 SCRA 967). As a
measure of self-protection against acts inimical to its interest, a
company has the right to dismiss its erring employees (Dole
Phils., Inc. v. National Labor Relations Commission, supra). An
employer cannot be compelled to continue in employment an
employee guilty of acts inimical to its interest, justifying loss of
confidence in him (International Hardwood and Veneer Co., of
the Philippines v. Leogardo, Jr. supra;National Service
Corporation v. Leogardo, Jr; supra; Engineering Equipment, Inc.
v. National Labor Relations Commission, supra). The law does
not impose unjust situations on either labor or
management." cdrep
Because of the difference between the findings of the Labor
Arbiter and the NLRC, we have examined this aspect of the
petition carefully. We affirm the NLRC conclusion that there
was a clear falsification of commercial documents in this case.
The tampered documents in the hands of Mr. Vega and presented
to the cashier and finance officer showed fifteen cases of soft
drinks bottles while the earlier copies of the same documents in
the hands of the gate guard and the stock clerk and in the files
reflected only five cases returned to the employer. There was no

Page | 37

brownout yet when the "incoming load report" was given at the
guard house and the checker slip given to the stock clerk. It
cannot be reason for the discrepancy. Besides, why should a
salesman prepare basic reports in the dark? The tampering to
reflect a bigger number of returns was effected when the
salesman presented his reports for the cashier and finance
officer. The allegation that the salesman would not risk his job
for such a small amount is not a defense because minor
pilferages or thefts carried on over a long period of time through
false reports or juggling of funds and properties may, as
intended by the employee, remain unnoticed but they would
destroy the company nonetheless if unchecked or tolerated. The
Labor Arbiter is wrong; the NLRC is correct insofar as the
appreciation of facts is concerned.
WHEREFORE, the assailed decision of the National Labor
Relations Commission is hereby REVERSED and SET ASIDE.
The dismissal of petitioner Fernando Vega from his employment
by Coca-Cola Bottlers Philippines, Incorporated is AFFIRMED
as valid and according to law.
SO ORDERED.
||| (Coca-Cola Bottlers Phils. Inc. v. NLRC, G.R. Nos. 82580 &
84075, April 25, 1989)
[G.R. No. L-52056. October 30, 1980.]
BONIFACIO DE LEON, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, SUGAR PRODUCERS
COOPERATIVE MARKETING ASSOCIATION, INC.,
ALFREDO U. BENEDICTO and GWENDOLYN H.
GUSTILO, respondents.
DECISION
DE CASTRO, J p:
Petition for certiorari with prayer to annul the decision of the
National Labor Relations Commission reversing the decision of
the Labor Arbiter which ordered respondents to reinstate
petitioner to his former position as Assistant Vice-PresidentManager of Sugar Producers Cooperative Marketing
Association, Inc. without loss of seniority rights and with full
backwages to be computed from the date of his dismissal.
This case arose from a complaint for illegal dismissal instituted
by herein petitioner against private respondents.
Petitioner started working with said corporation as a messenger
wayback in 1949. He held various positions therein, such as
bookkeeper, accountant, general office supervisor and Assistant-

Manager. He rose to the position as Assistant Vice-PresidentManager (Makati Office) in 1973 and held it continuously up to
1977. Prior to his dismissal, he was in the service for more than
28 years.
In October 1976, petitioner was sent to Korea on an official
business for respondent corporation. Before that, respondent
Alfredo Benedicto, president and general manager of the
corporation, verbally intimated to petitioner that the latter would
soon be appointed as Assistant Vice-President for Finance,
preparatory to his assuming the position of Vice-President for
Finance upon the resignation of the then incumbent.
In early November 1976, petitioner was instructed to attend the
staff meeting at Bacolod every second and fourth Tuesdays of
every month starting January 1977. Arrangements were made to
enable petitioner to go to Bacolod on January 7, 1977.

The Labor Arbiter ruled in favor of petitioner and ordered

respondents to reinstate the latter to his former position without
loss of seniority rights and with full backwages. He stated in his
decision 1 that there was no showing that petitioner has applied
for retirement, which was admitted by respondent Benedicto
himself during one of the hearings when he testified, and that
there is no disclosure in the record that petitioner had even the
slightest intention to retire or to avail of any retrenchment
program. In support of his stand, the labor arbiter quoted an
opinion rendered by leading US Arbitrators, to wit:
". . . if intent to resign or to retire is not adequately evidenced or
if a statement of intent to resign or to retire is involuntary or
coerced, an alleged resignation or retirement will be treated as
discharge for purposes of arbitral review." (Healy in 61LA557;
Kates in 51LA 1090)
The Labor Arbiter, further found, in substance as follows:

On January 6, 1977, respondent Benedicto called petitioner and

asked him to take a vacation leave of one (1) month to start on
January 10, 1977. On January 31, 1977, said respondent wrote
petitioner a letter stating "that because of necessity, complainant
is to extend his vacation leave for another month." Then on
February 28, 1977, petitioner again received a letter from
respondent Benedicto advising the former that he is to resume
his leave effective March 1, 1977 to April 30, 1977 and that his
application for retirement has been accepted effective April 30,
1977.
On April 25, 1977, respondent Corporation tendered to
petitioner a check for P36,492.63 "representing (his) retirement
gratuity pay and office consideration for P10,000." Petitioner
returned the P10,000 and accepted only P26,492.63 explaining
in his letter that "he was shocked, tortured and desperate because
of his unceremonious dismissal without cause and being the
only breadwinner which includes eight (8) children, he naturally
grabbed any money offered by the company, and that his
decision was without the benefit of a legal counsel."
Petitioner in his complaint alleged that he had not at any time or
in any manner applied for retirement; that the requirement of
due process was not observed, hence his dismissal is illegal and
unjustified; that he was not confronted by respondents to explain
to him any cause or reason for his dismissal; that no specific
charges were made against him and no formal investigation was
made to afford him opportunity to acquit himself of any charges;
and finally, the money offered by the corporation does not
constitute estoppel or waiver on his part, considering that his
acceptance was without prejudice to all his rights resulting from
his illegal dismissal. LLpr

1) The alleged retirement of petitioner is now treated as

discharge for purposes of arbitral review and since discharge is
recognized to be the extreme industrial penalty, the burden is
held to be on the employer to prove guilt of wrongdoing and
probably more so where the agreement requires "just cause" for
discharge.
2) From the testimony of respondent Benedicto that the auditing
of the Company's books was done in the absence of petitioner
and that there was no need to confront petitioner with the actual
reports, it is safe to conclude that respondents have violated the
basic notions of fairness and due process.
3) The evidence on record disclosed that petitioner was not
afforded even a single opportunity to defend himself against the
adverse partial findings of the auditors and as reflected in the
testimony of respondent Benedicto, the reports made by the
auditors were verbal reports only and not reduced to writing.
4) Respondents failed to present such quantum of proof where
the alleged offense involves an element of moral turpitude or
criminal intent. Reasonable doubts raised by proofs should be
resolved in favor of the accused.
5) Respondent's contention that petitioner being a Managerial
employee, could be terminated for lack of confidence cannot be
sustained since the alleged loss of confidence must necessarily
have resulted from grounds which prompted petitioner's
dismissal and in as much as said grounds are unsubstantiated,
there can be no valid reason for loss of confidence.
6. The ground of retrenchment as the basis of petitioner's
dismissal became a mere pretext and discriminatory considering

Page | 38

that when petitioner was forced to go on vacation leave,

respondent Benedicto appointed immediately respondent Gustilo
to perform the functions of petitioner.
7) Respondents' allegation that petitioner is estopped from
questioning the legality of his dismissal considering that he has
accepted the retirement gratuity, runs counter to the ruling of the
Supreme Court in the Mercury Drug Case (56 SCRA 694-713)
wherein Justice Sanchez has said: ". . . those benefits would not
amount to estoppel. . . . , employer and employee obviously do
not stand on the same footing. The employer drove the
employee to the wall. The latter must have in get hold of his
money. Because, out of job, he had to face the harsh necessities
of life. He thus found himself in no position to resist the money
proferred him. He is then, a case of adherence, not of choice.
One thing sure, however, is that petitioners did not relent on
their claim. They pressed it. They are deemed not to have
waived any right. . . ."
Private respondents appealed to the Commission which rendered
a decision on July 12, 1979 reversing the Labor Arbiter's
decision and dismissing the complaint. It was pointed out by the
Commission that although no retirement application was filed,
petitioner was agreeable to retirement since he accepted the
retirement benefits; that petitioner should have insisted on an
investigation upon learning of his involvement in the
irregularities in the Company books, and under the
circumstance, his position required a high degree of trust and
confidence and he could no longer measure up to respondent
Corporation's expectation. 2 Hence, the petition before Us
raising the following assignment of errors:

neither is there a reference to the nature of the evidence collated

by the team of auditors; that there is no demonstration or
explanation as to how such evidence established his personal
involvement in said irregularities; that it is employer's duty to
conduct an investigation into the anomalies imputed to an
employee even if the latter does not expressly ask for it; and an
employee is entitled to an investigation as a matter of right.

concern since it is a constitutional safeguard of the highest

order; and a response to man's innate sense of justice. 4 No
interrogations or inquiries took place to due petitioner an
opportunity to defend himself, as testified by Mr. Benedicto
thus:

Commenting on the petition, private respondents averred that

they gave petitioner one month vacation leave to give the
auditors a free hand in the audit of the books in the Makati
Office; that petitioner authorized his brother to withdraw from
the Company's bonded warehouse empty plastic bags which are
normally sold for added income to the company but such
withdrawal was not supported by sales invoices nor delivery
orders contrary to the company's standard accounting principles;
that petitioner caused the issuance to another check in addition
to his loyalty bonus which was beyond board approval; that Mr.
Benedicto informed petitioner in private that the initial findings
of the auditor's team were adverse to him, and it was agreed that
petitioner would just retire under the company's retrenchment
program to save him from embarrassment attendant to a fulldress investigation; petitioner accepted the retirement gratuity
and with that, he is estopped from claiming that he did not apply
for retirement, and the involvement, of petitioner in the
anomalies reported by the auditors is more than sufficient cause
for his severance from the company on the ground of lack of
confidence. cdrep

Was there a time when these auditors requested the presence of

Mr. de Leon so he could explain some items he was auditing?

We find merit in the petition.

1. Whether or not the NLRC can make findings or conclusions
which are not supported by evidence presented.
2. Whether or not an employee is entitled to a formal
investigation of whatever specific charges against him or
whether or not his dismissal based on lack of confidence should
be set aside.
3. Whether or not a retirement effected upon employer's
initiative and insistence can be considered a free and voluntary
act of an employee.
4. Whether or not acceptance by employee of benefits proferred
by employer amounts to estoppel.
5. Whether or not dismissal for loss of confidence, to be
warranted, should have some basis therefor.
Petitioner alleged that the "irregularities" charged were not
explained or amplified in the text of the commission's decision;

There is in this case a clear denial of due process, a

constitutional right which must be safeguarded at all times
specially when what is at stake is petitioner's position as his only
means of livelihood. He has, in addition, a family to consider,
and it is the right of every working man to assure himself and
his family a life worthy of human dignity. It is therefore
incumbent upon the employer to conduct a formal investigation
and conform the employee of the specific charges against him.
Respondents should be reminded that under our system of
government, even the most hardened criminals are given their
day in court.
That petitioner was deprived of his right to be heard and acquit
himself of the charges, finds support in the testimony of Mr.
Benedicto. 3 The latter declared that there was no need to
confront Mr. de Leon with the actual reports, but he was told
that partial audit reports were adverse to him. It must be stressed
that the due process requirement is not a mere formality that
may be dispensed with at will. Its disregard is a matter of serious

"Atty. de Castillo:

"Mr. Benedicto:
No." 5
The act of respondents in dismissing petitioner without first
conducting a formal investigation is arbitrary and unwarranted.
The right of an employer to dismiss an employee differs from
and should not be confused with the manner in which such right
is exercised. 6 It must not be oppressive and abusive since it
affects one's person and property.
The Commission in its decision states that petitioner did not file
any retirement application, a fact likewise admitted by Mr.
Benedicto when he was interrogated by the Labor Arbiter. 7 We
agree with the observation of the Labor Arbiter that if the intent
to retire is not clearly established or if the retirement is
involuntary, it is to be treated as a discharge. There is no
showing that petitioner had the slightest intention to retire or
avail of the retrenchment program as alleged by private
respondents. The retirement of petitioner was, therefore, forced
upon him by his employer and was not done voluntarily. 8
While a Managerial employee may be dismissed merely on the
ground of loss of confidence, the matter of determining whether
the cause for dismissing an employee is justified on ground of
loss of confidence, cannot be left entirely to the employer.
Impartial tribunals do not rely only on the statement made by
employer that there is "loss of confidence" unless duly proved or
sufficiently substantiated. We find no reason to disturb the
findings of the Labor Arbiter that the charges against petitioner
were not fully substantiated, and "there can be no valid reason
for said loss of confidence. Anent the charges of unauthorized
withdrawal of the plastic bags by petitioner's brother, and
unauthorized additional bonus, the arbiter found no anomaly
considering that the evidence presented during the proceedings
discloses that the withdrawal and the granting of bonus were all
approved and ratified by the board. Thus, the Commission erred
in dismissing the complaint and acted with patent abuse of
discretion. Its assailed decision fails to establish by substantial
evidence the involvement of petitioner in the alleged anomalies
imputed to him. Without such supporting evidence, the

Page | 39

conclusions made by the Commission are not binding with this

Court; they must be set aside.
After having served the company for more than 20 years,
dismissal would be too severe a penalty for petitioner who was
not even afforded an opportunity to be heard. He was just a
victim of the whims and malicious maneuver of private
respondents. cdphil
The contention of respondents that petitioner is barred from
contesting the illegality of his dismissal since he has already
received his separation pay cannot be sustained. Since he was
forced to retire, he suddenly found himself jobless with a family
of eight (8) children to support. He had no alternative but to
accept what was offered to him. He needed money to support his
family. He had to grab whatever was offered as he accepted less
than what was offered to show his non-acquiescence to what
amounted to dismissal. Employees who received their separation
pay are not barred from contesting the legality of their dismissal.
The acceptance of those benefits would not amount to estoppel
as held in the leading case of Mercury Drug Co. vs. CIR 9 as
aptly cited in the decision of the Labor Arbiter.
Having been illegally dismissed, petitioner is entitled to
reinstatement with backwages corresponding to a period of three
(3) years without qualification minus the amount of P26,492.63
he was forced to receive as retirement gratuity pay.
WHEREFORE, the assailed decision dated July 12, 1979 of the
National Labor Relations Commission is hereby SET ASIDE,
and the Labor Arbiter's decision dated January 2, 1979 is
REINSTATED with modification by ordering private
respondents to immediately reinstate petitioner to his former
position as Assistant Vice-President Manager (Makati Office) of
respondent corporation without loss of seniority rights and other
benefits and increases recognized by law or granted by private
respondents during the period of his illegal dismissal
corresponding to his position to which he is now ordered
reinstated, with backwages equivalent to three years without
qualification minus the amount of P26,492.63 he received as
retirement gratuity pay. No costs.
SO ORDERED.
||| (De Leon v. NLRC, G.R. No. L-52056, October 30, 1980)

[G.R. No. 177937. January 19, 2011.]

ROBINSONS GALLERIA/ROBINSONS SUPERMARKET

CORPORATION ET AL. and/or JESS
MANUEL, petitioners, vs. IRENE R. RANCHEZ, respondent.
DECISION

On August 10, 1998, the Labor Arbiter rendered a

decision, 10 the fallo of which reads:
CONFORMABLY WITH THE FOREGOING, judgment is
hereby rendered dismissing the claim of illegal dismissal for
lack of merit.

NACHURA, J p:
Before the Court is a petition for review on certiorari under Rule
45 of the Rules of Court, assailing the Decision 1 dated August
29, 2006 and the Resolution 2 dated May 16, 2007 of the Court
of Appeals (CA) in CA-G.R. SP No. 91631.

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

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 Prosecutor's 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. 8
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 HIaTCc

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 strip-searched 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.
Respondent's 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 decision 13 dated
October 20, 2003. The dispositive portion of the decision reads:
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. Stripsearching 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.

Page | 40

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 stripsearched, 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 ETIDaH
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 Prosecutor's 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 Prosecutor's 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 stripsearched inside the company premises or during the police
investigation, and in the preliminary investigation before the
Prosecutor's 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 respondent's 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 IaESCH
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. 25
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.
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

Page | 41

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 MODIFICATIONthat 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.
SO ORDERED.
||| (Robinsons Galleria/Robinsons Supermarket Corp. v.
Ranchez, G.R. No. 177937, January 19, 2011)

[G.R. No. 186169. August 1, 2012.]

MYLENE CARVAJAL, petitioner, vs. LUZON
DEVELOPMENT BANK AND/OR OSCAR Z.
RAMIREZ, respondents.
DECISION
PEREZ, J p:
In this Petition for Review on Certiorari, petitioner Mylene
Carvajal assails the Decision 1 of the Court of Appeals, Second
Division, dated 20 August 2008 which dismissed her complaint
for illegal dismissal. The Court of Appeals reversed and set aside
the Resolution 2 of the National Labor Relations Commission

(NLRC) affirming with modification the Labor Arbiter's

Decision 3 finding petitioner's dismissal as illegal and ordering
reinstatement or payment of backwages and attorney's fees.

On 9 June 2005, the Labor Arbiter ruled that petitioner was

illegally dismissed. Respondents were held solidarily liable for
payment of money claims. The dispositive portion of the
Decision reads:

The facts are as follows:

Petitioner Mylene Carvajal was employed as a trainee-teller by
respondent Luzon Development Bank (Bank) on 28 October
2003 under a six-month probationary employment contract, with
a monthly salary of P5,175.00. Respondent Oscar Ramirez is the
President and Chief Executive Officer of the Bank.
On 10 December 2003, the Bank sent petitioner a
Memorandum 4 directing her to explain in writing why she
should not be subjected to disciplinary action for "chronic
tardiness" on November 3, 5, 6, 14, 18, 20, 21 and 28, 2003 or
for a total of eight (8) times. Petitioner apologized in writing and
explained that she was in the process of making adjustments
regarding her work and house chores. 5 She was thus
reprimanded in writing and reminded of her status as a
probationary employee. 6 Still, on 6 January 2004, a second
Memorandum was sent to petitioner directing her to explain why
she should not be suspended for "chronic tardiness" on 13
occasions or on December 2, 3, 4, 5, 8, 10, 11, 12, 15, 16, 18,
22, and 23, 2003. On 7 January 2004, petitioner submitted her
written explanation and manifested her acceptance of the
consequences of her actions. 7 On 12 January 2004, petitioner
was informed, through a Memorandum, 8 of her suspension for
three (3) working days without pay effective 21 January 2004.
Finally, in a Memorandum dated 22 January 2004, petitioner's
suspension was lifted but in the same breath, her employment
was terminated effective 23 January 2004. 9 IDcTEA
Hence, petitioner's filing of the Complaint for illegal dismissal
before the Labor Arbiter. Petitioner alleged, in her position
paper, that the following were the reasons for her termination: 1)
she is not an effective frontliner; 2) she has mistakenly cleared a
check; 3) tardiness; 4) absenteeism; and 5) shortage. 10
In their position paper, respondents averred that petitioner was
terminated as a probationary employee on three grounds,
namely: 1) chronic tardiness; 2) unauthorized absence; and 3)
failure to perform satisfactorily as a probationary employee.
Respondents explained that petitioner was a chronic violator of
the bank's rules and regulations on tardiness and absenteeism.
Aside from her numerous tardiness, petitioner was absent
without leave for 2 days. She also cleared a check which later
turned out to be a bounced check. Finally, petitioner garnered
only a rating of 2.17, with 4 being the highest and 1 the lowest,
in her performance evaluation.

WHEREFORE, premises considered, judgment is rendered

declaring that complainant as probationary employee was
illegally dismissed. Respondents are ordered to immediately
reinstate complainant to her former position, without loss of any
seniority rights and other monetary benefits. However, if
reinstatement is no longer feasible due to strained relationship
between the parties, respondents are further ordered to pay
complainant, jointly and severally the amount of P20,070.38,
representing full backwages of complainant from the time of her
illegal dismissal up to the end of her probationary contract of
employment with respondent bank. Plus, 10% of the monetary
award as attorney's fee. 11
The Labor Arbiter found that petitioner was dismissed without
due process because "she was not afforded the notice in writing
informing her of what respondent (the Bank) would like to bring
out to her for the latter to answer in writing." The Labor Arbiter
also did not consider "unsatisfactory performance" as a valid
ground to shorten the six-month contract of petitioner with the
Bank. 12 IaEScC
The decision of the Labor Arbiter was partially appealed to the
NLRC by petitioner. Petitioner contended that she should be
considered a regular employee and that the computation by the
Labor Arbiter of backwages up to the end of her probationary
contract is without basis. In its Comment, respondent argued
against the illegality of petitioner's dismissal and their joint and
solidary liability to pay complainant's monetary claims. On 31
May 2006, the NLRC affirmed with modification the Labor
Arbiter's Decision and ordered for petitioner's reinstatement, to
wit:
WHEREFORE, premises considered, the assailed decision is
hereby affirmed with MODIFICATION ordering the
respondents to reinstate the complainant to her former position,
without loss of any seniority rights and other monetary benefits
and to pay her full backwages from the date of her dismissal to
the date of her reinstatement, actual or in payroll.
All other aspect[s] of the assailed decision stands. 13
Respondents filed a motion for reconsideration but the NLRC
denied the same in a Resolution 14 dated 20 July 2006.
In a petition for certiorari filed by respondents, the Court of
Appeals rendered the 20 August 2008 Decision reversing the
NLRC ruling, thus:

Page | 42

IN VIEW OF ALL THE FOREGOING, the instant petition is

GRANTED. The assailed NLRC Resolution in NLRC CA No.
046866-05 dated May 31, 2006 which affirmed with
modification the Decision of the Labor Arbiter in NLRC Case
No. RAB IV-2-18910-04-L dated June 9, 2005 is hereby
REVERSED and SET ASIDE. All monetary liabilities decreed
in the Labor Arbiter's Decision against petitioners are hereby
SET ASIDE. The Complaint for illegal dismissal, money claims
and damages is ORDERED DISMISSED. 15
The Court of Appeals found that petitioner is not entitled to
backwages because she was rightfully dismissed for failure to
meet the employment standards.
The motion for reconsideration filed by petitioner was likewise
dismissed.
Petitioner elevated the case to this Court via petition for review
on certiorari, raising the following errors allegedly committed
by the Court of Appeals: CETIDH
THE HON. COURT OF APPEALS COMMITTED ERRORS IN
LAW IN DECIDING THE ISSUE ON PETITIONER'S
VALIDITY OF DISMISSAL DESPITE SUCH ISSUE HAD
LONG BEC[O]ME FINAL AND EXECUTORY FOR
FAILURE OF PRIVATE RESPONDENT LUZON
DEVELOPMENT BANK TO APPEAL THE DECISION OF
THE LABOR ARBITER FINDING PETITIONER'S
DISMISSAL ILLEGAL.
THE HON. COURT OF APPEALS COMMITTED ERROR IN
LAW IN DECIDING ISSUES WHICH WERE NOT RAISED
BEFORE THE NLRC ON APPEAL. 16
Petitioner harps on the finality of the Labor Arbiter's ruling on
illegal dismissal and questions the judgment of the Court of
Appeals in discussing and upholding the validity of her
dismissal.
Indeed, respondents did not assail the ruling of the Labor
Arbiter. It was in fact petitioner who partially appealed the
Labor Arbiter's computation of backwages. Provided with the
opportunity, respondents assailed the Labor Arbiter's Decision in
their Comment to the Partial Appeal. Upon affirmance of the
Labor Arbiter's Decision by the NLRC, respondent filed a
petition for certiorari with the Court of Appeals insisting on the
validity of the dismissal.
Petitioner seeks to limit the issues to her employment status and
backwages, her basis being that the illegality of her dismissal
has already been finally determined by the Labor Arbiter.

We disagree. As We noted, the facts show that the illegality of

petitioner's dismissal was an issue that was squarely before the
NLRC. When the NLRC decision was reversed by the Court of
Appeals, from which the issue was elevated to us, we had a
situation where "the findings of facts are conflicting." Thus, we
find applicable the rule that while generally, only questions of
law can be raised in a petition for review on certiorari under
Rule 45 of the Rules of Court, the rule admits of certain
exceptions, namely: (1) when the findings are grounded entirely
on speculations, surmises, or conjectures; (2) when the inference
made is manifestly mistaken, absurd, or impossible; (3) when
there is a grave abuse of discretion; (4) when the judgment is
based on misappreciation of facts; (5) when the findings of fact
are conflicting; (6) when in making its findings, the same are
contrary to the admissions of both appellant and appellee; (7)
when the findings are contrary to those of the trial court; (8)
when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioner's main and reply briefs
are not disputed by the respondent; and (10) when the findings
of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record. 17 EDIaSH
The petition comes within the purview of exception (5) and by
analogy, exception (7). Hence, the Court resolves to scour the
records of this case.
Truly, it is axiomatic that an appeal, once accepted by this Court,
throws the entire case open to review, and that this Court has the
authority to review matters not specifically raised or assigned as
error by the parties, if their consideration is necessary in arriving
at a just resolution of the case. 18
Petitioner premised her appeal on Article 279 of the Labor Code
which provides:
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 other monetary equivalent computed
from the time his compensation was withheld from him up to the
time of his actual reinstatement.
Petitioner maintained that she became a regular employee by
virtue of Book VI, Rule 1, Section 6 (d) of the Implementing
Rules of the Labor Code which states:
(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.
It is beyond dispute that petitioner was hired as a probationary
employee. Whether her employment status ripened into a regular
one is the point of contention.
Under the very provision cited by petitioner, we cannot, by any
hermeneutics, see petitioner's employment status as regular. At
the time of her engagement and as mandated by law, petitioner
was informed in writing of the standards necessary to qualify her
as a regular employee. Her appointment
letter 19 reads: TCADEc
Dear Ms. Carvajal:
We are pleased to confirm your appointment as follows:
Position:Trainee-Teller
Assignment:Main Branch
Status:Probationary (6 months)
Effectivity:October 28, 2003
Remuneration:P5,175.00 (262)
Possible extension of this contract will depend on the job
requirements of the Bank and your overall performance.
Performance review will be conducted before possible renewal
can take effect.
The Bank reserves the right to immediately terminate this
contract in the event of a below satisfactory performance,
serious disregard of company rules and policies and other
reasons critical to its interests.
Kindly sign below if the above conditions are acceptable. We
look forward to a performance commensurate to your presented
capabilities.
Very truly yours,
[sgd] Oscar S. Ramirez
Vice President
CONFORME:
[sgd] Mylene T. Carvajal [Emphasis Supplied]
Petitioner knew, at the time of her engagement, that she must
comply with the standards set forth by respondent and perform
satisfactorily in order to attain regular status. She was apprised
of her functions and duties as a trainee-teller. Respondent
released to petitioner its evaluation 20 of her performance.

Page | 43

Petitioner was found wanting. Even the NLRC upheld

petitioner's probationary status, thus:
During the time that the complainant was dismissed by
respondents, she was holding the position of a trainee-teller on
probationary status. Thus, with the Labor Arbiter's finding of
illegal dismissal, which the respondent left unchallenged, the
complainant is entitled to be reinstated to resume the functions
of a trainee-teller, no more no less. Reinstatement is not
synonymous with regularization. The determination of whether
the complainant can qualify to become one of respondent bank's
regular employees is still within the well recognized
management's prerogative. 21 [Emphasis Supplied] CHDAaS
A probationary employee, like a regular employee, enjoys
security of tenure. 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. 22
It is evident that the primary cause of respondent's dismissal
from her probationary employment was her "chronic tardiness."
At the very start of her employment, petitioner already exhibited
poor working habits. Even during her first month on the job, she
already incurred eight (8) tardiness. In a Memorandum dated 11
December 2003, petitioner was warned that her tardiness might
affect her opportunity to become a permanent or regular
employee. And petitioner did not provide a satisfactory
explanation for the cause of her tardiness.
Punctuality is a reasonable standard imposed on every
employee, whether in government or private sector. As a matter
of fact, habitual tardiness is a serious offense that may very well
constitute gross or habitual neglect of duty, a just cause to
dismiss a regular employee. Assuming that petitioner was not
apprised of the standards concomitant to her job, it is but
common sense that she must abide by the work hours imposed
by the bank. As we have aptly stated in Aberdeen Court, Inc. v.
Agustin, Jr., 23 the rule on reasonable standards made known to
the employee prior to engagement 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.

Respondent also cited other infractions such as unauthorized

leaves of absence, mistake in clearing of a check, and
underperformance. All of these infractions were not refuted by
petitioner. The Labor Arbiter failed to discuss the veracity of
these grounds. It focused on unsatisfactory performance and
concluded that such is not a sufficient ground to terminate the
probationary employment. The Labor Arbiter relied on its own
misappreciation of facts for a finding that, resultingly, is
contradicted by the evidence on record. caIDSH

notice and hearing as in the case of the first

ground. 26 ADHaTC

More importantly, satisfactory performance is and should be one

of the basic standards for regularization. Naturally, before an
employer hires an employee, the former can require the
employee, upon his engagement, 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. This is the concept of probationary
employment which is intended to afford the employer an
opportunity to observe the fitness of a probationary employee
while at work, and to ascertain whether he will become an
efficient and productive employee. While the employer observes
the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the
probationer, on the other hand, seeks to prove to the satisfaction
of the employer that he has the qualifications to meet the
reasonable standards for permanent employment. 24

Petitioner was even notified in two (2) memoranda regarding the

bank's displeasure over her chronic tardiness. Every
memorandum directed petitioner to explain in writing why she
should not be subjected to disciplinary action. Each time,
petitioner acknowledged her fault and assured the bank that she
would, in her daily schedules, make adjustments to make
amends. This certainly is compliance with due process. Taken
together with her low performance rating and other infractions,
petitioner was called by the head of Human Resources who
discussed with her the reasons for the discontinuance of her
probationary appointment before she was formally served the
termination letter on that very same day. There was, in this case,
full accordance to petitioner of the opportunity to be heard.

Moreover, in the letter of appointment, respondents reserved the

right to "immediately terminate this contract in the event of a
below satisfactory performance, serious disregard of company
rules and policies and other reasons critical to its interests."
In finding for illegal dismissal, the Labor Arbiter held that the
dismissal was without due process. We hold otherwise. As
elucidated by this Court in Philippine Daily Inquirer, Inc. v.
Magtibay, Jr.: 25
Unlike under the first ground for the valid termination of
probationary employment which is for just cause, the second
ground [failure to qualify in accordance with the standards
prescribed by employer] does not require notice and hearing.
Due process of law for this second ground consists of making
the reasonable standards expected of the employee during his
probationary period known to him at the time of his
probationary employment. By the very nature of a probationary
employment, the employee knows from the very start that he
will be under close observation and his performance of his
assigned duties and functions would be under continuous
scrutiny by his superiors. It is in apprising him of the standards
against which his performance shall be continuously assessed
where due process regarding the second ground lies, and not in

As we have underscored, respondent complied with the basic

requirements of due process as defined in Magtibay,
Jr. Petitioner had more than sufficient knowledge of the
standards her job entails. Respondent had not been remiss in
reminding petitioner, through memoranda, of the standards that
should be observed in aspiring for regularization.

In sum, petitioner was validly dismissed from probationary

employment before the expiration of her 6-month probationary
employment contract. If the termination is for cause, it may be
done anytime during the probation; the employer does not have
to wait until the probation period is over. 27
With a valid reason for petitioner's dismissal coupled with the
proper observance of due process, the claim for backwages must
necessarily fail.
In view of the foregoing, we find no reason to disturb the
findings and conclusions of the Court of Appeals.
WHEREFORE, the petition is DENIED.
SO ORDERED.
[G.R. No. 167714. March 7, 2007.]
ROWELL INDUSTRIAL CORPORATION, petitioner, vs.
HON. COURT OF APPEALS and JOEL
TARIPE, respondents.
This case is a Petition for Review under Rule 45 of the 1997
Revised Rules of Civil Procedure seeking to set aside the
Decision 1 and Resolution 2 of the Court of Appeals in CA-G.R.
SP No. 74104, entitled, Rowell Industrial Corp., and/or Edwin
Tang vs. National Labor Relations Commission and Joel Taripe,

Page | 44

dated 30 September 2004 and 1 April 2005, respectively, which

affirmed the Resolutions 3 of the National Labor Relations
Commission (NLRC) dated 7 June 2002 and 20 August 2002,
finding herein respondent Joel Taripe (Taripe) as a regular
employee who had been illegally dismissed from employment
by herein petitioner Rowell Industrial Corp. (RIC), thereby
ordering petitioner RIC to reinstate respondent Taripe with full
backwages, subject to the modification of exonerating Edwin
Tang, the RIC General Manager and Vice President, from
liability and computing the backwages of herein respondent
Taripe based on the prevailing salary rate at the time of his
dismissal. The NLRC Resolutions reversed the Decision 4 of the
Labor Arbiter dated 29 September 2000, which dismissed
respondent Taripe's complaint. aIAEcD
Petitioner RIC is a corporation engaged in manufacturing tin
cans for use in packaging of consumer products, e.g., foods,
paints, among other things. Respondent Taripe was employed by
petitioner RIC on 8 November 1999 as a "rectangular power
press machine operator" with a salary of P223.50 per day, until
he was allegedly dismissed from his employment by the
petitioner on 6 April 2000.
The controversy of the present case arose from the following
facts, as summarized by the NLRC and the Court of Appeals:
On [17 February 2000], [herein respondent Taripe] filed a
[C]omplaint against [herein petitioner RIC] for regularization
and payment of holiday pay, as well as indemnity for severed
finger, which was amended on [7 April 2000] to include illegal
dismissal. [Respondent Taripe] alleges that [petitioner RIC]
employed him starting [8 November 1999] as power press
machine operator, such position of which was occupied by
[petitioner RIC's] regular employees and the functions of which
were necessary to the latter's business. [Respondent Taripe] adds
that upon employment, he was made to sign a document, which
was not explained to him but which was made a condition for
him to be taken in and for which he was not furnished a copy.
[Respondent Taripe] states that he was not extended full benefits
granted under the law and the [Collective Bargaining
Agreement] and that on [6 April 2000], while the case for
regularization was pending, he was summarily dismissed from
his job although he never violated any of the [petitioner RIC's]
company rules and regulations.
[Petitioner RIC], for [its] part, claim[s] that [respondent Taripe]
was a contractual employee, whose services were required due
to the increase in the demand in packaging requirement of [its]
clients for Christmas season and to build up stock levels during
the early part of the following year; that on [6 March 2000],
[respondent Taripe's] employment contract expired. [Petitioner
RIC] avers that the information update for union members,

which was allegedly filled up by [respondent Taripe] and

submitted by the Union to [petitioner] company, it is stated
therein that in the six (6) companies where [respondent Taripe]
purportedly worked, the latter's reason for leaving was "finished
contract," hence, [respondent Taripe] has knowledge about being
employed by contract contrary to his allegation that the
document he was signing was not explained to him. [Petitioner
RIC] manifest[s] that all benefits, including those under the
[Social Security System], were given to him on [12 May
2000]. 5
On 29 September 2000, the Labor Arbiter rendered a Decision
dismissing respondent Taripe's Complaint based on a finding
that he was a contractual employee whose contract merely
expired. The dispositive portion of the said Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby
rendered declaring this complaint of [herein respondent Taripe]
against [herein petitioner RIC] and Mr. Edwin Tang for illegal
dismissal DISMISSED for lack of merit. However, on ground of
compassionate justice, [petitioner RIC and Mr. Edwin Tang] are
hereby ordered to pay [respondent Taripe] the sum of
PHP5,811.00 or one month's salary as financial assistance and
holiday pay in the sum of PHP894.00, as well as attorney's fees
of 10% based on holiday pay (Article 110, Labor Code). 6
Aggrieved, respondent Taripe appealed before the NLRC. In a
Resolution dated 7 June 2002, the NLRC granted the appeal
filed by respondent Taripe and declared that his employment
with the petitioner was regular in status; hence, his dismissal
was illegal. The decretal portion of the said Resolution reads as
follows:
WHEREFORE, premises considered, [herein respondent
Taripe's] appeal is GRANTED. The Labor Arbiter's [D]ecision
in the above-entitled case is hereby REVERSED. It is hereby
declared that [respondent Taripe's] employment with [herein
petitioner RIC and Mr. Edwin Tang] is regular in status and that
he was illegally dismissed therefrom. STHAID
[Petitioner RIC and Mr. Edwin Tang] are hereby ordered to
reinstate [respondent Taripe] and to jointly and severally pay
him full backwages from the time he was illegally dismissed up
to the date of his actual reinstatement, less the amount of
P1,427.67. The award of P894.00 for holiday pay
is AFFIRMED but the award of P5,811.00 for financial
assistance is deleted. The award for attorney's fees is hereby
adjusted to ten percent (10%) of [respondent Taripe's] total
monetary award. 7

Dissatisfied, petitioner RIC moved for the reconsideration of the

aforesaid Resolution but it was denied in the Resolution of the
NLRC dated 20 August 2002.
Consequently, petitioner filed a Petition for Certiorari under
Rule 65 of the 1997 Revised Rules of Civil Procedure before the
Court of Appeals with the following assignment of errors:
I. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND
IS IN EXCESS OF ITS JURISDICTION WHEN IT
MISINTERPRETED ARTICLE 280 OF THE LABOR CODE
AND IGNORED JURISPRUDENCE WHEN IT DECIDED
THAT [RESPONDENT TARIPE] IS A REGULAR
EMPLOYEE AND THUS, ILLEGALLY DISMISSED.
II. THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND
IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED
[EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY
LIABLE FOR MONETARY CLAIMS OF [RESPONDENT
TARIPE].
III. THE [NLRC] GRAVELY ABUSED ITS DISCRETION
AND IS IN EXCESS OF ITS JURISDICTION WHEN IT
ORDERED PAYMENT OF MONETARY CLAIMS
COMPUTED ON AN ERRONEOUS WAGE RATE. 8
The Court of Appeals rendered the assailed Decision on 30
September 2004, affirming the Resolution of the NLRC dated 7
June 2002, with modifications. Thus, it disposed
WHEREFORE, the Resolutions dated [7 June 2002] and [20
August 2002] of [the NLRC] are affirmed, subject to the
modification that [Edwin Tang] is exonerated from liability and
the computation of backwages of [respondent Taripe] shall be
based on P223.50, the last salary he received. 9
A Motion for Reconsideration of the aforesaid Decision was
filed by petitioner RIC, but the same was denied for lack of
merit in a Resolution 10 of the Court of Appeals dated 1 April
2005. acCTSE
Hence, this Petition.
Petitioner RIC comes before this Court with the lone issue of
whether the Court of Appeals misinterpreted Article 280 of the
Labor Code, as amended, and ignored jurisprudence when it
affirmed that respondent Taripe was a regular employee and was
illegally dismissed.
Petitioner RIC, in its Memorandum, 11 argues that the Court of
Appeals had narrowly interpreted Article 280 of the Labor Code,

Page | 45

as amended, and disregarded a contract voluntarily entered into

by the parties.

been engaged to perform is not necessary or desirable to the

usual business or trade of the employer.

(3) casual employees or those who are neither regular nor

project employees. 13

Petitioner RIC emphasizes that while an employee's status of

employment is vested by law pursuant to Article 280 of the
Labor Code, as amended, said provision of law admits of two
exceptions, to wit: (1) those employments which have been
fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the
engagement of the employment; and (2) when the work or
services to be performed are seasonal; hence, the employment is
for the duration of the season. Thus, there are certain forms of
employment which entail the performance of usual and desirable
functions and which exceed one year but do not necessarily
qualify as regular employment under Article 280 of the Labor
Code, as amended.

As aptly ruled by [the NLRC]:

Regular employees are further classified into: (1) regular

employees by nature of work; and (2) regular employees by
years of service. 14 The former refers to those employees who
perform a particular activity which is necessary or desirable in
the usual business or trade of the employer, regardless of their
length of service; while the latter refers to those employees who
have been performing the job, regardless of the nature thereof,
for at least a year. 15

The Petition is unmeritorious.

A closer examination of Article 280 of the Labor Code, as
amended, is imperative to resolve the issue raised in the present
case.
In declaring that respondent Taripe was a regular employee of
the petitioner and, thus, his dismissal was illegal, the Court of
Appeals ratiocinated in this manner:
In determining the employment status of [herein respondent
Taripe], reference must be made to Article 280 of the Labor
Code, which provides:
xxx xxx xxx
Thus, there are two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of
service, whether continuous or broken, with respect to the
activity in which they are employed. [Respondent Taripe]
belonged to the first category of regular employees.
The purported contract of employment providing that
[respondent Taripe] was hired as contractual employee for five
(5) months only, cannot prevail over the undisputed fact that
[respondent Taripe] was hired to perform the function of power
press operator, a function necessary or desirable in [petitioner's]
business of manufacturing tin cans. [Herein petitioner RIC's]
contention that the four (4) months length of service of
[respondent Taripe] did not grant him a regular status is
inconsequential, considering that length of service assumes
importance only when the activity in which the employee has

"In the instant case, there is no doubt that [respondent Taripe], as

power press operator, has been engaged to perform activities
which are usually necessary or desirable in [petitioner RIC's]
usual business or trade of manufacturing of tin cans for use in
packaging of food, paint and others. We also find that
[respondent Taripe] does not fall under any of the
abovementioned exceptions. Other that (sic) [petitioner RIC's]
bare allegation thereof, [it] failed to present any evidence to
prove that he was employed for a fixed or specific project or
undertaking the completion of which has been determined at the
time of his engagement or that [respondent Taripe's] services are
seasonal in nature and that his employment was for the duration
of the season." 12
Article 280 of the Labor Code, as amended, provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT.
The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: Provided, That, any employee who
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his
employment shall continue while such activity exists. [Emphasis
supplied]
The aforesaid Article 280 of the Labor Code, as amended,
classifies employees into three categories, namely: (1) regular
employees or those whose work is necessary or desirable to the
usual business of the employer; (2) project employees or those
whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season; and

The aforesaid Article 280 of the Labor Code, as amended,

however, does not proscribe or prohibit an employment contract
with a fixed period. It does not necessarily follow that where the
duties of the employee consist of activities usually necessary or
desirable in the usual business of the employer, the parties are
forbidden from agreeing on a period of time for the performance
of such activities. There is nothing essentially contradictory
between a definite period of employment and the nature of the
employee's duties. 16 What Article 280 of the Labor Code, as
amended, seeks to prevent is the practice of some unscrupulous
and covetous employers who wish to circumvent the law that
protects lowly workers from capricious dismissal from their
employment. The aforesaid provision, however, should not be
interpreted in such a way as to deprive employers of the right
and prerogative to choose their own workers if they have
sufficient basis to refuse an employee a regular status.
Management has rights which should also be protected. 17
In the case at bar, respondent Taripe signed a contract of
employment prior to his admission into the petitioner's company.
Said contract of employment provides, among other things:
4. That my employment shall be contractual for the period of
five (5) months which means that the end of the said period, I
can (sic) discharged unless this contract is renewed by mutual
consent or terminated for cause. 18
Based on the said contract, respondent Taripe's employment with
the petitioner is good only for a period of five months unless the
said contract is renewed by mutual consent. And as claimed by
petitioner RIC, respondent Taripe, along with its other
contractual employees, was hired only to meet the increase in
demand for packaging materials during the Christmas season
and also to build up stock levels during the early part of the year.
Although Article 280 of the Labor Code, as amended, does not
forbid fixed term employment, it must, nevertheless, meet any of
the following guidelines in order that it cannot be said to
circumvent security of tenure: (1) that the fixed period of
employment was knowingly and voluntarily agreed upon by the

Page | 46

parties, without any force, duress or improper pressure being

brought to bear upon the employee and absent any other
circumstances vitiating his consent; or (2) it satisfactorily
appears that the employer and employee dealt with each other on
more or less equal terms with no moral dominance whatever
being exercised by the former on the latter. 19
In the present case, it cannot be denied that the employment
contract signed by respondent Taripe did not mention that he
was hired only for a specific undertaking, the completion of
which had been determined at the time of his engagement. The
said employment contract neither mentioned that respondent
Taripe's services were seasonal in nature and that his
employment was only for the duration of the Christmas season
as purposely claimed by petitioner RIC. What was stipulated in
the said contract was that respondent Taripe's employment was
contractual for the period of five months.
Likewise, as the NLRC mentioned in its Resolution, to which
the Court of Appeals agreed, other than the bare allegations of
petitioner RIC that respondent Taripe was hired only because of
the increase in the demand for packaging materials during the
Christmas season, petitioner RIC failed to substantiate such
claim with any other evidence. Petitioner RIC did not present
any evidence which might prove that respondent Taripe was
employed for a fixed or specific project or that his services were
seasonal in nature.
Also, petitioner RIC failed to controvert the claim of respondent
Taripe that he was made to sign the contract of employment,
prepared by petitioner RIC, as a condition for his hiring. Such
contract in which the terms are prepared by only one party and
the other party merely affixes his signature signifying his
adhesion thereto is called contract of adhesion. 20 It is an
agreement in which the parties bargaining are not on equal
footing, the weaker party's participation being reduced to the
alternative "to take it or leave it."21 In the present case,
respondent Taripe, in need of a job, was compelled to agree to
the contract, including the five-month period of employment,
just so he could be hired. Hence, it cannot be argued that
respondent Taripe signed the employment contract with a fixed

term of five months willingly and with full knowledge of the

impact thereof.
With regard to the second guideline, this Court agrees with the
Court of Appeals that petitioner RIC and respondent Taripe
cannot be said to have dealt with each other on more or less
equal terms with no moral dominance exercised by the former
over the latter. As a power press operator, a rank and file
employee, he can hardly be on equal terms with petitioner RIC.
As the Court of Appeals said, "almost always, employees agree
to any terms of an employment contract just to get employed
considering that it is difficult to find work given their ordinary
qualifications." 22
Therefore, for failure of petitioner RIC to comply with the
necessary guidelines for a valid fixed term employment contract,
it can be safely stated that the aforesaid contract signed by
respondent Taripe for a period of five months was a mere
subterfuge to deny to the latter a regular status of employment.
Settled is the rule that the primary standard of determining
regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the
casual business or trade of the employer. The connection can be
determined by considering the nature of the work performed and
its relation to the scheme of the particular business or trade in its
entirety. 23
Given the foregoing, this Court agrees in the findings of the
Court of Appeals and the NLRC that, indeed, respondent Taripe,
as a rectangular power press machine operator, in charge of
manufacturing covers for "four liters rectangular tin cans," was
holding a position which is necessary and desirable in the usual
business or trade of petitioner RIC, which was the manufacture
of tin cans. Therefore, respondent Taripe was a regular employee
of petitioner RIC by the nature of work he performed in the
company.
Respondent Taripe does not fall under the exceptions mentioned
in Article 280 of the Labor Code, as amended, because it was
not proven by petitioner RIC that he was employed only for a
specific project or undertaking or his employment was merely

seasonal. Similarly, the position and function of power press

operator cannot be said to be merely seasonal. Such position
cannot be considered as only needed for a specific project or
undertaking because of the very nature of the business of
petitioner RIC. Indeed, respondent Taripe is a regular employee
of petitioner RIC and as such, he cannot be dismissed from his
employment unless there is just or authorized cause for his
dismissal.
Well-established is the rule that regular employees enjoy
security of tenure and they can only be dismissed for just cause
and with due process, notice and hearing. 24 And in case of
employees' dismissal, the burden is on the employer to prove
that the dismissal was legal. Thus, respondent Taripe's summary
dismissal, not being based on any of the just or authorized
causes enumerated under Articles 282, 25 283, 26 and 284 27 of
the Labor Code, as amended, is illegal.
Before concluding, we once more underscore the settled precept
that factual findings of the NLRC, having deemed to acquire
expertise in matters within its jurisdiction, are generally
accorded not only respect but finality especially when such
factual findings are affirmed by the Court of Appeals; 28 hence,
such factual findings are binding on this Court.
WHEREFORE, premises considered, the instant Petition is
hereby DENIED. The Decision and Resolution of the Court of
Appeals dated 30 September 2004 and 1 April 2005,
respectively, which affirmed with modification the Resolutions
of the NLRC dated 7 June 2002 and 20 August 2002,
respectively, finding herein respondent Taripe as a regular
employee who had been illegally dismissed from employment
by petitioner RIC, are hereby AFFIRMED. Costs against
petitioner RIC.
SO ORDERED.
||| (Rowell Industrial Corporation v. Court of Appeals, G.R. No.
167714, March 07, 2007)